Exhibit 10.1

 

CONFIDENTIAL TREATMENT REQUESTED

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

Execution Version

 

LICENSE AND RESEARCH AGREEMENT

 

This License and Research Agreement (together with all Exhibits, Schedules and
other attachments hereto, this “Agreement”), is dated as of the 7th day of
January, 2008 (the “Execution Date”), by and between Genzyme Corporation, a
Massachusetts corporation (“Genzyme”) and Isis Pharmaceuticals, Inc., a Delaware
corporation (“Isis”).  Genzyme and Isis each may be referred to herein
individually as a “Party” or collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, simultaneously with this Agreement, Isis and Genzyme will enter into
that certain Stock Purchase Agreement of even date herewith in the form attached
hereto as Exhibit A (the “Stock Purchase Agreement”) pursuant to which Genzyme
is purchasing the Shares;

 

WHEREAS, Isis possesses certain intellectual property with respect to certain
oligonucleotide-based therapeutic compounds;

 

WHEREAS, Isis desires to grant to Genzyme, and Genzyme desires to obtain, a
license under certain Isis intellectual property to advance mipomersen, formerly
known as ISIS 301012, and related compounds targeting apoB, through human
clinical trials and ultimately commercialize it as a product; and

 

WHEREAS, Isis and Genzyme desire to enter into a research agreement under which
Isis will conduct research related to certain gene targets selected by Genzyme.

 

NOW, THEREFORE, in consideration of the Parties’ willingness to enter into the
Stock Purchase Agreement and the respective covenants, representations,
warranties and agreements set forth herein, the Parties hereto agree as follows:

 

ARTICLE 1.
DEFINITIONS

 

For purposes of this Agreement, the following capitalized terms will have the
following meanings.  Capitalized terms used without definition in this Agreement
will have the meanings ascribed to them in the Product Term Sheet and the
Research Term Sheet.

 

1.1.                              “AAA” has the meaning set forth in
Section 6.2.2 (Binding Arbitration With Respect to Agreement Terms).

 

1.2.                              “Action” has the meaning set forth in
Section 6.3.1 (Jurisdiction).

 

1.3.                              “Additional Third Party Agreement” has the
meaning set forth in Section 2.1.6 (Additional Rights after Effective Date).

 

1.4.                              “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

 

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meanings, the terms “controlled by” and “under common control with”) means the
possession of the actual 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.  In addition, [***] will not
be considered an Affiliate of Isis.

 

1.5.                              “apoB” means apolipoprotein B.

 

1.6.                              “Bankruptcy Code” has the meaning set forth in
Section 8.14 (Rights in Bankruptcy).

 

1.7.                              “Confidential Information” has the meaning set
forth in Section 8.1.1 (Non-Disclosure).

 

1.8.                              “Control” or “Controlled” means, with respect
to any Know-How, Patent or other intellectual property right or Regulatory
Materials, possession by a Party (including its Affiliates) of the right
(whether by ownership, license or otherwise) to grant to the other Party a
license or a sublicense under such Know-How, Patent or other intellectual
property right or access to Regulatory Materials without violating the terms of
any agreement or other arrangement with any Third Party.

 

1.9.                              “Diligence Period” means the period beginning
on the Execution Date and ending on the earlier of (a) the date that is [***]
after the Execution Date or (b) the date the Parties enter into the More
Detailed Product Agreement.  The Parties’ goal is to conclude diligence and
enter into the More Detailed Product Agreement by [***].

 

1.10.                        “Disclosure Schedule” means the schedule (dated as
of the Execution Date and updated pursuant to Section 5.4 (Right to Update
Disclosure Schedule Prior to Effective Date)) delivered by Isis to Genzyme that
includes exceptions to Isis’ representations and warranties in Section 5.2
(Product Representations and Warranties) and Section 5.3 (Research
Representations and Warranties) hereof.

 

1.11.                        “Dispute” has the meaning set forth in
Section 6.1.1 (Escalation).

 

1.12.                        “Effective Date” has the meaning set forth in
Section 7.1.2 (Effective Date).

 

1.13.                        “Encumbered Follow-On Product” has the meaning set
forth in Section 2.2 (Follow-On Product).

 

1.14.                        “Executives” has the meaning set forth in
Section 6.1.1 (Escalation).

 

1.15.                        “Follow-On Product” means all pharmaceutical
compositions, formulations, dosage forms, delivery systems and presentations
that contain [***] (alone or with other active ingredients) other than
Mipomersen.

 

1.16.                        “Follow-On Product Encumbrances” has the meaning
set forth in Section 2.2.2.

 

1.17.                        “General Representations and Warranties” has the
meaning set forth in Section 5.1 (Representations and Warranties of Both
Parties).

 

1.18.                        “HSR” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

 

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1.19.                        “In-Licensed Third Party IP” means Patents or
Know-How Controlled by Isis that are in-licensed by Isis pursuant to a Third
Party Agreement.

 

1.20.                        “Isis Core Technology Patents” means all Patents,
other than the Product-Specific Patents or Isis Manufacturing and Analytical
Patents, Controlled by Isis or any of its Affiliates as of the Execution Date
hereof or during the term of the Product License that are necessary or useful
for the development and commercialization of Product, including the Patents
identified on Schedule 1.20.

 

1.21.                        “Isis Manufacturing and Analytical Know-How” means
Know-How other than Product Know-How Controlled by Isis or its Affiliates as of
the Execution Date hereof or during the term of the Product License that relates
to the synthesis or analysis of Products independent of sequence or chemical
modification.

 

1.22.                        “Isis Manufacturing and Analytical Patents” means
Patents Controlled by Isis or its Affiliates as of the Execution Date hereof or
during the term of the Product License that claim methods and materials used in
the synthesis or analysis of Products independent of sequence or chemical
modification, including the Patents identified on Schedule 1.22.  Isis
Manufacturing and Analytical Patents do not include the Product-Specific Patents
and the Isis Core Technology Patents.

 

1.23.                        “Isis Manufacturing and Analytical Technology”
means the Isis Manufacturing and Analytical Know-How and Isis Manufacturing and
Analytical Patents solely to the extent necessary or useful to manufacture a
Product.(1)

 

1.24.                        “Know-How” means technical information and
materials, including technology, software, instrumentation, devices, data,
compositions, formulas, biological materials, assays, constructs, compounds,
discoveries, inventions, procedures, processes, practices, protocols, methods,
techniques, results of experimentation or testing, knowledge, trade secrets,
skill and experience, whether or not patentable or copyrightable.

 

1.25.                        “Licensed IP” means the Licensed Patents, the
Product Know-How and the Isis Manufacturing and Analytical Know-How; provided,
however, that (a) for any such Know-How or Patent that becomes Controlled by
Isis after the Execution Date pursuant to an Additional Third Party Agreement,
the provisions of Section 2.1.6 (Additional Rights after Effective Date) will
govern whether such Know-How or Patent will be

 

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(1) As part of its collaboration with other pharmaceutical partners, Isis has an
arrangement where Isis can share manufacturing technology improvements made by
such pharmaceutical partners with other Third Parties so long as such Third
Parties similarly agree to share their manufacturing technology improvements. 
Genzyme may decide to participate in this arrangement if Genzyme wishes.

 

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included as Licensed IP, and (b) with respect to any Follow-On Product, the
provisions of Section 2.2 (Follow-On Product) will govern the extent to which
In-Licensed Third Party IP will be included in Licensed IP.

 

1.26.                        “Licensed Patent(s)” means the Product-Specific
Patents, Isis Core Technology Patents and the Isis Manufacturing and Analytical
Patents.

 

1.27.                        “Mipomersen” means mipomersen sodium, formerly
known as ISIS 301012.

 

1.28.                        “More Detailed Product Agreement” has the meaning
set forth in Section 2.1.2 (More Detailed Product Agreement).

 

1.29.                        “More Detailed Research Agreement” has the meaning
set forth in Section 2.3 (Research Option Agreement).

 

1.30.                        “Patent(s)” means (a) patents and patent
applications in any country or jurisdiction, (b) all priority applications,
divisionals, continuations, substitutions, and continuations-in-part of any of
the foregoing, and (c) all patents issuing on any of the foregoing patent
applications, together with all registrations, reissues, renewals,
re-examinations, confirmations, supplementary protection certificates, and
extensions of any of (a), (b) or (c).

 

1.31.                        “Permitted Licenses” means licenses granted by Isis
after the Execution Date to any Third Party under the Isis Core Technology
Patents or the Isis Manufacturing and Analytical Technology (but not under the
Product-Specific Patents or for use of [***] to (a) use oligonucleotides (or
supply oligonucleotides to end users) in quantities not to exceed [***](2) per
oligonucleotide per end user solely to conduct Pre-Clinical Research, or
(b) enable such Third Party to [***], where such Third Party is primarily
engaged in providing contract manufacturing or services and is not engaged in
drug discovery, development or commercialization.  Notwithstanding the
foregoing, Permitted Licenses do not include any licenses that allow (i) a Third
Party to make, use or sell an oligonucleotide having the same [***] as a Product
or Isis’ preferred [***], (ii) a Third Party to manufacture any nucleic acid
that [***] apoB that will be incorporated into a therapeutic product for use in
human clinical trials or for commercial sale or (iii) Isis to directly supply to
a Third Party any [***] apoB.

 

1.32.                        “Pre-Clinical Research” means pre-clinical research
including gene function, gene expression and target validation research using
cells and animals, which may include small pilot toxicology studies but excludes
pharmacokinetic and toxicology studies

 

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(2) Quantity subject to confirmation by the Parties during the Diligence Period.

 

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required to meet the regulations for filing an IND, clinical development and
commercialization.

 

1.33.                        “Product” means all pharmaceutical compositions,
formulations, dosage forms, delivery systems and presentations that contain
Mipomersen or any Follow-On Product, including all pharmaceutically acceptable
salts, solvates, hydrates, hemihydrates, metabolites, pro-drug forms,
stereoisomers, enantiomers, racemates and all optically active forms thereof.

 

1.34.                        “Product Know-How” means Know-How Controlled by
Isis on the Execution Date or during the term of the Product License relating to
or otherwise necessary for the development and commercialization of Product. 
Product Know-How does not include the Isis Manufacturing and Analytical Know
How.

 

1.35.                        “Product License” has the meaning set forth in
Section 2.1 (Grant).

 

1.36.                        “Product Representations and Warranties” has the
meaning set forth in Section 5.2 (Product Representations and Warranties).

 

1.37.                        “Product-Specific Patents” means Patents Controlled
by Isis or any of its Affiliates as of the Execution Date and during the term of
the Product License claiming or covering (a) [***] apoB; (b) the sequence of
apoB; (c) the specific composition of matter of a Product; and (d) methods of
using Product as a therapeutic, methods of using Product to modulate apoB, and
methods of using the product to inhibit expression of apoB, including the
Patents identified on Schedule 1.37; provided, however, that if a Patent
satisfies the criteria set forth above but also applies to gene targets other
than apoB, such Patent will be considered an Isis Core Technology Patent.

 

1.38.                        “Product Term Sheet” means the term sheet attached
hereto as Exhibit B.

 

1.39.                        “Regulatory Materials” means any regulatory
submissions, notifications, registrations, approvals and/or other filings and
correspondence made to or with a regulatory authority in any country or
jurisdiction in the Territory, and any other records required to be maintained
for possible audit by a regulatory authority that may be necessary or useful to
develop, manufacture, market, sell or otherwise commercialize Product in the
Territory.

 

1.40.                        “Research Option Agreement” has the meaning set
forth in Section 2.3 (Research OptionAgreement).

 

1.41.                        “Research Term Sheet” means the term sheet attached
hereto as Exhibit C.

 

1.42.                        “SEC” means Securities and Exchange Commission.

 

1.43.                        “Shares” means the shares of Isis’ Common Stock
purchased by Genzyme pursuant to the Stock Purchase Agreement.

 

1.44.                        “Territory” means worldwide.

 

1.45.                        “Third Party” means a person or entity other than
the Parties and their respective

 

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Affiliates.

 

1.46.                        “Third Party Agreement” means any agreements
pursuant to which Isis obtains rights applicable to the development or
commercialization of Product or Follow-On Product.

 

ARTICLE 2.
LICENSE AND RESEARCH AGREEMENTS

 

2.1.                              Product License.

 

2.1.1.                     Grant.  Isis hereby grants to Genzyme an exclusive
license, (with the limited right to sublicense as set forth in Section 2.1.3
(Limited Right to Sublicense)), under the Licensed IP to research, develop,
make, have made, use, sell, offer for sale, have sold, import and export
Products in the Territory for therapeutic purposes on the terms and conditions
set forth in the Product Term Sheet and this Agreement (the “Product License”). 
Notwithstanding the foregoing, (a) the exclusive license to the Isis Core
Technology Patents will be subject to the licenses granted by Isis to Third
Parties identified on Schedule 2.1.1 and Isis’ right to grant Permitted
Licenses, and (b) with respect to any Follow-On Product, the provisions of
Section 2.2 (Follow-On Product) will govern the extent to which In-Licensed
Third Party IP is included within Licensed IP.

 

2.1.2.                     More Detailed Product Agreement.  The Parties agree
that the Product Term Sheet and this Agreement contain all material terms of the
Product License and will form a legally binding and enforceable license and
co-development agreement without need for execution of further documentation or
any further action by any Party.  The Parties also recognize that it may be
desirable to agree upon other more detailed customary terms and conditions with
respect to the Product License.  Accordingly, as soon as reasonably practicable
after the Effective Date, the Parties will negotiate and enter into a more
detailed written license and co-development agreement that will include the
terms set forth in the Product Term Sheet and any additional terms and
conditions that are customary and reasonable for agreements of this type that
may be agreed to by the Parties, including provisions relating to intellectual
property ownership, prosecution and enforcement, regulatory interactions and
approvals, term and termination, indemnification and confidentiality (the “More
Detailed Product Agreement”).

 

2.1.3.                     Limited Right to Sublicense.

 

(a)                                  The licenses granted to Genzyme under the
Licensed IP are sublicensable only in connection with a sublicense of a Product
to any Affiliate of Genzyme or to any Third Party, in each case for the
continued research, development or commercialization of such Product in
accordance with the terms of the Product License.

 

(b)                                 Notwithstanding the foregoing, the licenses
granted to Genzyme under the Isis Manufacturing and Analytical Technology are
sublicensable to a Third Party [***] only upon the mutual agreement of the
Parties.

 

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2.1.4.                     Upfront License Fee.  Provided that this Agreement
and the Product License have become effective and neither has not been
terminated, Genzyme will pay to Isis the upfront license fee specified in the
Product Term Sheet upon five (5) business days after the earlier of
(a) expiration of the Diligence Period or (b) the Parties enter into the More
Detailed Product Agreement.

