Exhibit 10.2

 

CONFIDENTIAL

 

CONFIDENTIAL TREATMENT REQUESTED

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

 

EXCLUSIVE LICENSE AND
NONEXCLUSIVE OPTION AGREEMENT

 

BETWEEN

 

GLAXO GROUP LIMITED

 

AND

 

REGULUS THERAPEUTICS INC.

 

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This EXCLUSIVE LICENSE AND NONEXCLUSIVE OPTION AGREEMENT (this “Agreement”) is
entered into and made effective as of the 24th day of February 2010 (the
“Effective Date”) by and between Regulus Therapeutics Inc., a Delaware
corporation having its principal place of business at 1896 Rutherford Road,
Carlsbad, CA 92008 (“Regulus”), and Glaxo Group Limited, a company existing
under the laws of England and Wales, having its registered office at Glaxo
Wellcome House, Berkeley Avenue, Greenford, Middlesex, UB6 0NN, England
(“GSK”).  Regulus and GSK are each referred to herein by name or as a “Party”
or, collectively, as “Parties.”

 

RECITALS

 

WHEREAS, Regulus is a Delaware corporation that is jointly owned by Isis
Pharmaceuticals, Inc. (“Isis”) and Alnylam Pharmaceuticals, Inc. (“Alnylam” and
together with Isis, Regulus’ “Founding Companies”, and each a “Founding
Company”);

 

WHEREAS, Regulus and GSK are parties to the Product Development and
Commercialization Agreement dated April 17, 2008, as amended (the “Existing
Collaboration”);

 

WHEREAS, Regulus possesses proprietary technology and know-how related to the
research, discovery, identification, synthesis and development of
single-stranded oligonucleotide miRNA Antagonists in the Field (each as defined
below);

 

WHEREAS, GSK possesses expertise in the pharmaceutical research, development,
manufacturing and commercialization of human pharmaceuticals, and GSK is
interested in developing miRNA Antagonists as drug products in the Field;

 

WHEREAS, GSK may obtain from Santaris a license to commercialize the miRNA
Compound known as SPC-3649;

 

WHEREAS, GSK desires, upon obtaining certain rights to SPC-3649 from Santaris,
to obtain from Regulus an exclusive license to develop and commercialize
SPC-3649 in the Field; and Regulus desires to grant GSK such rights, all on the
terms and conditions set forth herein; and

 

WHEREAS, GSK may, during the term of this Agreement, desire to obtain from
Regulus a nonexclusive license to certain other patents in the Field, and in
such case, GSK and Regulus agree to negotiate in good faith, in accordance with
the terms and conditions of this Agreement to the extent possible, and in
accordance with the Agreement between Regulus and Garching Innovation GmbH, as
appropriate.

 

1

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NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
hereby bound, do hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

1.1          THE CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED IN THIS
AGREEMENT SHALL HAVE THE MEANINGS SET FORTH IN EXHIBIT A ATTACHED HERETO UNLESS
CONTEXT DICTATES OTHERWISE.  ALL REFERENCES TO “DOLLARS” MEAN U.S. DOLLARS.  THE
USE OF THE SINGULAR FORM OF A DEFINED TERM ALSO INCLUDES THE PLURAL FORM AND
VICE VERSA, EXCEPT WHERE EXPRESSLY NOTED. THE USE OF THE WORD “INCLUDING” SHALL
MEAN “INCLUDING WITHOUT LIMITATION”.  THE USE OF THE WORDS “HEREIN,” “HEREOF” OR
“HEREUNDER,” AND WORDS OF SIMILAR IMPORT, REFER TO THIS AGREEMENT IN ITS
ENTIRETY AND NOT TO ANY PARTICULAR PROVISION HEREOF.

 

ARTICLE 2
[***] OPTION

 

2.1          OPTION TO LICENSE THE [***] PATENTS.  IF GSK PROVIDES REGULUS WITH
WRITTEN NOTICE OF A DESIRE TO NEGOTIATE IN GOOD FAITH TO OBTAIN A NONEXCLUSIVE
LICENSE TO THE [***] PATENTS, THEN REGULUS AND GSK SHALL, IN GOOD FAITH, USE
COMMERCIALLY REASONABLE EFFORTS TO CONCLUDE A WRITTEN LICENSE AGREEMENT (THE
“[***] SUBLICENSE”) WITHIN SIXTY (60) DAYS OF SUCH WRITTEN NOTICE FOR THE GRANT
BY REGULUS TO GSK OF A WORLDWIDE, NONEXCLUSIVE, ROYALTY-BEARING, SUBLICENSEABLE
(IN ACCORDANCE WITH SECTION 3.1.2 BELOW) LICENSE, UNDER THE [***] PATENTS SOLELY
TO DEVELOP, MANUFACTURE AND COMMERCIALIZE SPC-3649 IN THE FIELD; PROVIDED, THAT,
SUCH LICENSE WILL (A) BE SUBJECT TO THE TERMS AND CONDITIONS OF THOSE CERTAIN
AGREEMENTS BETWEEN REGULUS AND THOSE CERTAIN THIRD PARTIES IN EFFECT AS OF THE
EFFECTIVE DATE AND AS LISTED ON EXHIBIT G, AND (B) HAVE A MAXIMUM ROYALTY RATE
TO BE PAID BY GSK UNDER SUCH AGREEMENT CAPPED AT THE THIRD PARTY LICENSE
PASS-THROUGH COSTS UNDER THE [***].  UPON GSK’S AND REGULUS’ EXECUTION OF THE
[***]SUBLICENSE, AND SUBJECT TO THE TERMS AND CONDITIONS OF THE [***]
SUBLICENSE, (I) THE [***] SHALL BE DEEMED LISTED ON EXHIBIT G, AND (II) THE
[***] PATENTS SHALL BE DEEMED INCLUDED IN THE DEFINITION OF REGULUS PATENTS AND
THEREFORE SUBJECT TO ARTICLE 3.

 

ARTICLE 3
GRANT OF LICENSE RIGHTS

 

3.1          LICENSE GRANTS TO GSK.

 

3.1.1       DEVELOPMENT AND COMMERCIALIZATION LICENSE.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT (INCLUDING BUT NOT LIMITED TO THE LIMITATIONS SET
FORTH IN THIS ARTICLE 3) AND THOSE CERTAIN AGREEMENTS BETWEEN REGULUS AND THOSE
CERTAIN THIRD PARTIES IN EFFECT AS OF THE EFFECTIVE DATE AND AS LISTED ON
EXHIBIT G, REGULUS HEREBY GRANTS TO GSK A WORLDWIDE, EXCLUSIVE, ROYALTY-BEARING,
SUBLICENSEABLE (IN ACCORDANCE WITH SECTION 3.1.2 BELOW) LICENSE, UNDER THE
REGULUS PATENTS SOLELY TO DEVELOP, MANUFACTURE AND COMMERCIALIZE SPC-3649 IN THE
FIELD.

 

2

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3.1.2       SUBLICENSE RIGHTS.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT (INCLUDING BUT NOT LIMITED TO THE LIMITATIONS SET FORTH IN THIS
ARTICLE 3) AND THOSE CERTAIN AGREEMENTS BETWEEN REGULUS AND THOSE CERTAIN THIRD
PARTIES IN EFFECT AS OF THE EFFECTIVE DATE AND AS LISTED ON EXHIBIT G, GSK SHALL
HAVE THE RIGHT TO GRANT TO ITS AFFILIATES AND/OR THIRD PARTIES SUBLICENSES UNDER
THE LICENSE GRANTED UNDER SECTION 3.1.1 ABOVE SOLELY TO CONTINUE THE
DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF SPC-3649; PROVIDED, THAT,
(A) EACH SUCH SUBLICENSE SHALL BE SUBJECT AND SUBORDINATE TO, AND CONSISTENT
WITH, THE APPLICABLE TERMS AND CONDITIONS OF THIS AGREEMENT; (B) GSK MAY NOT
GRANT A SUBLICENSE TO SANTARIS OR ANY OF SANTARIS’ AFFILIATES; AND (C) GSK
CANNOT SUBLICENSE THE STANFORD PATENTS.  GSK SHALL PROVIDE REGULUS WITH A COPY
OF ANY SUBLICENSE GRANTED PURSUANT TO THIS SECTION 3.1.2 WITHIN THIRTY (30) DAYS
AFTER THE EXECUTION THEREOF.  SUCH COPY MAY BE REDACTED TO EXCLUDE CONFIDENTIAL
SCIENTIFIC INFORMATION AND OTHER SENSITIVE INFORMATION REQUIRED BY A SUBLICENSEE
OR GSK TO BE KEPT CONFIDENTIAL; PROVIDED, THAT FOR AGREEMENTS THAT ARE ENTERED
INTO BY GSK OR ITS AFFILIATES AFTER THE EFFECTIVE DATE THAT MATERIALLY RELATE TO
THE REGULUS PATENTS, GSK WILL REASONABLY ENDEAVOR TO FACILITATE THE
COMMUNICATION OF INFORMATION BETWEEN THE PARTIES WITH RESPECT TO ANY SUBSEQUENT
DEVELOPMENT ACTIVITIES BY GSK TO THE EXTENT REQUIRED BY THOSE CERTAIN AGREEMENTS
BETWEEN REGULUS AND THOSE CERTAIN THIRD PARTIES IN EFFECT AS OF THE EFFECTIVE
DATE AND AS LISTED ON EXHIBIT G.  REGULUS MAY SHARE SUCH COPY OR INFORMATION
WITH ITS FOUNDING COMPANIES AND RELEVANT THIRD PARTY LICENSORS WHO HAVE A
CONTRACTUAL RIGHT AND MATERIAL NEED TO KNOW SUCH INFORMATION UNDER OBLIGATIONS
OF CONFIDENTIALITY WHICH ARE NO LESS STRICT THAN THE CONFIDENTIALITY OBLIGATIONS
IMPOSED UPON REGULUS HEREUNDER.  GSK WILL REMAIN RESPONSIBLE FOR THE PERFORMANCE
OF ITS AFFILIATES AND SUBLICENSEES, AND WILL ENSURE THAT ALL SUCH AFFILIATES AND
SUBLICENSEES COMPLY WITH THE RELEVANT PROVISIONS OF THIS AGREEMENT.

 

3.1.3       RETAINED RIGHTS; NO IMPLIED LICENSES.  THE EXCLUSIVE LICENSE GRANTED
TO REGULUS BY ALNYLAM PURSUANT TO SECTION 2.2(A) OF THE REGULUS LICENSE
AGREEMENT IS SUBJECT TO ALNYLAM’S RETAINED RIGHT TO USE AND EXPLOIT ALNYLAM’S
FOUNDING COMPANY KNOW-HOW AND FOUNDING COMPANY PATENTS SOLELY TO SUPPORT ITS OWN
INTERNAL RESEARCH IN THE ALNYLAM FIELD (EACH AS DEFINED IN THE REGULUS LICENSE
AGREEMENT).  THE EXCLUSIVE LICENSE GRANTED TO REGULUS BY ISIS PURSUANT TO
SECTION 2.2(A) OF THE REGULUS LICENSE AGREEMENT IS SUBJECT TO ISIS’ RETAINED
RIGHT TO USE AND EXPLOIT ISIS’ FOUNDING COMPANY KNOW-HOW AND FOUNDING COMPANY
PATENTS SOLELY TO SUPPORT ITS OWN INTERNAL RESEARCH IN THE ISIS FIELD (EACH AS
DEFINED IN THE REGULUS LICENSE AGREEMENT).  ALL RIGHTS IN AND TO REGULUS PATENTS
NOT EXPRESSLY LICENSED TO GSK

 

3

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HEREUNDER, UNDER THE EXISTING COLLABORATION OR PURSUANT TO THE OPERATION OF THE
RELEVANT APPLICABLE EXPRESS PROVISIONS OF THIS AGREEMENT OR THE EXISTING
COLLABORATION, AND ANY OTHER PATENT RIGHTS OR KNOW-HOW OF REGULUS OR ITS
FOUNDING COMPANIES OR AFFILIATES, ARE HEREBY RETAINED BY REGULUS OR SUCH
FOUNDING COMPANY OR AFFILIATE.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NO PARTY WILL BE DEEMED BY ESTOPPEL OR IMPLICATION TO HAVE GRANTED THE OTHER
PARTIES ANY LICENSE OR OTHER RIGHT WITH RESPECT TO ANY INTELLECTUAL PROPERTY OF
SUCH PARTY.

 

3.1.4       STANFORD LICENSE CONSIDERATIONS.  FOR PURPOSES OF CLARIFICATION,
WITH RESPECT TO THE SUBLICENSE GRANTED BY REGULUS TO GSK UNDER THE STANFORD
PATENTS, GSK ACKNOWLEDGES AND AGREES THAT (A) SUCH SUBLICENSE IS SUBJECT AND
SUBORDINATE TO THE TERMS AND CONDITIONS OF THE STANFORD LICENSE AGREEMENT,
(B) STANFORD IS A THIRD PARTY BENEFICIARY TO THIS AGREEMENT AS IT RELATES TO
ARTICLES 8, 9 AND 10 OF THE STANFORD LICENSE AGREEMENT, SUCH THAT STANFORD MAY
DIRECTLY ENFORCE ARTICLES 8, 9 AND 10 OF THE STANFORD LICENSE AGREEMENT AGAINST
GSK, AND (C) IF STANFORD TERMINATES THE STANFORD LICENSE AGREEMENT AS IT RELATES
TO REGULUS (BUT NOT AS IT RELATES TO THIS AGREEMENT), GSK WILL ASSUME (AND BE
DIRECTLY LIABLE TO STANFORD FOR) ALL THIRD PARTY LICENSE PASS-THROUGH COSTS AND
ALL THIRD PARTY AND FOUNDING COMPANY-ORIGINATED RIGHTS AND OBLIGATIONS DUE
STANFORD IN CONNECTION WITH THIS AGREEMENT; PROVIDED, THAT IF, BY OPERATION OF
THIS SECTION 3.1.4 GSK ACTUALLY PAYS ANY SUCH COSTS OR FEES TO STANFORD IN
SATISFACTION OF ANY AMOUNTS OWED UNDER SECTION 4.5, ARTICLE 7 OR SECTION 13.2 OF
THE STANFORD LICENSE AGREEMENT, THEN GSK SHALL HAVE THE RIGHT, IN ADDITION TO
ALL OTHER RIGHTS AVAILABLE AT LAW AND IN EQUITY, TO [***].  IF GSK EXERCISES ITS
RIGHT OF [***] UNDER THIS SECTION 3.1.4, THEN GSK WILL PROVIDE WRITTEN NOTICE TO
REGULUS OF SUCH [***] CLAIM.

 

3.2          SANTARIS OPTION TO [***] PATENTS.  REGULUS HEREBY AGREES THAT IT
WILL GRANT SANTARIS AN EXCLUSIVE LICENSE UNDER THE [***] PATENTS TO DEVELOP AND
COMMERCIALIZE SPC-3649 WITHIN THE FIELD (THE “SANTARIS LICENSE”) IF (A) GSK
OBTAINS RIGHTS TO DEVELOP AND/OR COMMERCIALIZE SPC-3649 FROM SANTARIS OR ITS
AFFILIATES (“SPC-3649 RIGHTS”), AND (B) IF GSK SUBSEQUENTLY CEASES DEVELOPMENT
OF SPC-3649 AND RETURNS RIGHTS TO SPC-3649 TO SANTARIS (THE “SANTARIS OPTION
TRIGGER DATE”); PROVIDED, (A) SANTARIS GIVES REGULUS A WRITTEN NOTICE ELECTING
TO OBTAIN THE SANTARIS LICENSE ON OR BEFORE 5:00 P.M. PACIFIC TIME ON THE
SIXTIETH (60TH) DAY FOLLOWING THE SANTARIS OPTION TRIGGER DATE, AND (B) REGULUS
AND SANTARIS EXECUTE THE SANTARIS LICENSE WITHIN SIXTY (60) DAYS FOLLOWING
REGULUS’ RECEIPT OF SUCH ELECTION NOTICE.  THE SANTARIS LICENSE, IF GRANTED,
WILL INCLUDE THE MATERIAL TERMS LISTED IN EXHIBIT H ATTACHED HERETO.  REGULUS
AND GSK AGREE THAT IF GSK OBTAINS THE SPC-3649 RIGHTS, THEN SANTARIS IS AN
INTENDED THIRD PARTY BENEFICIARY OF THIS AGREEMENT WITH RESPECT TO THE RIGHTS
GRANTED TO SANTARIS PURSUANT TO THIS SECTION 3.2 AND THAT SANTARIS MAY EXERCISE
ITS RIGHTS UNDER THIS SECTION 3.2 INDEPENDENTLY.  FOR CLARITY, IF SANTARIS DOES
NOT GIVE REGULUS A WRITTEN NOTICE ELECTING TO OBTAIN THE SANTARIS LICENSE ON OR
BEFORE 5:00 P.M. PACIFIC TIME ON THE 60TH DAY FOLLOWING THE SANTARIS OPTION
TRIGGER DATE, OR IF REGULUS AND SANTARIS HAVE NOT EXECUTED THE SANTARIS LICENSE
WITHIN SIXTY (60) DAYS FOLLOWING REGULUS’ RECEIPT OF SUCH ELECTION NOTICE, THEN
IN EACH CASE THIS SECTION 3.2 WILL BE NULL AND VOID.

 

4

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ARTICLE 4
[INTENTIONALLY LEFT BLANK]

 

ARTICLE 5
SPC-3649 MILESTONES AND ROYALTIES; SPC-3649 PAYMENTS

 

5.1          UPFRONT PAYMENT TO REGULUS.  IN PARTIAL CONSIDERATION FOR THE
LICENSE AND OPTION GRANTED TO GSK UNDER SECTION 2.1 AND ARTICLE 3 OF THIS
AGREEMENT, GSK SHALL PAY TO REGULUS, BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE
FUNDS TO AN ACCOUNT DESIGNATED BY REGULUS IN WRITING, A ONE-TIME-ONLY INITIAL
NON-REFUNDABLE, NON-CREDITABLE FEE OF THREE MILLION U.S. DOLLARS ($3,000,000) NO
LATER THAN TEN (10) BUSINESS DAYS AFTER RECEIPT BY GSK OF AN INVOICE SENT FROM
REGULUS ON OR AFTER THE EFFECTIVE DATE OF THIS AGREEMENT (THE “UPFRONT
PAYMENT”).

 

5.2          [INTENTIONALLY LEFT BLANK].

 

5.3          SPC-3649 EXCLUSIVE LICENSE FEES.  IF (A) GSK OBTAINS THE SPC-3649
RIGHTS; AND (B) [***] GSK OBTAINING SUCH SPC-3649 RIGHTS, THEN GSK SHALL PAY TO
REGULUS A NON-REFUNDABLE, NON-CREDITABLE FEE OF [***] WITHIN THIRTY (30) DAYS OF
RECEIPT BY GSK OF AN INVOICE SENT FROM REGULUS REGARDING SUCH FEE; PROVIDED,
HOWEVER, IF [***] GSK OBTAINING SUCH SPC-3649 RIGHTS AND GSK SUBSEQUENTLY
[***]], THEN GSK SHALL PAY TO REGULUS A NON-REFUNDABLE, NON-CREDITABLE FEE [***]
WITHIN THIRTY (30) DAYS OF RECEIPT BY GSK OF AN INVOICE SENT FROM REGULUS
REGARDING SUCH FEE.  NOTWITHSTANDING THE FOREGOING, IF GSK EITHER: (I) HOLDS THE
SPC-3649 RIGHTS AS OF [***] AND GSK HAS NOT PREVIOUSLY PAID REGULUS THE [***]
FEE UNDER THIS SECTION 5.3 OR (II) GSK LICENSES THE SPC-3649 RIGHTS AFTER [***],
GSK SHALL PAY TO REGULUS A NON-REFUNDABLE, NON-CREDITABLE FEE OF [***] WITHIN
THIRTY (30) DAYS OF RECEIPT OF AN INVOICE FROM REGULUS FOR SUCH FEE.

