Exhibit 10.2

 

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Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Double asterisks denote omissions.

August 27, 2012

B. Lynne Parshall

Chief Operating Officer and Chief Financial Officer

Isis Pharmaceuticals, Inc.

2855 Gazelle Court

Carlsbad, CA 92010

 

  Re: Letter Agreement Amendment

Dear Lynne:

Reference is made to the Amended and Restated Strategic Collaboration and
License Agreement dated April 28, 2009 between Isis Pharmaceuticals, Inc.
(“Isis”) and Alnylam Pharmaceuticals, Inc. (together with its wholly owned
subsidiaries Alnylam US, Inc. and Alnylam Europe AG, “Alnylam”) (the
“Agreement”). Capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Agreement.

Concurrent with the execution of this letter by the Parties, Alnylam is entering
into that certain License and Collaboration Agreement with Monsanto Company
dated as of August 27, 2012 (“Agbio License Agreement”), that includes an
exclusive sublicense of Alnylam’s rights under the Agreement to certain of Isis’
intellectual property rights with respect to Double Stranded RNA. Pursuant to
Section 7.6 of the Agreement, the CEO of Isis and the CEO of Alnylam have
discussed the Agbio License Agreement and simultaneously with the execution of
the Agbio License Agreement, the Parties agree to amend the Agreement as
follows:

 

1. Definitions. Exhibit 1.1 of the Agreement is amended as follows:

 

a. The following definitions are added to Exhibit 1.1:

“Agbio License Agreement” shall mean that certain License and Collaboration
Agreement with Monsanto Company dated as of August 27, 2012, as amended from
time to time.

“Agricultural Field” shall mean applications in agriculture, horticulture,
forestry, aquaculture and/or the residential markets relating to plants, fish,
arthropods and/or pests and pathogens thereof (e.g., home, lawn, and/or garden).
The Agricultural Field excludes, without limitation, (a) all human and animal
(other than fish and arthropods) therapeutic, prophylactic or diagnostic
applications; (b) the development, sale and use

 

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of research reagent products for any purpose; and (c) modification of any cells,
tissues or organisms for the purpose of manufacturing heterologous proteins,
peptides or viruses for any purpose other than the modification of plants, plant
cells, or plant tissues for the purpose of manufacturing heterologous proteins,
peptides or viruses for application to plants, fish, arthropods and/or pests or
pathogens thereof.

“Agricultural Field Product” means a product that contains a Double Stranded RNA
(including transgenic applications thereof) for application in the Agricultural
Field that either (a) modulates the viability and/or biological processes
(including expression of genes and/or proteins) of (i) plants, (ii) fish,
(iii) arthropods, and/or (iv) pests or pathogens thereof; or (b) modifies
plants, plant cells or plant tissues for the purpose of manufacturing
heterologous proteins, peptides or viruses for application to (i) plants,
(ii) fish, (iii) arthropods, and/or (iv) pests or pathogens thereof.

“Agricultural Field Product Net Sales” will mean (a) the gross invoice price of
Agricultural Field Products sold by Alnylam, its Affiliates and sublicensees
(but with respect to Alnylam does not include Naked Sublicensees) to a Third
Party; provided, that such Third Party is an end-user of such Licensed Product
or a Third Party which purchases Agricultural Field Product(s) (whether in
packaged form or bulk form) from Alnylam, its Affiliate or sublicensee and
resells such Agricultural Field Product(s) to third parties in a manner
consistent with normal trade practices in the Agricultural Field; less (b) the
following items: (i) deductions actually incurred, allowed, paid, accrued or
specifically allocated in financial statements in accordance with generally
accepted accounting principles, in preparing and utilizing distribution channels
for an Agricultural Field Product (including product returns, customer rebates,
dealer incentives, volume discounts, seed service fees, cash discounts (pre-pay
discounts), (ii) local competitive response, transportation or cargo insurance,
taxes, duties or other governmental tariffs (other than income taxes),
(iii) government-mandated rebates, and (iv) a reasonable reserve for bad debts,
(and some of which items, by way of example, are currently identified as “crop
loss and replant” and “seed action pack”) in all cases allocated to such
Agricultural Field Products in accordance with generally accepted accounting
principles and methodologies established by Alnylam, its Affiliates or
sublicensee, as the case may be, and that are consistently applied by such party
across all of such party’s products in the Agricultural Field; provided, that
such methodologies may be amended from time to time, upon notice to Isis to
reflect general changes to such party’s methodologies, which changes are
consistently applied by such selling party across of such party’s products in
the Agricultural Field and which changes are made in the ordinary course of such
party’s business.