 

2.1.5.                     Access.  Isis will afford to Genzyme and its
representatives reasonable access to and copies of all information (including
reasonable access to knowledgeable employees and representatives of Isis to
discuss such information) within the possession or control of Isis or any of its
Affiliates pertaining to the development of the Product and the Licensed IP,
including all Regulatory Materials related to the Product.

 

2.1.6.                     Additional Rights after Effective Date.  After the
Execution Date, Isis may wish to in-license or acquire rights to Know-How or
Patents Controlled by Third Parties (such a Third Party in-license or
acquisition agreement being an “Additional Third Party Agreement”) which, if so
licensed or acquired, may be included in the Licensed IP licensed to Genzyme
under Section 2.1.1.  In such event (and to the extent permitted by Isis’
confidentiality agreement with the applicable Third Party), Isis will notify
Genzyme regarding the nature of the technology and status of negotiations
related to the Additional Third Party Agreement through the JDC.  Once Isis has
executed such Additional Third Party Agreement, Isis will offer such Third Party
Patents or Know-How to Genzyme (which offer will include a description of the
payments paid or potentially payable by Isis thereunder).  At such time, if
Genzyme wishes to include such Third Party Patents or Know-How under the
licenses granted under Section 2.1.1, Genzyme will notify Isis of its desire to
do so and the Parties will fairly and in good faith allocate upfront payments or
ongoing payment obligations between Products and compounds that are not Products
and other Isis licensees, if appropriate.  As part of this allocation process,
Isis will share with Genzyme, in reasonable detail, the assumptions and
methodology Isis used to create the proposed allocation.  If Genzyme does not
agree to reimburse Isis for the amount of any upfront or similar acquisition
payments fairly allocated to Product, and to be responsible for the payment of
its share of any upfront, milestone and royalty payments, then the Know-How or
Patents acquired or in licensed by Isis under the Additional Third Party
Agreement will not be considered Licensed IP licensed to Genzyme under the
Product License.  When Genzyme pays its share of any upfront, milestone and
royalty payments assumed by Genzyme under this Section 2.1.6, such payments will
be considered Program Costs for the applicable Product.

 

2.2.                              Follow-On Product.  The Parties contemplate
that after the Effective Date Genzyme, either on its own or in collaboration
with Isis, may wish to research, develop and commercialize Follow-On Products. 
The scope of the In-Licensed Third Party IP included in Licensed IP under the
Product License with respect to such Follow-On Products will be determined in
accordance with the procedures set forth in this Section 2.2.  At the time
Genzyme intends to designate a Follow-On Product as a development candidate,
Genzyme will notify Isis in writing of such intention and will describe in

 

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reasonable detail the applicable Follow-On Product.  Subject to Section 2.1.6
(Additional Rights after Effective Date), if a Follow-On Product utilizes any
In-Licensed Third Party IP (an “Encumbered Follow-On Product”), such In-Licensed
Third Party IP will be included in Licensed IP only to the extent set forth
below:

 

2.2.1.                     If the applicable Third Party Agreement contains a
contractual obligation that would preclude Isis from including such In-Licensed
Third Party IP in Licensed IP  with respect to such Encumbered Follow-On
Product, then the In-Licensed Third Party IP that is the subject of such Third
Party Agreement will not be included in Licensed IP.

 

2.2.2.                     If the applicable Third Party Agreement contains any
potential encumbrances known by Isis and related to the potential Follow-On
Product, including field or territory restrictions, covenants, or milestones,
royalty, sublicense revenue or other payments (“Follow-On Product
Encumbrances”), Isis will fully disclose to Genzyme such Follow-On Product
Encumbrances and, if Genzyme agrees in writing to assume the Follow-On Product
Encumbrances (with any payments being included in Program Costs for such
Encumbered Follow-On Product), then the In-Licensed Third Party IP that is the
subject of such Third Party Agreement will be included in Licensed IP.

 

2.2.3.                     If the applicable Third Party Agreement does not
contain the obligations or encumbrances described in Sections 2.2.1 and 2.2.2
above, the In-Licensed Third Party IP that is the subject of such Third Party
Agreement will automatically be included in Licensed IP.

 

2.2.4.                     If the applicable Third Party Agreement is or was
also applicable to Mipomersen, then the In-Licensed Third Party IP that is the
subject of such Third Party Agreement will automatically be included in the
Licensed IP to the extent that (a) the terms of such Third Party Agreement do
not preclude Isis from including it and (b) Genzyme agrees in writing to assume
any applicable Follow-On Product Encumbrances associated with such Third Party
Agreement.

 

2.2.5.                     Each time the Parties complete the process set forth
above, Isis will update the schedules relating to Licensed Patents and Third
Party Agreements, and Schedule 2.1.1 as appropriate.

 

2.3.                              Research Option Agreement.  Isis and Genzyme
hereby enter into a research agreement under which Isis will perform research on
the terms and conditions set forth in the Research Term Sheet (the “Research
Option Agreement”).  The Parties agree that the Research Term Sheet and this
Agreement contain all material terms of the Research Option Agreement and will
form a legally binding and enforceable research agreement, without need for
execution of further documentation or any further action by any Party.  The
Parties also recognize that it may be desirable to agree upon other more
detailed customary terms and conditions with respect to the Research Option
Agreement.  Accordingly, as quickly as practicable following the Effective Date,
the Parties will negotiate and enter into a more detailed research agreement
that will include the terms set

 

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forth in the Research Term Sheet and any additional terms and conditions that
are customary and reasonable for agreements of this type that may be agreed to
by the Parties, including provisions relating to intellectual property
ownership, prosecution and enforcement, regulatory matters, term and
termination, indemnification and confidentiality (the “More Detailed Research
Agreement”).

 

ARTICLE 3.
NON-COMPETE

 

3.1.                              Product.  During the term of the Product
License, Isis and its Affiliates will not, directly or indirectly, and will not
collaborate with, license or otherwise authorize any Third Party to, research,
develop or commercialize any [***] apoB, except pursuant to (a) the agreements
identified on Schedule 2.1.1, as they exist on the Execution Date, (b) Permitted
Licenses, or (c) this Agreement, including the Product License, and the More
Detailed Product Agreement.

 

ARTICLE 4.
[RESERVED]

 

ARTICLE 5.
REPRESENTATIONS AND WARRANTIES

 

5.1.                              Representations and Warranties of Both
Parties.  Each Party hereby represents and warrants to the other Party as of
both the Execution Date and Effective Date (collectively, the “General
Representations and Warranties”) that:

 

5.1.1.                     it is a duly organized and validly existing
corporation under the laws of its jurisdiction of incorporation;

 

5.1.2.                     it has the power and authority and the legal right to
enter into this Agreement and perform its obligations hereunder, and that it has
taken all necessary action on its part required to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder;

 

5.1.3.                     the execution and delivery of this Agreement, the
Product License and the Research Option Agreement and the performance of such
Party’s obligations hereunder do not conflict with or violate any requirement of
applicable law or any provision of its articles of incorporation or similar
organizational documents, its bylaws, or the terms or provisions of any
agreement or other instrument to which it is a party or by which it is bound, or
any order, award, judgment or decree to which it is a party or by which it is
bound; and

 

5.1.4.                     this Agreement has been duly executed and delivered
on behalf of such Party and constitutes a legal, valid and binding obligation of
such Party and is enforceable against it in accordance with its terms subject to
the effects of bankruptcy, insolvency or other laws of general application
affecting the enforcement of creditor rights and judicial principles affecting
the availability of specific performance and general principles of equity,
whether enforceability is considered

 

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a proceeding at law or equity.

 

5.2.                              Product Representations and Warranties.  Isis
represents and warrants to Genzyme that the statements contained in this
Section 5.2 (the “Product Representations and Warranties”) are true and correct
as of the Execution Date and will be true as of the Effective Date, as though
made as of the Effective Date, with each such representation and warranty
subject only to such exceptions, if any, as are set forth in the particular
section in the Disclosure Schedule attached hereto as Exhibit D that corresponds
to the particular section number in this Agreement:

 

5.2.1.                     Schedule 1.20, Schedule 1.22, and Schedule 1.37 set
forth true, correct and complete lists of all Isis Core Technology Patents, Isis
Manufacturing and Analytical Patents, and Product-Specific Patents,
respectively, and all Licensed Patents used in the development or
commercialization of Mipomersen and existing as of the Execution Date and
indicates whether each such Patent is owned by Isis or licensed by Isis from a
Third Party and if so, identifies the licensor or sublicensor from which the
Patent is licensed.

 

5.2.2.                     A true, correct and complete list of any Third Party
Agreements related to Mipomersen is set forth on Schedule 5.2.2.

 

5.2.3.                     With respect to all Product-Specific Patents, and all
Licensed IP used in the development or commercialization of Mipomersen, Isis has
the sufficient legal and/or beneficial title and ownership or rights to grant
the Product License to Genzyme and the grant of the Product License to Genzyme
does not violate the terms of any Third Party Agreement or any other agreement
Isis has with a Third Party.

 

5.2.4.                     Each of the Product-Specific Patents, and each of the
Licensed Patents used in the development or commercialization of Mipomersen
properly identifies each and every inventor of the claims thereof as determined
in accordance with the laws of the jurisdiction in which such Patent is issued
or such application is pending.

 

5.2.5.                     With respect to all Product-Specific Patents owned by
Isis, and all Licensed Patents owned by Isis and used in the development or
commercialization of Mipomersen, (a) each person who has or has had any rights
in or to each of such Patents has executed an agreement assigning his, her or
its entire right, title and interest in and to such Patents to Isis and (b) to
the best of Isis’ knowledge, each such inventor has complied in all material
respects with all applicable duties of candor and good faith in dealing with any
patent office, including the duty to disclose to any applicable patent office
all information known to be material to patentability.

 

5.2.6.                     To the best of Isis’ knowledge, no circumstances or
grounds exist that would invalidate, reduce or eliminate, in whole or in part,
the enforceability, validity or scope of any Product-Specific Patent or any
Licensed Patent used in the development or commercialization of Mipomersen.

 

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5.2.7.    Isis is not aware of any Patents owned or Controlled by a Third Party
that would be infringed by Genzyme during the development or commercialization
of Mipomersen in its current form.

 

5.2.8.    To the best of Isis’ knowledge, no actions, suits, claims, disputes or
proceedings concerning the Licensed Patents are currently pending or are
threatened, that if determined adversely to Isis would have a material adverse
effect on or would impair Genzyme’s rights under the Product License.

 

5.2.9.    Isis is not subject to any agreement with any Third Party or to any
outstanding order, judgment or decree of any court or administrative agency that
restricts it in any way from granting to Genzyme the Product License.

 

5.2.10.            Isis has not granted, or permitted to be attached, and it
will not grant or permit to be attached, any lien, security interest or other
encumbrance with respect to any Product-Specific Patent, or any Licensed IP used
in the development or commercialization of Mipomersen which would adversely
affect the rights granted to Genzyme hereunder.

 

5.2.11.            Each Third Party Agreement related to Mipomersen is in full
force and effect, and Isis, and to the best of Isis’ knowledge, each
counterparty thereto, is in compliance in all material respects with all such
Third Party Agreements and no circumstances or grounds exist that would
reasonably be expected to give rise to a claim of material breach or right of
rescission, termination, revision or amendment of such Third Party Agreements.

 

5.2.12.            Isis has not assigned, licensed, sublicensed, granted any
interest in or options to, or entered into an agreement with respect to the
Licensed IP with a Third Party that would adversely impair Genzyme’s exclusive
rights under this Agreement, except for the agreements identified on Schedule
2.1.1.

 

5.2.13.            Isis has not received any claim alleging that Isis’
development of Mipomersen or use of any Product-Specific Patent or any Licensed
IP used in the development or commercialization of Mipomersen interferes with,
infringes, or misappropriates any intellectual property rights of any Third
Party (including any claim that Isis must license or refrain from using any
intellectual property rights of any Third Party in order to develop, make, use,
sell or offer for sale any product or technology using or incorporating the
Licensed IP), and to the best of Isis’ knowledge, the development and
commercialization of Mipomersen and the use of any Product-Specific Patent or
any Licensed IP used in the development or commercialization of Mipomersen will
not interfere with, infringe or misappropriate the intellectual property rights
of any Third Party.  To the best of Isis’ knowledge, no Third Party has
interfered with, infringed upon or misappropriated the Licensed IP in the
making, using or selling of a lipid lowering product.

 

5.2.14.            Isis holds, and is operating in material compliance with,
such exceptions, permits,

 

11

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

 

licenses, franchises, authorizations and clearances of any governmental entity
required in connection with the current development of Mipomersen.  Isis has not
received any warning letters or written correspondence from any governmental
entity requiring the termination, suspension or modification of any clinical or
pre-clinical studies or tests with respect to Mipomersen.  Isis has conducted
and required its contractors to conduct all clinical studies related to
Mipomersen in accordance with cGCP, cGLP and applicable law.

 

5.2.15.            As of the Execution Date, Isis has prepared, maintained and
retained all Regulatory Materials required to be maintained or reported pursuant
to and in accordance with applicable laws and the Regulatory Materials do not
contain any materially false or misleading statements.

 

5.2.16.            Except for the agreements identified on Schedule 2.1.1, Isis
has not granted to any Third Party rights under the Licensed Patents to
research, develop or commercialize any nucleic acid that hybridizes to a nucleic
acid molecule encoding apoB.

 

5.3.      Research Representations and Warranties.  Isis represents and warrants
to Genzyme that the statements contained in this Section 5.3 are true and
correct as of the Execution Date and will be true as of the Effective Date, as
though made as of the Effective Date, with each such representation and warranty
subject only to such exceptions, if any, as are set forth in the particular
section in the Disclosure Schedule attached hereto as Exhibit D that corresponds
to the particular section number in this Agreement:

 

5.3.1.    To the best of Isis’ knowledge, no actions, suits, claims, disputes or
proceedings are currently pending or are threatened, that if determined
adversely to Isis would have a material adverse effect on or impair Isis’
ability to perform its obligations under the Research Option Agreement.

 

5.3.2.    Isis is not subject to any agreement with any Third Party or to any
outstanding order, judgment or decree of any court or administrative agency that
materially restricts Isis from performing its obligations under the Research
Option Agreement.

 

5.3.3.    Isis has sufficient resources to perform the activities contemplated
under the Research Option Agreement and the Isis personnel or permitted
contractors performing such activities will be skilled, appropriately
credentialed, licensed and qualified to provide the specific research services
they are providing.

 

5.4.      Right to Update Disclosure Schedule Prior to Effective Date.  On or
before the Effective Date, Isis may deliver to Genzyme an updated Disclosure
Schedule reflecting any exceptions to the representations and warranties made by
Isis as of the Effective Date.