 

5.4          MILESTONE PAYMENTS FOR ACHIEVEMENT OF MILESTONE EVENTS.  GSK SHALL
PAY TO REGULUS THE APPLICABLE MILESTONE PAYMENTS AS SET FORTH IN THE TABLE BELOW
IN THIS SECTION 5.4 WITHIN THIRTY (30) DAYS OF RECEIPT BY GSK OF AN INVOICE SENT
FROM REGULUS ON OR AFTER THE DATE OF FIRST ACHIEVEMENT OF SUCH MILESTONE EVENT
BY SPC-3649 OR AN SPC-3649 PRODUCT.  GSK SHALL SEND REGULUS A WRITTEN NOTICE
THEREOF PROMPTLY FOLLOWING THE DATE OF ACHIEVEMENT OF EACH MILESTONE EVENT.

 

5

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Milestone Payment*

 

Milestone Event (each a “Milestone Event”)

 

US$Million (“m”)

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

[***]

 

$

[***]

 

TOTAL Potential Milestones

 

$

[***]

 

 

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*Each milestone will be paid only once upon the first achievement of the
Milestone Event.

 

†Such milestone will only be payable if, at the time such milestone is achieved
there is a Valid Claim within the Regulus Patents, which covers the [***] of
SPC-3649 or an SPC-3649 Product; provided, however, that if there is no Valid
Claim at the time of such Milestone Event, then (a) GSK must pay to Regulus
[***] percent ([***]%) of such milestone payment upon [***] of an SPC-3649
Product in any country in the [***]; and (b) if a Pending Claim within the
Regulus Patents issues such that it is a Valid Claim in the [***] prior to the
[***] anniversary of the date of the First Commercial Sale described in clause
(a) above, then GSK will pay Regulus the remaining [***] percent ([***]%) of
such milestone within thirty (30) days of receipt by GSK of an invoice sent from
Regulus on or after the date of the issuance of the applicable Pending Claim.

 

5.5          ROYALTY PAYMENTS FOR SPC-3649 TO REGULUS.

 

5.5.1       GSK PATENT ROYALTY. AS PARTIAL CONSIDERATION FOR THE LICENSE GRANTED
TO GSK HEREUNDER, GSK WILL PAY TO REGULUS ROYALTIES ON ANNUAL WORLDWIDE NET
SALES OF ANY SPC-3649 PRODUCT SOLD BY GSK, ITS AFFILIATES OR SUBLICENSEES DURING
A CALENDAR YEAR, ON A COUNTRY-BY-COUNTRY BASIS, IN THE FIELD IN THE COUNTRIES OF
THE TERRITORY IN WHICH THERE IS A VALID CLAIM IN THE FIELD WITHIN THE REGULUS
PATENTS, WHICH COVERS THE [[***] SPC-3649 OR SUCH SPC-3649 PRODUCT, IN THE
AMOUNTS AS FOLLOW (THE “GSK PATENT ROYALTY”).  FOR PURPOSES OF CLARITY, IN NO
EVENT SHALL GSK BE OBLIGATED TO PAY ROYALTIES MORE THAN ONCE WITH RESPECT TO THE
SAME UNIT OF SPC-3649 PRODUCT AND GSK SHALL OWE NO ROYALTIES OR MILESTONES TO
REGULUS, ITS AFFILIATES, FOUNDING COMPANIES, OR ANYONE ON BEHALF OF REGULUS, ITS
AFFILIATES, OR FOUNDING COMPANIES, ON SPC-3649 PRODUCT UNDER ANY TERMS OF THE
EXISTING COLLABORATION.

 

(A)           GSK SHALL PAY TO REGULUS THE ROYALTIES AT THE PERCENTAGES AS
DESCRIBED IN THE TABLE BELOW:

 

6

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Annual Worldwide Net Sales (U.S. $ Million)
of SPC-3649 Product per Calendar Year
US$Million (“m”)

 

Applicable Royalty Rate

 

up to $1000m

 

[***]

%

$1000m up to $2000m

 

[***]

%

$2000m up to $3000m

 

[***]

%

> $3000m

 

[***]

%

 

(B)           IN THE EVENT ANY COMBINATION PRODUCT(S) ARE SOLD, ROYALTIES ON
SUCH COMBINATION PRODUCTS WILL BE DETERMINED PURSUANT TO THE DEFINITION OF “NET
SALES” ON EXHIBIT A.

 

(C)           THE ROYALTY RATES IN THE TABLE ABOVE ARE INCREMENTAL RATES, WHICH
APPLY ONLY FOR THE RESPECTIVE INCREMENT OF ANNUAL WORLDWIDE NET SALES DESCRIBED
IN THE ANNUAL WORLDWIDE NET SALES COLUMN.  THUS, ONCE A TOTAL ANNUAL WORLDWIDE
NET SALES FIGURE IS ACHIEVED FOR THE YEAR, THE ROYALTIES OWED ON ANY LOWER TIER
PORTION OF ANNUAL WORLDWIDE NET SALES ARE NOT ADJUSTED UP TO THE HIGHER TIER
RATE.

 

5.5.2       ROYALTY ADJUSTMENT.  IF THERE ARE NO VALID CLAIMS WITHIN THE REGULUS
PATENTS THAT [***] AN SPC-3649 PRODUCT SOLD IN A PARTICULAR COUNTRY, THE GSK
PATENT ROYALTY SET FORTH IN SECTION 5.5.1 SHALL BE REDUCED TO [***] PERCENT
([***]%) OF THE GSK PATENT ROYALTY RATES ABOVE IN SUCH COUNTRIES WHERE A PENDING
CLAIM WITHIN THE REGULUS PATENTS CLAIMS [***] AN SPC-3649 PRODUCT HAS NOT YET
BEEN ISSUED.  FOR THE AVOIDANCE OF DOUBT, FOR SUCH PENDING CLAIMS, GSK SHALL PAY
REGULUS [***] PERCENT ([***]%) OF THE GSK PATENT ROYALTY SET FORTH IN
SECTION 5.5.1 ABOVE, AND SHALL PAY THE REMAINING [***] PERCENT ([***]%) OF THE
GSK PATENT ROYALTY INTO AN ESCROW ACCOUNT, UNTIL SUCH TIME AS A VALID CLAIM
WITHIN THE REGULUS PATENTS ISSUES THAT COVERS [***] AN SPC-3649 PRODUCT BEING
SOLD IN THE COUNTRY OF SALE, PROVIDED THAT SUCH VALID CLAIM MUST ISSUE WITHIN
[***] YEARS OF DATE OF FIRST COMMERCIAL SALE OF AN SPC-3649 PRODUCT (THE
“ROYALTY TAIL PERIOD”).  IN THE EVENT SUCH VALID CLAIM ISSUES DURING THE ROYALTY
TAIL PERIOD, (I) THE ESCROW ACCOUNT AND ANY INTEREST THEREON SHALL BE PAID TO
REGULUS AND (II) GSK WILL PAY THE FULL GSK PATENT ROYALTY IN SUCH COUNTRIES
STARTING ONLY FROM THE DATE OF SUCH ISSUANCE OF THE VALID CLAIM AND SHALL NOT
OWE ANY GSK PATENT ROYALTY IN SUCH COUNTRIES FOR ANY PRECEDING PERIOD.  IN THE
EVENT THAT NO SUCH VALID CLAIM ISSUES DURING THE ROYALTY TAIL PERIOD, THEN THE
ESCROWED AMOUNTS AND ANY INTEREST THEREON SHALL BE RETURNED TO GSK AND ANY
OBLIGATIONS GSK MAY HAVE HAD WITH RESPECT TO THE PENDING CLAIMS SHALL CEASE.  IF
GSK MAINTAINS SOLE CONTROL OVER SUCH ESCROW ACCOUNT THEN GSK SHALL BE SOLELY
RESPONSIBLE FOR THE COSTS AND EXPENSES ASSOCIATED WITH MAINTAINING SUCH ESCROW
ACCOUNT, OTHERWISE GSK AND REGULUS SHALL BE

 

7

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MUTUALLY RESPONSIBLE FOR THE COSTS AND EXPENSES ASSOCIATED WITH MAINTAINING SUCH
ESCROW ACCOUNT; PROVIDED, THAT THE PARTIES MUST MUTUALLY AGREE (SUCH AGREEMENT
NOT TO BE UNREASONABLY WITHHELD) BEFORE TAKING ANY ACTION THAT WOULD CAUSE GSK
TO LOSE SOLE CONTROL OF SUCH ESCROW ACCOUNT.  IF A VALID CLAIM WITHIN THE
REGULUS PATENTS THAT [***] AN SPC-3649 PRODUCT ISSUES AFTER THE ROYALTY TAIL
PERIOD, THEN GSK WILL PAY REGULUS THE FULL GSK PATENT ROYALTY IN SUCH COUNTRIES
STARTING ONLY FROM THE DATE OF SUCH ISSUANCE OF THE VALID CLAIM AND SHALL NOT
OWE ANY GSK PATENT ROYALTY IN SUCH COUNTRIES FOR ANY PRECEDING PERIOD.

 

5.5.3            PATENT ROYALTY TERM.

 

(A)           FOR PENDING CLAIMS, GSK’S OBLIGATION TO PAY THE GSK REDUCED GSK
PATENT ROYALTY IN SECTION 5.5.2 ABOVE WITH RESPECT TO SPC-3649 PRODUCT OR
COMBINATION PRODUCT WILL CONTINUE ON A COUNTRY-BY-COUNTRY BASIS FROM THE DATE OF
FIRST COMMERCIAL SALE OF AN SPC-3649 PRODUCT OR COMBINATION PRODUCT IN THE FIELD
UNTIL THE END OF THE ROYALTY TAIL PERIOD.

 

(B)           FOR VALID CLAIMS, GSK’S OBLIGATION TO PAY THE GSK PATENT ROYALTY
RATE ABOVE WITH RESPECT TO SPC-3649 PRODUCT OR COMBINATION PRODUCT WILL CONTINUE
ON A COUNTRY-BY-COUNTRY BASIS FROM THE DATE OF FIRST COMMERCIAL SALE OF AN
SPC-3649 PRODUCT OR COMBINATION PRODUCT IN THE FIELD UNTIL THE DATE OF
EXPIRATION OF THE LAST VALID CLAIM IN THE FIELD WITHIN THE REGULUS PATENTS,
WHICH COVERS [***] OF AN SPC-3649 PRODUCT OR COMBINATION PRODUCT.  IN NO
CIRCUMSTANCE WILL GSK PAY A GSK PATENT ROYALTY OR ANY OTHER ROYALTY HEREUNDER
BEYOND THE DATE OF EXPIRATION OF THE LAST VALID CLAIM IN THE FIELD.

 

5.6          PASS THROUGH PAYMENTS.

 

5.6.1       REGULUS OBLIGATIONS.  REGULUS WILL BE SOLELY RESPONSIBLE FOR PAYING
[***] TOTAL LICENSE PASS-THROUGH COSTS (A) [***] (AS SUCH TERM IS DEFINED IN THE
EXISTING COLLABORATION) EXCEPT PURSUANT TO THE TERMS OF SECTION 5.6.2 HEREIN,
AND (B) DUE UNDER THE [***].

 

5.6.2       OBLIGATIONS FOR FUTURE IP.  AFTER THE EFFECTIVE DATE, REGULUS MAY
WISH TO IN-LICENSE OR ACQUIRE RIGHTS TO PATENT RIGHTS CONTROLLED BY A THIRD
PARTY (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 REGULUS PATENTS LICENSED TO GSK UNDER SECTION 3.1.  ONCE REGULUS
HAS EXECUTED SUCH ADDITIONAL THIRD PARTY AGREEMENT, REGULUS WILL OFFER SUCH
THIRD PARTY PATENT RIGHTS TO GSK (INCLUDING A DESCRIPTION OF THE PAYMENTS PAID
OR POTENTIALLY PAYABLE BY REGULUS THEREUNDER).  AT SUCH TIME, IF GSK WISHES TO
INCLUDE SUCH THIRD PARTY PATENTS UNDER THE LICENSES GRANTED UNDER SECTION 3.1,
GSK WILL NOTIFY REGULUS OF ITS DESIRE TO DO SO AND THE PARTIES WILL FAIRLY AND
IN GOOD FAITH ALLOCATE UPFRONT PAYMENTS OR ONGOING PAYMENT OBLIGATIONS BETWEEN
SPC-3649 AND COMPOUNDS THAT ARE NOT SPC-3649.  IF GSK DOES NOT AGREE TO

 

8

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REIMBURSE REGULUS FOR THE AMOUNT OF ANY UPFRONT OR SIMILAR ACQUISITION PAYMENTS
FAIRLY ALLOCATED TO SPC-3649, AND TO BE RESPONSIBLE FOR THE PAYMENT OF GSK’S
SHARE OF ANY [***] PAYMENTS UNDER THE ADDITIONAL THIRD PARTY AGREEMENT, THEN THE
THIRD PARTY PATENTS ACQUIRED OR IN-LICENSED BY REGULUS UNDER THE ADDITIONAL
THIRD PARTY AGREEMENT WILL NOT BE CONSIDERED A REGULUS PATENT LICENSED TO GSK
UNDER THIS AGREEMENT.  SHOULD THE PARTIES AGREE, THEN GSK SHALL REIMBURSE
REGULUS FOR GSK’S SHARE OF SUCH AMOUNTS WITHIN FORTY-FIVE (45) DAYS AFTER GSK’S
RECEIPT OF AN INVOICE FROM REGULUS THEREFOR.

 

5.6.3       REGULUS OBTAINS RIGHTS TO SPC-3649.  SHOULD REGULUS OBTAIN SPC-3649
RIGHTS FROM SANTARIS OR ITS AFFILIATE(S), THEN THIS AGREEMENT SHALL
AUTOMATICALLY TERMINATE, AND THE PROVISIONS OF [***] THE PRODUCT DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT BETWEEN THE PARTIES OF EVEN DATE HEREWITH SHALL
APPLY.

 

5.7          Third Party Licenses.  Subject to Section 5.6.2, GSK shall be
solely responsible for obtaining any licenses from Third Parties that GSK
determines, in its sole discretion, are required in order to lawfully develop,
manufacture, and commercialize SPC-3649 in the Field for patents (i) not
included within the license grants to GSK as set forth in Section 3.1 of this
Agreement and/or (ii) not included within Regulus Patents.

 

5.8          MINIMUM ROYALTY PAYMENT.  NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT, AT A MINIMUM, GSK WILL PAY REGULUS A MINIMUM ROYALTY ON NET
SALES OF SPC-3649 PRODUCT BY GSK, ITS AFFILIATES OR SUBLICENSEES EQUAL TO
(A) THE TOTAL PASS THROUGH COSTS THAT ARE ROYALTY OBLIGATIONS REGULUS MUST PAY
UNDER [***]; AND (B) ANY ROYALTY PAYMENTS GSK AGREES TO PAY UNDER SECTION 2.1
AND/OR SECTION 5.6.2.

 

5.9          PAYMENTS.

 

5.9.1       COMMENCEMENT.  BEGINNING WITH THE CALENDAR QUARTER IN WHICH THE
FIRST COMMERCIAL SALE OF AN SPC-3649 PRODUCT IS MADE AND FOR EACH CALENDAR
QUARTER THEREAFTER, ROYALTY PAYMENTS SHALL BE MADE BY GSK TO REGULUS UNDER THIS
AGREEMENT WITHIN FORTY-FIVE (45) DAYS FOLLOWING THE END OF EACH SUCH CALENDAR
QUARTER.  EACH ROYALTY PAYMENT SHALL BE ACCOMPANIED BY A REPORT, SUMMARIZING NET
SALES FOR EACH SPC-3649 PRODUCT DURING THE RELEVANT CALENDAR QUARTER AND THE
CALCULATION OF ROYALTIES (INCLUDING THE DETAILS OF ANY ADJUSTMENTS OR CREDITS
PERMITTED UNDER THIS AGREEMENT), IF ANY, DUE THEREON.  NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THAT NO ROYALTIES ARE PAYABLE IN RESPECT OF A GIVEN
CALENDAR QUARTER, THE PAYOR SHALL SUBMIT A ROYALTY REPORT SO INDICATING.

 

5.9.2       MODE OF PAYMENT.  ALL PAYMENTS UNDER THIS AGREEMENT SHALL BE
PAYABLE, IN FULL, IN U.S. DOLLARS, REGARDLESS OF THE COUNTRY(IES) IN WHICH SALES
ARE MADE.  FOR THE PURPOSES OF COMPUTING NET SALES OF SPC-3649 PRODUCT SOLD IN A
CURRENCY OTHER THAN U.S. DOLLARS, SUCH

 

9

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currency shall be converted into U.S. Dollars as calculated at the actual
average rates of exchange for the pertinent quarter or year to date, as the case
may be, as reasonably used by the Payor in producing its quarterly and annual
accounts.  Such payments shall be without deduction of exchange, collection or
other charges.

 

5.9.3       RECORDS RETENTION.  COMMENCING WITH THE FIRST COMMERCIAL SALE OF
SPC-3649 PRODUCT, THE PAYOR SHALL KEEP COMPLETE AND ACCURATE RECORDS PERTAINING
TO THE SALE OF SPC-3649 PRODUCT, FOR A PERIOD OF THREE (3) CALENDAR YEARS AFTER
THE YEAR IN WHICH SUCH SALES OCCURRED, AND IN SUFFICIENT DETAIL TO PERMIT THE
PAYEE TO CONFIRM THE ACCURACY OF THE NET SALES OR ROYALTIES PAID BY THE PAYOR
HEREUNDER.

