Exhibit 10.3

 

SECTION VII.

 

Isis Policy and Procedures Manual

 

CODE OF ETHICS AND& BUSINESS CONDUCT

 

Reviewed & Approved – 12/2008

Next Review – 12/2009March 2008

Document Owner – LegalCFO

 

ISIS PHARMACEUTICALS, INC.

1896 Rutherford Road

Carlsbad, CA 92008

 

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Code of Ethics and Business Conduct

Table of Contents

 

SECTION VII. CODE OF ETHICS AND BUSINESS CONDUCT

 

1

 

 

 

PHILOSOPHY OF ISIS CODE OF ETHICS AND BUSINESS CONDUCT

 

3

COMPLIANCE WITH LAWS AND REGULATIONS

 

3

ETHICAL CONDUCT

 

3

YOUR RESPONSIBILITY

 

3

BUSINESS PRACTICES

 

4

Interaction with Competitors

 

4

Bribes, Kickbacks and Similar Payments

 

4

Books, Records and Information Management

 

4

Retention of Records

 

5

Audit Integrity

 

5

CONFLICTS OF INTEREST

 

5

PRE-CLEARANCE PROCEDURE

 

5

CERTAIN PRE-CLEARED BUSINESS ACTIVITIES

 

6

DISHONESTY AND THEFT

 

6

INSIDER TRADING

 

6

WAIVERS FOR EXECUTIVE OFFICERS AND DIRECTORS

 

7

REPORTING SUSPECTED VIOLATIONS

 

7

CONSEQUENCES OF VIOLATING ISIS’ CODE OF ETHICS

 

8

APPENDIX A – The Foreign Corrupt Practices Act

 

9

 

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PHILOSOPHY OF ISIS CODE OF ETHICS AND BUSINESS CONDUCT

 

Approved – Drafting

Next Review – 12/07

Document Owner – COO

 

Isis Pharmaceuticals, Inc. (hereinafter referred to as “Isis” or the “Company”)
will adhere to high legal and ethical standards.  As such, this Code of Ethics
and Business Conduct (hereinafter referred to as the “Code of Ethics”) applies
to each of Isis’ employees (including its executive officers) and each member of
the Isis Board of Directors.

 

COMPLIANCE WITH LAWS AND REGULATIONS

 

Approved –

Next Review –

Document Owner –

 

As a U.S. company, Isis is governed by and required to comply with U.S. federal
law.  In addition to complying with federal law, Isis will conduct all its
activities in compliance with all applicable national, state and local laws,
regulations and judicial decrees wherever it conducts business.

 

At no time will you take any action on behalf of the Company that you know, or
reasonably should know, violates any law or regulation.  Whenever possible, you
will strive to comply with the spirit of the law as well as its letter.

 

No code of conduct can cover all circumstances or anticipate every situation. 
When you encounter situations not addressed specifically by this Code of Ethics,
you should apply its overall philosophy and concepts to the situation.  You
should also refer to specific Company policies on the subject in question or
similar subjects.  If you still have a question about the appropriateness of an
action, you should review the particular circumstances with Isis’ COOExecutive
Vice President, CEO or the Audit Committee of the Board of Directors.

 

ETHICAL CONDUCT

 

Approved –

Next Review –

Document Owner –

 

You should strive to act in a manner using good judgment, high ethical standards
and honesty in your business dealings on behalf of the Company.  Unethical
practices and activities do not serve the interests of the Company or the
community, even if they do not technically violate the law.

 

Your Responsibilities

 

·                  Know and comply with the Isis Code of Ethics and Company
policies that apply to business activities.

 

·                  Be honest, fair and trustworthy in all business activities
and relationships.

 

·                  Provide and support a culture that values integrity and
ethical conduct.

 

·                  Avoid all conflicts of interest between work and personal
affairs.

 

·                  Report suspected violations of law, the Isis Code of Ethics
or Company Policies.

 

·                  Cooperate in any investigation into possible violations of
law, the Isis Code of Ethics or Company Policies.

 

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Business Practices

 

It is Isis’ policy to deal with its business associates, partners, suppliers,
competitors and any governments or governmental agencies with which it interacts
in an ethical manner.  As such, you will comply with the principles outlined
below and will take steps to ensure similar compliance by the persons you
directly manage.

 

Interaction with Competitors

 

As a vigorous competitor in the marketplace, Isis will seek economic knowledge
about our competitors.  However, you will not engage in illegal or improper acts
to acquire any competitor information.  In addition, you will not hire
competitors’ employees for the purpose of obtaining confidential information,
urge competitors’ personnel, customers or suppliers to disclose confidential
information, or seek such information from competitors’ employees subsequently
hired by the Company.