 

5.5.      Isis Covenants.

 

5.5.1.    Third Party Agreements.  Isis covenants that it will not, without
Genzyme’s prior written consent, agree, consent or acquiesce to any amendment,
supplement or

 

12

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other modification to any Third Party Agreement or take any action under such
Third Party Agreement or with respect to the intellectual property licensed
thereunder that would adversely affect the rights granted to Genzyme under this
Agreement, including under the Product License.

 

5.5.2.    Sublicense Survival.  Isis covenants that it will use good faith and
commercially reasonable efforts to enter into any necessary amendments or side
agreements to its Third Party Agreements to ensure that (a) sublicenses under
each Third Party Agreement will survive termination of such Third Party
Agreement or (b) Genzyme will receive a direct license from the counterparty to
each Third Party Agreement upon termination of such Third Party Agreement.

 

5.5.3.    Notice of Developments.  During the Diligence Period, Isis will give
Genzyme prompt written notice upon becoming aware of any development, event or
circumstance that could reasonably be expected to result in a breach of or
inaccuracy in any of the General Representations and Warranties and Product
Representations and Warranties.

 

ARTICLE 6.
DISPUTE RESOLUTION

 

6.1.      Escalation.

 

6.1.1.    In the event any dispute, controversy or claim arises under, out of,
in connection with or in relation to this Agreement, or the breach, termination,
validity or enforceability of any provision hereof (a “Dispute”), the Parties
will discuss and negotiate in good faith a solution acceptable to the Parties
and in the spirit of this Agreement.  If, after negotiating in good faith
pursuant to the foregoing sentence, the Parties fail to reach agreement within
sixty (60) days, then the Dispute may be referred to the Chief Executive Officer
of Genzyme and the Chief Executive Officer of Isis (the “Executives”) for
resolution at the request of either Party.

 

6.1.2.    If the Executives fail, after good faith discussions, to reach an
amicable agreement on the Dispute within ten (10) business days of submission to
the Executives, then:

 

(a)       if the Dispute relates to the Parties’ failure to reach agreement with
respect to the interpretation of this Agreement, the Product Term Sheet or
Research Term Sheet or with respect to any term or condition to be included in
the More Detailed Product Agreement or More Detailed Research Agreement, then
either Party’s sole recourse is to submit such Dispute to binding arbitration
pursuant to Section 6.2 (Binding Arbitration with Respect to Agreement Terms)
after providing written notice to the other Party; and

 

(b)       if the Dispute relates to any other matter, either Party may pursue a
legal remedy in accordance with Section 6.3 (Jurisdiction, Venue, Service of
Process).

 

13

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6.2.      Binding Arbitration With Respect to Agreement Terms.

 

6.2.1.    If the Parties fail to reach agreement with respect to the
interpretation of this Agreement, the Product Term Sheet or Research Term Sheet
or with respect to any term or condition to be included in the More Detailed
Product Agreement or More Detailed Research Agreement and the Dispute is not
resolved informally through negotiation between the Parties or the Executives,
then the Dispute will be submitted to binding arbitration.  The Parties will
select a mutually agreeable arbitrator experienced in matters regarding
contracts of a similar nature who (a) is a lawyer with at least fifteen (15)
years experience who has extensive experience negotiating and drafting license,
research and collaboration agreements among biotechnology and pharmaceutical
companies and (b) has no affiliation or pre-existing relationship with either
Genzyme or Isis or their respective Affiliates.  If the Parties are unable to
agree on an arbitrator within a thirty (30) day period, then each Party will
select an arbitrator satisfying the criteria described in the immediately
preceding sentence within five (5) business days, the two (2) designated
arbitrators will select a mutually agreeable third arbitrator satisfying the
criteria described in the immediately preceding sentence within five
(5) business days and all three (3) arbitrators will hear the Dispute as a panel
and render a decision upon the determination of the majority of the panel.  In
each case, the arbitrator(s) will render their decision by supplying the term or
condition upon which the Parties failed to agree.

 

6.2.2.    The arbitration will be conducted in accordance with the rules of, and
under the auspices of, the American Arbitration Association (the “AAA”).  The
decisions rendered by the arbitrators will be final and binding, and the Parties
will not have any right of appeal to any court on the merits of the Dispute. 
Judgment upon the award rendered in any such arbitration may be entered in any
court having jurisdiction thereof.  The location of the arbitration will be
Chicago, Illinois.  This Agreement and the Product License and Research Option
Agreement will remain in effect pending completion of the proceedings brought
under this Section 6.2.  Each Party will bear its own costs and expenses with
respect to any such arbitration, including one-half of the fees and expenses of
the arbitrator.

 

6.3.      Jurisdiction; Venue; Service of Process.

 

6.3.1.    Jurisdiction.  Each Party by its execution hereof, (a) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court located in Chicago, Illinois for the purpose of any Dispute arising
between the Parties in connection with this Agreement, other than those Disputes
that must be resolved by binding arbitration pursuant to Section 6.2 (Binding
Arbitration With Respect to Agreement Terms) (each, an “Action”), and (b) hereby
waives to the extent not prohibited by applicable law, and agrees not to assert,
by way of motion, as a defense or otherwise, in any such Action, any claim that
it is not subject personally to the jurisdiction of the above-named court, that
its property is exempt or immune from attachment or execution, that any such
Action brought in the above-named court should be dismissed on grounds of forum
non conveniens,

 

14

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should be transferred or removed to any court other than the above-named court,
or should be stayed by reason of the pendency of some other proceeding in any
other court other than the above-named court, or that this Agreement or the
subject matter hereof may not be enforced in or by such court and (c) hereby
agrees not to commence any such Action other than before the above-named court. 
Notwithstanding the previous sentence a Party may commence any Action in a court
other than the above-named court solely for the purpose of enforcing an order or
judgment issued by the above-named court.

 

6.3.2.    Venue.  Each Party agrees that for any Action between the Parties
arising in whole or in part under or in connection with this Agreement, such
Party bring Actions only in the federal courts of the United States of America
located in Chicago, Illinois and any appellate court having jurisdiction over
appeals from such courts.  Each Party further waives any claim and will not
assert that venue should properly lie in any other location within the selected
jurisdiction.

 

6.3.3.    Service of Process.  Each Party hereby agrees that service of process
made by registered or certified mail, return receipt requested, at its address
specified pursuant to Section 8.5 (Notices), will constitute good and valid
service of process in any such Action and (c) waives and agrees not to assert
(by way of motion, as a defense, or otherwise) in any such Action any claim that
service of process made in accordance with clause (a) or (b) does not constitute
good and valid service of process.

 

ARTICLE 7.
CONDITIONS PRECEDENT AND TERMINATION

 

7.1.      Conditions Precedent.

 

7.1.1.    HSR Compliance.

 

(a)       Each Party will use commercially reasonable efforts to satisfy any
applicable requirements under the HSR, and the regulations promulgated
thereunder, including by making an initial HSR filing no later than five
(5) days after the Execution Date or upon such other timing as mutually agreed
by the Parties.

 

(b)       Each Party will cooperate with the other Party in the prompt
preparation, execution and filing of all documents that are required or
permitted to be filed pursuant to HSR, and to notify the other Party upon
receipt of any formal or informal requests for information from any government
agency in connection with any filings under HSR.  Each Party will bear its own
costs with respect thereto (except the filing fees for HSR, which will be paid
by Genzyme).

 

7.1.2.    Effective Date.  This Agreement will not be effective until the date
(the “Effective Date”) the requirements described in Section 7.1.1 have been
satisfied and all applicable waiting periods (including any extensions thereof)
under HSR have

 

15

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

 

expired or been terminated.  All obligations, rights, duties and liabilities
under this Agreement (except those contained in this Section 7.1 (Conditions
Precedent), Article 3 (Non-Compete), Article 5 (Representations and Warranties)
and Article 8 (Miscellaneous) of this Agreement) are subject to such date.

 

7.1.3.    Party’s Termination Right.  If the Effective Date has not occurred
within ninety (90) days after the Execution Date, notwithstanding that each
Party has fulfilled its obligations under this Section 7.1, either Party has the
right to terminate this Agreement without liability to the other Party by notice
in writing with immediate effect; provided, however, that if the Parties receive
a request for more information from a government agency in connection with the
HSR filing, the Parties will mutually agree to extend the ninety (90) day period
for a reasonable period of time.

 

7.2.      Isis’ Right to Terminate.  If either (a) after the satisfaction or
waiver of the closing conditions set forth in Section 5.2 of the Stock Purchase
Agreement, Genzyme has not paid Isis the Purchase Price for the Shares by the
Closing Date (as required by and defined in the Stock Purchase Agreement) or
(b) Genzyme fails to pay the upfront license fee when due under Section 2.1.4
(Upfront License Fee), Isis has the right to terminate this Agreement without
liability to Genzyme by notice in writing with immediate effect if Genzyme has
failed to cure such non-payment within a reasonable period of time after
receiving written notice from Isis of such failure to pay.

 

7.3.      Termination by Genzyme.  The Parties have negotiated and entered into
this Agreement (but not the Stock Purchase Agreement) on an abbreviated schedule
that has not permitted Genzyme to complete a customary due diligence review and
analysis of the Product’s clinical data, regulatory history, relevant Isis and
Third Party intellectual property, and relevant Third Party Agreements, and
intend for Genzyme to conduct and complete such a due diligence review and
analysis during the Diligence Period.  Therefore, Genzyme may terminate the
Product License with immediate effect by providing written notice to Isis at any
time during the Diligence Period if, based on its due diligence review and
analysis, Genzyme concludes in good faith that the value of the Product License
is significantly reduced.  For purposes of clarification, this Section 7.3 does
not give Genzyme the right to terminate the Stock Purchase Agreement.

 

16

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

 

ARTICLE 8.
MISCELLANEOUS

 

8.1.      Confidentiality.

 

8.1.1.    Non-Disclosure.  Genzyme and Isis agree that all information relating
to the Licensed IP, the terms and conditions of this Agreement (including the
Product Term Sheet and Research Term Sheet), or any activities conducted in
connection with or pursuant to this Agreement and disclosed by either Party in
accordance with this Agreement (“Confidential Information”) will be used and
disclosed by the receiving Party only to perform its obligations and exercise
its rights under this Agreement.  Information relating to the development of the
Product, the Licensed IP and the terms and conditions of this Agreement will be
considered the Confidential Information of both Parties under the Agreement, as
if both Parties were receiving Parties.  Notwithstanding the foregoing,
“Confidential Information” will not include information that the receiving Party
can establish:

 

(a)       was already known by the receiving Party (other than under an
obligation of confidentiality) at the time of disclosure by the disclosing
Party;

 

(b)       was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;

 

(c)       became generally available to the public or otherwise part of the
public domain after its disclosure or development, as the case may be, other
than through any act or omission of the receiving Party or any of its
Affiliates;

 

(d)       was disclosed to the receiving Party, other than under an obligation
of confidentiality, by a Third Party who had no obligation to the disclosing
Party not to disclose such information to others; or

 

(e)       was independently discovered or developed by or on behalf of the
receiving Party without the use of any Confidential Information belonging to the
disclosing Party.

 

8.1.2.    Authorized Disclosure and Use.  Notwithstanding the foregoing
provisions of Section 8.1.1, each Party may disclose Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary to:

 

(a)       prosecute or defend litigation,

 

(b)       comply with applicable governmental laws and regulations (including
the rules and regulations of the SEC); or

 

(c)       make filings and submissions to, or correspond or communicate with,
any government authority.

 

In the event a Party deems it reasonably necessary to disclose Confidential

 

17

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

 

Information belonging to the other Party pursuant to clauses (a), (b) and (c) of
this Section 8.1.2, the disclosing Party will to the extent possible give
reasonable advance notice of such disclosure to the other Party and take
reasonable measures to ensure confidential treatment of such information.

 

8.2.      Specific Performance.  Each Party acknowledges and agrees that, in the
event of any breach of this Agreement by such Party or any of its Affiliates,
the non-breaching Party may be irreparably and immediately harmed and may not be
able to be made whole by monetary damages.  Without prejudice to any rights and
remedies otherwise available, the non-breaching Party will be entitled to seek
equitable relief by way of injunction, specific performance or otherwise if the
breaching Party or any of its Affiliates breaches any provision of this
Agreement.

 

8.3.      Governing Law.  This Agreement will be governed by and interpreted in
accordance with the laws of the State of New York without reference to its
choice of laws or conflicts of laws provisions.

 

8.4.      Waiver.  The failure by either Party to take any action or assert any
right hereunder will in no way be construed to be a waiver of such right, nor in
any way be deemed to affect the validity of this Agreement or any part hereof,
or the right of a Party to thereafter enforce each and every provision of this
Agreement.

 

8.5.      Notices.  Any consent or notice required or permitted to be given or
made under this Agreement by one of the Parties hereto to the other will be in
writing and delivered by hand or sent by nationally recognized overnight
delivery service, prepaid registered or certified air mail, or by facsimile
confirmed by prepaid, registered or certified mail letter, and will be deemed to
have been properly served to the addressee upon receipt of such written
communication, in any event to the following addresses (or any updated address
provided to the notifying Party in writing in accordance with this Section 8.5):

 

If to Genzyme:

Genzyme Corporation

 

500 Kendall Street

 

Cambridge, Massachusetts 02142

 

Attn:

General Manager,

 

 

Cardiovascular Business Unit

 

Fax: (617) 252-7553

 

with a copy to:

Genzyme Corporation

 

500 Kendall Street

 

Cambridge, Massachusetts 02142

 

Attn:

General Counsel

 

Fax:  (617) 252-7553

 

If to Isis:

Isis Pharmaceuticals, Inc.

 

1896 Rutherford Road

 

Carlsbad, CA 92008

 

Attn:

COO and CFO

 

18

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Fax:  (760) 603-4650

 

 

with a copy to:

Isis Pharmaceuticals, Inc.

 

1896 Rutherford Road

 

Carlsbad, CA 92008

 

Attn:

General Counsel

 

Fax:  (760) 268-4922

 

8.6.      Entire Agreement.  This Agreement and all Exhibits and Schedules
attached hereto (the terms of which are incorporated herein by reference) sets
forth all the covenants, promises, agreements, warranties, representations,
conditions and understandings between the Parties hereto with respect to the
subject matter hereof and supersedes and terminates all prior agreements
(including the Confidential Disclosure and Standstill Agreement dated
September 19, 2007 between the Parties) and understandings between the Parties
and constitutes the entire agreement between the Parties with respect to the
subject matter hereof.  All Exhibits and Schedules referred to herein and other
attachments hereto are intended to be, and hereby are, specifically incorporated
herein and made a part of this Agreement.  No subsequent alteration, amendment
or modification to this Agreement will be binding upon the Parties unless in
writing and duly executed by authorized representatives of both Parties.