 

5.10        AUDITS.  DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF THREE
(3) YEARS THEREAFTER, AT THE REQUEST AND EXPENSE OF THE PAYEE, THE PAYOR SHALL
PERMIT AN INDEPENDENT, CERTIFIED PUBLIC ACCOUNTANT OF NATIONALLY RECOGNIZED
STANDING APPOINTED BY THE PAYEE, AND REASONABLY ACCEPTABLE TO THE PAYOR, AT
REASONABLE TIMES AND UPON REASONABLE NOTICE, BUT IN NO CASE MORE THAN ONCE PER
CALENDAR YEAR THEREAFTER, TO EXAMINE SUCH RECORDS AS MAY BE NECESSARY FOR THE
SOLE PURPOSE OF VERIFYING THE CALCULATION AND REPORTING OF NET SALES AND THE
CORRECTNESS OF ANY ROYALTY PAYMENT AND ANNUAL WORLDWIDE NET SALES PAYMENTS MADE
UNDER THIS AGREEMENT FOR ANY PERIOD WITHIN THE PRECEDING THREE (3) YEARS.  THE
INDEPENDENT, CERTIFIED PUBLIC ACCOUNTANT SHALL DISCLOSE TO THE PAYEE ONLY THE
ROYALTY AMOUNTS WHICH THE INDEPENDENT AUDITOR BELIEVES TO BE DUE AND PAYABLE
HEREUNDER TO THE PAYEE AND SHALL DISCLOSE NO OTHER INFORMATION REVEALED IN SUCH
AUDIT.  GSK SHALL ALSO HAVE THE RIGHT TO HAVE AUDITED, IN ACCORDANCE WITH THIS
SECTION 5.10, THE RELEVANT BOOKS AND RECORDS OF REGULUS AS MAY BE NECESSARY FOR
THE SOLE PURPOSE OF VERIFYING THE AMOUNT OF THIRD PARTY LICENSE PASS-THROUGH
COSTS OR TOTAL LICENSE PASS-THROUGH COSTS ACTUALLY BEING PAID BY REGULUS.  ANY
AND ALL RECORDS OF THE AUDITED PARTY EXAMINED BY SUCH INDEPENDENT ACCOUNTANT
SHALL BE DEEMED SUCH AUDITED PARTY’S CONFIDENTIAL INFORMATION WHICH MAY NOT BE
DISCLOSED BY SAID INDEPENDENT, CERTIFIED PUBLIC ACCOUNTANT TO ANY THIRD PARTY OR
(EXCEPT FOR THE INFORMATION EXPRESSLY SOUGHT TO BE CONFIRMED BY THE AUDITING
PARTY AS SET FORTH IN THIS SECTION 5.5) TO THE AUDITING PARTY.  IF, AS A RESULT
OF ANY INSPECTION OF THE BOOKS AND RECORDS OF THE AUDITED PARTY, IT IS SHOWN
THAT (X) THE AUDITED PARTY’S PAYMENTS UNDER THIS AGREEMENT WERE LESS THAN THE
ROYALTY AMOUNT WHICH SHOULD HAVE BEEN PAID, THEN SUCH AUDITED PARTY SHALL MAKE
ALL PAYMENTS REQUIRED TO BE MADE, OR (Y) THE AMOUNT PAID TO THIRD PARTIES BY THE
AUDITED PARTY AS PASS-THROUGH COSTS IS LESS THAN THE AMOUNT FOR WHICH
REIMBURSEMENT WAS REQUESTED FROM THE AUDITING PARTY TO COVER SUCH PASS-THROUGH
COSTS, THEN THE AUDITED PARTY SHALL PAY THE AUDITING PARTY THE DIFFERENCE
BETWEEN SUCH AMOUNTS, TO ELIMINATE ANY DISCREPANCY REVEALED BY SAID INSPECTION,
WITHIN SIXTY (60) DAYS AND SHALL BE ENTITLED TO A CREDIT WITH RESPECT TO ANY
OVERPAYMENT MADE BY SUCH AUDITED PARTY.  THE AUDITING PARTY SHALL PAY FOR SUCH
AUDITS, EXCEPT

 

10

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THAT IN THE EVENT THAT THE ROYALTY PAYMENTS AND/OR THE AMOUNT OF PASS-THROUGH
COSTS MADE BY THE AUDITED PARTY WERE LESS THAN NINETY PERCENT (90%) OF THE
UNDISPUTED AMOUNTS (OR THE AMOUNT REQUESTED TO BE REIMBURSED BY THE AUDITING
PARTY, WITH RESPECT TO PASS-THROUGH COSTS) THAT SHOULD HAVE BEEN PAID DURING THE
PERIOD IN QUESTION, THE AUDITED PARTY SHALL PAY THE REASONABLE COSTS OF THE
AUDIT.

 

5.11        TAXES.

 

5.11.1     SALES OR OTHER TRANSFERS.  THE RECIPIENT OF ANY TRANSFER UNDER THIS
AGREEMENT OF REGULUS PATENTS, GSK TECHNOLOGY, AND/OR CONFIDENTIAL INFORMATION,
AS THE CASE MAY BE, SHALL BE SOLELY RESPONSIBLE FOR ANY SALES, USE, VALUE ADDED,
EXCISE OR OTHER TAXES APPLICABLE TO SUCH TRANSFER.

 

5.11.2     WITHHOLDING TAX.  THE PARTIES ACKNOWLEDGE AND AGREE THAT, UNDER
APPLICABLE LAWS IN EFFECT AS OF THE EFFECTIVE DATE, GSK SHALL NOT BE REQUIRED TO
WITHHOLD ANY TAXES FROM THE WITHHOLDING-FREE PAYMENTS PAYABLE TO REGULUS UNDER
THIS AGREEMENT.  CONSEQUENTLY, GSK AGREES NOT TO WITHHOLD ANY TAXES FROM PAYMENT
OF THE WITHHOLDING-FREE PAYMENTS HEREUNDER.  ANY TAX PAID OR REQUIRED TO BE
WITHHELD BY GSK FOR THE BENEFIT OF REGULUS ON ACCOUNT OF ANY ROYALTIES OR OTHER
PAYMENTS (OTHER THAN THE WITHHOLDING-FREE PAYMENTS) PAYABLE TO REGULUS UNDER
THIS AGREEMENT SHALL BE DEDUCTED FROM THE AMOUNT OF ROYALTIES OR OTHER PAYMENTS
OTHERWISE DUE.  GSK SHALL SECURE AND SEND TO REGULUS PROOF OF ANY SUCH TAXES
WITHHELD AND PAID BY GSK FOR THE BENEFIT OF REGULUS, AND SHALL, AT REGULUS’
REQUEST, PROVIDE REASONABLE ASSISTANCE TO REGULUS IN RECOVERING SUCH TAXES.
REGULUS WARRANTS THAT REGULUS IS A DELAWARE CORPORATION AS OF THE EFFECTIVE DATE
AND, PRIOR TO THE PAYMENT OF ROYALTIES BY GSK HEREUNDER, SHALL BE A RESIDENT FOR
TAX PURPOSES IN THE US AND THAT, AS OF SUCH TIME, REGULUS SHALL BE ENTITLED TO
RELIEF FROM UNITED KINGDOM INCOME TAX UNDER THE TERMS OF THE DOUBLE TAX
AGREEMENT BETWEEN THE UK AND THE US.  REGULUS SHALL NOTIFY GSK IMMEDIATELY IN
WRITING IN THE EVENT THAT REGULUS CEASES TO BE ENTITLED TO SUCH RELIEF. PENDING
RECEIPT OF FORMAL CERTIFICATION FROM THE UK INLAND REVENUE, GSK MAY PAY ROYALTY
INCOME AND ANY OTHER PAYMENTS (OTHER THAN THE WITHHOLDING-FREE PAYMENTS) UNDER
THIS AGREEMENT TO REGULUS BY DEDUCTING TAX AT THE APPLICABLE RATE SPECIFIED IN
THE DOUBLE TAX TREATY BETWEEN THE UK AND US.  REGULUS AGREES TO INDEMNIFY AND
HOLD HARMLESS GSK AGAINST ANY LOSS, DAMAGE, EXPENSE OR LIABILITY ARISING IN ANY
WAY FROM A BREACH OF THE ABOVE WARRANTIES OR ANY FUTURE CLAIM BY A UK TAX
AUTHORITY OR OTHER SIMILAR BODY ALLEGING THAT GSK WAS NOT ENTITLED TO DEDUCT
WITHHOLDING TAX ON SUCH PAYMENTS AT SOURCE AT THE TREATY RATE, EXCEPT THAT
REGULUS’ INDEMNIFICATION OBLIGATION UNDER THIS SECTION 5.11.2 SHALL NOT APPLY TO
GSK’S PAYMENT OF THE WITHHOLDING-FREE PAYMENTS.  REGULUS SHALL TIMELY COMPLETE
ALL US AND UK TAX FORMS AS REASONABLY REQUESTED BY GSK WITH RESPECT TO TAXES
WITHHELD PURSUANT TO THIS SECTION 5.11.2.  NOTWITHSTANDING THE FOREGOING, IF UK
TAX LAW

 

11

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CHANGES AFTER THE EFFECTIVE DATE AND GSK HAS A GOOD FAITH BELIEF  THAT SUCH
CHANGE REQUIRES GSK TO WITHHOLD TAXES FROM ANY WITHHOLDING-FREE PAYMENT, THEN
GSK WILL FIRST NOTIFY REGULUS IN WRITING THEREOF, AND GSK MAY WITHHOLD TAXES
FROM THE WITHHOLDING-FREE PAYMENTS THAT GSK REASONABLY BELIEVES IS NECESSARY TO
COMPLY WITH THE NEW UK TAX LAW, CONSISTENTLY APPLIED BY GSK TO SIMILARLY
SITUATED LICENSING ARRANGEMENTS.

 

ARTICLE 6
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT PROSECUTION

 

6.1          OWNERSHIP.  THE DETERMINATION OF INVENTORSHIP SHALL BE MADE IN
ACCORDANCE WITH UNITED STATES PATENT LAWS.

 

6.2          PROSECUTION AND MAINTENANCE OF PATENTS.

 

6.2.1       REGULUS PATENTS.  AT REGULUS’ EXPENSE, REGULUS SHALL (BUT SHALL NOT
BE OBLIGATED TO) CONTROL AND BE RESPONSIBLE FOR ALL ASPECTS OF THE PROSECUTION,
MAINTENANCE, ENFORCEMENT AND DEFENSE OF ALL REGULUS PATENTS.

 

6.2.2       DUTY TO NOTIFY OF COMPETITIVE INFRINGEMENT.  IF EITHER PARTY LEARNS
OF AN INFRINGEMENT, UNAUTHORIZED USE, MISAPPROPRIATION OR THREATENED
INFRINGEMENT BY A THIRD PARTY WITH RESPECT TO ANY REGULUS PATENT IN THE FIELD,
BY REASON OF THE DEVELOPMENT, MANUFACTURE, USE OR COMMERCIALIZATION IN THE FIELD
OF A PRODUCT THAT CONTAINS OR CONSISTS OF A MIRNA COMPOUND AS AN ACTIVE
INGREDIENT THAT IS SUBSTANTIALLY IDENTICAL IN STRUCTURE, SEQUENCE OR COMPOSITION
TO SPC-3649 (“COMPETITIVE INFRINGEMENT”), SUCH PARTY SHALL PROMPTLY NOTIFY THE
OTHER PARTY AND SHALL PROVIDE SUCH OTHER PARTY WITH AVAILABLE EVIDENCE OF SUCH
COMPETITIVE INFRINGEMENT.

 

6.3          [***]

 

ARTICLE 7
CONFIDENTIALITY

 

7.1          CONFIDENTIALITY; EXCEPTIONS.  EXCEPT TO THE EXTENT EXPRESSLY
AUTHORIZED BY THIS AGREEMENT OR OTHERWISE AGREED IN WRITING, THE PARTIES AGREE
THAT, DURING THE AGREEMENT TERM AND FOR FIVE (5) YEARS THEREAFTER, THE RECEIVING
PARTY (THE “RECEIVING PARTY”), ITS AFFILIATES AND, WITH RESPECT TO REGULUS, ITS
FOUNDING COMPANIES, SHALL KEEP CONFIDENTIAL AND SHALL NOT PUBLISH OR OTHERWISE
DISCLOSE OR USE FOR ANY PURPOSE OTHER THAN AS PROVIDED FOR IN THIS AGREEMENT ANY
KNOW-HOW OR OTHER CONFIDENTIAL AND PROPRIETARY INFORMATION AND MATERIALS,
PATENTABLE OR OTHERWISE, IN ANY FORM (WRITTEN, ORAL, PHOTOGRAPHIC, ELECTRONIC,
MAGNETIC, OR OTHERWISE) WHICH IS DISCLOSED TO IT BY THE OTHER PARTY (THE
“DISCLOSING PARTY”), ITS AFFILIATES OR, WITH RESPECT TO REGULUS, ITS FOUNDING
COMPANIES OR OTHERWISE RECEIVED OR ACCESSED BY A RECEIVING PARTY IN THE COURSE
OF PERFORMING ITS OBLIGATIONS OR EXERCISING ITS RIGHTS UNDER THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO TRADE SECRETS, KNOW-HOW, INVENTIONS OR
DISCOVERIES, PROPRIETARY INFORMATION,

 

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FORMULAE, PROCESSES, TECHNIQUES AND INFORMATION RELATING TO THE PAST, PRESENT
AND FUTURE MARKETING, FINANCIAL, AND RESEARCH AND DEVELOPMENT ACTIVITIES OF ANY
PRODUCT OR POTENTIAL PRODUCT OR USEFUL TECHNOLOGY OF THE DISCLOSING PARTY, ITS
AFFILIATES OR FOUNDING COMPANIES AND THE PRICING THEREOF (COLLECTIVELY,
“CONFIDENTIAL INFORMATION”), EXCEPT TO THE EXTENT THAT IT CAN BE ESTABLISHED BY
THE RECEIVING PARTY THAT SUCH CONFIDENTIAL INFORMATION:

 

7.1.1       WAS IN THE LAWFUL KNOWLEDGE AND POSSESSION OF THE RECEIVING PARTY,
ITS AFFILIATES OR FOUNDING COMPANIES PRIOR TO THE TIME IT WAS DISCLOSED TO, OR
LEARNED BY, THE RECEIVING PARTY, ITS AFFILIATES OR FOUNDING COMPANIES, OR WAS
OTHERWISE DEVELOPED INDEPENDENTLY BY THE RECEIVING PARTY, ITS AFFILIATES OR
FOUNDING COMPANIES, AS EVIDENCED BY WRITTEN RECORDS KEPT IN THE ORDINARY COURSE
OF BUSINESS, OR OTHER DOCUMENTARY PROOF OF ACTUAL USE BY THE RECEIVING PARTY,
ITS AFFILIATES OR FOUNDING COMPANIES;

 

7.1.2       WAS GENERALLY AVAILABLE TO THE PUBLIC OR OTHERWISE PART OF THE
PUBLIC DOMAIN AT THE TIME OF ITS DISCLOSURE TO THE RECEIVING PARTY, ITS
AFFILIATES OR FOUNDING COMPANIES;

 

7.1.3       BECAME GENERALLY AVAILABLE TO THE PUBLIC OR OTHERWISE PART OF THE
PUBLIC DOMAIN AFTER ITS DISCLOSURE AND OTHER THAN THROUGH ANY ACT OR OMISSION OF
THE RECEIVING PARTY, ITS AFFILIATES OR FOUNDING COMPANIES IN BREACH OF THIS
AGREEMENT; OR

 

7.1.4       WAS DISCLOSED TO THE RECEIVING PARTY, ITS AFFILIATES OR FOUNDING
COMPANIES, OTHER THAN UNDER AN OBLIGATION OF CONFIDENTIALITY, BY A THIRD PARTY
WHO HAD NO OBLIGATION TO THE DISCLOSING PARTY, ITS AFFILIATES OR FOUNDING
COMPANIES NOT TO DISCLOSE SUCH INFORMATION TO OTHERS.

 

7.2          AUTHORIZED DISCLOSURE.  EXCEPT AS EXPRESSLY PROVIDED OTHERWISE IN
THIS AGREEMENT, A RECEIVING PARTY OR ITS AFFILIATES MAY USE AND DISCLOSE, TO
THIRD PARTIES OR THE FOUNDING COMPANIES, CONFIDENTIAL INFORMATION OF THE
DISCLOSING PARTY AS FOLLOWS: (I)  WITH RESPECT TO ANY SUCH DISCLOSURE OF
CONFIDENTIAL INFORMATION, UNDER CONFIDENTIALITY PROVISIONS NO LESS RESTRICTIVE
THAN THOSE IN THIS AGREEMENT, AND SOLELY IN CONNECTION WITH THE PERFORMANCE OF
ITS OBLIGATIONS OR EXERCISE OF RIGHTS GRANTED OR RESERVED IN THIS AGREEMENT
(INCLUDING, WITHOUT LIMITATION, THE RIGHTS TO DEVELOP AND COMMERCIALIZE
SPC-3649, AND TO GRANT LICENSES AND SUBLICENSES HEREUNDER), PROVIDED, THAT
CONFIDENTIAL INFORMATION MAY BE DISCLOSED BY A RECEIVING PARTY TO A GOVERNMENTAL
ENTITY OR AGENCY WITHOUT REQUIRING SUCH ENTITY OR AGENCY TO ENTER INTO A
CONFIDENTIALITY AGREEMENT WITH SUCH RECEIVING PARTY IF SUCH RECEIVING PARTY HAS
USED REASONABLE EFFORTS TO IMPOSE SUCH REQUIREMENT WITHOUT SUCCESS AND
DISCLOSURE TO SUCH GOVERNMENTAL ENTITY OR AGENCY IS NECESSARY FOR THE
PERFORMANCE OF THE RECEIVING PARTY’S OBLIGATIONS HEREUNDER; (II) TO THE EXTENT
SUCH DISCLOSURE IS REASONABLY NECESSARY IN FILING OR PROSECUTING PATENT,
COPYRIGHT AND TRADEMARK APPLICATIONS, COMPLYING WITH APPLICABLE GOVERNMENTAL
REGULATIONS, OBTAINING

 

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REGULATORY APPROVALS, CONDUCTING PRE-CLINICAL STUDIES OR CLINICAL STUDIES,
MARKETING SPC-3649, OR AS OTHERWISE REQUIRED BY APPLICABLE LAW, REGULATION,
RULE OR LEGAL PROCESS (INCLUDING THE RULES OF THE SEC AND ANY STOCK EXCHANGE);
PROVIDED, HOWEVER, THAT IF A RECEIVING PARTY OR ANY OF ITS AFFILIATES OR
FOUNDING COMPANIES IS REQUIRED BY LAW OR REGULATION (INCLUDING THE RULES OF THE
SEC AND ANY STOCK EXCHANGE) TO MAKE ANY SUCH DISCLOSURE OF A DISCLOSING PARTY’S
CONFIDENTIAL INFORMATION IT WILL, EXCEPT WHERE IMPRACTICABLE FOR NECESSARY
DISCLOSURES, FOR EXAMPLE, BUT WITHOUT LIMITATION, IN THE EVENT OF MEDICAL
EMERGENCY, GIVE REASONABLE ADVANCE NOTICE TO THE DISCLOSING PARTY OF SUCH
DISCLOSURE REQUIREMENT AND WILL USE ITS REASONABLE EFFORTS TO SECURE
CONFIDENTIAL TREATMENT OF SUCH CONFIDENTIAL INFORMATION REQUIRED TO BE
DISCLOSED; (III) IN COMMUNICATION WITH ACTUAL OR POTENTIAL INVESTORS, MERGER
PARTNERS, ACQUIRERS, CONSULTANTS, OR PROFESSIONAL ADVISORS ON A NEED TO KNOW
BASIS, IN EACH CASE UNDER CONFIDENTIALITY PROVISIONS NO LESS RESTRICTIVE THAN
THOSE OF THIS AGREEMENT; (IV) IN COMMUNICATION WITH ACTUAL OR POTENTIAL
LICENSEES OUTSIDE THE FIELD ON A NEED TO KNOW BASIS, IN EACH CASE UNDER
CONFIDENTIALITY PROVISIONS NO LESS RESTRICTIVE THAN THOSE OF THIS AGREEMENT AND
SUCH CONFIDENTIAL INFORMATION MAY BE REDACTED TO EXCLUDE CONFIDENTIAL SCIENTIFIC
INFORMATION, THE NAME OF THE DISCLOSING PARTY AND OTHER SENSITIVE INFORMATION
REASONABLY REQUIRED BY THE DISCLOSING PARTY TO BE KEPT CONFIDENTIAL; (V) TO THE
EXTENT AND ONLY TO THE EXTENT THAT SUCH DISCLOSURE IS REQUIRED TO COMPLY WITH
EXISTING EXPRESSLY STATED CONTRACTUAL OBLIGATIONS OWED TO SUCH PARTY’S, ITS
AFFILIATE’S OR FOUNDING COMPANY’S LICENSOR WITH RESPECT TO ANY INTELLECTUAL
PROPERTY LICENSED UNDER THIS AGREEMENT; OR (VI) TO THE EXTENT MUTUALLY AGREED TO
IN WRITING BY THE PARTIES.  IF A FOUNDING COMPANY RECEIVES GSK’S CONFIDENTIAL
INFORMATION AS PERMITTED PURSUANT TO THIS SECTION 7.2, SUCH FOUNDING COMPANY MAY
ONLY USE AND DISCLOSE GSK’S CONFIDENTIAL INFORMATION SOLELY IN ACCORDANCE WITH
THIS SECTION 7.2 UNDER CONFIDENTIALITY PROVISIONS NO LESS RESTRICTIVE THAN THOSE
IN THIS AGREEMENT AND SOLELY AS AND TO THE EXTENT REQUIRED (X) BY LAW, COURT
ORDER OR AN EXISTING EXPRESSLY STATED CONTRACTUAL REQUIREMENT OF A LICENSOR TO
REGULUS PATENTS, OR (Y) FOR SUCH FOUNDING COMPANY TO PERFORM ITS RIGHTS OR
OBLIGATIONS IN CONNECTION WITH THIS AGREEMENT.