Isis and Alnylam agree that any reasonable definition of “net sales” customarily
used in agricultural industry technology licensing or

 

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collaboration contracts that is agreed to under the Agbio License Agreement or
subsequently agreed to by Alnylam (or a Third Party acquirer or assignee) and a
sublicensee with respect to royalties payable to Alnylam from such sublicensee
in an arms-length transaction under a particular sublicense will replace the
definition of Agricultural Field Product Net Sales in this Agreement and will be
used in calculating the royalty payment to Isis on sales of Agricultural Field
Products (including, but not limited to, products that consist of an
Agricultural Field Product and other technologies and/or materials (i.e.,
combination products)) sold pursuant to such sublicense and due under this
Agreement.

 

b. The definition “Bona Fide Drug Discovery Collaboration” is hereby amended in
its entirety as follows, and all references to “Bona Fide Drug Discovery
Collaboration” in the Agreement shall be replaced with “Bona Fide Discovery
Collaboration”:

“Bona Fide Discovery Collaboration” means (a) with respect to Double Stranded
RNA Products that are not Agricultural Field Products, a collaboration involving
the discovery and development of Double Stranded RNA Products, in which a Party
plays an integral role in the experimentation and an important, though not
necessarily dominant or co-equal, role in the decision-making, relating to the
discovery and development of such Double Stranded RNA Products from the point in
time at which the relevant Gene Target has been designated through the
initiation of [**]; and (b) with respect to Agricultural Field Products, a
collaboration involving the discovery and/or development of Double Stranded RNA
Products, in which a Party plays an integral role in the experimentation and an
important, though not necessarily dominant or co-equal, role in the
decision-making, relating to the discovery and/or development of such Double
Stranded RNA Products. A Bona Fide Discovery Collaboration for Double Stranded
RNA Products that are not Agricultural Field Products may continue beyond the
initiation of such [**]. For Isis Products that are Double Stranded RNA
Products, a Bona Fide Discovery Collaboration must be an Antisense Drug
Discovery Program. For each Party, collaborations that do not include or involve
Patents licensed from the other Party hereunder shall not constitute Bona Fide
Discovery Collaborations. A Party’s experimentation relating to the discovery
and development of Double Stranded RNA Products that modulate a relevant Gene
Target prior to the commencement of a collaboration shall be deemed to have been
conducted in the course of the collaboration for purposes of determining whether
the collaboration is a Bona Fide Discovery Collaboration. A series of related
collaborations and/or license agreements involving the discovery and development
of Double Stranded RNA Products with the same sublicensee or related
sublicensees that includes a Bona Fide Discovery Collaboration agreement will be
aggregated to constitute a single Bona Fide Discovery Collaboration. The Agbio
License Agreement is deemed a Bona Fide Discovery Collaboration for purposes of
this Agreement.

 

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c. The definition “Double Stranded RNA Product” is hereby amended in its
entirety as follows:

“Double Stranded RNA Product” means (a) a pharmaceutical composition that
contains a Double Stranded RNA or (b) an Agricultural Field Product.

 

d. The definition of “Net Sales” is hereby amended by adding the following
sentence to the end of such definition:

Notwithstanding anything in this Agreement to the contrary, where the term “Net
Sales” is used in this Agreement to apply to Agriculture Field Products, in such
context the term “Net Sales” shall be replaced with “Agricultural Field Product
Net Sales”.

 

e. The definition of “Technology Access Fee” is amended by (i) replacing all
references to “Bona Fide Collaboration” in such definition with “Bona Fide
Discovery Collaboration” and (ii) replacing clause (iii) thereof with the
following:

(iii) payments specifically committed to reimburse Alnylam for the
fully-burdened cost of research and development, including without limitation
the fully-burdened cost of products transferred by Alnylam in connection with
such research and development, and payments received by Alnylam pursuant to the
Agbio License Agreement that are specifically committed to reimburse Alnylam for
the cost of Patent prosecution, maintenance and/or defense of Patents covering
or claiming Agricultural Field Products; provided, however, that any payments
received by Alnylam but not applied to reimburse Alnylam for such expenses will
be Technology Access Fees,

 

2. Isis Retained Rights; Limitations on Licenses.

a. Section 5.2(d). Clause (ii) of Section 5.2(d) is hereby amended in its
entirety as follows:

(ii) Isis may continue to grant licenses to Third Parties for the purpose of
manufacturing and selling oligonucleotides; provided that, to the extent such
licenses cover Double Stranded RNA or Single Stranded RNAi Compounds, Isis will
restrict such licenses to [**] and, in the case of Double Stranded RNA, will
exclude from such licenses granted after the date of this Letter Agreement
Agricultural Field Products.