 

8.7.      Binding Effect; Assignment.  This Agreement will inure to the benefit
of and be binding upon the Parties and their respective successors and permitted
assigns.  Neither Party will assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other Party;
provided, however, that Genzyme  may assign this Agreement or its rights or
obligations hereunder to any of its Affiliates.

 

8.8.      Press Releases.  Except as required by applicable law, neither Party
will give notice to any Third Party or otherwise make any public statement or
releases concerning this Agreement or the transactions contemplated hereby
without obtaining the prior written consent of the other Party to this Agreement
as to the contents and manner of presentation and publication thereof, which
consent will not be unreasonably withheld, delayed or conditioned.

 

8.9.      Severability.  If any term, covenant or condition of this Agreement or
the application thereof to any Party or circumstance, to any extent, is invalid
or unenforceable, then (a) the remainder of this Agreement, or the application
of such term, covenant or condition to Parties or circumstances other than those
as to which it is invalid or unenforceable, will not be affected thereby and
each term, covenant or condition of this Agreement will be valid and be enforced
to the fullest extent permitted by law; and (b) the Parties hereto covenant and
agree to renegotiate any such term, covenant or application thereof in good
faith in order to provide a reasonably acceptable alternative to the term,
covenant or condition of this Agreement or the application thereof that is
invalid or unenforceable, it being the intent of the Parties that the basic
purposes of this Agreement are to be effectuated.

 

8.10.     Further Assurances.  Each Party will execute such other instruments,
give such further

 

19

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assurances and perform such acts which are or may become necessary or
appropriate to effectuate and carry out the provisions and intent of this
Agreement.

 

8.11.     Independent Contractors.  The status of the Parties under this
Agreement will be that of independent contractors.  No Party will have the right
to enter into any agreements on behalf of the other Party, nor will it represent
to any Third Party that it has any such right or authority.  Nothing in this
Agreement will be construed as establishing a partnership or joint venture
relationship between the Parties hereto.

 

8.12.     Interpretation.  The article and section headings herein are for
reference purposes only and will not affect the meaning or interpretation
hereof.  The term “including” (or any variation thereof such as “include”) will
be without limitation.

 

8.13.     Counterparts.  This Agreement may be executed in one or more
counterpart copies, and by facsimile signature, each of which will be deemed an
original and all of which taken together will be deemed to constitute one and
the same instrument.

 

8.14.     Rights in Bankruptcy.  All rights and licenses now or hereafter
granted under or pursuant to this Agreement, the Product Term Sheet and the
Research Term Sheet, including Section 2.1 of this Agreement, are rights to
“intellectual property” (as defined in Section 101(35A) of Title 11 of the
United States Code, as amended (such Title 11, the “Bankruptcy Code”)).  Isis
hereby grants to Genzyme and all Affiliates of Genzyme a right of access and to
obtain possession of and to benefit from (a) copies of research data,
(b) laboratory samples, (c)  samples of Product, (d) formulas, (e) laboratory
notes and notebooks, (f) data and results related to clinical trials,
(g) regulatory filings and approvals, (h) rights of reference in respect of
regulatory filings and approvals, (i) pre-clinical research data and results,
and (j) marketing, advertising and promotional materials, all of which
constitute “embodiments” of intellectual property pursuant to Section 365(n) of
the Bankruptcy Code, and (k) all other embodiments of such intellectual
property, in each case, solely in connection with Genzyme’s rights under the
Product License and the Research Option Agreement, whether any of the foregoing
are in Isis’ possession or control or in the possession and control of Third
Parties.  Isis agrees not to interfere with Genzyme’s and its Affiliates’
exercise of rights and licenses to intellectual property licensed hereunder and
embodiments thereof in accordance with this Agreement and agrees to use
commercially reasonable efforts to assist Genzyme and its Affiliates to obtain
such intellectual property and embodiments thereof in the possession or control
of Third Parties as reasonably necessary or desirable for Genzyme or its
Affiliates to exercise such rights and licenses in accordance with this
Agreement.  The Parties hereto acknowledge and agree that all payments by
Genzyme to Isis in the Product Term Sheet, other than the Profit Sharing and
Sales Milestones referred to in the Product Term Sheet, do not constitute
“royalties” within the meaning of Bankruptcy Code §365(n) or relate to licenses
of intellectual property hereunder.

 

[remainder of page intentionally left blank]

 

20

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IN WITNESS WHEREOF, the Parties have caused this License and Research Agreement
to be executed by their officers thereunto duly authorized as of the date first
written above.

 

 

 

Genzyme Corporation

 

 

 

By:

/s/ Earl M. Collier, Jr.

 

Name:

Earl M. Collier, Jr.

 

Title:

EVP

 

 

 

Isis Pharmaceuticals, Inc.

 

 

 

By:

/s/ B. Lynne Parshall

 

 

Name:

B. Lynne Parshall

 

Title:

COO & CFO

 

 

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

 

SCHEDULE 1.20

 

ISIS CORE TECHNOLOGY PATENTS

[***]

 

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

 

SCHEDULE 1.22

 

ISIS MANUFACTURING & ANALYTICAL PATENTS

[***]

 

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

 

SCHEDULE 1.37

 

PRODUCT-SPECIFIC PATENTS

[***]

 

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

 

Schedule 2.1.1

 

Licenses to Third Parties

[***]

 

2

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

 

Schedule 5.2.2

 

Third Party Agreements

[***]

 

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

 

Exhibit A

 

Stock Purchase Agreement

 

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

 

Execution Version

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (“Agreement”) is entered into as of January 7,
2008, by and between GENZYME CORPORATION, a Massachusetts corporation (
“Genzyme”), and ISIS PHARMACEUTICALS, INC., a Delaware corporation (“Isis”).

 

RECITALS

 

A.                  Isis has agreed to sell, and Genzyme has agreed to purchase,
shares of Isis’ common stock (the “Common Stock”) subject to and in accordance
with the terms and provisions hereof.

 

B.                  Isis and Genzyme are entering into a License and Research
Agreement, dated the same date hereof (the “License and Research Agreement”).

 

C.                  The capitalized terms used herein and not otherwise defined
have the meanings given to them in Appendix 1.

 

AGREEMENT

 

For good and valuable consideration, the Parties agree as follows:

 

SECTION 1.    SALE AND PURCHASE OF STOCK

 

1.1          Purchase of Stock.  Subject to the terms and conditions of this
Agreement, at the Closing, Isis will issue and sell to Genzyme, and Genzyme will
purchase from Isis, 5,000,000 shares of Common Stock (the “Shares”) for an
aggregate purchase price of $150,000,000 (the “Purchase Price”).

 

1.2          Payment.  At the Closing, Genzyme will pay the Purchase Price by
wire transfer of immediately available funds in accordance with wire
instructions provided by Isis to Genzyme prior to the Closing, and Isis will
deliver a stock certificate representing the Shares to Genzyme.

 

1.3          Closing. The closing of the transactions contemplated by this
Section 1 (the “Closing”) will be held at the offices of Isis within three
Business Days after the conditions to closing set forth in Section 5 are
satisfied or waived (other than those conditions that by their nature are to be
satisfied or waived at the Closing) or at such other place, time and/or date as
may be jointly designated by Genzyme and Isis (the “Closing Date”).

 

SECTION 2.    REPRESENTATIONS AND WARRANTIES OF ISIS

 

Except as otherwise specifically contemplated by this Agreement, Isis hereby
represents and warrants to Genzyme that:

 

2.1          Organization and Qualification.  Isis is duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to conduct its business as currently conducted as
disclosed in the SEC Documents.  Isis is duly qualified to do business and is in
good standing in every jurisdiction in which the nature of the

 

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business conducted by it or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not reasonably be expected to have a Material Adverse
Effect.

 

2.2          Authorization; Enforcement.  Isis has all requisite corporate power
and authority to enter into and to perform its obligations under this Agreement,
to consummate the transactions contemplated hereby and to issue the Shares in
accordance with the terms hereof.  The execution, delivery and performance of
this Agreement by Isis and the consummation by it of the transactions
contemplated hereby (including the issuance of the Shares) have been duly
authorized by Isis’ Board of Directors (the “Board”) and no further consent or
authorization of Isis, the Board, or its stockholders is required.  This
Agreement has been duly executed by Isis and constitutes a legal, valid and
binding obligation of Isis enforceable against Isis in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, or moratorium or similar laws affecting creditors’
and contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity and except as rights to indemnity and
contribution may be limited by state or federal securities laws or public policy
underlying such laws.

 

2.3          Capitalization.  The authorized capital stock of Isis, consists of
200,000,000 shares of Common Stock and 15,000,000 shares of Preferred Stock, of
which 87,317,938 shares of Common Stock and no shares of Preferred Stock are
issued and outstanding as of January 2, 2008.  All of the issued and outstanding
shares of Common Stock have been duly authorized, validly issued, fully paid,
and nonassessable.   Except as disclosed in the SEC Documents or issued pursuant
to equity incentive plans identified in the SEC Documents, Isis does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations.  Isis’ Restated
Certificate of Incorporation (the “Certificate of Incorporation”), as in effect
on the date hereof, and Isis’ Bylaws (the “Bylaws”) as in effect on the date
hereof, are each filed as exhibits to the SEC Documents.

 

2.4          Issuance of Shares.  The Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and will not be subject to preemptive rights or
other similar rights of stockholders of Isis.

 

2.5          No Conflicts; Government Consents and Permits.

 

(a)           The execution delivery and performance of this Agreement by Isis
and the consummation by Isis of the transactions contemplated hereby (including
the issuance of the Shares) will not (i) conflict with or result in a violation
of any provision of Isis’ Certificate of Incorporation or Bylaws, (ii) violate
or conflict with, or result in a breach of any provision of, or constitute a
default under, any agreement, indenture, or instrument to which Isis is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws and
regulations and regulations of any self-regulatory organizations) applicable to
Isis, except in the case of clauses (ii) and (iii) only, for such conflicts,
breaches, defaults, and violations as would not reasonably be expected to have a

 

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Material Adverse Effect or result in a liability for Genzyme. There is no
control share acquisition, business combination, rights agreement or other
anti-takeover provision contemplated by the Isis organizational documents or
Delaware law that will become applicable to Genzyme as a result of the purchase
of the Shares.

 

(b)           Isis is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
any regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement in accordance with the terms
hereof, or to issue and sell the Shares in accordance with the terms hereof
other than such as have been made or obtained, and except for (i) the
registration of the Shares under the Securities Act pursuant to Section 6
hereof, (ii) any post-closing filings required to be made under federal or state
securities laws, (iii) any required filings or notifications regarding the
issuance or listing of additional shares with Nasdaq, and (iv) any consent
required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR Act”).

 

(c)           Isis has all franchises, permits, licenses, and any similar
authority necessary for the conduct of its business as now being conducted by it
and as currently proposed to be conducted as disclosed in the SEC Documents,
except for such franchise, permit, license or similar authority, the lack of
which would not reasonably be expected to have a Material Adverse Effect. Isis
has not received any actual notice of any proceeding relating to revocation or
modification of any such franchise, permit, license, or similar authority except
where such revocation or modification would not reasonably be expected to have a
Material Adverse Effect.

 

2.6          SEC Documents, Financial Statements.  Isis has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC for the three years prior to the date of this Agreement,
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
filed at least two Business Days prior to the date hereof, including all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). As of their respective
dates, the SEC Documents complied in all material respects with the requirements
of the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.  As of their
respective dates, the Financial Statements and the related notes complied as to
form and substance in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto.  The Financial Statements and the related notes have been prepared in
accordance with accounting principles generally accepted in the United States,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in the Financial Statements or the notes thereto, or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes, may be condensed or summary statements or may conform to the SEC’s
rules and instructions for Reports on Form 10-Q) and fairly present in all
material respects the consolidated financial position of Isis as of the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal and
recurring year-end audit

 

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adjustments). Neither Isis not any of its subsidiaries has any material
liabilities of any nature, whether accrued, absolute, contingent or otherwise,
other than liabilities adequately reflected or reserved against on the balance
sheet dated September 30, 2007, included in the Form 10-Q filed by Isis for the
quarter ended September 30, 2007, or incurred since September 30, 2007 in the
ordinary course of business, consistent with past practice. All material
agreements filed as exhibits to the SEC Documents under Item 601 of Regulation
S-K (collectively, the “Material Agreements”) are valid and enforceable against
Isis in accordance with their respective terms, except for Material Agreements
that have expired in accordance with their terms or as otherwise set forth in
the SEC documents, and (i) as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally, and (ii) as enforceability
may be subject to general principles of equity and except as rights to indemnity
and contribution may be limited by state or federal securities laws or public
policy underlying such laws.  Isis is not in breach of or default under any of
the Material Agreements, and to Isis’ knowledge, no other party to a Material
Agreement is in breach of or default under such Material Agreement, except in
each case, for such breaches or defaults as would not reasonably be expected to
have a Material Adverse Effect.  Isis has not received a notice of termination
nor is Isis otherwise aware of any threats to terminate any of the Material
Agreements.  Since September 30, 2007, the business and operations of Isis and
its subsidiaries have been conducted in the ordinary course consistent with past
practice, and there have been and are no events or conditions that have
resulted, or are reasonably expected to result, individually or collectively, in
a Material Adverse Effect.

 

2.7          Investment Company.  Isis is not and, after giving effect to the
offering and sale of the Shares, will not be an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”).  Isis will conduct its business in a manner so that
it will not become subject to the Investment Company Act.

 

2.8          Nasdaq Global Market.  The Common Stock is listed on Nasdaq, and,
to Isis’ knowledge, there are no proceedings to revoke or suspend such listing
or the listing of the Shares.  Isis is in compliance with the requirements of
Nasdaq for continued listing of the Common Stock thereon and any other Nasdaq
listing and maintenance requirements.

 

2.9          Private Placement.  Neither Isis nor any person acting on its
behalf, has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Shares under the Securities Act. Subject to the
accuracy of the representations made by Genzyme in Section 3, the Shares will be
issued and sold to Genzyme in compliance with applicable exemptions from the
registration and prospectus delivery requirements of the Securities Act and the
registration and qualification requirements of all applicable securities laws of
the states of the United States. Isis has not engaged any brokers, finders or
agents, or incurred, or will incur, directly or indirectly, any liability for
brokerage or finder’s fees or agents’ commissions or any similar charges in
connection with this Agreement and the transactions contemplated hereby.