 

7.3          PRESS RELEASE; DISCLOSURE OF AGREEMENT.  ON OR PROMPTLY AFTER THE
EFFECTIVE DATE, THE PARTIES SHALL INDIVIDUALLY OR JOINTLY ISSUE A PUBLIC
ANNOUNCEMENT OF THE EXECUTION OF THIS AGREEMENT IN FORM AND SUBSTANCE
SUBSTANTIALLY AS SET FORTH ON EXHIBIT D.  EXCEPT TO THE EXTENT REQUIRED TO
COMPLY WITH APPLICABLE LAW, REGULATION, RULE OR LEGAL PROCESS OR AS OTHERWISE
PERMITTED IN ACCORDANCE WITH THIS SECTION 7.3, NEITHER PARTY NOR SUCH PARTY’S
AFFILIATES OR FOUNDING COMPANIES SHALL MAKE ANY PUBLIC ANNOUNCEMENTS, PRESS
RELEASES OR OTHER PUBLIC DISCLOSURES CONCERNING THIS AGREEMENT OR THE TERMS OR
THE SUBJECT MATTER HEREOF OR THEREOF, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
OTHER, WHICH SHALL NOT BE UNREASONABLY WITHHELD.  NOTWITHSTANDING THE FOREGOING,
(A) GSK AND ITS AFFILIATES MAY MAKE DISCLOSURES PERTAINING

 

14

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SOLELY TO SPC-3649, PROVIDED, HOWEVER, THAT GSK WILL IMMEDIATELY NOTIFY (AND
PROVIDE AS MUCH ADVANCE NOTICE AS POSSIBLE TO) REGULUS OF ANY EVENT MATERIALLY
RELATED TO SPC-3649 (INCLUDING ANY REGULATORY APPROVAL) SO THAT THE PARTIES MAY
ANALYZE THE NEED FOR OR DESIRABILITY OF PUBLICLY DISCLOSING OR REPORTING SUCH
EVENT; PROVIDED ANY PRESS RELEASE OR OTHER SIMILAR PUBLIC COMMUNICATION BY GSK
RELATED TO EFFICACY OR SAFETY DATA AND/OR RESULTS OF SPC-3649 WILL BE SUBMITTED
TO REGULUS FOR REVIEW AT LEAST FIVE (5) BUSINESS DAYS (TO THE EXTENT PERMITTED
BY LAW) IN ADVANCE OF SUCH PROPOSED PUBLIC DISCLOSURE, REGULUS SHALL HAVE THE
RIGHT TO EXPEDITIOUSLY REVIEW AND RECOMMEND CHANGES TO SUCH COMMUNICATION AND
THE PARTY WHOSE COMMUNICATION HAS BEEN REVIEWED SHALL IN GOOD FAITH CONSIDER ANY
CHANGES THAT ARE TIMELY RECOMMENDED BY THE REVIEWING PARTIES AND (B) TO THE
EXTENT INFORMATION REGARDING THIS AGREEMENT HAS ALREADY BEEN PUBLICLY DISCLOSED,
EITHER PARTY (OR ITS AFFILIATES OR THE FOUNDING COMPANIES) MAY SUBSEQUENTLY
DISCLOSE THE SAME INFORMATION TO THE PUBLIC WITHOUT THE CONSENT OF THE OTHER
PARTY.  IN ADDITION, GSK UNDERSTANDS THAT REGULUS IS A PRIVATE COMPANY, AND THAT
REGULUS MAY DISCLOSE THE FINANCIAL TERMS OF THIS AGREEMENT TO POTENTIAL,
INVESTORS AND INVESTMENT BANKERS, IN EACH CASE, UNDER CONFIDENTIALITY PROVISIONS
SIMILAR TO AND NO LESS RESTRICTIVE THAN THOSE OF THIS AGREEMENT.  EACH PARTY
SHALL GIVE THE OTHER PARTY A REASONABLE OPPORTUNITY (TO THE EXTENT CONSISTENT
WITH LAW) TO REVIEW ALL MATERIAL FILINGS WITH THE SEC DESCRIBING THE TERMS OF
THIS AGREEMENT PRIOR TO SUBMISSION OF SUCH FILINGS, AND SHALL GIVE DUE
CONSIDERATION TO ANY REASONABLE COMMENTS BY THE NON-FILING PARTY RELATING TO
SUCH FILING, INCLUDING WITHOUT LIMITATION THE PROVISIONS OF THIS AGREEMENT FOR
WHICH CONFIDENTIAL TREATMENT SHOULD BE SOUGHT.

 

7.4          REMEDIES.  NOTWITHSTANDING SECTION 11.1, EACH PARTY SHALL BE
ENTITLED TO SEEK, IN ADDITION TO ANY OTHER RIGHT OR REMEDY IT MAY HAVE, AT LAW
OR IN EQUITY, A TEMPORARY INJUNCTION, WITHOUT THE POSTING OF ANY BOND OR OTHER
SECURITY, ENJOINING OR RESTRAINING THE OTHER PARTY FROM ANY VIOLATION OR
THREATENED VIOLATION OF THIS ARTICLE 7.

 

ARTICLE 8
REPRESENTATIONS AND WARRANTIES

 

8.1          REPRESENTATIONS AND WARRANTIES OF BOTH PARTIES.  EACH PARTY HEREBY
REPRESENTS AND WARRANTS TO THE OTHER PARTY, AS OF THE EFFECTIVE DATE, THAT:

 

8.1.1       SUCH PARTY IS DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING
UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR ORGANIZATION AND HAS
FULL CORPORATE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO CARRY OUT
THE PROVISIONS HEREOF;

 

8.1.2       SUCH PARTY HAS TAKEN ALL NECESSARY ACTION ON ITS PART TO AUTHORIZE
THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE PERFORMANCE OF ITS
OBLIGATIONS HEREUNDER;

 

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8.1.3       THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED ON BEHALF OF
SUCH PARTY, AND CONSTITUTES A LEGAL, VALID, BINDING OBLIGATION, ENFORCEABLE
AGAINST IT IN ACCORDANCE WITH THE TERMS HEREOF;

 

8.1.4       THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT BY SUCH
PARTY WILL NOT CONSTITUTE A DEFAULT UNDER NOR CONFLICT WITH ANY AGREEMENT,
INSTRUMENT OR UNDERSTANDING, ORAL OR WRITTEN, TO WHICH IT IS A PARTY OR BY WHICH
IT IS BOUND, NOR VIOLATE ANY LAW OR REGULATION OF ANY COURT, GOVERNMENTAL BODY
OR ADMINISTRATIVE OR OTHER AGENCY HAVING JURISDICTION OVER SUCH PARTY; AND

 

8.1.5       NO GOVERNMENT AUTHORIZATION, CONSENT, APPROVAL, LICENSE, EXEMPTION
OF OR FILING OR REGISTRATION WITH ANY COURT OR GOVERNMENTAL DEPARTMENT,
COMMISSION, BOARD, BUREAU, AGENCY OR INSTRUMENTALITY, DOMESTIC OR FOREIGN, UNDER
ANY APPLICABLE LAWS, RULES OR REGULATIONS CURRENTLY IN EFFECT, IS OR WILL BE
NECESSARY FOR, OR IN CONNECTION WITH, THE TRANSACTION CONTEMPLATED BY THIS
AGREEMENT OR ANY OTHER AGREEMENT OR INSTRUMENT EXECUTED IN CONNECTION HEREWITH,
OR FOR THE PERFORMANCE BY IT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND SUCH
OTHER AGREEMENTS EXCEPT AS MAY BE REQUIRED TO OBTAIN HSR CLEARANCE.

 

8.2          REPRESENTATIONS AND WARRANTIES OF REGULUS.  REGULUS HEREBY
REPRESENTS AND WARRANTS TO GSK, AS OF THE EFFECTIVE DATE, THAT:

 

8.2.1       REGULUS IS THE OWNER OF, OR OTHERWISE HAS THE RIGHT TO GRANT ALL
RIGHTS AND LICENSES IT PURPORTS TO GRANT TO GSK WITH RESPECT TO THE REGULUS
PATENTS UNDER THIS AGREEMENT;

 

8.2.2       TO THE BEST OF ITS KNOWLEDGE AND BELIEF, WITHOUT HAVING CONDUCTED
ANY SPECIAL INQUIRY, REGULUS IS NOT AWARE OF ANY OTHER INTELLECTUAL PROPERTY
RIGHTS OWNED OR CONTROLLED BY REGULUS OR ANY OF ITS FOUNDING COMPANIES THAT ARE
NECESSARY FOR GSK TO DEVELOP, MANUFACTURE, OR COMMERCIALIZE SPC-3649 IN THE
FIELD; AND

 

8.2.3       TO THE BEST OF ITS KNOWLEDGE AND BELIEF, WITHOUT HAVING CONDUCTED
ANY SPECIAL INQUIRY, NO WRITTEN CLAIMS HAVE BEEN MADE AGAINST REGULUS OR ITS
FOUNDING COMPANIES ALLEGING THAT ANY OF THE REGULUS PATENTS ARE INVALID OR
UNENFORCEABLE OR INFRINGE ANY INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.

 

8.3          REGULUS COVENANTS.  REGULUS HEREBY COVENANTS TO GSK, THAT:

 

8.3.1       [INTENTIONALLY LEFT BLANK]; AND

 

8.3.2       WITH RESPECT TO THE RIGHTS TO REGULUS PATENTS EXISTING AS OF THE
EFFECTIVE DATE, REGULUS WILL NOT ENTER INTO ANY AGREEMENT AFTER THE EFFECTIVE
DATE WITH A FOUNDING COMPANY OR A THIRD PARTY THAT WOULD RESTRICT OR LIMIT
(I) THE LICENSES GRANTED BY REGULUS TO GSK UNDER SECTION 3.1 ABOVE, OR (II) THE
OPTIONS GRANTED BY REGULUS TO GSK UNDER SECTION 2.1.  FOR PURPOSES OF
CLARIFICATION, THIS SECTION 8.3.2 WILL NOT RESTRICT REGULUS’ ABILITY TO
PROSECUTE AND MAINTAIN THE REGULUS PATENT RIGHTS IN ACCORDANCE WITH SECTION 6.2.

 

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8.4          GSK COVENANTS.  GSK HEREBY COVENANTS TO REGULUS THAT:

 

8.4.1       GSK SHALL NOTIFY REGULUS IN WRITING WITHIN TEN (10) BUSINESS DAYS OF
THE DATE THAT GSK OR ITS AFFILIATE ACQUIRES FROM SANTARIS OR ONE OF SANTARIS’
AFFILIATES THE SPC-3649 RIGHTS; AND

 

8.4.2       IF GSK OR ITS AFFILIATE ACQUIRES FROM SANTARIS OR ONE OF SANTARIS’
AFFILIATES A LICENSE TO DEVELOP AND/OR COMMERCIALIZE SPC-3649, REGULUS AND GSK
WILL JOINTLY PREPARE A RESEARCH PLAN FOR SPC-3649; PROVIDED, THAT (I) GSK SHALL
NOT BE REQUIRED TO SHARE WITH REGULUS OR ANY FOUNDING COMPANY ANY CONFIDENTIAL
INFORMATION IF DOING SO WOULD RESULT IN A BREACH OF AN AGREEMENT BETWEEN GSK AND
SANTARIS; AND (II) GSK WILL HAVE THE SOLE DECISION MAKING AUTHORITY WITH RESPECT
TO SUCH RESEARCH PLAN.

 

8.5          DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY NOR ITS AFFILIATES OR PARENT COMPANIES MAKES ANY
REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, OR ANY WARRANTY THAT ANY PATENT RIGHTS LICENSED TO THE OTHER
PARTY HEREUNDER ARE VALID OR ENFORCEABLE OR THAT THEIR EXERCISE DOES NOT
INFRINGE OR MISAPPROPRIATE ANY PATENT RIGHTS OR OTHER INTELLECTUAL PROPERTY
RIGHTS OF THIRD PARTIES.  GSK UNDERSTANDS THAT SPC-3649 IS THE SUBJECT OF
ONGOING CLINICAL RESEARCH AND DEVELOPMENT AND THAT REGULUS CANNOT ASSURE THE
SAFETY, USEFULNESS OR COMMERCIAL OR TECHNICAL VIABILITY OF SUCH COMPOUNDS.

 

ARTICLE 9
INDEMNIFICATION; INSURANCE

 

9.1          INDEMNIFICATION BY GSK.  SUBJECT TO THIS ARTICLE 9, GSK SHALL
INDEMNIFY, DEFEND AND HOLD HARMLESS REGULUS, AND ITS AFFILIATES AND FOUNDING
COMPANIES, AND ITS OR THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS, FROM AND AGAINST ANY AND ALL LIABILITIES, DAMAGES, LOSSES, COSTS AND
EXPENSES INCLUDING, BUT NOT LIMITED TO, THE REASONABLE FEES OF ATTORNEYS AND
OTHER PROFESSIONALS (COLLECTIVELY “LOSSES”), ARISING OUT OF OR RESULTING FROM
ANY AND ALL THIRD PARTY SUITS, CLAIMS, ACTIONS, PROCEEDINGS OR DEMANDS
(“CLAIMS”) BASED UPON:

 

9.1.1       THE NEGLIGENCE, RECKLESSNESS OR WRONGFUL INTENTIONAL ACTS OR
OMISSIONS OF GSK AND/OR ITS AFFILIATES AND ITS OR THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS, IN CONNECTION WITH GSK’S PERFORMANCE OF ITS
OBLIGATIONS OR EXERCISE OF ITS RIGHTS UNDER THIS AGREEMENT;

 

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9.1.2       ANY BREACH OF ANY REPRESENTATION OR WARRANTY OR EXPRESS COVENANT
MADE BY GSK UNDER ARTICLE 8 OR ANY OTHER PROVISION UNDER THIS AGREEMENT;

 

9.1.3       THE DEVELOPMENT OR MANUFACTURING ACTIVITIES THAT ARE CONDUCTED BY
AND/OR ON BEHALF OF GSK OR ITS AFFILIATES OR SUBLICENSEES, INCLUDING HANDLING
AND STORAGE AND MANUFACTURE BY AND/OR ON BEHALF OF GSK OR ITS AFFILIATES OR
SUBLICENSEES OF SPC-3649 OR SPC-3649 PRODUCT FOR THE PURPOSE OF CONDUCTING
DEVELOPMENT OR COMMERCIALIZATION BY OR ON BEHALF OF GSK OR ITS AFFILIATES OR
SUBLICENSEES; OR

 

9.1.4       THE COMMERCIALIZATION BY OR ON BEHALF OF GSK, ITS AFFILIATES OR
SUBLICENSEES OF SPC-3649 OR SPC-3649 PRODUCT;

 

except, in each case above, to the extent such Claim arose out of or resulted
from or is attributable to the negligence, recklessness or wrongful intentional
acts or omissions of Regulus and/or its Affiliate, Founding Company, licensee,
Sublicensee or contractor, and its or their respective directors, officers,
employees and agents, or breach of any representation or warranty or express
covenant made by Regulus or any of its Founding Companies hereunder.

 

9.1.5       FOR THE AVOIDANCE OF DOUBT, (I) THE TERM “LOSS” OR “LOSSES” OF
SECTION 9.1 DOES NOT INCLUDE LIABILITIES, DAMAGES, LOSSES, COSTS, EXPENSES, OR
FEES OF ATTORNEYS AND OTHER PROFESSIONALS ARISING OUT OF OR RESULTING FROM ANY
SUIT BROUGHT BY A FOUNDING COMPANY TO ENFORCE ANY PATENT OR CLAIM THEREOF OWNED
BY OR CONTROLLED BY SAID FOUNDING COMPANY; AND (II) THE TERM “CLAIM” OR “CLAIMS”
OF SECTION 9.1 DOES NOT INCLUDE SUITS, CLAIMS, ACTIONS, PROCEEDINGS OR DEMANDS
BROUGHT BY A FOUNDING COMPANY TO ENFORCE ANY PATENT OR CLAIM THEREOF OWNED BY OR
CONTROLLED BY SAID FOUNDING COMPANY.

 

9.2          INDEMNIFICATION BY REGULUS.  REGULUS SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS GSK, AND ITS AFFILIATES, AND ITS OR THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS, FROM AND AGAINST ANY AND ALL LOSSES, ARISING OUT
OF OR RESULTING FROM ANY AND ALL CLAIMS BASED UPON ANY BREACH OF ANY
REPRESENTATION OR WARRANTY OR EXPRESS COVENANT MADE BY REGULUS UNDER ARTICLE 8
OR ANY OTHER PROVISION UNDER THIS AGREEMENT; EXCEPT, TO THE EXTENT SUCH CLAIM
AROSE OUT OF OR RESULTED FROM OR IS ATTRIBUTABLE TO THE NEGLIGENCE, RECKLESSNESS
OR WRONGFUL INTENTIONAL ACTS OR OMISSIONS OF GSK AND/OR ITS AFFILIATE, LICENSEE,
SUBLICENSEE OR CONTRACTOR AND ITS OR THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OR BREACH OF ANY REPRESENTATION OR WARRANTY OR EXPRESS
COVENANT MADE BY GSK HEREUNDER.