 

Bribes, Kickbacks and& Similar Payments

 

You are prohibited from paying or receiving any bribe, kickback or other similar
payment to or from any public official, or government, or other individual, to
secure any concession, contract or other favorable treatment for Isis or you. 
This prohibition extends to the payment or receipt of money or anything else of
substantial value when you have reason to believe that some part of the payment
or “fee” will be used for a bribe, kickback or other similar activity.

 

Because Isis is a global company and does business worldwide, you must comply
with the United States Foreign Corrupt Practices Act of 1977.  For more detail,
please read a definition of the “Foreign Corrupt Practices Act,” attached as
Appendix A.

 

Books, Records and& Information Management

 

Isis’ books of account and records must be accurately maintained and fully
disclose the nature of transactions reflected in them. Penalties for violating
the laws and regulations in this area could be severe for the Company and the
employees involved.  Isis will maintain these books according to the following
record-keeping requirements and in compliance with the spirit and letter of
applicable laws and regulations:

 

·                  All books, records and accounts must be kept in reasonable
detail and must accurately and fairly reflect all transactions and dispositions
of the Company’s assets.

 

·                  All disbursements of funds and all receipts must be properly
and promptly recorded.

 

·                  No undisclosed or unrecorded fund or account may be
established for any purposes.

 

·                  False or artificial entries must never be made in any of the
books or records of the Company, or in any public record for any reason, nor
should the Company’s records be falsely altered in any way.

 

You will not take any action, for the purpose of rendering the Company’s
financial statements materially misleading, or to fraudulently influence,
coerce, manipulate, or mislead any independent accountant engaged in the
performance of an audit of the Company’s financial statements.

 

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Retention of Records

 

Legal practice requires the retention of certain records for various periods of
time, particularly those relating to taxes, personnel, contracts and corporate
structure.  When litigation or a government investigation or audit is pending or
imminent, you must not destroy any relevant records until the matter is closed. 
Destruction of records to avoid disclosure in a legal proceeding or
investigation may constitute a criminal offense.

 

Audit Integrity

 

No officer or director of Isis, or any other person acting under their
direction, will take any action to fraudulently influence, coerce, manipulate,
or mislead any independent accountant engaged in the performance of an audit of
the Company’s financial statements for the purpose of rendering the Company’s
financial statements materially misleading.

 

Conflicts of Interest

 

As an employee youYou cannot without the Company’s express written consent,
engage in any employment or business activity other than for the Company. 
Unless expressly consented to in writing by the Company, your personal
activities should not involve the use of Company property, facilities, influence
or other resources, and should not reflect discredit upon the Company.

 

You will not engage in any activity through which you stand to benefit
personally from any sale or purchase of goods and services by the Company. This
provision does not apply to benefits arising out of your employment with the
Company, or to ownership of equity in a publicly traded company which was
purchased on the open  market and represents (i) less than 1% of such company’s
outstanding equity and (ii) less than 5% of your equity portfolio.

 

You must promptly disclose in writing any actual or potential conflicts of
interest to Isis’ COO, CEO or General Counsel.  Isis will review the matter, as
set forth above, and communicate its position in writing.

 

Pre-Clearance Procedure

 

All employees must pre-clear any employment or business activity other than for
the Company.  To do so, you should contact either (i) the CEO, (ii) COO or
(iii) General Counsel and explain to them the proposed business activity you
wish to engage in.  If you are an executive officer, the Nominating, Governance
and Review Committee will evaluate the proposed business activity and will
notify you whether such activity has been approved.  For all other employees,
the CEO or COO will evaluate the proposed business activity and will notify you
whether such activity has been approved.  In some cases, the
individual(s) reviewing your request may discuss your request with other members
of the Isis management team.  Remember, just because you have to pre-clear a
certain activity, does not mean that Isis will prevent you doing it.

 

Members of the Board of Directors must request and receiveWithout a
determination from the Board of Directors (for executive officers and Directors)
or the CEO or Executive Vice President (for non-executive officers) that no
conflict from the Nominating, Governance and Review Committee before engaging
inof interest exists, you will not engage in any activity, including acting as
an employee or , director, or advisor for any entity that directly or indirectly
competes with Isis.

 

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Certain Pre-Cleared Business Activities

 

Isis’ management has already pre-cleared certain business activities that should
not cause a conflict of interest.  For these activities, employees generally do
not need to obtain written permission from the Company.  However, please use
your common sense because even with pre-cleared activities, conflicts of
interest can arise.  If you are ever in doubt, you should follow the
pre-clearance procedures outlined above.  The pre-cleared business activities
include:

 

·                  Working in the food service or hospitality industry after
normal business hours;

·                  Owning rental property (unless Isis rents the property);

·                  Philanthropic or pro bono activities;

·                  Farming;

·                  Home-based retail (e.g. Amway, Tupperware, cosmetics),
provided you do not solicit sales during Isis business hours or at the Isis
workplace; and

·                  Fitness instructor.