 

SECTION 3.    REPRESENTATIONS AND WARRANTIES OF GENZYME

 

Except as otherwise specifically contemplated by this Agreement, Genzyme hereby
represents and warrants to Isis that:

 

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3.1          Investment Purpose.  Genzyme is purchasing the Shares for its own
account and not with a present view toward the public distribution thereof and
has no arrangement or understanding with any other persons regarding the
distribution of such Shares except as would not result in a violation of the
Securities Act.  Genzyme will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Shares except in accordance
with the provisions of Section 6 or pursuant to and in accordance with the
Securities Act.

 

3.2          Reliance on Exemptions.  Genzyme understands that Isis intends for
the Shares to be offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities
laws and that Isis is relying upon the truth and accuracy of, and Genzyme’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Genzyme set forth herein in order to determine the
availability of such exemptions and the eligibility of Genzyme to acquire the
Shares.

 

3.3          Accredited Investor; Access to Information.  Genzyme is an
“accredited investor” as defined in Regulation D under the Securities Act and is
knowledgeable, sophisticated and experienced in making, and is qualified to make
decisions with respect to investments in shares presenting an investment
decision like that involved in the purchase of the Shares.  Genzyme has been
furnished with materials relating to the offer and sale of the Shares, that have
been requested by Genzyme, including, without limitation, Isis’ SEC Documents,
and Genzyme has had the opportunity to review the SEC Documents.  Genzyme has
been afforded the opportunity to ask questions of Isis.  Neither such inquiries
nor any other investigation conducted by or on behalf of Genzyme or its
representatives or counsel will modify, amend or affect Genzyme’s right to rely
on the truth, accuracy and completeness of the SEC Documents and Isis’
representations and warranties contained in this Agreement. Genzyme has, with
respect to all matters relating to this Agreement and the offer and sale of the
Shares, not relied upon counsel to Isis except for the legal opinion to be
delivered to Genzyme pursuant to Section 5.2(g).

 

3.4          Governmental Review.  Genzyme understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Shares or an
investment therein.

 

3.5          Transfer or Resale.  Genzyme understands that:

 

(a)          the Shares have not been and are not being registered under the
Securities Act (other than as contemplated in Section 6) or any applicable state
securities laws and, consequently, Genzyme may have to bear the risk of owning
the Shares for an indefinite period of time because the Shares may not be
transferred unless (i) the resale of the Shares is registered pursuant to an
effective registration statement under the Securities Act, as contemplated in
Section 6; (ii) Genzyme has delivered to Isis an opinion of counsel (in form,
substance and scope customary for opinions of counsel in comparable
transactions) to the effect that the Shares to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration; or
(iii) the Shares are sold or transferred pursuant to Rule 144;

 

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(b)           any sale of the Shares made in reliance on Rule 144 may be made
only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Shares under circumstances in which the seller (or
the person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and

 

(c)           except as set forth in Section 6, neither Isis nor any other
person is under any obligation to register the resale of the Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

 

3.6          Legends. Genzyme understands the certificates representing the
Shares will bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the certificates for such
Shares):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES.  THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR
UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. ISIS
PHARMACEUTICALS, INC., A DELAWARE CORPORATION (“ISIS”) WILL BE ENTITLED TO
REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO ISIS THAT SUCH REGISTRATION IS NOT
REQUIRED TO THE EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN
STOCK PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.

 

Genzyme may request that Isis remove, and Isis agrees to authorize and instruct
(including by causing any required legal opinion to be provided) the removal of
any legend from the Shares promptly (i) following any sale of the Shares
pursuant to an effective Registration Statement or Rule 144, (ii) if the Shares
are eligible for sale under Rule 144 without reference to volume or manner of
sale limitations, or (iii) after the Registration Statement becomes effective. 
Any fees associated with the removal of the legend shall be borne by Isis;
provided, however, Genzyme shall be responsible for fees incurred directly by
Genzyme.

 

3.7          Authorization; Enforcement. Genzyme has the requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.  Genzyme has taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement. 
Upon the execution and delivery of this Agreement, this Agreement will
constitute a valid and binding obligation of Genzyme enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity and except as
rights to indemnity and contribution may be limited by state or federal
securities laws or public policy underlying such laws.

 

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SECTION 4.    COVENANTS OF THE PARTIES

 

4.1          Reporting Status.  Isis’ Common Stock is registered under
Section 12 of the Exchange Act. During the Registration Period, Isis will timely
file all documents required to be filed with the SEC, and Isis will not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.

 

4.2          Expenses.  Isis and Genzyme are each liable for, and will pay,
their own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement, including, without limitation,
attorneys’ and consultants’ fees and expenses.

 

4.3          Standstill and Holding Requirements.  Genzyme agrees to comply with
the restrictions and requirements set forth in Appendix 2.

 

SECTION 5.    CONDITIONS TO CLOSING

 

5.1          Conditions to Obligations of Isis.  Isis’ obligation to complete
the purchase and sale of the Shares and deliver such stock certificate(s) to
Genzyme is subject to the fulfillment or waiver of the following conditions at
or prior to the Closing:

 

(a)           Receipt of Funds.  Isis will have received immediately available
funds in the full amount of the Purchase Price for the Shares being purchased
hereunder.

 

(b)           Representations and Warranties.  The representations and
warranties made by Genzyme in Section 3 will be true and correct in all material
respects as of the Closing Date, except to the extent such representations and
warranties are made as of another date, in which case such representations and
warranties shall be true and correct in all material respects as of such other
date.

 

(c)           Covenants.  All covenants, agreements and conditions contained in
this Agreement to be performed by Genzyme on or prior to the Closing Date will
have been performed or complied with in all material respects.

 

(d)           Absence of Litigation.  No proceeding challenging this Agreement
or the transactions contemplated hereby, or seeking to prohibit, alter, prevent
or materially delay the Closing, will have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.

 

(e)           No Governmental Prohibition.  The sale of the Shares by Isis will
not be prohibited by the HSR Act, and will not be prohibited by any other law or
governmental order or regulation.

 

5.2          Conditions to Purchase’s Obligations at the Closing.  Genzyme’s
obligation to complete the purchase and sale of the Shares is subject to the
fulfillment or waiver of the following conditions at or before the Closing:

 

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(a)           Representations and Warranties.  The representations and
warranties made by Isis in Section 2 will be true and correct as of the Closing
Date, except to the extent such representations and warranties are made as of
another date, in which case such representations and warranties shall be true
and correct as of such other date.

 

(b)           Covenants.  All covenants, agreements and conditions contained in
this Agreement to be performed by Isis on or prior to the Closing Date will have
been performed or complied with in all material respects.

 

(c)           Transfer Agent Instructions.  Isis will have delivered to its
transfer agent irrevocable written instructions to issue the Shares to Genzyme
and deliver a certificate representing such Shares.

 

(d)           Nasdaq Qualification.  The Shares will be duly authorized for
listing by Nasdaq, subject to official notice of issuance, to the extent
required by the rules of Nasdaq.

 

(e)           Absence of Litigation.  No proceeding challenging this Agreement
or the transactions contemplated hereby, or seeking to prohibit, alter, prevent
or delay the Closing, will have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.

 

(f)            No Governmental Prohibition.  Any applicable waiting periods
under the HSR Act shall have expired or terminated and  any clearances, permits,
authorizations, consents or approvals sought by Genzyme under any other
applicable laws or regulations shall have been obtained. No statute, rule,
regulation, executive order, decree, ruling, injunction, action, proceeding or
interpretation shall have been enacted, entered, promulgated, endorsed or
adopted by any court or governmental authority of competent jurisdiction or any
self-regulatory organization or the staff of any of the foregoing, having
authority over the matters contemplated hereby, which questions the validity of,
or challenges or prohibits the consummation of, any of the transactions
contemplated by this Agreement.

 

(g)           Isis will have delivered to Genzyme a certificate signed by its
Chief Executive Officer certifying that the conditions specified in the
Section 5.2 with respect to Isis have been fulfilled. Isis shall have delivered
to Genzyme (i) a copy of a certificate executed by the Secretary of Isis
attaching and certifying to the truth and correctness of the Certificate of
Incorporation, the Bylaws and the resolutions adopted by the Board in connection
with the transactions contemplated by this Agreement, (ii) a good standing
certificate dated as of a recent date, and (iii) an opinion from the general
counsel of Isis regarding the matters in Sections 2.1, 2.2, the first sentence
of 2.3, 2.4, 2.5, 2.7, and the second sentence of 2.9.

 

SECTION 6.    REGISTRATION RIGHTS

 

6.1          As soon as reasonably practicable, but in no event later than 30
days after the Closing Date (the “Filing Date”), Isis will file a registration
statement covering the resale of the Registrable Securities on a registration
statement (the “Registration Statement”) with the SEC and effect the
registration, qualifications or compliances (including, without limitation, the
execution of any required undertaking to file post-effective amendments) as
promptly as possible after the filing thereof, but in any event prior to the
date (the “Effectiveness Date”) which is (i) 

 

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90 days after the Closing Date if the Registration Statement is not reviewed by
the SEC, or (ii) 120 days after the Closing Date, if the Registration Statement
is reviewed by the SEC.

 

6.2          All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.1
will be borne by Isis.  All Selling Expenses relating to the sale of Registrable
Securities by or on behalf of Genzyme will be borne by Genzyme.

 

6.3          In the case of the registration, qualification, exemption or
compliance effected by Isis pursuant to this Agreement, Isis will, upon
reasonable request, inform Genzyme as to the status of such registration,
qualification, exemption and compliance.  At its expense Isis will:

 

(a)           except for such times as Isis is permitted hereunder to suspend
the use of the prospectus forming part of the Registration Statement, use its
commercially reasonable efforts to keep such registration, and any required
qualification, exemption or compliance under state securities laws, continuously
effective with respect to Genzyme and its permitted assignees, and to keep such
Registration Statement free of any material misstatements or omissions, until
the date all Shares held by Genzyme may be sold during any 90 day period under
Rule 144 and any contractual agreements with Isis.  The period of time during
which Isis is required hereunder to keep the Registration Statement effective is
referred to herein as the “Registration Period.”

 

(b)           advise Genzyme promptly (and, in any event, within one Business
Day):

 

(i)            when the Registration Statement or any amendment thereto has been
filed with the SEC and when the Registration Statement or any post-effective
amendment thereto has become effective;

 

(ii)           of the receipt by Isis of any notification from the SEC of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for such purpose;

 

(iii)         of the receipt by Isis of any notification with respect to the
suspension of the qualification of the Registrable Securities included therein
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and

 

(iv)          of the occurrence of any event that requires the making of any
changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in the light of the circumstances under
which they were made) not misleading;

 

(c)           use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of any Registration Statement as soon
as reasonably practicable;

 

(d)           if Genzyme so requests in writing, promptly furnish to Genzyme,
without charge, at least one copy of such Registration Statement and any
post-effective amendment

 

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thereto, including financial statements and schedules, and, if explicitly
requested, all exhibits in the form filed with the SEC;

 

(e)           during the Registration Period, promptly deliver to Genzyme,
without charge, at least one copy of the prospectus included in such
Registration Statement and any amendment or supplement thereto and as many
additional copies as Genzyme may reasonably request; and Isis consents to the
use, consistent with the provisions hereof, of the prospectus or any amendment
or supplement thereto by Genzyme in connection with the offering and sale of the
Registrable Securities covered by the prospectus or any amendment or supplement
thereto;

 

(f)            during the Registration Period, if Genzyme so requests in
writing, deliver to Genzyme, without charge, (i) one copy of the following
documents, other than those documents available via EDGAR (and excluding, in
each case, exhibits thereto): (A) its annual report to its stockholders, if any
(which annual report will contain financial statements audited in accordance
with generally accepted accounting principles in the United States of America by
a firm of certified public accountants of recognized standing), (B) if not
included in substance in its annual report to stockholders, its annual report on
Form 10-K (or similar form), (C) its definitive proxy statement with respect to
its annual meeting of stockholders, (D) each of its quarterly reports to its
stockholders, and, if not included in substance in its quarterly reports to
stockholders, its quarterly report on Form 10-Q (or similar form), and (E) a
copy of the Registration Statement; and (ii) if explicitly requested, any
exhibits filed with respect to the foregoing;

 

(g)           upon the occurrence of any event contemplated by
Section 6.3(b)(v) above, except for such times as Isis is permitted hereunder to
suspend the use of the prospectus forming part of the Registration Statement,
Isis will use its commercially reasonable efforts to as soon as reasonably
practicable prepare a post-effective amendment to the Registration Statement or
a supplement to the related prospectus, or file any other required document so
that, as thereafter delivered to Genzyme, the prospectus will not include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading;

 

(h)           otherwise use its commercially reasonable efforts to comply in all
material respects with all applicable rules and regulations of the SEC which
could affect the sale of the Registrable Securities;

 

(i)            use its commercially reasonable efforts to cause all Registrable
Securities to be listed on each securities exchange or market, if any, on which
equity securities issued by Isis have been listed;

 

(j)            use its commercially reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities contemplated
hereby and to enable Genzyme to sell Registrable Securities under Rule 144; and

 

(k)           permit a single counsel for Genzyme to review the Registration
Statement and all amendments and supplements thereto, within two Business Days
prior to the filing thereof with the Commission;

 

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provided that, in the case of clause (k) above, Isis will not be required to
delay the filing of the Registration Statement or any amendment or supplement
thereto to incorporate any comments to the Registration Statement or any
amendment or supplement thereto by or on behalf of Genzyme if such comments
would require a delay in the filing of such Registration Statement, amendment or
supplement, as the case may be.

 

If at any time during the Registration Period there is not an effective
Registration Statement covering all of the Registrable Securities and Isis shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of a
business or equity securities issuable in connection with stock option or other
employee or director benefit plans, then Isis shall send to Genzyme written
notice of such determination and, if within ten Business Days after receipt of
such notice, Genzyme shall so request in writing, Isis shall include in such
registration statement all or any part of such Registrable Securities Genzyme
requests to be registered, subject to customary underwriter cutbacks applicable
to all holders of registration rights on a pro rata basis (along with other
holders of piggyback registration rights with respect to Isis); provided, that
(i) if at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, Isis shall determine for any reason not to
register or to delay registration of such securities, Isis may, at its election,
give written notice of such determination to Genzyme and, thereupon, (A) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities to this paragraph in connection with such
registration (but not from its obligation to pay expenses in accordance with
this Agreement, and (B) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this paragraph for the same period as the delay in
registering such other securities and (ii) if such registration involves an
underwritten public offering, a condition to having any Registrable Securities
included in such registration shall be Genzyme or its permitted assignees
entering into an underwriting agreement in customary form and agreeing to sell
such Registrable Securities to the underwriters on the same terms and conditions
as Isis (provided, however, that in no event shall Genzyme or any permitted
transferee be required to provide any indemnification or contribution in favor
of any underwriters on terms more favorable than the terms set forth in this
Agreement).