 

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9.3          PROCEDURE.  IN THE EVENT THAT ANY PERSON ENTITLED TO
INDEMNIFICATION UNDER SECTION 9.1 OR SECTION 9.2 (AN “INDEMNITEE”) IS SEEKING
SUCH INDEMNIFICATION, SUCH INDEMNITEE SHALL (I) INFORM, IN WRITING, THE
INDEMNIFYING PARTY OF A CLAIM AS SOON AS REASONABLY PRACTICABLE AFTER SUCH
INDEMNITEE RECEIVES NOTICE OF SUCH CLAIM, (II) PERMIT THE INDEMNIFYING PARTY TO
ASSUME DIRECTION AND CONTROL OF THE DEFENSE OF THE CLAIM (INCLUDING THE SOLE
RIGHT TO SETTLE IT AT THE SOLE DISCRETION OF THE INDEMNIFYING PARTY, PROVIDED,
THAT SUCH SETTLEMENT OR COMPROMISE DOES NOT ADMIT ANY FAULT OR NEGLIGENCE ON THE
PART OF THE INDEMNITEE, NOR IMPOSE ANY OBLIGATION ON, OR OTHERWISE MATERIALLY
ADVERSELY AFFECT, THE INDEMNITEE OR OTHER PARTY), (III) COOPERATE AS REASONABLY
REQUESTED (AT THE EXPENSE OF THE INDEMNIFYING PARTY) IN THE DEFENSE OF THE
CLAIM, AND (IV) UNDERTAKE REASONABLE STEPS TO MITIGATE ANY LOSS, DAMAGE OR
EXPENSE WITH RESPECT TO THE CLAIM(S).  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, THE INDEMNIFYING PARTY SHALL HAVE NO LIABILITY UNDER
SECTION 9.1 OR 9.2, AS THE CASE MAY BE, WITH RESPECT TO CLAIMS SETTLED OR
COMPROMISED BY THE INDEMNITEE WITHOUT THE INDEMNIFYING PARTY’S PRIOR WRITTEN
CONSENT.

 

9.4          INSURANCE.  GSK HEREBY REPRESENTS AND WARRANTS TO REGULUS THAT IT
IS SELF-INSURED AGAINST LIABILITY AND OTHER RISKS ASSOCIATED WITH ITS ACTIVITIES
AND OBLIGATIONS UNDER THIS AGREEMENT IN SUCH AMOUNTS AND ON SUCH TERMS AS ARE
CUSTOMARY FOR PRUDENT PRACTICES FOR LARGE COMPANIES IN THE PHARMACEUTICAL
INDUSTRY FOR THE ACTIVITIES TO BE CONDUCTED BY GSK UNDER THIS AGREEMENT.  GSK
SHALL FURNISH TO REGULUS EVIDENCE OF SUCH SELF-INSURANCE, UPON REQUEST.

 

9.5          LIMITATION OF CONSEQUENTIAL DAMAGES.  EXCEPT FOR CLAIMS OF A THIRD
PARTY WHICH ARE SUBJECT TO INDEMNIFICATION UNDER THIS ARTICLE 9 OR AS OTHERWISE
EXPRESSLY STATED IN THIS AGREEMENT, NEITHER REGULUS NOR GSK, NOR ANY OF THEIR
AFFILIATES OR SUBLICENSEES NOR THE PARENT COMPANIES WILL BE LIABLE TO THE OTHER
PARTY TO THIS AGREEMENT, ITS AFFILIATES OR ANY OF THEIR SUBLICENSEES NOR THE
PARENT COMPANIES, FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR OTHER
INDIRECT DAMAGES OR LOST OR IMPUTED PROFITS OR ROYALTIES, LOST DATA OR COST OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN
CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY OR
CONTRIBUTION, AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF
THAT PARTY HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE
POSSIBILITY OF, ANY SUCH LOSS OR DAMAGE.

 

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ARTICLE 10
TERM AND TERMINATION

 

10.1        AGREEMENT TERM; EXPIRATION.  UNLESS EARLIER TERMINATED PURSUANT TO
SECTION 5.6.3 OR THE OTHER PROVISIONS OF THIS ARTICLE 10, THIS AGREEMENT SHALL
BE EFFECTIVE AS OF THE EFFECTIVE DATE AND SHALL CONTINUE IN FULL FORCE AND
EFFECT UNTIL THE DATE OF THE EXPIRATION OF ALL PAYMENT OBLIGATIONS BY GSK UNDER
THIS AGREEMENT, (THE “AGREEMENT TERM”).

 

10.2        TERMINATION FOR CAUSE.

 

10.2.1     EITHER PARTY (IN SUCH CAPACITY, THE “NON-BREACHING PARTY”) MAY,
WITHOUT PREJUDICE TO ANY OTHER REMEDIES AVAILABLE TO IT AT LAW OR IN EQUITY,
TERMINATE THIS AGREEMENT IN THE EVENT THE OTHER PARTY (IN SUCH CAPACITY, THE
“BREACHING PARTY”) SHALL HAVE MATERIALLY BREACHED OR DEFAULTED IN THE
PERFORMANCE OF ANY OF ITS MATERIAL OBLIGATIONS HEREUNDER, AND SUCH DEFAULT SHALL
HAVE CONTINUED FOR NINETY (90) DAYS AFTER WRITTEN NOTICE THEREOF WAS PROVIDED TO
THE BREACHING PARTY BY THE NON-BREACHING PARTY, SUCH NOTICE DESCRIBING WITH
PARTICULARITY AND IN DETAIL THE ALLEGED MATERIAL BREACH.

 

10.2.2     DISAGREEMENT.  NOTWITHSTANDING ANY OF THE FOREGOING, IF THE PARTIES
REASONABLY AND IN GOOD FAITH DISAGREE AS TO WHETHER THERE HAS BEEN A MATERIAL
BREACH UNDER SECTION 10.2.1 ABOVE, THE PARTY WHICH SEEKS TO DISPUTE THAT THERE
HAS BEEN A MATERIAL BREACH MAY CONTEST THE ALLEGATION IN ACCORDANCE WITH
SECTION 11.1.  NOTWITHSTANDING THE ABOVE SENTENCE, THE CURE PERIOD FOR ANY
ALLEGATION MADE IN GOOD FAITH AS TO A MATERIAL BREACH UNDER THIS AGREEMENT WILL
RUN FROM THE DATE THAT WRITTEN NOTICE WAS FIRST PROVIDED TO THE BREACHING PARTY
BY THE NON-BREACHING PARTY.  ANY TERMINATION OF THE AGREEMENT UNDER THIS
SECTION 10.2 SHALL BECOME EFFECTIVE AT THE END OF SUCH NINETY (90) DAY PERIOD,
UNLESS THE BREACHING PARTY HAS CURED ANY SUCH BREACH OR DEFAULT PRIOR TO THE
EXPIRATION OF SUCH NINETY (90) DAY PERIOD.  THE RIGHT OF EITHER PARTY TO
TERMINATE THIS AGREEMENT SHALL NOT BE AFFECTED IN ANY WAY BY SUCH PARTY’S WAIVER
OR FAILURE TO TAKE ACTION WITH RESPECT TO ANY PREVIOUS DEFAULT.

 

10.3        GSK UNILATERAL TERMINATION RIGHTS.  GSK SHALL HAVE THE RIGHT, AT ITS
SOLE DISCRETION, EXERCISABLE AT ANY TIME DURING THE AGREEMENT TERM, TO
TERMINATE  (I) ITS LICENSE UNDER ARTICLE 3 (INCLUDING ALL OTHER PROVISIONS OF
THIS AGREEMENT RELATED THERETO), OR (II) THIS AGREEMENT IN ITS ENTIRETY, FOR ANY
REASON OR FOR NO REASON AT ALL, UPON NINETY (90) DAYS WRITTEN NOTICE TO
REGULUS.  EXCEPT AS SET FORTH IN SECTION 10.5, GSK SHALL NOT HAVE ANY ADDITIONAL
COST, LIABILITY, EXPENSE, OR OBLIGATION OF ANY KIND WHATSOEVER ON ACCOUNT OF ANY
TERMINATION UNDER THIS SECTION 10.3.  FOR PURPOSES OF CLARITY, IN NO EVENT SHALL
GSK HAVE THE RIGHT TO EXERCISE ITS RIGHT TO TERMINATE THE AGREEMENT UNDER THIS
SECTION 10.3 FOLLOWING REGULUS’ NOTICE OF TERMINATION UNDER SECTION 10.2.

 

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10.4        TERMINATION FOR INSOLVENCY.

 

10.4.1     EITHER PARTY MAY TERMINATE THIS AGREEMENT, IF, AT ANY TIME, THE OTHER
PARTY SHALL FILE IN ANY COURT OR AGENCY PURSUANT TO ANY STATUTE OR REGULATION OF
ANY STATE OR COUNTRY, A PETITION IN BANKRUPTCY OR INSOLVENCY OR FOR
REORGANIZATION OR FOR AN ARRANGEMENT OR FOR THE APPOINTMENT OF A RECEIVER OR
TRUSTEE OF THE PARTY OR OF SUBSTANTIALLY ALL OF ITS ASSETS, OR IF THE OTHER
PARTY PROPOSES A WRITTEN AGREEMENT OF COMPOSITION OR EXTENSION OF SUBSTANTIALLY
ALL OF ITS DEBTS, OR IF THE OTHER PARTY SHALL BE SERVED WITH AN INVOLUNTARY
PETITION AGAINST IT, FILED IN ANY INSOLVENCY PROCEEDING, AND SUCH PETITION SHALL
NOT BE DISMISSED WITHIN NINETY (90) DAYS AFTER THE FILING THEREOF, OR IF THE
OTHER PARTY SHALL PROPOSE OR BE A PARTY TO ANY DISSOLUTION OR LIQUIDATION, OR IF
THE OTHER PARTY SHALL MAKE AN ASSIGNMENT OF SUBSTANTIALLY ALL OF ITS ASSETS FOR
THE BENEFIT OF CREDITORS.

 

10.4.2     ALL RIGHTS AND LICENSES GRANTED UNDER OR PURSUANT TO ANY SECTION OF
THIS AGREEMENT ARE AND SHALL OTHERWISE BE DEEMED TO BE FOR PURPOSES OF
SECTION 365(N) OF TITLE 11, UNITED STATES CODE (THE “BANKRUPTCY CODE”) LICENSES
OF RIGHTS TO “INTELLECTUAL PROPERTY” AS DEFINED IN SECTION 101(56) OF THE
BANKRUPTCY CODE.  THE PARTIES SHALL RETAIN AND MAY FULLY EXERCISE ALL OF THEIR
RESPECTIVE RIGHTS AND ELECTIONS UNDER THE BANKRUPTCY CODE.  UPON THE BANKRUPTCY
OF ANY PARTY, THE NON-BANKRUPT PARTY SHALL FURTHER BE ENTITLED TO A COMPLETE
DUPLICATE OF, OR COMPLETE ACCESS TO, ANY SUCH INTELLECTUAL PROPERTY, AND SUCH,
IF NOT ALREADY IN ITS POSSESSION, SHALL BE PROMPTLY DELIVERED TO THE
NON-BANKRUPT PARTY, UNLESS THE BANKRUPT PARTY ELECTS TO CONTINUE, AND CONTINUES,
TO PERFORM ALL OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

10.5        ACCRUED RIGHTS; SURVIVING PROVISIONS OF THE AGREEMENT; CERTAIN
CLARIFICATIONS.

 

(A)           TERMINATION, RELINQUISHMENT OR EXPIRATION OF THIS AGREEMENT FOR
ANY REASON SHALL BE WITHOUT PREJUDICE TO ANY RIGHTS THAT SHALL HAVE ACCRUED TO
THE BENEFIT OF ANY PARTY PRIOR TO SUCH TERMINATION, RELINQUISHMENT OR EXPIRATION
INCLUDING, WITHOUT LIMITATION, THE PAYMENT OBLIGATIONS UNDER ARTICLE 5 HEREOF
AND ANY AND ALL DAMAGES ARISING FROM ANY BREACH HEREUNDER.  SUCH TERMINATION,
RELINQUISHMENT OR EXPIRATION SHALL NOT RELIEVE ANY PARTY FROM OBLIGATIONS WHICH
ARE EXPRESSLY INDICATED TO SURVIVE TERMINATION OF THIS AGREEMENT.

 

(B)           THE PROVISIONS OF SECTIONS 3.1.4 (SOLELY TO THE EXTENT ARTICLES 8,
9 OR 10 OF THE STANFORD AGREEMENT SURVIVE AND ARE APPLICABLE TO GSK AS A CURRENT
OR FORMER SUBLICENSEE UNDER THE STANFORD AGREEMENT), 5.9.3, 5.10, 5.11, 8.5,
10.5 AND ARTICLE 6, ARTICLE 7, ARTICLE 9, AND ARTICLE 11 SHALL SURVIVE THE
TERMINATION OR EXPIRATION OF THIS AGREEMENT FOR ANY REASON, IN ACCORDANCE WITH
THEIR RESPECTIVE TERMS AND CONDITIONS, AND FOR THE DURATION STATED, AND WHERE NO
DURATION IS STATED, SHALL SURVIVE INDEFINITELY.

 

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ARTICLE 11
MISCELLANEOUS

 

11.1        DISPUTE RESOLUTION BY BINDING ARBITRATION.  ANY CONTROVERSY OR CLAIM
ARISING OUT OF OR UNDER THIS AGREEMENT, OR THE BREACH THEREOF, SHALL BE FINALLY
RESOLVED BY BINDING ARBITRATION, HELD IN NEW YORK CITY, NEW YORK, AND
ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS COMMERCIAL
ARBITRATION RULES.  JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.  THE PARTIES SHALL MAKE
REASONABLE EFFORTS TO APPOINT THREE (3) ARBITRATORS, WHO ARE EACH MUTUALLY
ACCEPTABLE TO GSK AND REGULUS, WITHIN FORTY-FIVE (45) DAYS OF THE INITIATION OF
THE ARBITRATION; IN THE EVENT THEY ARE UNSUCCESSFUL AND DO NOT AGREE TO EXTEND
THE TIME PERIOD, THEN THE ARBITRATORS SHALL BE APPOINTED IN ACCORDANCE WITH THE
RULES.  THE PARTIES SHALL SHARE THE EXPENSES FOR THE ARBITRATORS, BUT SHALL
OTHERWISE BE RESPONSIBLE FOR THEIR OWN FEES IN RELATION TO SUCH ARBITRATION. 
UNTIL SUCH TIME AS ARBITRATORS ARE APPOINTED, THE PARTIES MAY SEEK JUDICIAL
RELIEF FOR INTERIM MEASURES, SUCH AS INJUNCTIVE RELIEF, IN ANY COURT HAVING
COMPETENT JURISDICTION.  FOR CLARITY, THE PARTIES UNDERSTAND AND AGREE THAT
BINDING ARBITRATION PURSUANT TO THIS SECTION 11.1 SHALL NOT APPLY TO ALTER OR
MODIFY THE INDEMNITY OBLIGATIONS OF THE RESPECTIVE PARTIES UNDER ARTICLE 9, BUT
ARBITRATION MAY BE SOUGHT TO INTERPRET SUCH OBLIGATIONS.  FOR CLARITY, THE
ARBITRATORS SHALL NOT HAVE AUTHORITY OR DISCRETION TO DECIDE ANY MATTER OTHER
THAN THE MATTER FOR DECISION BEFORE THEM, AND ANY SUCH DECISION SHALL NOT
INCLUDE ANY AWARD OR DETERMINATION WHICH WOULD AMEND THE APPLICABLE TERMS OF THE
AGREEMENT.

 

11.2        GOVERNING LAW.  THIS AGREEMENT AND ANY DISPUTE ARISING FROM THE
PERFORMANCE OR BREACH HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, U.S.A., WITHOUT REFERENCE TO
CONFLICTS OF LAWS PRINCIPLES.

 

11.3        ASSIGNMENT.  THIS AGREEMENT SHALL NOT BE ASSIGNABLE BY EITHER PARTY
TO ANY THIRD PARTY OR FOUNDING COMPANY, IN THE CASE OF REGULUS, (EXCEPT AS
EXPRESSLY STATED BELOW) WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY
HERETO, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD.  NOTWITHSTANDING THE
FOREGOING, (A) EITHER PARTY MAY ASSIGN THIS AGREEMENT, WITHOUT ANY CONSENT OF
THE OTHER PARTY, TO AN AFFILIATE, TO A THIRD PARTY, OR TO THE FOUNDING COMPANY
OF SUCH PARTY, IN THE CASE OF REGULUS, THAT ACQUIRES ALL OR SUBSTANTIALLY ALL OF
THE BUSINESS OR ASSETS OF SUCH PARTY TO WHICH THE SUBJECT MATTER OF THIS
AGREEMENT PERTAINS (WHETHER BY MERGER, REORGANIZATION, ACQUISITION, SALE OR
OTHERWISE), AND (B) REGULUS MAY ASSIGN OR TRANSFER ITS RIGHTS TO RECEIVE
ROYALTIES AND MILESTONES UNDER THIS AGREEMENT (BUT NO LIABILITIES), WITHOUT
GSK’S CONSENT, TO AN AFFILIATE, TO ITS FOUNDING COMPANY, OR TO A THIRD PARTY IN
CONNECTION WITH A PAYMENT FACTORING TRANSACTION.  NOTWITHSTANDING THE FOREGOING,
EACH PARTY SHALL HAVE THE RIGHT TO ASSIGN THIS AGREEMENT, IN WHOLE OR IN PART,
TO ITS AFFILIATE OR FOUNDING COMPANY, IN THE CASE OF REGULUS,

 

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WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER PARTY; PROVIDED, THAT, SUCH
ASSIGNEE IS ABLE TO EXERCISE DILIGENT EFFORTS EQUIVALENT TO THOSE REQUIRED TO BE
EXERCISED BY SUCH ASSIGNING PARTY AND OTHERWISE PERFORM ALL OF THE OBLIGATIONS
OF THE ASSIGNING PARTY HEREUNDER AND ASSUMES IN WRITING ALL OF THE RELEVANT
LIABILITIES AND OBLIGATIONS OF THE ASSIGNING PARTY HEREUNDER.  NO ASSIGNMENT AND
TRANSFER SHALL BE VALID AND EFFECTIVE UNLESS AND UNTIL THE ASSIGNEE/TRANSFEREE
SHALL AGREE IN WRITING TO BE BOUND BY THE PROVISIONS OF THIS AGREEMENT. 
NOTWITHSTANDING ANYTHING IN THIS SECTION 11.3 TO THE CONTRARY, ANY PERSON TO
WHOM REGULUS ASSIGNS THIS AGREEMENT OR ANY OF ITS RIGHTS UNDER THIS AGREEMENT
SHALL BE REQUIRED TO COMPLETE ANY PAPERWORK REQUESTED BY GSK PURSUANT TO
SECTION 5.11.2;  SUCH OBLIGATIONS SHALL CONTINUE TO ANY OTHER
PERSON(S) THEREAFTER, IF ANY, TO WHOM THIS AGREEMENT AND ANY RIGHTS HEREUNDER
ARE ASSIGNED. THE TERMS AND CONDITIONS OF THIS AGREEMENT SHALL BE BINDING UPON
AND SHALL INURE TO THE BENEFIT OF THE SUCCESSORS, HEIRS, ADMINISTRATORS AND
PERMITTED ASSIGNS OF THE PARTIES.  ANY ASSIGNMENT NOT IN ACCORDANCE WITH THE
FOREGOING SHALL BE VOID.

 

11.4        PERFORMANCE WARRANTY.  EACH PARTY HEREBY ACKNOWLEDGES AND AGREES
THAT IT SHALL BE RESPONSIBLE FOR THE FULL AND TIMELY PERFORMANCE AS AND WHEN DUE
UNDER, AND OBSERVANCE OF ALL THE COVENANTS, TERMS, CONDITIONS AND AGREEMENTS SET
FORTH IN, THIS AGREEMENT BY ITS AFFILIATE(S) AND SUBLICENSEES.