 

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b. Section 5.3(d). Section 5.3(d) of the Agreement is hereby amended in its
entirety as follows:

(d) Licenses to Isis Patent Rights that are subject to contractual obligations
between Isis and Third Parties in effect as of the Restatement Date are licensed
(i) subject to the restrictions and other terms described in Exhibit 5.3(d)
attached hereto, and (ii) with respect to Agricultural Field Products, to the
extent Isis has the right under such Third Party agreements to grant such a
license for Agricultural Field Products. Alnylam hereby agrees to comply, and to
cause its sublicensees to comply, with such restrictions and other terms.

 

3. Technology Access Fees and Royalties.

a. Royalties. Section 7.2(a) of the Agreement is hereby amended in its entirety
as follows:

(a) (i) Subject to the terms and conditions of, and during the term of, this
Agreement, Alnylam will pay to Isis royalties on sales of Alnylam Double
Stranded RNA Products (other than Agricultural Field Products) by Alnylam, its
Affiliates or sublicensees (except Naked Sublicensees) equal to [**]% of Net
Sales. Alnylam may reduce the royalty due under this section by [**]% of any
additional royalties that Alnylam owes to Third Parties on such Alnylam Double
Stranded RNA Product (other than an Agricultural Field Product) that arise from
Alnylam acquiring access to new technologies after the Effective Date; provided,
however that (x) the royalty due under this section can never be less than a
floor of [**]% and (y) additional royalties arising as the result of the
addition, pursuant to Section 11.8, of Isis Future Chemistry Patents or Isis
Future Motif and Mechanism Patents to the Isis Patent Rights licensed to Alnylam
cannot be used to reduce the royalty.

(ii) Subject to the terms and conditions of, and during the term of, this
Agreement, Alnylam will pay to Isis royalties on sales of Alnylam Agricultural
Field Products by Alnylam, its Affiliates or sublicensees equal to [**]% of
Agricultural Field Product Net Sales. Alnylam may not reduce the royalty due
under this subsection (a)(ii) for any additional royalties that Alnylam owes to
Third Parties on such Agricultural Field Products.

b. Milestones. Section 7.3(c) of the Agreement is hereby amended by including
the following sentence at the end of such section:

Notwithstanding the foregoing, the provisions of this Section 7.3(c) shall not
apply to any Alnylam Agricultural Field Product.

 

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c. Technology Access Fee. Section 7.5(b) of the Agreement is hereby amended by
including the following sentence at the end of such section:

Notwithstanding the foregoing, the provisions of this Section 7.5(b) shall not
apply to any Bona Fide Discovery Collaboration involving solely Agricultural
Field Products.

 

4. Representation and Warranty. Alnylam hereby represents and warrants to Isis
that the Agbio License Agreement includes a collaboration involving the
discovery and/or development of Double Stranded RNA Products, in which Alnylam
plays an integral role in the experimentation and an important, though not
necessarily dominant or co-equal, role in the decision-making, relating to the
discovery and/or development of such Double Stranded RNA Products.

 

5. Additional Provisions. The Parties agree that the provisions of Section 10.2
of the Agreement shall not apply to licenses involving solely Agricultural Field
Products.

 

6. No Other Amendments; Entire Agreement. Except as amended, modified and
supplemented by the terms of this Letter Agreement, the provisions of the
Agreement are and shall remain in full force and effect. This Letter Agreement
and the Agreement (as amended by this Letter Agreement) contain the entire
understanding of the Parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either oral or written, with
regard to such subject matter are superseded by the terms of this Letter
Agreement and the Agreement (as amended by this Letter Agreement). This Letter
Agreement may be amended, or any term hereof modified, only by a written
instrument duly-executed by authorized representatives of both Parties hereto.

[Signature page follows.]

 

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If Isis is in agreement with the foregoing, please so indicate by signing below.

 

Sincerely,

 

ALNYLAM PHARMACEUTICALS, INC.

 

By:  

/s/ John Maraganore

Name:   John Maraganore Title:   Chief Executive Officer

 

Agreed to and acknowledged by:

 

ISIS PHARMACEUTICALS, INC.

 

By:  

/s/ B. Lynne Parshall

Name:   B. Lynne Parshall Title:   Chief Operating Officer and Chief Financial
Officer

 

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