 

6.4          Genzyme will have no right to take any action to restrain, enjoin
or otherwise delay any registration pursuant to Section 6.1 hereof as a result
of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.

 

6.5          (a)  To the extent permitted by law, Isis will indemnify and hold
harmless Genzyme, each Genzyme director and officer and each person controlling
Genzyme within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, with respect to which any registration that has been effected
pursuant to this Agreement, against all claims, losses, damages, penalties,
fines, charges and liabilities (or action in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened
(subject to Section 6.5(c) below), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in the
Registration Statement, prospectus, any amendment

 

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or supplement thereof, or other document incident to any such registration,
qualification or compliance or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in light of the circumstances in which
they were made, and will reimburse Genzyme and each director, officer and person
controlling Genzyme, for reasonable legal and other out-of-pocket expenses
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action as incurred; provided that Isis will not be liable
in any such case to the extent that any untrue statement or omission or
allegation thereof is made in reliance upon and in conformity with written
information furnished to Isis by or on behalf of Genzyme specifically for use in
such Registration Statement, prospectus, amendment or supplement; provided
further that Isis will not be liable in any such case where the claim, loss,
damage or liability arises solely out of the failure of Genzyme to comply with
Section 6.6 of this Agreement respecting sales of Registrable Securities, and
except that the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue statement or alleged untrue statement
or omission or alleged omission made in the preliminary prospectus but
eliminated in the amended prospectus on file with the SEC at the time the
Registration Statement becomes effective or in the amended prospectus filed with
the SEC pursuant to Rule 424(b) of the Securities Act, which meets the
requirements of Section 10(a) of the Securities Act (the “Final Prospectus”),
such indemnity will not inure to the benefit of Genzyme or any such controlling
person, if a copy of the Final Prospectus had been furnished by Isis to Genzyme
for delivery was not furnished to the person or entity asserting the loss,
liability, claim or damage prior to the time such furnishing was required by the
Securities Act and the Final Prospectus would have cured all defects giving rise
to such loss, liability, claim or damage.

 

(b)           Genzyme will severally, and not jointly, indemnify Isis, each of
its directors and officers, and each person who controls Isis within the meaning
of Section 15 of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened (subject to
Section 6.5(c) below), to the extent arising out of or based on any untrue
statement of a material fact contained in the Registration Statement,
prospectus, or any amendment or supplement thereof, incident to any such
registration, or based on any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in light of the circumstances in which they were made, and will reimburse Isis,
such directors and officers, and each person controlling Isis for reasonable
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action as
incurred, in each case to the extent, but only to the extent, that such untrue
statement or omission or allegation thereof is made in reliance upon and in
conformity with written information furnished to Isis by or on behalf of Genzyme
specifically for use in the Registration Statement, prospectus, amendment or
supplement.  Notwithstanding the foregoing, Genzyme’s aggregate liability
pursuant to this subsection (b) and subsection (d) will be limited to the net
amount received by Genzyme from the sale of the Registrable Securities.

 

(c)           Each party entitled to indemnification under this Section 6.5 (the
“Indemnified Party”) will give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party (at its expense) to assume the defense of any such
claim or any litigation resulting therefrom, provided

 

12

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that counsel for the Indemnifying Party, who will conduct the defense of such
claim or litigation, will be approved by the Indemnified Party (whose approval
will not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such Indemnified Party’s expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein will not
relieve the Indemnifying Party of its obligations under this Agreement, except
to the extent such failure is materially prejudicial to the Indemnifying Party
in defending such claim or litigation, provided, however, that the Indemnified
Parties shall each have the right to retain their own counsel with the fees and
expenses of not more than one counsel for the Indemnified Parties as a group to
be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by an Indemnified Party, the representation by separate counsel of all
the Indemnified Parties and the indemnifying party would be inappropriate due to
actual or potential conflicting interests between any Indemnified Party and any
other party represented by such counsel in such proceeding.  An Indemnifying
Party will not be liable for any settlement of an action or claim effected
without its written consent (which consent will not be unreasonably withheld). 
No Indemnifying Party, in its defense of any such claim or litigation, will,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.  The
indemnifying party shall keep each Indemnified Party apprised as to the status
of the defense or any settlement negotiations with respect thereto.  No
indemnifying party shall, without the prior written consent of an Indemnified
Party, consent to entry of any judgment or enter into any settlement or other
compromise which requires any admission of wrongdoing by such Indemnified Party
or obligates or requires an Indemnified Party to take, or refrain from taking,
any action.

 

(d)           If the indemnification provided for in this Section 6.5 is held by
a court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, will contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations.  The
relative fault of the Indemnifying Party and of the Indemnified Party will be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

 

6.6          (a)  Genzyme agrees that, within one Business Day following receipt
of any written notice from Isis specifically stating that there has occurred the
happening of an event requiring the preparation of a supplement or amendment to
a prospectus relating to Registrable Securities so that, as thereafter delivered
to Genzyme, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, Genzyme will
discontinue disposition of Registrable Securities pursuant to the Registration
Statement and prospectus contemplated by Section 6.1 until its receipt of copies
of the supplemented or amended prospectus from Isis and,

 

13

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if so directed in writing by Isis, Genzyme will deliver to Isis or destroy all
copies, other than permanent file copies then in Genzyme’s possession, of the
prospectus covering such Registrable Securities at the time of receipt of such
notice.

 

(b)           Genzyme will be obligated to suspend, upon request of Isis
pursuant to Section 6.6(a), any disposition of Registrable Securities pursuant
to the Registration Statement and prospectus contemplated by Section 6.1 during
no more than two periods of no more than 30 calendar days each during any
12-month period and only to the extent that Genzyme has received notice from
Isis specifically stating that the Board has determined in good faith that the
sale of Registrable Securities under the Registration Statement would be
reasonably likely to cause a violation of the Securities Act or Exchange Act.

 

(c)           As a condition to the inclusion of its Registrable Securities,
Genzyme will furnish to Isis such information regarding Genzyme and the
distribution proposed by Genzyme as Isis may reasonably request in writing,
including completing a Registration Statement questionnaire in customary form.

 

(d)           Genzyme hereby covenants with Isis (i) not to make any sale of the
Registrable Securities without effectively causing any applicable prospectus
delivery requirements under the Securities Act to be satisfied, and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange, Nasdaq or in the over-the-counter
market, in privately negotiated transactions, or in a combination of such
methods, to notify Isis at least five Business Days prior to the date on which
Genzyme first offers to sell any such Registrable Securities.

 

(e)           [Intentionally omitted]

 

(f)            Genzyme agrees not to take any action with respect to any
distribution deemed to be made pursuant to such Registration Statement which
would constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.

 

(g)           At the end of the Registration Period Genzyme will discontinue
sales of shares pursuant to such Registration Statement upon receipt of notice
from Isis of its intention to remove from registration the shares covered by
such Registration Statement which remain unsold, and Genzyme will notify Isis of
the number of shares registered which remain unsold within five Business Days
after receipt of such notice from Isis.

 

6.7          The rights of Genzyme under any provision of this Section 6 may be
waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely) or
amended by an instrument in writing signed by Genzyme.

 

SECTION 7.    GOVERNING LAW; MISCELLANEOUS.

 

7.1          Governing Law; Jurisdiction.  This Agreement will be governed by
and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws.

 

14

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7.2          Counterparts; Signatures by Facsimile.  This Agreement may be
executed in two counterparts, both of which are considered one and the same
agreement and will become effective when the counterparts have been signed by
each party and delivered to the other party hereto.  This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

 

7.3          Headings.  The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.

 

7.4          Severability.  If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law. 
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.

 

7.5          Entire Agreement; Amendments.  This Agreement (including any
schedules and exhibits hereto) and the License and Research Agreement constitute
the entire agreement among the parties hereto with respect to the subject matter
hereof and thereof.  There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein.  This
Agreement supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.  No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.  Any amendment or waiver effected
in accordance with this Section 7.5 will be binding upon Genzyme and Isis.

 

7.6          Notices.  All notices required or permitted hereunder will be in
writing and will be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed email or facsimile if sent
during normal business hours of the recipient, if not, then on the next Business
Day, or (c) one Business Day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt.  The addresses for such communications are:

 

15

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

 

If to Isis:

 

Isis Pharmaceuticals

 

 

1896 Rutherford Road

 

 

Carlsbad, CA 92008

 

 

Attn: COO

 

 

Facsimile: 760-603-2700

 

With a copy to:

 

ISIS GENERAL COUNSEL

 

 

Facsimile: 760-268-4922

 

If to Genzyme:

 

Genzyme Corporation

 

 

500 Kendall Street

 

 

Cambridge, MA 02142

 

 

Attn: General Counsel

 

 

Facsimile: 617-252-7600

 

7.7          Successors and Assigns.  This Agreement is binding upon and inures
to the benefit of the parties and their successors and assigns.  Isis will not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of Genzyme, and Genzyme will not assign this Agreement or any
rights or obligations hereunder without the prior written consent of Isis;
provided, however, that Genzyme may assign this Agreement together with all of
the Shares it then owns (in accordance with the terms of Sections 3.5 and 3.6)
to any wholly-owned subsidiary and any such assignee may assign the Agreement
together with all of the Shares it then owns (in accordance with the terms of
Sections 3.5 and 3.6) to Genzyme or any other subsidiary wholly-owned by
Genzyme, in any such case, without such consent provided that the assignee
agrees to assume Genzyme’s obligations under Appendix 2 of this Agreement.

 

7.8          Third Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto, their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

7.9          Further Assurances.  Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as the
other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

7.10        No Strict Construction.  The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against a party.

 

7.11        Equitable Relief.  Isis recognizes that, if it fails to perform or
discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to Genzyme. Isis therefore agrees that Genzyme are
entitled to seek temporary and permanent injunctive relief in any such case.
Genzyme also recognizes that, if it fails to perform or discharge any of its
obligations under this Agreement, any remedy at law may prove to be

 

16

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

 

inadequate relief to Isis.  Genzyme therefore agrees that Isis is entitled to
seek temporary and permanent injunctive relief in any such case.

 

7.12        Survival of Representations and Warranties.  Notwithstanding any
investigation made by a party to this Agreement, all representations and
warranties made by Isis and Genzyme herein will survive for a period of one year
following the date hereof.

 

17

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IN WITNESS WHEREOF, Genzyme and Isis have caused this Stock Purchase Agreement
to be duly executed as of the date first above written.

 

 

 

GENZYME CORPORATION

 

 

 

By:

/s/ Earl M. Collier, Jr.

 

 

 

 

Its:

EVP

 

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

By:

/s/ B. Lynne Parshall

 

 

 

 

Its:

COO & CFO

 

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APPENDIX 1

 

DEFINED TERMS

 

“Business Day” means a day Monday through Friday on which banks are generally
open for business in the State of California.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Financial Statements” means the financial statements of Isis included in the
SEC Documents.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, assets or financial condition of Isis, taken as a whole, or (b) the
ability of Isis to perform its obligations pursuant to the transactions
contemplated by this Agreement.

 

“Nasdaq” means The Nasdaq Global Market.

 

“Person” means any person, individual, corporation, limited liability company,
partnership, trust or other nongovernmental entity or any governmental agency,
court, authority or other body (whether foreign, federal, state, local or
otherwise).

 

The terms “register,” “registered” and “registration” refer to the registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.

 

“Registrable Securities” means the Shares; provided, however, that securities
will only be treated as Registrable Securities if and only for so long as they
(A) have not been disposed of pursuant to a registration statement declared
effective by the SEC and (B) have not been sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale.

 

“Registration Expenses” means all expenses incurred by Isis in complying with
Section 6.1 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and expenses
of counsel for Isis (but excluding the Selling Expenses).

 

“Rule 144” means Rule 144 promulgated under the Securities Act, or any successor
rule.

 

“SEC” means the United States Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute.

 

“Selling Expenses” means all selling commissions applicable to the sale of
Registrable Securities and all fees and expenses of legal counsel for Genzyme.

 

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

 

“Trading Market” means Nasdaq or any national securities exchange, market or
trading or quotation facility on which the Common Stock is then listed or
quoted.

 

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APPENDIX 2

 

STANDSTILL AND HOLDING REQUIREMENTS

 

 

1.             Restrictions.  Prior to the earlier of (a) the ten-year
anniversary of the effective date of the License and Research Agreement or
(b) the date on which Genzyme holds less than 2% of Isis’ outstanding Common
Stock on an issued and outstanding basis without giving effect to any
convertible securities, except as contemplated by this Stock Purchase Agreement,
Genzyme and its Affiliates will not, directly or indirectly:

 

(i)            acquire, agree to acquire, or publicly offer to acquire
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act)
of any Isis voting securities;

 

(ii)           participate in any “solicitation” of “proxies” to vote (as such
terms are used in the proxy rules of the SEC promulgated pursuant to Section 14
of the Exchange Act) with respect to any Isis voting securities;

 

(iii)          form, join or in any way participate in a “group” within the
meaning of Section 13(d)(3) of the Exchange Act with respect to any Isis voting
securities;

 

(iv)          publicly propose any business combination, restructuring,
recapitalization or similar transaction involving Isis or any of its
subsidiaries; nominate any person as a director of Isis who is not nominated by
the then incumbent directors or a committee thereof; or propose any matter to be
voted upon by the stockholders of Isis that relates to a business combination,
restructuring, recapitalization or similar transaction involving Isis;

 

(v)           bring any legal action contesting or otherwise challenge in a
legal proceeding the validity of this Section 1 of Appendix 2; or

 

(vi)          enter into any agreement with a third party to do any of the
actions prohibited under (i), (ii), (iii) (iv) or (v) above.

 

2.             Termination of Limitations.  The limitations provided in
Section 1 of this Appendix 2 will terminate:

 

(a)                                  following the commencement by any Third
Party of a tender or exchange offer seeking to acquire beneficial ownership of
fifty percent (50%) or more of the outstanding shares of Isis Common Stock;

 

(b)                                 following the public announcement of the
execution of an agreement which, if consummated, would result in either (i) the
beneficial owners of Isis Common Stock beforehand owning less than 50% of the
voting securities or voting power of the surviving company in the transaction or
(ii) the sale of all or substantially all of the assets of Isis;

 

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(c)                                  upon the filing of a preliminary or final
proxy statement by any Third Party with respect to the commencement of a proxy
or consent solicitation subject to Section 14 of the Exchange Act to elect or
remove a majority of the directors of Isis;

 

(d)                                 upon the adoption of a plan of liquidation
or dissolution with respect to Isis; or

 

(e)                                  upon written consent from Isis.