 

11.5        FORCE MAJEURE.  NO PARTY SHALL BE HELD LIABLE OR RESPONSIBLE TO THE
OTHER PARTY NOR BE DEEMED TO BE IN DEFAULT UNDER, OR IN BREACH OF ANY PROVISION
OF, THIS AGREEMENT FOR FAILURE OR DELAY IN FULFILLING OR PERFORMING ANY
OBLIGATION OF THIS AGREEMENT WHEN SUCH FAILURE OR DELAY IS DUE TO FORCE MAJEURE,
AND WITHOUT THE FAULT OR NEGLIGENCE OF THE PARTY SO FAILING OR DELAYING.  FOR
PURPOSES OF THIS AGREEMENT, FORCE MAJEURE IS DEFINED AS CAUSES BEYOND THE
REASONABLE CONTROL OF A PARTY, WHICH MAY INCLUDE, WITHOUT LIMITATION, ACTS OF
GOD; ACTS, REGULATIONS, OR LAWS OF ANY GOVERNMENT; WAR; CIVIL COMMOTION;
DESTRUCTION OF PRODUCTION FACILITIES OR MATERIALS BY FIRE, FLOOD, EARTHQUAKE,
EXPLOSION OR STORM; LABOR DISTURBANCES; EPIDEMIC AND FAILURE OF PUBLIC UTILITIES
OR COMMON CARRIERS.  IN SUCH EVENT THE PARTY SO FAILING OR DELAYING SHALL
IMMEDIATELY NOTIFY THE OTHER PARTY OF SUCH INABILITY AND OF THE PERIOD FOR WHICH
SUCH INABILITY IS EXPECTED TO CONTINUE.  THE PARTY GIVING SUCH NOTICE SHALL
THEREUPON BE EXCUSED FROM SUCH OF ITS OBLIGATIONS UNDER THIS AGREEMENT AS IT IS
THEREBY DISABLED FROM PERFORMING FOR SO LONG AS IT IS SO DISABLED FOR UP TO A
MAXIMUM OF NINETY (90) DAYS, AFTER WHICH TIME THE PARTIES WILL NEGOTIATE IN GOOD
FAITH ANY MODIFICATIONS OF THE TERMS OF THIS AGREEMENT THAT MAY BE NECESSARY TO
ARRIVE AT AN EQUITABLE SOLUTION, UNLESS THE PARTY GIVING SUCH NOTICE HAS SET OUT
A REASONABLE TIMEFRAME AND PLAN TO RESOLVE THE EFFECTS OF SUCH FORCE MAJEURE AND
EXECUTES SUCH PLAN WITHIN SUCH TIMEFRAME.  TO THE EXTENT POSSIBLE, EACH PARTY
SHALL USE REASONABLE EFFORTS TO MINIMIZE THE DURATION OF ANY FORCE MAJEURE.

 

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11.6        NOTICES.  ANY NOTICE OR REQUEST REQUIRED OR PERMITTED TO BE GIVEN
UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
SUFFICIENTLY GIVEN IF IN WRITING AND PERSONALLY DELIVERED OR SENT BY CERTIFIED
MAIL (RETURN RECEIPT REQUESTED), FACSIMILE TRANSMISSION (RECEIPT VERIFIED), OR
OVERNIGHT EXPRESS COURIER SERVICE (SIGNATURE REQUIRED), PREPAID, TO THE PARTY
FOR WHICH SUCH NOTICE IS INTENDED, AT THE ADDRESS SET FORTH FOR SUCH PARTY
BELOW:

 

If to Regulus, addressed to:

 

Regulus Therapeutics Inc.

 

 

1896 Rutherford Road

 

 

Carlsbad, California 92008

 

 

Attention: Chief Executive Officer

 

 

Fax: 760-268-6868

 

 

 

with a copy to:

 

Isis Pharmaceuticals, Inc.

 

 

1896 Rutherford Road

 

 

Carlsbad, California 92008

 

 

Attention: General Counsel

 

 

Fax: 760-268-4922

 

 

 

 

 

Cooley Godward Kronish LLP

 

 

4401 Eastgate Mall

 

 

San Diego, CA  92121-1909

 

 

Attention: Thomas A. Coll

 

 

Fax: 858-550-6420

 

 

 

 

 

Alnylam Pharmaceuticals, Inc.

 

 

300 Third Street, 3rd Floor

 

 

Cambridge, MA 02142

 

 

Attention: Vice President, Legal

 

 

Fax: 617-551-8109

 

 

 

 

 

WilmerHale

 

 

60 State Street

 

 

Boston, MA 02109

 

 

Attention: Steven D. Singer, Esq.

 

 

Fax: 617-526-5000

 

 

 

If to GSK, addressed to:

 

Attention: Business Development

 

 

GlaxoSmithKline

 

 

Greenford Road

 

 

Greenford

 

 

Middlesex

 

 

UB6 0HE, United Kingdom

 

 

Fax: +44 208 966 5371

 

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with a copy to:

 

Attention: Vice President and

 

 

Associate General Counsel,

 

 

R&D Legal Operations

 

 

GlaxoSmithKline301

 

 

Renaissance Boulevard

 

 

Mail Code RN0220

 

 

King of Prussia, PA 19406

 

 

Telecopy: (610) 787-7084

 

or to such other address for such Party as it shall have specified by like
notice to the other Party; provided that notices of a change of address shall be
effective only upon receipt thereof.  If delivered personally or by facsimile
transmission, the date of delivery shall be deemed to be the date on which such
notice or request was given.  If sent by overnight express courier service, the
date of delivery shall be deemed to be the next Business Day after such notice
or request was deposited with such service.  If sent by certified mail, the date
of delivery shall be deemed to be the third Business Day after such notice or
request was deposited with the U.S. Postal Service.

 

11.7        EXPORT CLAUSE.  EACH PARTY ACKNOWLEDGES THAT THE LAWS AND
REGULATIONS OF THE UNITED STATES RESTRICT THE EXPORT AND RE-EXPORT OF
COMMODITIES AND TECHNICAL DATA OF UNITED STATES ORIGIN.  EACH PARTY AGREES THAT
IT WILL NOT EXPORT OR RE-EXPORT RESTRICTED COMMODITIES OR THE TECHNICAL DATA OF
THE OTHER PARTY IN ANY FORM WITHOUT THE APPROPRIATE UNITED STATES AND FOREIGN
GOVERNMENT LICENSES.

 

11.8        WAIVER.  NEITHER PARTY MAY WAIVE OR RELEASE ANY OF ITS RIGHTS OR
INTERESTS IN THIS AGREEMENT EXCEPT IN WRITING.  THE FAILURE OF EITHER PARTY TO
ASSERT A RIGHT HEREUNDER OR TO INSIST UPON COMPLIANCE WITH ANY TERM OR CONDITION
OF THIS AGREEMENT SHALL NOT CONSTITUTE A WAIVER OF THAT RIGHT OR EXCUSE A
SIMILAR SUBSEQUENT FAILURE TO PERFORM ANY SUCH TERM OR CONDITION.  NO WAIVER BY
EITHER PARTY OF ANY CONDITION OR TERM IN ANY ONE OR MORE INSTANCES SHALL BE
CONSTRUED AS A CONTINUING WAIVER OR SUBSEQUENT WAIVER OF SUCH CONDITION OR TERM
OR OF ANOTHER CONDITION OR TERM.

 

11.9        SEVERABILITY.  IF ANY PROVISION HEREOF SHOULD BE HELD INVALID,
ILLEGAL OR UNENFORCEABLE IN ANY JURISDICTION, THE PARTIES SHALL NEGOTIATE IN
GOOD FAITH A VALID, LEGAL AND ENFORCEABLE SUBSTITUTE PROVISION THAT MOST NEARLY
REFLECTS THE ORIGINAL INTENT OF THE PARTIES AND ALL OTHER PROVISIONS HEREOF
SHALL REMAIN IN FULL FORCE AND EFFECT IN SUCH JURISDICTION AND SHALL BE
LIBERALLY CONSTRUED IN ORDER TO CARRY OUT THE INTENTIONS OF THE PARTIES HERETO
AS NEARLY AS MAY BE POSSIBLE.  SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY
SHALL NOT AFFECT THE VALIDITY, LEGALITY OR ENFORCEABILITY OF SUCH PROVISION IN
ANY OTHER JURISDICTION.

 

11.10      ENTIRE AGREEMENT; EXISTING COLLABORATION.  THIS AGREEMENT, TOGETHER
WITH THE SCHEDULES AND EXHIBITS HERETO, AND THE RELEVANT APPLICABLE CITED
PROVISIONS OF THE EXISTING

 

25

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COLLABORATION, SET FORTH ALL THE COVENANTS, PROMISES, AGREEMENTS, WARRANTIES,
REPRESENTATIONS, CONDITIONS AND UNDERSTANDINGS BETWEEN THE PARTIES AND SUPERSEDE
AND TERMINATE ALL PRIOR AGREEMENTS AND UNDERSTANDING BETWEEN THE PARTIES.  THERE
ARE NO COVENANTS, PROMISES, AGREEMENTS, WARRANTIES, REPRESENTATIONS, CONDITIONS
OR UNDERSTANDINGS, EITHER ORAL OR WRITTEN, BETWEEN THE PARTIES OTHER THAN AS SET
FORTH HEREIN AND THEREIN.  NO SUBSEQUENT ALTERATION, AMENDMENT, CHANGE OR
ADDITION TO THIS AGREEMENT SHALL BE BINDING UPON THE PARTIES HERETO UNLESS
REDUCED TO WRITING AND SIGNED BY THE RESPECTIVE AUTHORIZED OFFICERS OF THE
PARTIES.  NOTWITHSTANDING THE FIRST SENTENCE OF THIS SECTION 11.10, EXCEPT AS
EXPLICITLY STATED IN THIS AGREEMENT, ALL THE TERMS AND CONDITIONS OF THE
EXISTING COLLABORATION AND THE EXISTING CONVERTIBLE PROMISSORY NOTE BY REGULUS
AND ITS FOUNDING COMPANIES TO GSK, DATED APRIL 24, 2008, SHALL REMAIN UNCHANGED
AND WILL CONTINUE IN FULL FORCE AND EFFECT.

 

11.11      INDEPENDENT CONTRACTORS.  NOTHING HEREIN SHALL BE CONSTRUED TO CREATE
ANY RELATIONSHIP OF EMPLOYER AND EMPLOYEE, AGENT AND PRINCIPAL, PARTNERSHIP OR
JOINT VENTURE BETWEEN THE PARTIES.  EACH PARTY IS AN INDEPENDENT CONTRACTOR. 
NEITHER PARTY SHALL ASSUME, EITHER DIRECTLY OR INDIRECTLY, ANY LIABILITY OF OR
FOR THE OTHER PARTY.  NEITHER PARTY SHALL HAVE THE AUTHORITY TO BIND OR OBLIGATE
THE OTHER PARTY AND NEITHER PARTY SHALL REPRESENT THAT IT HAS SUCH AUTHORITY.

 

11.12      HEADINGS.  HEADINGS USED HEREIN ARE FOR CONVENIENCE ONLY AND SHALL
NOT IN ANY WAY AFFECT THE CONSTRUCTION OF OR BE TAKEN INTO CONSIDERATION IN
INTERPRETING THIS AGREEMENT.

 

11.13      BOOKS AND RECORDS.  ANY BOOKS AND RECORDS TO BE MAINTAINED UNDER THIS
AGREEMENT BY A PARTY OR ITS AFFILIATES OR SUBLICENSEES SHALL BE MAINTAINED IN
ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (OR ANY SUCCESSOR
STANDARD) IN THE CASE OF REGULUS, AND SHALL BE MAINTAINED IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IN THE CASE OF GSK,
CONSISTENTLY APPLIED, EXCEPT THAT THE SAME NEED NOT BE AUDITED.

 

11.14      FURTHER ACTIONS.  EACH PARTY SHALL EXECUTE, ACKNOWLEDGE AND DELIVER
SUCH FURTHER INSTRUMENTS, AND DO ALL SUCH OTHER ACTS, AS MAY BE NECESSARY OR
APPROPRIATE IN ORDER TO CARRY OUT THE EXPRESSLY STATED PURPOSES AND THE CLEAR
INTENT OF THIS AGREEMENT.

 

11.15      CONSTRUCTION OF AGREEMENT.  THE TERMS AND PROVISIONS OF THIS
AGREEMENT REPRESENT THE RESULTS OF NEGOTIATIONS BETWEEN THE PARTIES AND THEIR
REPRESENTATIVES, EACH OF WHICH HAS BEEN REPRESENTED BY COUNSEL OF ITS OWN
CHOOSING, AND NEITHER OF WHICH HAS ACTED UNDER DURESS OR COMPULSION, WHETHER
LEGAL, ECONOMIC OR OTHERWISE.  ACCORDINGLY, THE TERMS AND PROVISIONS OF THIS
AGREEMENT SHALL BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THEIR USUAL AND
CUSTOMARY MEANINGS, AND EACH OF THE PARTIES HERETO HEREBY WAIVES THE APPLICATION
IN CONNECTION WITH THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT OF ANY
RULE OF LAW TO THE EFFECT THAT AMBIGUOUS OR CONFLICTING TERMS OR PROVISIONS
CONTAINED IN THIS AGREEMENT SHALL BE INTERPRETED OR CONSTRUED AGAINST THE PARTY
WHOSE ATTORNEY PREPARED THE EXECUTED DRAFT OR ANY EARLIER DRAFT OF THIS
AGREEMENT.

 

26

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11.16      COUNTERPARTS.  THIS AGREEMENT MAY BE SIGNED IN COUNTERPARTS, EACH AND
EVERY ONE OF WHICH SHALL BE DEEMED AN ORIGINAL, NOTWITHSTANDING VARIATIONS IN
FORMAT OR FILE DESIGNATION WHICH MAY RESULT FROM THE ELECTRONIC TRANSMISSION,
STORAGE AND PRINTING OF COPIES OF THIS AGREEMENT FROM SEPARATE COMPUTERS OR
PRINTERS.  FACSIMILE SIGNATURES AND SIGNATURES TRANSMITTED VIA PDF SHALL BE
TREATED AS ORIGINAL SIGNATURES.

 

11.17      COMPLIANCE WITH LAWS: EACH PARTY SHALL AND SHALL ENSURE THAT ITS
AFFILIATES, FOUNDING COMPANIES, IN THE CASE OF REGULUS, AND SUBLICENSEES WILL,
COMPLY WITH ALL RELEVANT LAWS AND REGULATIONS IN EXERCISING THEIR RIGHTS AND
FULFILLING THEIR OBLIGATIONS UNDER THIS AGREEMENT.

 

* - * - * - *

 

27

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.

 

Regulus Therapeutics Inc.

 

 

 

 

 

By:

 /s/ Kleanthis G. Xanthopoulos

 

 

Name:

Kleanthis G. Xanthopoulos

 

 

Title:

President and CEO

 

 

Date:

 

 

 

 

 

 

 

 

 

Glaxo Group Limited

 

 

 

 

 

By:

 /s/ Victoria Whyte

 

 

Name:

Victoria Whyte

 

 

Title:

For and on behalf of the Wellcome Foundation Limited

 

 

Date:

 

 

 

 

28

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LIST OF SCHEDULES AND EXHIBITS

 

EXHIBIT A — Definitions

 

EXHIBIT B — Representative List of Regulus Patents

 

EXHIBIT C — [***] Patent Rights

 

EXHIBIT D — Press Release

 

EXHIBIT E — [Intentionally Left Blank]

 

EXHIBIT F — Stanford Patents

 

EXHIBIT G — Relevant In-Licenses

 

29

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DEFINITIONS

 

1.             “Acceptance” means, with respect to an NDA filed for SPC-3649 or
an SPC-3649 Product, (a) in the United States, the receipt by GSK, its
Affiliates or Sublicensees of written notice from the FDA in accordance with 21
CFR 314.101(a)(2) that such NDA is officially “filed”, (b) in the European
Union, receipt by GSK of written notice of acceptance by the EMEA of such NDA
for filing under the centralized European procedure in accordance with any
feedback received from European Regulatory Authorities; provided, that if the
centralized filing procedure is not used, then Acceptance shall be determined
upon the acceptance of such NDA by the applicable Regulatory Authority in a
Major Country in the EU, and (c) in Japan, receipt by GSK of written notice of
acceptance of filing of such NDA from the Japanese Ministry of Health, Labour
and Welfare (“MHLW”).

 

2.             “Additional Third Party Agreement” shall have the meaning
assigned to such term in Section 5.6.2.

 

3.             “Affiliate” shall mean any Person, whether de jure or de facto,
which directly or indirectly through one (1) or more intermediaries controls, is
controlled by or is under common control with another Person.  A Person shall be
deemed to “control” another Person if it (a) owns, directly or indirectly,
beneficially or legally, at least fifty percent (50%) of the outstanding voting
securities or capital stock (or such lesser percentage which is the maximum
allowed to be owned by a Person in a particular jurisdiction) of such other
Person, or has other comparable ownership interest with respect to any Person
other than a corporation; or (b) has the power, whether pursuant to contract,
ownership of securities or otherwise, to direct the management and policies of
the Person. Notwithstanding the above, neither of the Founding Companies of
Regulus shall be deemed an Affiliate of Regulus for the purposes of this
Agreement under any circumstances.

 

4.             “Agreement” shall have the meaning assigned to such term in the
Recitals.

 

5.             “Agreement Term” shall have the meaning assigned to such term in
Section 10.1

 

6.             “Alnylam” shall have the meaning assigned to such term in the
Recitals.

 

7.             “Annual” or “Annually” shall mean Calendar Year.

 

8.             “Bankruptcy Code” shall have the meaning assigned to such term in
Section 10.4.2.

 

9.             “Breaching Party” shall have the meaning assigned to such term in
Section 10.2.1.

 

10.           “Business Day” shall mean any day other than a Saturday or Sunday
on which banking institutions in both New York, New York and London, England are
open for business.

 

11.           “Calendar Quarter” shall mean a period of three (3) consecutive
months ending on the last day of March, June, September, or December,
respectively and will also include the period beginning on the Effective Date
and ending on the last day of the calendar quarter in which the Effective Date
falls.

 

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12.           “Calendar Year” shall mean a year of 365 days (or 366 days in a
leap year) beginning on January 1st (or, with respect to 2010, the Effective
Date) and ending December 31st, and so on year-by-year.

 

13.           “Claims” shall have the meaning assigned to such term in
Section 9.1.

 

14.           “Clinical Studies” shall mean human studies designed to measure
the safety, efficacy, tolerability and/or appropriate dosage of SPC-3649, as the
context requires, including without limitation Phase 1 Clinical Trials, Phase 2
Clinical Trials (including any PoC Trial), Phase 3 Clinical Trials and any
post-Regulatory Approval studies (such as Phase 4 Clinical Trials).

 

15.           “Collaboration Target” shall have the meaning assigned to such
term in the Existing Collaboration.

 

16.           “Combination Product” shall have the meaning assigned to such term
in the definition of “Net Sales” below.

 

17.           “Commercialize” or “Commercialization” shall mean any and all
activities directed to marketing, promoting, detailing, distributing, importing,
having imported, exporting, having exported, selling or offering to sell an
SPC-3649 Product following receipt of Regulatory Approval for such SPC-3649
Product.

 

18.           “Competitive Infringement” shall have the meaning assigned to such
term in Section 6.2.2.

 

19.           “Confidential Information” shall have the meaning assigned to such
term in Section 7.1.

 

20.           “Control,” “Controls,” “Controlled” or “Controlling” shall mean
the possession of the right (whether by ownership, license or otherwise) to
assign, or grant a license, sublicense or other right, as provided for herein
without violating the terms of any agreement or other arrangement with any Third
Party or with any Founding Company of Regulus.