 

3.             Agreement to Hold Shares.  Genzyme agrees that it will hold and
will not sell the Shares (or otherwise make any short sale of, grant any option
for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale of the Shares) until the earlier of (a) the
4-year anniversary of the effective date of the License and Research Agreement,
(b) the first commercial sale of a Product under the License and Research
Agreement or (c) termination or reversion of the product license granted to
Genzyme under the License and Research Agreement (the “Holding Period”).  In
addition, after the expiration of the Holding Period, Genzyme will not sell more
than 500,000 Shares in any thirty (30) day period.

 

4.             Affiliate.  For the purposes of this Appendix 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 of the actual 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.  In addition, Regulus
Therapeutics, LLC will not be considered an Affiliate of Isis.

 

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Exhibit B

 

Product Term Sheet

 

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EXHIBIT B

 

Collaboration and License Agreement

Isis Pharmaceuticals and Genzyme

Product Term Sheet

 

January 7, 2008

 

Capitalized terms used but not defined in this Product Term Sheet are used with
the meanings given to them in the License and Research Agreement.

 

Scope:

 

Genzyme will exclusively license the apoB program, for therapeutic purposes.
Genzyme will be responsible for the continued development and commercialization
of the Product, subject to profit sharing and milestone payments paid to Isis.

 

 

 

Isis Grants:

 

As described in License and Research Agreement.

 

 

 

Product

 

As described in License and Research Agreement.

 

 

 

Restrictions on Cross Use of Product and Non-Competition:

 

As described in License and Research Agreement.

 

 

 

 

 

 

Cross-License

 

Genzyme will grant Isis a first option to negotiate a license to practice any
technology Genzyme discovers or develops as part of its program to develop or
commercialize the Product that would be relevant to antisense therapeutics as a
whole, including but not limited to manufacturing, formulation and delivery
technologies, with appropriate consideration to be negotiated in good faith by
the parties.

 

 

 

License Fee and Up-Front Payments:

 

Genzyme will pay to Isis an up-front, non-refundable, non-creditable license fee
in the amount of US $175M payable as described in the License and Research
Agreement.

 

 

 

Milestones:

 

Genzyme will pay Isis the following cash payments for the achievement of the
following milestones of the Product by Genzyme or a sublicensee.

 

 

 

 

 

Mipomersen in familial hypercholesterolemia (FH):

 

 

 

 

 

Event

 

Milestone

 

 

 

U.S. NDA Filing

 

US$ [***]

 

 

 

U.S. NDA Approval HoFH

 

US$ [***]

 

 

 

U.S. NDA Approval HeFH

 

US$ [***]

 

 

 

MAA Approval for FH

 

US$ [***]

 

 

 

 

 

 

 

Mipomersen in first non-FH indication:

 

 

 

 

 

Event

 

Milestone

 

 

 

U.S. NDA Approval

 

US$ [***]

 

 

 

MAA Approval

 

US$ [***]

 

 

 

JNDA Approval

 

US$ [***]

 

 

 

 

 

 

Follow-On Product:

 

 

 

 

 

Event

 

Milestone

 

 

 

Aggregate Milestones

 

US$ [***]

 

 

 

The parties will mutually agree on development and regulatory strategy and
allocation of milestones based on various regulatory approvals.

 

1

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Sales milestones for annual sales of Products

 

 

 

 

 

Event (must reach level for two consecutive years)

 

Milestone

 

 

 

Achievement of US$ 3B in total annual sales

 

US$ [***]

 

 

 

Achievement of US$ 4B in total annual sales

 

US$ [***]

 

 

 

Achievement of US$ 5B in total annual sales

 

US$ [***]

 

 

 

 

 

 

 

 

Sales milestones are achieved one time only, regardless of Product.

 

 

 

Development and Commercialization Roles and Responsibilities:

 

Development Plan:

 

As part of the More Detailed Product Agreement, the parties will agree to a
Development Plan for the Product. The Development Plan will include a detailed
budget of development costs and will be managed by a Joint Development Committee
(“JDC”) comprised of equal members from both Parties for the initial [***] years
following the Effective Date [***]. The JDC will act by unanimous consent, with
each party having a single vote. Disputes that cannot be resolved by the JDC
will be referred initially to designated senior officers of Isis and Genzyme and
then, if necessary, to mediation.

 

Roles and Responsibilities:

 

·      Isis will transfer to Genzyme all requested preclinical pharmacology and
safety data, clinical data, and other information related to the Product.

·      Attachment B sets forth Isis’ recommendations regarding which trials in
2008 Isis will conduct, which trials Genzyme will conduct, and which trials Isis
will transition to Genzyme over the first half of the year pursuant to a
mutually agreed upon plan.

·      Except as otherwise determined by the JDC, Genzyme will conduct all
clinical trials and all preclinical work initiated in 2009 and thereafter, and
will be responsible for worldwide regulatory support for the Product including
NDA preparation and submission.

·      Isis will fund the studies described as Isis-funded in Attachment B plus
the first $75 million of the remaining external development expense for the
Product (calculated beginning January 1, 2008) including, without limitation,
clinical trial expense for the remaining studies in Attachment B (non
Isis-funded) and future studies, toxicology (except for Isis-funded studies) and
PK studies, API and drug product, (including packaging and distribution), SAB
and DSMB expense, etc. Beginning when the initial $75 million in external
development expense has been funded by Isis, all development costs (internal and
external) except the costs for the studies described as Isis funded in
Attachment B if such studies are still ongoing will be treated as Program Costs.

·      Genzyme will be responsible for all of Genzyme’s internal labor costs and
for all Program Costs after the first $75 million of external expenditure funded
by Isis until the Program achieves profitability (provided, however, that before
the Program achieves profitability, Isis internal labor will not be reimbursed
by Genzyme).

·      Except for the specific tasks assigned to Isis above, Genzyme (subject to
JDC oversight) shall be responsible for all other aspects of the development and
commercialization of the Product, the costs for which, except as otherwise
described above, shall be deemed to be Program Costs.

·      Genzyme will provide to Isis, at Isis’ request, any and all data from
clinical or preclinical studies with Product(s).

 

2

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“Program Costs” means all costs and expenses incurred by Genzyme or Isis in
connection with the commercial manufacture, promotion and sale of the Product,
including all royalties, milestones and license fees payable to third-parties
(including those currently owed to [***] and [***]), the costs of all clinical
trials  and preclinical studies, the costs to produce and maintain a CMC
document to support product manufacturing including, without limitation,
stability studies, and other validation activities, and costs associated with
obtaining and maintaining regulatory approvals for the Product.  Program Costs
specifically will not include the purchase price for the Shares, the license fee
or milestones payable to Isis.  Program Costs will also not include the costs to
prosecute and maintain Patents which will be dealt with as described later in
this term sheet.  The Parties will agree on a chart of accounts to determine
Program Costs relying in general on the principles attached as Attachment A.

 

 

 

Profit Sharing

 

In lieu of royalties on Product sales, the Parties will share the profits from
sales of all Product beginning in any year in which such Product generates Net
Profits.  The Parties will then divide Net Profits pursuant to an allocation as
follows:

 

 

 

 

 

 

For Annual Net Revenues

 

Genzyme Profit %

 

 

 

 

$1 - <$200 M

 

70%

 

 

 

 

[***]

 

 

 

 

 

 

>$2 B

 

50%

 

 

 

 

 

 

In any year in which Program Costs for such year exceed Net Revenue for such
year, Genzyme’s share of Net Revenue will be 100% and Genzyme will be solely
responsible for all Program Costs.

 

 

 

 

 

Notwithstanding the foregoing, in any year in which Net Profits are generated in
an amount greater than or equal to [***] of Net Revenue, Isis’ share of Net
Profits shall not fall below an amount equal to [***] of Net Revenue.

 

 

 

 

 

For the purposes of this Term Sheet, “Net Profit” for any calendar year in which
Net Revenue exceeds Program Costs is defined as all Net Revenue derived from
sales or license of Product in such year, minus all Program Costs borne by the
parties during such year (which, for items that need to be mutually agreed to,
are within a mutually agreed budget).  “Net Revenue” means the gross invoiced
sales amount of Product billed by Genzyme and its affiliates for the sale of
Product during the applicable year, minus standard deductions taken in
accordance with standard allocation procedures and accounting methods or any
revenue received by Genzyme in connection with the license of a Product or grant
of any other rights to a product such as distribution rights.

 

 

 

Licensed Patents:

 

The Licensed Patents are defined in the License and Research Agreement.

 

 

 

 

 

Following the signing of the More Detailed Product Agreement, Isis will assign
the Product-Specific Patents to Genzyme, and Genzyme will be responsible at its
own expense for prosecuting and maintaining such patents and any future
Product-Specific Patents. Isis will be responsible for all costs of prosecuting
and maintaining Isis Core Technology Patents and the Isis Manufacturing and
Analytical Patents.  Even though [***] is a Product-Specific Patent, Isis will
not assign such [***] to Genzyme, but Genzyme will have the first right to
prosecute, maintain and enforce the [***] at Genzyme’s expense.

 

3

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Joint Patent Review Meetings.

 

 

 

 

 

At least once a quarter, Isis and Genzyme patent professionals will meet to
discuss prosecution strategy for the Licensed Patents in so far as relevant to
maintaining the broadest coverage for the Products.

 

 

 

 

 

The patent professionals will also discuss any potential third party
infringement of patents that might affect the Products, and any third party
licenses that might be necessary or useful to maximize the value of the
Products.  The expenses associated with any licensing or action to pursue an
infringer that is mutually agreed between the Parties will be included in
Program Costs. Similarly, any recoveries made by a Party in enforcing a Licensed
Patent that is mutually agreed to be enforced will be included in Net Revenues.

 

 

 

Research Support

 

The parties will agree on a research program that may include, but is not
limited to, the following research topics;

     [***]

 

 

 

 

 

Isis will fund research expenses, for these programs in [***].  Genzyme will
fund the research expenses, for these programs in [***], and the cost of such
research programs will not be included in Program Costs.

 

 

 

 

 

The nature and scope of this research program will be determined by JDC.

 

 

 

[***] Technology:

 

Without first obtaining Genzyme’s written consent (such consent not to be
unreasonably withheld), Isis will not license to a Third Party any technology
that (i) is specifically useful in [***], but is not broadly applicable to other
[***], and (ii) was invented by Isis while performing the research or
development plan funded by Genzyme under the Product License.

 

 

 

Safety Database:

 

Isis maintains a database that includes information regarding the tolerability
of its drug compounds, individually and as a class, including information
discovered during pre-clinical and clinical development (the “Isis Database”). 
In an effort to maximize understanding of the safety profile and
pharmacokinetics of Isis compounds, Genzyme will cooperate in connection with
populating the Isis Database.  In accordance with Applicable Law and any
applicable informed consents or other Third Party obligations, Genzyme will
provide Isis with copies of toxicology, pharmacokinetic and serious adverse
event final reports related to each Product plus any supporting data reasonably
requested by Isis.

 

 

 

Term:

 

The term of the Product License will be perpetual subject to termination and
reversion rights.

 

 

 

Reversion Rights:

 

Should Genzyme not advance the Product using commercially reasonable efforts or
discontinue development or commercialization of the Product, then all rights to
the Product will revert back to Isis (the “Reversion”), including a license to
or reassignment of all patent claims and transfer of all data and regulatory
filings controlled by Genzyme that are necessary to develop and commercialize
the Product solely for such purpose.  The license will be sublicensable.

 

 

 

 

 

Notwithstanding the foregoing, in the event that the approved label for the
Product [***] that are not currently anticipated by the parties, the parties
will discuss in good faith the extent to which such [***] changes the [***] for
the Product.

 

4

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In consideration for the Reversion, Genzyme would receive a royalty on Net
Revenue.  Genzyme’s royalty would be (i) [***] of Net Revenue if the Reversion
occurred prior to the approval of the Product in an FH indication, (ii) [***] of
Net Revenue if the Reversion occurred prior to the approval of the Product for a
non-FH indication, and (iii) [***] of Net Revenue if the Reversion occurred at
the time of or after the approval of the Product for a non-FH indication. 
Notwithstanding the foregoing in no event will the total royalty payable to
Genzyme exceed the aggregate amount of Program Costs that Genzyme has
contributed to the Product, with interest thereon at [***] per year, net of any
amounts paid for by Isis or covered by Product Revenue.

 

 

 

Manufacture of Product

 

Isis will supply the API for the Product for the Phase 2 clinical trials at the
cost that Isis calculates on an annual basis as its fully-burdened cost. 
Further, Isis agrees to supply the Pivotal Trial and initial launch supply of
API for the Product at its fully burdened cost, as calculate on an annual basis,
which costs will be included in Program Costs and the calculation of Net
Profit.  The parties will enter into a supply agreement for Isis’ supply of the
API for the Product which will contain mutually agreeable terms and conditions.

 

 

 

 

 

The Parties anticipate that Genzyme will build manufacturing capability to
manufacture API for commercial supply, however, Genzyme and Isis will mutually
agree on the use of third parties to manufacture the Product.

 

 

 

Indemnity

 

Each Party will indemnify the other Party, from and against any third party
claims to the extent occurring as a result of the negligence or willful
misconduct of the indemnifying party; except to the extent such claims result
from the gross negligence or willful misconduct of any party seeking
indemnification.

 

 

 

Change of Control

 

In the event of a Change of Control of Isis, Genzyme shall have the right to
(i) purchase Isis’ interest in the Product at the then-applicable fair market
value (as determined by a mutually agreeable third party) and/or (ii) terminate
(a) the participation of the successor to Isis in any ongoing research and
development programs and Genzyme’s funding obligations associated therewith, and
(b) the right of the successor to Isis to sit on the JDC or otherwise exercise
any control over the development or commercialization of the apoB program.  In
the event that Genzyme elects option (ii) above, such actions would not affect
any of the economic rights that the successor to Isis would otherwise hold.

 

 

 

 

 

For the purposes of this Term Sheet, a Change of Control shall mean (a) the
acquisition by any person or group of Control of Isis or (b) any direct or
indirect sale, lease, exchange, or other transfer by Isis of substantially all
of the assets to which this Term Sheet relate (but not including any financial
factoring agreement).  Control means the ownership of, directly or indirectly,
at least 50% of the shares of such equity entitled to vote on the election of
directors.

 

5

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Attachment A
Definition of Program Costs

 

“Program Costs” means all costs and expenses incurred by Genzyme or Isis in
connection with the development, manufacture, promotion and sale of the Product,
including internal and external costs, as described in more detail below. All
Program Costs will be based on each Party’s accounting records as maintained in
accordance with U.S. GAAP consistently applied.