 

21.           “Develop” or “Development” shall mean, with respect to a miRNA
Compound or miRNA Therapeutic, any and all discovery, characterization,
preclinical or clinical activity with respect to such miRNA Compound or miRNA
Therapeutic, including human clinical trials conducted after Regulatory Approval
of such miRNA Therapeutic to seek Regulatory Approval for additional indications
for such miRNA Therapeutic.

 

22.           “Disclosing Party” shall have the meaning assigned to such term in
Section 7.1.

 

23.           “Effective Date” shall have the meaning assigned to such term in
the Recitals.

 

A-2

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24.           “EMEA” shall mean the European Medicines Evaluation Agency, and
any successor entity thereto.

 

25.           “European Union” or “EU” shall include Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands,
Portugal, Spain, Sweden, United Kingdom, Cyprus, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, and any such
other country or territory that may officially become part of the European Union
after the Effective Date.

 

26.           “Executive Officers” shall mean the Chief Executive Officer of
Regulus (or a senior executive officer designated by such Person) and either the
Chief Executive Officer or the Chairman of R&D at GSK (or another senior
executive officer designated by such Persons).

 

27.           “Existing Collaboration” shall have the meaning assigned to such
term in the Recitals.

 

28.           “FDA” shall mean the U.S. Food and Drug Administration, and any
successor entity thereto.

 

29.           “Field” shall mean the treatment and/or prophylaxis of hepatitis C
virus.

 

30.           “First Commercial Sale” means, with respect to an SPC-3649 Product
in a country in the Territory, the first sale, transfer or disposition for value
by GSK, its Affiliates or Sublicensees to an end user of an SPC-3649 Product in
such country; provided, that, the following shall not constitute a First
Commercial Sale: (a) any sale to an Affiliate, Founding Company or Sublicensee
unless the Affiliate, Founding Company or Sublicensee is the last entity in the
distribution chain the SPC-3649 Product, (b) any use of SPC-3649 or an SPC-3649
Product in Clinical Studies, pre-clinical studies or other research or
development activities, or disposal or transfer of SPC-3649 or an SPC-3649
Product for a bona fide charitable purpose, (c) compassionate use, (d) so called
“treatment IND sales” and “named patient sales,” and (e) use under the ATU
system in France and/or the International Pharmi system in Europe.

 

31.           “Founding Company” shall have the meaning assigned to such term in
the Recitals.

 

32.           “Founding Company Patents” shall mean, with respect to each
Founding Company,

 

(a)           all Patent Rights Controlled by such Founding Company on the
Effective Date that claim:

 

(i)            miRNA Compounds or miRNA Therapeutics in general,

 

(ii)           specific miRNA Compounds or miRNA Therapeutics,

 

(iii)          [***] of miRNA Compounds or miRNA Therapeutics,

 

A-3

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(iv)          [***] by which a miRNA Antagonist directly prevents the production
of the specific miRNA, or

 

(v)           [***], by modulating one or more miRNAs;

 

provided, however, that in each case of (a) and (b), (x) for any such Patent
Rights that include [***] (as defined in the Regulus License Agreement), the
provisions of Section 2.4 of the Regulus License Agreement will govern whether,
with respect to a Patent Right licensed under an Optional In-License (as defined
in the Regulus License Agreement) or as an Additional Right (as defined in the
Regulus License Agreement), such Patent Right will be included as a Founding
Company Patents, and (y) Founding Company Patents do not include [***].

 

33.           “Garching Agreement” means the Amended License Agreement dated
October 18, 2004 among Max Plank Innovation GmbH (formerly Garching Innovation
GmbH), Isis and Alnylam

 

34.           “GSK” shall have the meaning assigned to such term in the
Recitals.

 

35.           “IND” shall mean any investigational new drug application filed
with the FDA pursuant to Part 312 of Title 21 of the U.S. Code of Federal
Regulations, including any amendments thereto. References herein to IND shall
include, to the extent applicable, any comparable filing(s) outside the U.S.
(such as a Clinical Trial Application in the European Union).

 

36.           “Indemnitee” shall have the meaning assigned to such term in
Section 9.3.

 

37.           “Initiation” shall mean, with respect to any human Clinical
Studies set forth in Section 6.4, the first dosing of the first patient or
subject in such study.

 

38.           “Isis” shall have the meaning assigned to such term in the
Recitals.

 

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

 

40.           “Losses” shall have the meaning assigned to such term in
Section 9.1.

 

41.           “Major Country” shall mean any of the following countries:  the
[***].

 

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

 

A-4

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43.           “Milestone Event” shall have the meaning assigned to such term in
Section 5.4.

 

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

 

45.           “miRNA Antagonist” shall mean a single-stranded oligonucleotide
(or a single stranded analog thereof) that [***] interfere with or inhibit a
particular miRNA.  For purposes of clarity, the definition of “miRNA Antagonist”
is not intended to include oligonucleotides that function predominantly through
[***].

 

46.           “miRNA Compound” shall mean a compound consisting of a miRNA
Antagonist.  For purposes of clarity, miRNA Compound [***].

 

47.           “miRNA Mimic” shall mean a double-stranded or single-stranded
oligonucleotide or analog thereof with a substantially similar base composition
as a particular miRNA and which [***] mimic the activity of such miRNA.

 

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

 

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

 

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

 

51.           “NDA” shall mean a New Drug Application (as more fully defined in
21 C.F.R. 314.5 et seq. or its successor regulation) and all amendments and
supplements thereto filed with the FDA, or the equivalent application filed with
any equivalent agency or governmental authority outside the U.S. (including any
supra-national agency such as the EMEA in the EU).

 

52.           “Net Sales” shall mean, with respect to any SPC-3649 Product, the
gross invoiced sales of SPC-3649 Product sold by GSK, its Affiliates or
Sublicensees (in each case, the “Selling Party”), in finished product form,
packaged and labeled for sale, under this Agreement in arm’s length sales to
Third Parties, less the following deductions which are actually incurred,
allowed, paid, accrued or specifically allocated to the Third Party customer by
the Selling Party, to the

 

A-5

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extent actually taken by such Third Party customer, on such sales for: 
(a) [***] trade, quantity, and cash discounts; (b) [***] credits, rebates and
chargebacks (including those to [***] including [[***], and allowances or
credits to customers on account of [***] or on account of [***] affecting such
SPC-3649 Product; (c) [***] charges relating to such SPC-3649 Product, including
[***] thereto; (d) [***] directly linked to the sales of such SPC-3649 Product
to the extent included in the gross amount invoiced; (e) the lesser or [***] of
Net Sales or [***]; (f) [***] allowed or paid to [***] employed by the Selling
Party; and (g) any other items actually deducted from gross invoiced sales
amounts as reported by such Party in its financial statements in accordance
with, in the case of GSK’s Net Sales, the International Financial Reporting
Standards, applied on a consistent basis, and, in the case of Regulus’ Net
Sales, the U.S. generally accepted accounting principles applied on a consistent
basis.

 

Net Sales will not include any transfer or sale between or among a Party and any
of its Affiliates or Founding Companies or direct Sublicensees.

 

SPC-3649 Product provided to patients for [***] will not be included in Net
Sales.

 

In the event SPC-3649 is sold as part of a Combination Product (as defined
below), the Net Sales from the SPC-3649, for the purposes of determining royalty
payments, will be determined by multiplying the Net Sales (as determined without
reference to this paragraph) of the Combination Product, by the fraction, A/A+B,
where A is the [***] price (determined substantially in accordance with the
above) of the SPC-3649 when sold separately in finished form and B is the [***]
price (determined substantially in accordance with the above) [***] in the
Combination Product when sold separately in finished form, each during the
applicable royalty period or, if sales of all compounds did not occur in such
period, then in the most recent royalty reporting period in which sales of all
occurred.  In the event that such [***] price cannot be determined for both the
SPC-3649 and all other therapeutically active pharmaceutical compounds included
in the Combination Product, Net Sales for the purposes of determining royalty
payments will be calculated as above, but the [***] price in the above equation
will be replaced by a good faith estimate of the [***] for which no such price
exists.  As used above, the term “Combination Product” shall mean any
pharmaceutical product which consists of SPC-3649 and other therapeutically
active pharmaceutical compound(s).

 

53.           “Non-breaching Party” shall have the meaning assigned to such term
in Section 10.2.1.

 

54.           “Party” or “Parties” shall have the meaning assigned to such term
in the Recitals.

 

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

 

A-6

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56.           “Payee” shall mean the Party to whom milestone payments or
royalties are payable hereunder.

 

57.           “Payor” shall mean GSK and, with respect to milestone payments,
GSK.

 

58.           “Pending Claim” means a claim within any patent application in the
Regulus Patents that has not been cancelled, withdrawn, or abandoned.  For
purposes of clarity, if any Pending Claim of a patent application subsequently
issues, such claim shall be deemed to qualify as a Valid Claim (as defined
herein).

 

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

 

60.           “Phase 1 Clinical Trial” means a Clinical Study in any country,
the principal purpose of which is a preliminary determination of safety in
healthy individuals or patients that would satisfy the requirements of 21 CFR
312.21(a), or an equivalent clinical study required by a Regulatory Authority in
a jurisdiction outside of the United States.

 

61.           “Phase 2 Clinical Trial” means a Clinical Study conducted in any
country that is intended to explore a variety of doses, dose response and
duration of effect to generate initial evidence of clinical safety and activity
in a target patient population, that would satisfy the requirements of 21 CFR
312.21(b), or an equivalent clinical study required by a Regulatory Authority in
a jurisdiction outside of the United States.

 

62.           “Phase 3 Clinical Trial” means a Clinical Study in any country
performed after preliminary evidence of efficacy has been obtained, which if
successful, would provide sufficient evidence of the safety and efficacy of a
product to support a Regulatory Approval, and that would satisfy the
requirements of 21 CFR 312.21(c), or an equivalent clinical study required by
Regulatory Authority in a jurisdiction outside of the United States.

 

63.           “Phase 4 Clinical Trial” means a Clinical Study in any country
which is conducted after Regulatory Approval of a product has been obtained from
an appropriate Regulatory Authority, consisting of trials conducted voluntarily
for enhancing marketing or scientific knowledge of an approved indication and
trials conducted due to request or requirement of a Regulatory Authority.

 

64.           “PoC Trial” shall mean the first human in-patient study designed
to provide evidence of efficacy, safety and tolerability of SPC-3649 or an
SPC-3649 Product.

 

65.           “PoC Trial Reports” shall mean a reasonably complete data package
containing all material analysis, results and clinical data or any related
material correspondence or information received from or sent to any Regulatory
Authority relating to SPC-3649 or an SPC-3649 Product.

 

66.           “Proceeding” shall mean an action, suit or proceeding.

 

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67.           “Prosecution and Maintenance” or “Prosecute and Maintain” shall
mean, with regard to a Patent Right, the preparing, filing, prosecuting and
maintenance of such Patent Right, as well as handling re-examinations, reissues,
and requests for patent term extensions with respect to such Patent Right,
together with the conduct of interferences, the defense of oppositions and other
similar proceedings with respect to the particular Patent.  For clarification,
“Prosecution and Maintenance” or “Prosecute and Maintain” shall not include any
other enforcement actions taken with respect to a Patent Right.

 

68.           “Receiving Party” shall have the meaning assigned to such term in
Section 7.1.

 

69.           “Regulatory Approval” shall mean any and all approvals (including
price and reimbursement approvals, if required prior to sale in the applicable
jurisdiction), licenses, registrations, or authorizations of any country,
federal, supranational, state or local regulatory agency, department, bureau or
other government entity that are necessary for the manufacture, use, storage,
import, transport and/or sale of SPC-3649 or an SPC-3649 Product in the
applicable jurisdiction.

 

70.           “Regulatory Authority” or “Regulatory Authorities” shall mean the
FDA in the U.S., and any health regulatory authority(ies) in any country in the
Territory that is a counterpart to the FDA and holds responsibility for granting
Regulatory Approval for SPC-3649 or an SPC-3649 Product in such country, and any
successor(s) thereto.

 

71.           “Regulus” shall have the meaning assigned to such term in the
Recitals.

 

72.           “Regulus License Agreement” means the Amended and Restated License
and Collaboration Agreement dated January 1, 2009 among Regulus, Isis and
Alnylam.

 

73.           “Regulus Patents” shall mean:

 

(a)           all Founding Company Patents Controlled by Regulus or any of its
Affiliates as of the Effective Date and/or after the Effective Date and having
an earliest priority date of no later than the Effective Date, including without
limitation those listed on Exhibit B,

 

(b)           all Patent Rights, other than Founding Company Patents, Controlled
by Regulus or any of its Affiliates as of the Effective Date and/or after the
Effective Date and having an earliest priority date of no later than the
Effective Date, including without limitation the Patent Rights listed on
Exhibit F,

 

in each case, that are necessary to Development, Manufacture or Commercialize
SPC-3649 in the Field: provided, however, that in each case of (a) through (b),
(y) for any Patent Right that is the subject of an Additional Third Party
Agreement, the provisions of Section 5.6.2 will govern whether such Patent Right
will be included as a Regulus Patent hereunder, and (z) unless the Parties enter
into a Tuschl 3 Sublicense under Section 2.1 of this Agreement , Regulus Patents
will exclude the Tuschl 3 Patents.

 

74.           “Royalty Tail Period” shall have the meaning assigned to such term
in Section 5.5.2.

 

A-8

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75.           “Santaris” shall mean Santaris Pharma A/S.

 

76.           “Santaris Agreement” shall mean that certain Research and
Development Collaboration and License Agreement between SmithKline Beecham
Corporation d/b/a/ GlaxoSmithKline and Santaris, dated December 18, 2007.

 

77.           “SEC” shall mean the U.S. Securities and Exchange Commission.

 

78.           “Selling Party” shall have the meaning assigned to such term in
Section 52 .

 

79.           “SPC-3649” shall mean (a) the proprietary Santaris compound known
on the Effective Date as SPC-3649, and (b) any and all salts, crystalline and
amorphous forms, and solvates (including hydrates) thereof.  The sequence and
chemistry of SPC-3649 is described in [***].

 

80.           “SPC-3649 Product” means any product that includes SPC-3649 as an
active ingredient, or includes SPC-3649 in any base form, salt form, prodrug,
ester, crystalline polymorph, hydrate or solvate thereof, whether or not as the
sole active ingredient and in any dosage, form or formulation, sold by GSK, its
Affiliates or Sublicensees, in finished product form, packaged and labeled for
sale.  Unless otherwise indicated by context, “Product” or “SPC-3649 Product”
includes Combination Products.

 

81.           “SPC-3649 Rights” shall have the meaning assigned to such term in
Section 3.2(a).

 

82.           “Stanford” means The Board of Trustees of the Leland Stanford
Junior University.

 

83.           “Stanford License Agreement” means the Co-Exclusive License
Agreement dated August 31, 2005 among Stanford and the Founding Companies (as
assigned by Isis to Regulus on July 13, 2009).

 

84.           “Stanford Patent(s)” means any Patent Right licensed under the
Stanford License Agreement.  A list of the Stanford Patents as of the Effective
Date is attached hereto under Exhibit F.

 

85.           “Sublicensee” shall mean a Third Party or Founding Company to whom
a Party or its Affiliates or Sublicensees has granted a sublicense or license
under any Regulus Patents, licensed to such Party in accordance with the terms
of this Agreement.

 

86.           “Territory” shall mean all of the countries and territories of the
world.

 

87.           “Third Party” shall mean any Person other than Regulus or GSK or
an Affiliate of Regulus or GSK or a Founding Company of Regulus.

 

88.           “Third Party License Pass-Through Costs” shall mean, (a) with
respect to Regulus, the licensing costs and payments that Regulus owes to Third
Parties, but excluding any costs and payments of any kind owed by Regulus to
[***], or (b) with respect to GSK, the

 

A-9

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licensing costs and payments that GSK owes to Third Parties, in each case as a
result of the practice of intellectual property licensed from such Third Parties
in the Development, Manufacture and/or Commercialization of SPC-3649 hereunder,
including, without limitation, all [***] payments.  For clarity, any such costs
and payments owed to Third Parties by a Party (x) shall only include the share
of such costs and payments which is [***], and not by any of its Affiliates or
by Regulus, [***], as applicable (although, for clarity, if such costs and
payments are paid by [***], as applicable, solely in order for such [***] to the
relevant Third Party in those situations in which (i) GSK is a sublicensee of
such Third Party, through its Affiliate, then such costs and payments shall be
[***], or (ii) Regulus is a sublicensee of such Third Party through its
Affiliate or Founding Company, then such costs and payments shall be [***], in
each case subject to the following clause (y)), and (y) shall only include any
such costs and payments to the [***].

 

89.           “Third Party and Founding Company-Originated Rights and
Obligations” shall mean the rights of, and any limitations, restrictions or
obligations imposed by, (a) Founding Companies pursuant to the Regulus License
Agreement and (b) Third Parties pursuant to (i) the contracts assigned to
Regulus pursuant to Section 2.1 of the Regulus License Agreement, including but
not limited to the Stanford License Agreement, [***] (as defined in the Regulus
License Agreement), [***] (as defined in the Regulus License Agreement), [***]
(as defined in the Regulus License Agreement), [***] (each as defined in the
Regulus License Agreement) [***]

 

90.           “Total License Pass-Through Costs” shall mean the licensing costs
and payments that [***] as a result of the practice of intellectual property
licensed from any such [***] in the Development, Manufacture and/or
Commercialization of SPC-3649 or an SPC-3649 Product hereunder, including,
without limitation, all upfront fees, annual payments, milestone payments and
royalty payments.  For clarity, any such costs and payments (a) shall only
include the share of such costs and payments which is [***], and not by any of
[***] (although, for clarity, if such costs and payments are paid [***] solely
in order for [***] to the relevant Third Party in those situations in which
[***], of such Third Party, then such costs and payments shall be [***], subject
to clause (b)), and (b) shall only include any such costs and payments to the
[***].

 

91.           “[***] Patents” means all Patent Rights licensed by Isis and/or
Alnylam under the License Agreement among [***], Isis and Alnylam dated [***],
as amended.  A representative list of the [***] Patents as of the Effective Date
is attached hereto under Exhibit C.

 

92.           “[***] Sublicense” will have the meaning assigned to such term in
Section 2.1.

 

93.           “United States” or “U.S.” shall mean the fifty states of the
United States of America and all of its territories and possessions and the
District of Columbia.

 

94.           “Upfront Payment” shall have the meaning assigned to such term in
Section 5.1.

 

A-10

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95.           “Valid Claim” means a claim within an issued Patent in the Regulus
Patents that has not expired, lapsed, been cancelled or abandoned, and that has
not been dedicated to the public, disclaimed or been revoked, cancelled or held
unenforceable or invalid by a decision of a court or governmental administrative
agency of competent jurisdiction from which no appeal can be taken, or with
respect to which an appeal is not taken within the time allowed for appeal, and
that has not been disclaimed or admitted to be invalid or unenforceable
including through opposition, re-examination, reissue, disclaimer or otherwise.

 

96.           “Withholding-Free Payments” means the [***] and [***] payments
payable to Regulus under Sections [***] and [***] of this Agreement.