 

The following items will be excluded from Program Costs:

 

·                  the first $75 million of external development expenses that
Isis will fund as described under “Development and Commercialization Roles and
Responsibilities” in the term sheet

·                  the purchase price for the Shares, license fee or milestones
payable to Isis

·                  the costs of the mutually agreed to research program
described under “Research Support” in the term sheet

·                  the costs to prosecute and maintain Patents

·                  costs associated with stock-based compensation expenses or
other pro forma adjustments to either Party’s GAAP financials

·                  Isis’ internal costs for any year in which Program Costs
exceed Net Program Revenues (to the extent of such excess).

 

Program Costs are grouped into the categories described below. Each of the
categories below includes both internal and external costs unless specifically
stated otherwise. The calculation for internal costs is described in the section
titled “Internal Costs”. In addition, each category includes the allocation of
indirect costs as described in the section titled “Indirect Costs”. The
following is a brief explanation of each of these categories.

 

Indirect Costs

 

Indirect costs are the costs for facilities, utilities, insurance, facility and
equipment depreciation/amortization and other fixed costs directly related to
the conduct of the activities described in each of the categories below and
allocated based upon the proportion of such costs directly attributable to the
performance of the activities described under each category below or by such
other cost allocation method as may be mutually agreed to by the Parties.

 

Internal Costs

 

Internal costs consist of the base salary plus a factor for reasonable and
customary employee benefits and payroll taxes for those employees directly
responsible for performing the activities described in each of the categories
below. In the case of commissioned sales personnel performing activities under
Sales and Marketing expenses below, internal costs will include the commissions
paid to such personnel.

 

Cost of Goods Sold (COGS)

 

COGS consists of those standard manufacturing costs routinely included in COGS
as defined by U.S. GAAP, including the cost of raw materials, manufacturing
labor and related manufacturing overhead. COGS also includes manufacturing
variances typically included in COGS under U.S. GAAP. Additionally, COGS
includes costs, such as royalties, milestones and license fees, paid to third
parties including those currently owed to [***] and [***]. In calculating COGS,
the Parties shall use the same assumptions, allocations and calculations as each
uses in preparing its publicly reported financial statements and shall allocate
to cost categories in a manner consistent across all pharmaceutical product
lines without discrimination against Isis products versus Genzyme and its
Affiliates’ internal products or other products licensed from Third Parties.
Notwithstanding the foregoing, COGS does not include costs that are applicable
to manufacturing buildings, space or equipment that will not be used to support
the manufacturing process during the Firm Order period or that are projected to
be underutilized in the manufacturing process due to lower planned capacity
versus normal plant capacity. Additionally, COGS does not include the cost of
worn-out facilities or equipment, previously used in manufacturing but no longer
in operation, or the cost of scrapping and abandoning such assets. Expense items
related to the manufacturing operations that are of a non-recurring nature such
as equipment or facility design changes, alterations, disassembly, moving,
reinstallation and reassembly of machinery and equipment will be included in the
cost of capital projects and amortized into COGS according to the Parties
amortization practices under U.S. GAAP. Further, the Parties anticipate that
Genzyme will build manufacturing capability to manufacture API for commercial
supply.  If Genzyme does

 

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

 

not do so, and a third party is required to manufacture API the portions of API
cost reasonably calculated to represent profit and amortization of facility and
equipment will not be included in Program Costs. To the extent that Isis
manufactures API for the initial launch of the Product, COGS will be Isis’ fully
burdened cost, as calculated on an annual basis and described in the term sheet
under “Manufacture of Product”.

 

Sales & Marketing Expenses (S&M)

 

S&M expenses include costs necessary to market, distribute and sell the Product.
This category includes costs such as those for advertising, marketing
collateral, samples, promotional materials, distributor fees, contract sales
organization payments, field marketing programs, market research, outside
educational programs, printing, publishing, speaker programs, medical education
programs, trade shows and exhibits, sales training meetings and seminars,
reasonable travel and entertainment costs, translations, reimbursement services,
reasonable patient support services, website development and maintenance, call
center costs, toll-free phone costs and product liability insurance costs.

 

Development Expenses

 

Development expenses include the costs of all clinical trials and preclinical
studies, including post-marketing trials, as detailed in the budget attached to
the Development Plan. The types of expenses included in this category are
investigator grants, laboratory services, clinical PK assays, CRO services and
pass-throughs, costs for packaging, distribution and reconciliation (including
labels and translations, inventory control, IVRS, off-site storage and
destruction), data management (including EDC), clinical study reports, drug
costs (API & DP), investigator meetings, monitoring, SAB costs, DSMB costs, key
opinion leader costs, program specific travel, metabolomics assays, courier
services and clinical trial liability insurance costs. Development expenses
include Quality Assurance costs for auditing clinical trial activities and
preclinical studies support (report reviews and CMC review). To the extent that
Isis manufactures API for clinical trials or preclinical studies of the Product,
the cost of the API will be Isis’ fully burdened cost, as calculated on an
annual basis and described in the term sheet under “Manufacture of Product”.

 

Regulatory Expenses

 

Regulatory expenses include those costs associated with obtaining and
maintaining regulatory approvals for the Product. They include costs such as
regulatory consulting, filing fees, eCTD costs and other publishing costs. They
also include costs associated with safety reporting and pharmacovigilance.

 

Non-COGS Manufacturing Expenses (Non-COGS Mfg)

 

Non-COGS manufacturing expenses include costs such as those for ongoing
stability testing, drug substance and drug product registration stability
testing, transfer of API and drug product release and in-process methods,
validation of analytical methods, regulatory support and photostability testing.
Additionally, this category includes costs incurred for NDA supporting studies
such as pH rate profile, pH solubility profile, freeze and thaw stability,
terminal sterilization and shipping studies. Non-COGS manufacturing expenses
also include process justification work for API and DP to support regulatory
filings, costs associated with writing development history documents, costs
incurred to add additional supply chain vendors as demands increase and tech
transfer for API and drug product to Genzyme. Non-COGS manufacturing costs also
include any other costs necessary to produce and maintain a CMC document to
support product manufacturing.

 

Other Expenses

 

Other expenses include costs such as those associated with licensing or actions
to pursue an infringer that are mutually agreed to by the Parties. Program Costs
will not include the costs to prosecute and maintain Patents. To the extent that
there are royalties, milestones and/or license fees owed to third parties that
cannot be included in COGS under U.S. GAAP, they will be included in Program
Costs within this category. This category would also include foreign currency
gains/losses. This category also includes costs specifically identifiable to the
Product, which do not fit in any other category.

 

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

 

Attachment B

 

[***]

 

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Exhibit C

 

Research Term Sheet

 

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CONFIDENTIAL

 

EXHIBIT C

 

Research Term Sheet

 

Isis Pharmaceuticals and Genzyme

 

January 7, 2008

 

This term sheet outlines principal business terms for an agreement (the
“Research Option Agreement”) between Isis and Genzyme whereby Genzyme will be
granted the option to license certain Isis drugs. Genzyme will have the
exclusive right to license drugs that become Development Candidates in Isis’
neuro-degenerative and rare disease programs for the next two years.

 

Capitalized terms used but not defined in this Research Term Sheet are used with
the meanings given to them in the License and Research Agreement.

 

Overview of Isis-Genzyme Research Relationship:

 

·                  Isis has or will establish research programs in the Exclusive
Therapeutic Areas which are described in the attached Exclusive Research Program
description.  During the Research Period, Isis will continue these programs for
the purpose of discovery of Compounds suitable for development and
commercialization for human therapeutic uses.

 

·                  Genzyme will have the right to recommend specific targets for
the Exclusive Research Programs and to contribute to the research strategy as
appropriate.  In addition, Genzyme will provide Isis access to certain animal
models for use in Exclusive Therapeutic Areas. The Exclusive Research Program
will be reviewed every [***] months on a formal basis with Genzyme and it is
anticipated that it will be discussed on an informal basis more frequently.

 

·                  For a [***] period from the Effective Date of the License and
Research Agreement, Genzyme will have the option to fund development of any
Development Candidate arising out of the Exclusive Research Programs and to
license any such Funded Development Candidates after clinical proof-of-concept
study(ies) have been completed. Terms for any such licenses will be negotiated
in good faith using the basic principles articulated in this term sheet. After
licensing a Funded Development Candidate, Genzyme will be solely responsible for
the further development and commercialization worldwide.

 

·                  Isis currently has two advanced programs in
neuro-degenerative disease for [***] and [***]. Genzyme’s decision to fund each
of these programs will be deferred to the time the current funding is exhausted
(end of initial Phase 1 clinical study for [***] and completion of IND
supporting toxicology studies for [***] [***]) and any licenses for such
programs will reflect the advanced status of these programs and the independent
funding thereof.

 

1

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·                  At the end of the Research Period , Genzyme will have the
right, but not the obligation, to extend the Research Period for up to three
years by agreeing to fund a continued Exclusive Research Program agreed upon by
both parties at Isis’ fully burdened cost.

 

Joint Research Committee

 

·                  A joint research committee will be formed to meet on a
regular basis to review the work conducted in the Exclusive Research Program.

 

Exclusive Research Programs:

 

·                  Isis will conduct the Exclusive Research Program at Isis’
expenseduring the Research Period which will include activities up to the
designation of a Development Candidate (a Compound ready for the initiation of
IND-supporting studies for all programs except [***] and [***] [***] which now
include activities that are currently covered by outside funding).

 

·                  At the time Development Candidate status is attained, Genzyme
will have [***] to determine if it would like to advance this Development
Candidate forward through clinical proof-of-concept trials. If Genzyme
determines that it wants to advance the Development Candidate, it will fund all
development work through clinical proof-of-concept (criteria to be mutually
defined by Isis and Genzyme prior to initiation of development work), unless
otherwise agreed upon by the Parties.  These development activities may be
conducted by Genzyme or Genzyme may contract with Isis to conduct the work at
Isis’ fully-burdened cost. After achievement of the pre-determined clinical
proof-of-concept, Genzyme will have [***] to determine if it would like to
exercise its option to license the Funded Development Candidate.

 

·                  The terms for any license will be negotiated in good faith at
whatever time Genzyme requests which can be as early as the funding decision at
Development Candidate status.  Any Compound that either reaches Development
Candidate status and Genzyme decides not to fund or that reaches clinical
proof-of-concept and Genzyme does not license, will belong to Isis with no
further obligations to Genzyme.  The scope of any such license would be similar
to the scope of the Product License for mipomersen, including the components of
the licensed intellectual property.

 

·                  The research relationship is focused on delineated Exclusive
Therapeutic Areas.  Nevertheless, Genzyme’s license to any drugs arising there
from will not be limited to the Exclusive Therapeutic Areas.  Similarly Isis and
its partners conduct research programs which, during any period of Genzyme’s
exclusivity under the terms of this agreement will not be directed to the
Genzyme Exclusive Therapeutic Areas but drugs arising out of those programs may
similarly be developed and commercialized for any indication.

 

·                  As part of the Exclusive Research Program, the [***] Isis
development program is being included in the neuro-degenerative disease area. It
should be noted that the advanced stage of this program will require Genzyme to
make a decision as to whether to fund

 

2

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early clinical development so as to fit in the option process described above
and that any licensing terms will take into account the advanced stage of the
drug and Isis’ funding thereof.

 

·                  Similarly, Isis will be including its [***] program into the
Exclusive Research Program. The advanced stage of this program will require
Genzyme to make a development funding decision prior to initiation of Phase 1
studies.

 

Exclusive License:

 

·                  Unless otherwise agreed upon by the Parties, upon granting of
a license to any Funded Development Candidate that Genzyme has an option to
license, Genzyme will be solely responsible, including responsibility for all
funding, resourcing and decision-making, all further clinical development,
manufacturing (with Isis providing the initial clinical supply), regulatory and
commercialization activities for Licensed Compounds and Licensed Products.  Upon
request by Genzyme, Isis would provide consulting and technical support relating
to the Licensed Compounds and Licensed Products.

 

(I)             MANUFACTURING

 

·                  Genzyme will have the option to manufacture Licensed
Compounds and Licensed Products; At Genzyme’s request, Isis will manufacture and
sell to Genzyme pre-clinical and clinical API for each Funded Development
Candidate through clinical proof-of-concept trial at the standard rate and upon
standard terms Isis charges its other partners, which represents a good faith
estimate of fully-burdened cost determined annually. Genzyme will be responsible
for DP manufacturing.

 

·                  In the case where Isis is unable or for any reason otherwise
fails to supply API to Genzyme, upon written request by Genzyme, Isis shall
transfer to Genzyme all documentation and information, and permit Genzyme to
reference and use any regulatory filings, and otherwise fully cooperate with
Genzyme to enable Genzyme to make or have made API for use by Genzyme.

 

Intellectual Property

 

·                  Following license of a Compound to Genzyme, Isis will assign
to Genzyme all Isis Product Specific Patents relating to Licensed Products and
their gene targets.  Isis will be responsible for filing and prosecuting all
Core Technology Patents and any other patents owned or controlled by Isis.

 

·                  Isis will agree to consult with Genzyme on prosecution and
filing decisions after Genzyme opts to fund work following Development Candidate
status on patents relating to such Development Candidate.

 

3

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·                  The Parties will cooperate to obtain new licenses under any
third party patents that are necessary for the development, manufacture and
commercialization of the Licensed Product.

 

·                  Inventions conceived solely by Isis shall be documented,
processed and owned by Isis.

 

·                  Inventions conceived solely by Genzyme shall be documented,
processed and owned by Genzyme.

 

·                  Inventions conceived jointly, as deemed by the U.S. laws of
inventorship, by Genzyme and Isis shall be documented, processed and owned
equally by both organization.

 

·                 In the event that a third party is interested in licensing an
invention that was developed jointly under this agreement and is applicable only
in the Exclusive Therapeutic Area, both Genzyme and Isis must agree to the terms
of the license.

 

Certain Definitions:

 

“Compound” means any oligonucleotide acting by [***] that arises from the
Exclusive Research Program during the Research Period.

 

“Development Candidate” means any Compound that has been deemed by Isis ready to
start IND-enabling toxicology studies in accordance with its standard process.

 

“Effective Date” has the meaning given to it in the License and Research
Agreement.

 

“Exclusive Therapeutic Area” means the therapeutic areas of neuro-degenerative
and certain rare diseases to be mutually agreed upon by the Parties.

 

“Exclusive Research Program” means the research program being performed by Isis
pursuant to the Research Plan to identify Development Candidates in the Genzyme
Exclusive Therapeutic Areas.

 

“Funded Development Candidate” means any Development Candidate that has been
funded by Genzyme for preclinical toxicology and early clinical studies.

 

“Research Period” means the two year period in which Isis will conduct the
Exclusive Research Program.

 

4

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Genzyme-Isis Drug Discovery Exclusive Research Program Description

 

January 7, 2008

[***]

 

1

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Exhibit D

 

Disclosure Schedule

 

[***]

 

2

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