 

A-11

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

 

EXHIBIT B

 

Representative List of Regulus Patents as of the Effective Date

 

[***]

 

B-1

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

 

EXHIBIT C

 

[***] Patents as of the Effective Date

 

[***]

 

 

C-1

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

 

EXHIBIT D

 

Press Release

 

Regulus Therapeutics and GlaxoSmithKline Establish New Collaboration to Develop
and Commercialize microRNA Therapeutics Targeting miR-122

 

- miR-122 Represents a Novel “Host Factor” Strategy for Treatment of Hepatitis C
Infection —

 

- Further Demonstration of Regulus Leadership in microRNA Science, Technology
and Intellectual Property -

 

Carlsbad, CA., February 24, 2010 — Regulus Therapeutics Inc. today announced the
establishment of a new collaboration with GlaxoSmithKline (GSK) to develop and
commercialize microRNA therapeutics targeting microRNA-122 in all fields with
Hepatitis C Viral infection (HCV) as the lead indication.  Under the terms of
the new collaboration, Regulus will receive additional upfront and early-stage
milestone payments with the potential to earn more than $150 million in
miR-122-related combined payments, and tiered royalties up to double digits on
worldwide sales of products.

 

“This new collaboration with GSK demonstrates the clear scientific leadership
that Regulus has established in advancing a whole new frontier of pharmaceutical
research.  microRNA therapeutics target the pathways of human diseases, not just
single disease targets, and hold considerable promise as novel therapies across
a broad range of unmet medical needs,” said Kleanthis G. Xanthopoulos, Ph.D.,
President and Chief Executive Officer of Regulus. “It also further validates
Regulus’ microRNA product platform built on fundamental biology of human
diseases and intellectual property, and also extends the therapeutic scope of
our existing collaboration formed with GSK in 2008.  Furthermore, the funding
from this alliance supports Regulus’ efforts in advancing high impact, novel
medicines based on microRNA biology to patients.”

 

The collaboration provides GSK with access to Regulus’ comprehensive and robust
intellectual property estate.  Regulus exclusively controls patent rights
covering miR-122 antagonists and their use as HCV therapeutics in the United
States, Europe, and Japan, including but not limited to the patent families
which encompass:  the ‘Sarnow’ patent pertaining to the method of use of
anti-miR-122 to inhibit HCV replication, the ‘Esau’ patent application claiming
the use of anti-miRs targeting miR-122 as inhibitory agents, the ‘Tuschl III’
patent claiming composition of matter for miR-122 and complementary
oligonucleotides, and the ‘Manoharan’ patent claiming antagomirs, including
antagomirs targeting miR-122.

 

miR-122 is a liver-expressed microRNA that has been shown to be a critical
endogenous “host factor” for the replication of HCV, and anti-miRs targeting
miR-122 have been shown to block HCV infection (Jopling et al. (2005) Science
309, 1577-81). In earlier work, scientists at Alnylam and Isis demonstrated the
ability to antagonize miR-122 in vivo using chemically modified single-stranded
anti-miR oligonucleotides. Further, work by Regulus scientists and collaborators
showed that inhibiting miR-122 results in significant inhibition of HCV
replication in human liver cells, suggesting that antagonism of miR-122 may
comprise a novel “host factor”

 

D-1

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

 

therapeutic strategy. Regulus scientists have shown in multiple preclinical
studies a robust HCV antiviral effect following inhibition of miR-122.  Regulus
plans to identify a clinical development candidate in the second half of 2010
and file an investigational new drug (IND) application in 2011.

 

About microRNAs

 

The discovery of microRNA in humans is one of the most exciting scientific
breakthroughs in the last decade. microRNAs are small RNA molecules, typically
20 to 25 nucleotides in length, that do not encode proteins but instead regulate
gene expression. Nearly 700 microRNAs have been identified in the human genome,
and more than one-third of all human genes are believed to be regulated by
microRNAs. As a single microRNA can regulate entire networks of genes, these new
molecules are considered the master regulators of the genome. microRNAs have
been shown to play an integral role in numerous biological processes including
the immune response, cell-cycle control, metabolism, viral replication, stem
cell differentiation and human development. Many microRNAs are conserved across
multiple species indicating the evolutionary importance of these molecules as
modulators of critical biological pathways. Indeed, microRNA expression or
function has been shown to be significantly altered in many disease states,
including cancer, heart failure and viral infections. Targeting microRNAs opens
the possibility of a novel class of therapeutics and a unique approach to
treating disease by modulating entire biological pathways.

 

About Hepatitis C Virus (HCV)

 

HCV infection is a disease with an estimated prevalence of 170 million patients
worldwide, with more than 3 million patients in the United States. HCV shows
significant genetic variation in worldwide populations due to its frequent rates
of mutation and rapid evolution. There are six genotypes of HCV, with several
subtypes within each genotype, which vary in prevalence across the different
regions of the world. The response to treatment varies from individual to
individual underscoring the inadequacy of existing therapies and highlights the
need for combination therapies that not only target the virus but endogenous
“host factors” as well. Strategies that include the Regulus miR-122 antagonist
as part of emerging combination therapies to shorten duration of treatment and
interferon use, improve the safety profile and sustained virologic response
(SVR), increase the barrier to drug resistance, and address difficult-to-treat
genotypes hold significant potential to expand the limited therapies available
to physicians treating HCV patients.

 

About Regulus Therapeutics Inc.

 

Regulus Therapeutics is a biopharmaceutical company leading the discovery and
development of innovative new medicines based on microRNAs.  Regulus is
targeting microRNAs as a new class of therapeutics by working with a broad
network of academic collaborators and leveraging oligonucleotide drug discovery
and development expertise from its founding companies Alnylam Pharmaceuticals
(Nasdaq:ALNY) and Isis Pharmaceuticals (Nasdaq:ISIS). Regulus is advancing
microRNA therapeutics towards the clinic in several areas including hepatitis C
infection, cardiovascular disease, fibrosis, oncology, immuno-inflammatory
diseases, and metabolic diseases. Regulus’ intellectual property estate contains
both the fundamental and core patents in the field as well as over 600 patents
and more than 300 pending patent applications pertaining primarily to chemical
modifications of oligonucleotides targeting microRNAs for therapeutic

 

D-2

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applications.  In 2008, Regulus entered into a major alliance with
GlaxoSmithKline to discover and develop microRNA therapeutics for
immuno-inflammatory diseases. For more information, visit www.regulusrx.com.

 

Forward-Looking Statements

 

This press release includes forward-looking statements regarding the future
therapeutic and commercial potential of Regulus’, Alnylam’s, and Isis’ business
plans, technologies and intellectual property related to microRNA therapeutics
being discovered and developed by Regulus, including statements regarding
expectations around the relationship between GSK and Regulus.  Any statement
describing Regulus’, Alnylam’s, and Isis’ goals, expectations, financial or
other projections, intentions or beliefs is a forward-looking statement and
should be considered an at-risk statement, including those statements that are
described as such parties’ goals.  Such statements are subject to certain risks
and uncertainties, particularly those inherent in the process of discovering,
developing and commercializing drugs that are safe and effective for use as
human therapeutics, and in the endeavor of building a business around such
products.  Such parties’ forward-looking statements also involve assumptions
that, if they never materialize or prove correct, could cause their results to
differ materially from those expressed or implied by such forward-looking
statements.  Although these forward-looking statements reflect the good faith
judgment of the management of each such party, these statements are based only
on facts and factors currently known by Regulus’, Alnylam’s, and Isis’
management as the case may be.  As a result, you are cautioned not to rely on
these forward-looking statements.  These and other risks concerning Regulus’,
Alnylam’s, and Isis’ programs are described in additional detail in Alnylam’s
and Isis’ annual reports on Form 10-K for the year ended December 31, 2008, and
their most recent quarterly reports on Form 10-Q which are on file with the
SEC.  Copies of these and other documents are available from Alnylam or Isis.

 

D-3

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EXHIBIT E

 

[Intentionally Left Blank]

 

E-1

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

 

EXHIBIT F

 

Stanford Patents as of the Effective Date

 

[***]

 

F-1

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

 

EXHIBIT G

 

Third Party In-Licenses

 

[***]

 

G-1

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

 

EXHIBIT H

 

[***] License Terms

 

The following is a summary of material terms that would apply to a license under
[***] Patents (as set forth in Appendix 1) for SPC-3649, in relation to SPC-3649
Rights.  Terms used herein and not otherwise defined shall have the meaning
assigned to such term in the Agreement.

 

Licensor

 

Regulus Therapeutics Inc.

 

 

 

Licensee

 

Santaris A/S

 

 

 

Field

 

The treatment and/or prophylaxis of hepatitis C virus

 

 

 

Territory

 

Worldwide

 

 

 

Santaris Option

 

Santaris’ option (the “Santaris Option”) to take an exclusive license from
Regulus under the [***] Patents to develop and commercialize only SPC-3649
within the Field.

 

 

 

 

 

The Santaris Option can be exercised by Santaris:

 

 

1.     if after GSK takes a license to SPC-3649 it subsequently ceases
development of SPC-3649 and returns rights to SPC-3649 to Santaris.

 

 

 

 

 

The Santaris Option would expire sixty (60) days following the event above.

 

 

 

 

 

[***]

Up-front Payment

 

[***]] however if GSK has taken license to SPC-3649 and made the corresponding
$[***] payment to Regulus following completion of the PoC Trial, then this
payment would be waived.

 

 

 

Milestones to Regulus

 

Santaris would pay the following milestones to Regulus, based upon the
achievement of the milestone event by SPC-3649:

 

 

 

Milestone Payment*

 

Milestone Event

 

US$Million (“m”)

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

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

 

 

*Each milestone will be paid only once upon the first achievement of the
Milestone Event by SPC-3649.  For clarity, if GSK had paid a milestone, then the
milestone would not be payable a second time by Santaris.

 

H-1

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

 

 

 

†Such milestone will only be payable if, at the time such milestone is achieved
there is a Valid Claim within the [***] Patents, which covers [***]; provided,
however, that if there is no Valid Claim at the time of such Milestone Event,
then (a) Santaris must pay to Regulus [***] of such milestone payment upon the
First Commercial Sale of an SPC-3649 Product in any country in the [***]; and
(b) if a Pending Claim within the [***] Patents issues such that it is a Valid
Claim in the [***] prior to the [***] anniversary of the date of the First
Commercial Sale described in clause (a) above, then Santaris will pay Regulus
the remaining [***] of such milestone within thirty (30) days of receipt by
Santaris of an invoice sent from Regulus on or after the date of the issuance of
the applicable Pending Claim.

 

 

 

 

 

“Clinical Studies” shall mean human studies designed to measure the safety,
efficacy, tolerability and/or appropriate dosage of SPC-3649, as the context
requires, including without limitation Phase 1 Clinical Trials, Phase 2 Clinical
Trials (including any PoC Trial), Phase 3 Clinical Trials and any
post-Regulatory Approval studies (such as Phase 4 Clinical Trials).

 

 

 

 

 

“First Commercial Sale” means, with respect to an SPC-3649 Product in a country
in the Territory, the first sale, transfer or disposition for value by Santaris,
its Affiliates or Sublicensees to an end user of an SPC-3649 Product in such
country; provided, that, the following shall not constitute a First Commercial
Sale: (a) any sale to an Affiliate, Founding Company or Sublicensee unless the
Affiliate, Founding Company or Sublicensee is the last entity in the
distribution chain the SPC-3649 Product, (b) any use of SPC-3649 or an SPC-3649
Product in Clinical Studies, pre-clinical studies or other research or
development activities, or disposal or transfer of SPC-3649 or an SPC-3649
Product for a bona fide charitable purpose, (c) compassionate use, (d) so called
“treatment IND sales” and “named patient sales,” and (e) use under the ATU
system in France and/or the International Pharmi system in Europe.

 

 

 

 

 

“Pending Claim” means a claim within any patent application in the [***] Patents
that has not been cancelled, withdrawn, or abandoned.  For purposes of clarity,
if any Pending Claim of a patent application subsequently issues, such claim
shall be deemed to qualify as a Valid Claim.

 

 

 

 

 

“Regulatory Approval” shall mean any and all approvals (including price and
reimbursement approvals, if required prior to sale in the applicable
jurisdiction), licenses, registrations, or authorizations of any country,
federal, supranational, state or local regulatory agency,

 

H-2

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

 

 

 

department, bureau or other government entity that are necessary for the
manufacture, use, storage, import, transport and/or sale of SPC-3649 or an
SPC-3649 Product in the applicable jurisdiction.

 

 

 

 

 

“SPC-3649 Product” means any product that includes SPC-3649 as an active
ingredient, or includes SPC-3649 in any base form, salt form, prodrug, ester,
crystalline polymorph, hydrate or solvate thereof, whether or not as the sole
active ingredient and in any dosage, form or formulation, sold by Santaris, its
Affiliates or Sublicensees, in finished product form, packaged and labeled for
sale.  Unless otherwise indicated by context, “Product” or “SPC-3649 Product”
includes Combination Products.

 

 

 

 

 

“Valid Claim” means a claim within an issued Patent in the [***] Patents that
has not expired, lapsed, been cancelled or abandoned, and that has not been
dedicated to the public, disclaimed or been revoked, cancelled or held
unenforceable or invalid by a decision of a court or governmental administrative
agency of competent jurisdiction from which no appeal can be taken, or with
respect to which an appeal is not taken within the time allowed for appeal, and
that has not been disclaimed or admitted to be invalid or unenforceable
including through opposition, re-examination, reissue, disclaimer or otherwise.

 

 

 

Royalties to Regulus

 

Santaris will pay to Regulus royalties on Annual worldwide Net Sales of any
SPC-3649 Product sold by Santaris, its Affiliates or Sublicensees (“Santaris
Patent Royalty”) during a calendar year, on a country-by-country basis, in the
Field in the countries of the Territory in which there is a Valid Claim in the
Field within the [***] Patents, which [***], in the amounts as follows:

 

Annual Worldwide Net Sales (U.S. $
Million) of SPC-3649 Product per
Calendar Year US$Million (“m”)

 

Applicable Royalty
Rate

 

up to $1000m

 

[***]

%

$1000m up to $2000m

 

[***]

%

$2000m up to $3000m

 

[***]

%

> $3000m

 

[***]

%

 

 

 

The royalty rates in the table above are incremental rates, which apply only for
the respective increment of Annual worldwide Net Sales described in the Annual
worldwide Net Sales column.  Thus, once a total Annual worldwide Net Sales
figure is achieved for the year, the

 

H-3

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

 

 

 

royalties owed on any lower tier portion of Annual worldwide Net Sales are not
adjusted up to the higher tier rate.

 

 

 

 

 

Royalty Adjustment.  If there are no Valid Claims within the [***] Patents that
claim [***] SPC-3649 Product sold in a particular country, the Santaris Patent
Royalty set forth above shall be reduced to [***] of the Santaris Patent Royalty
rates above in such countries where a Pending Claim within the [***] Patents
claims [***] has not yet been issued.  For the avoidance of doubt, for such
Pending Claims, Santaris shall pay Regulus [***] of the Santaris Patent Royalty
set forth in the table above, and shall pay the remaining [***] of the Santaris
Patent Royalty into an escrow account, until such time as a Valid Claim within
the [***] Patents issues that covers the [***] being sold in the country of
sale, provided that such Valid Claim must issue within [***] years of date of
First Commercial Sale of an SPC-3649 Product (the “Royalty Tail Period”).  In
the event such Valid Claim issues during the Royalty Tail Period, (i) the escrow
account and any interest thereon shall be paid to Regulus and (ii) Santaris will
pay the full Santaris Patent Royalty in such countries starting only from the
date of such issuance of the Valid Claim and shall not owe any Santaris Patent
Royalty in such countries for any preceding period.  In the event that no such
Valid Claim issues during the Royalty Tail Period, then the escrowed amounts and
any interest thereon shall be returned to Santaris and any obligations Santaris
may have had with respect to the Pending Claims shall cease.  If Santaris
maintains sole control over such escrow account then Santaris shall be solely
responsible for the costs and expenses associated with maintaining such escrow
account, otherwise Santaris and Regulus shall be mutually responsible for the
costs and expenses associated with maintaining such escrow account; provided,
that the Parties must mutually agree (such agreement not to be unreasonably
withheld) before taking any action that would cause Santaris to lose sole
control of such escrow account.  If a Valid Claim within the [***] Patents that
[***] issues after the Royalty Tail Period, then Santaris will pay Regulus the
full Santaris Patent Royalty in such countries starting only from the date of
such issuance of the Valid Claim and shall not owe any Santaris Patent Royalty
in such countries for any preceding period.

 

 

 

Prosecution and Maintenance of Sarnow Patents

 

At Regulus’ expense, Regulus shall (but shall not be obligated to) control and
be responsible for all aspects of the Prosecution, Maintenance, enforcement and
defense of all Sarnow Patents

 

 

 

No Challenge

 

Santaris covenants to Regulus that pursuant to the Santaris Option to take a
license to the [***] Patents, that during the term of the Santaris Option and
any license agreement granted thereunder, solely with respect to claims within
the Regulus Patent Rights to the [***] Patents that are to be included in the
license to be granted to Santaris pursuant to the terms set forth in this
Exhibit H, Santaris, its Affiliates or

 

H-4

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

 

 

 

Sublicensees will not, in the U.S. or any other Major Country, (a) commence or
otherwise voluntarily determine to participate in (other than as may be
necessary or reasonably required to assert a cross-claim or a counter-claim or
to respond to a court request or order or administrative law request or order)
any action or proceeding, challenging or denying the validity of any claim
within an issued patent or patent application within the [***] Patents, or
(b) direct, support or actively assist any other Person (other than as may be
necessary or reasonably required to assert a cross-claim or a counter-claim or
to respond to a court request or order or administrative law request or order)
in bringing or prosecuting any action or proceeding challenging or denying the
validity of any claim within an issued patent or patent application within the
[***] Patents.  For purposes of clarification, any breach of these terms will be
a material breach of the license granted to Santaris, and will be grounds for
termination by Regulus of the license.

 

 

 

 

 

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

 

 

 

Research Plan

 

If Santaris exercises the Santaris Option to take a license to the [***]
Patents, Regulus and Santaris will jointly prepare a research plan for SPC-3649;
provided, that (i) Santaris shall not be required to share with Regulus or any
confidential information; and (ii) Santaris will have the sole decision making
authority with respect to such research plan.

 

 

 

Stanford License Considerations

 

With respect to the sublicense granted by Regulus under the [***] Patents,
Santaris acknowledges and agrees that (a) such sublicense is subject and
subordinate to the terms and conditions of the Stanford License Agreement,
(b) Stanford is a third party beneficiary to this Agreement as it relates to
Articles 8, 9 and 10 of the Stanford License Agreement, such that Stanford may
directly enforce Articles 8, 9 and 10 of the Stanford License Agreement against
Santaris, and (c) if Stanford terminates the Stanford License Agreement as it
relates to Regulus (but not as it relates to this Agreement), Santaris will
assume (and be directly liable to Stanford for) all Third Party License
Pass-Through Costs and all Third Party and Founding Company-Originated Rights
and Obligations due Stanford in connection with this Agreement.

 

H-5

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Term

 

Unless earlier terminated pursuant to Santaris’ termination rights below, the
license agreement would continue in full force and effect until the date of
expiration of all payment obligations by Santaris under such license agreement
(the “Santaris Agreement Term”).

 

 

 

Santaris termination rights

 

Santaris would have the right, at its sole discretion, exercisable at any time
during the Santaris Agreement Term, to terminate the license agreement in its
entirety, for any reason or for no reason at all, upon ninety (90) days written
notice to Regulus.

 

H-6

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Appendix 1

 

The [***] Patents are all Patent Rights related to the following:

 

[***]

 

H-7

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