 

You must promptly disclose in writing any actual or potential conflicts of
interest to Isis’ Executive Vice President, CEO or Vice President Human
Resources.  Isis will review the matter, as set forth above, and communicate its
position in writing.

 

Dishonesty and Theft

 

You will not knowingly:

 

·                  Engage in fraud or embezzlement affecting Company property,
funds, securities or other assets; or

 

·                  Willfully damage or destroy property or materials belonging
to the Company, its employees or customers.

 

In addition, without proper supervisory authorization, you will not knowingly:

 

·                  Remove property, material or money from the Company, its
employees, or its customers for personal gain, personal use, resale or to give
to another party;

 

·                  Receive property, materials or money belonging to the
Company, its employees or its customers for personal gain, personal use, resale
or to give to another party;

 

·                  Access, remove, publish, destroy or alter private or
confidential information existing in physical Company records or electronically
stored information;

 

·                  Remove, publish, destroy or alter other physical Company
records or electronically stored information affecting the Company, its
employees or corporate partners; or

 

·                  Copy, reprint, duplicate, or recreate in whole or in part,
computer programs or related systems developed or modified by Isis personnel, or
acquired from outside vendors.

 

Insider Trading

 

During the course of your employment, you may receive important information
which is not yet publicly available (“inside information”) about Isis or about
other publicly traded companies with which the Company has business dealings. 
Because of your access to this information, you may be in a position to profit
financially by buying or selling or in some other way dealing in Company stock
or the stock of another publicly traded company.  Similarly,Or you may be in a
position to benefit financially or

 

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otherwise by passing this information on to some other person.  Whether you
personally benefit or another benefits, this is considered “insider trading” and
is illegal.

 

You may not disclose inside information to anyone inside the Company who is not
authorized to access it or to anyone outside the Company.  When you have access
to inside information, you may not buy or sell Isis stock regardless of the
number of shares nor may you encourage or discourage others from trading on
Company stock.

 

WAIVERS FOR EXECUTIVE OFFICERS AND DIRECTORS

 

Any waiver of this Code of Ethics for executive officers or members of the Board
of Directors must be approved by the Nominating, Governance and Review
CommitteeBoard of Directors and must be promptly disclosed to the Company’s
stockholders, including the reasons for the waiver.

 

REPORTING SUSPECTED VIOLATIONS

 

Isis is committed to complying with all applicable securities laws and to filing
fair and accurate disclosures with the SEC.  Each Employee who reports
suspectedIf you suspect accounting improprieties or , violations of the law or
this Code of Ethics or of any laws specifically including federal mail fraud,
wire fraud, or securities fraud statutes will be taken seriously and the
allegations will be thoroughly investigated.

 

An employee who suspects accounting improprieties or violations of this Code of
Ethics or of any laws specifically including federal mail fraud, wire fraud, or
securities fraud statutes should take the following steps:

 

1.               The employee you should immediately communicate his/heryour
concern to the Vice President Human Resources, the General Counsel, the
COOExecutive Vice President or the CEO.  To ensure the highest quality response,
employees should communicate directly with Any one of these designated Isis
officials.  However, any concern may be made anonymously and will be taken
seriously.

 

2.               Any officer receivingofficers who receives such a complaint
will immediately communicate the complaint to the chairman of the Audit
Committee or.  Alternatively, you may directly report a suspected violation any
such violations directly to the Chairmanchairman of the Audit Committee.

 

3.               The Audit Committee together with management will conduct, if
appropriate, a confidential, but not anonymous investigation which will involve
talking to the complainant (if known), the accused, and as circumstances
warrant, any witnesses, and anyone who may have similar complaints.

 

4.               Any concern may be made anonymously and will be taken
seriously.  All parties involved in the investigation will be required to
cooperate fully, maintain complete confidentiality and take no action which
might be considered retaliatory.

 

5.               Once the investigation is complete, the Audit Committee will
make a determination as to what happened, the level of severity and the
appropriate remedial action, and will take such action.

 

Isis will not discharge, demote, suspend, threaten, harass, or in any other
manner discriminate against an employee because you (1) have provided
information, caused information to be

 

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provided, or otherwise assisted in an investigation regarding any conduct which
you reasonably believe constitutes a violation of this Code of Ethics or of the
federal mail fraud, wire fraud, or securities fraud statutes, any SEC rule or
any provision of federal law relating to fraud against stockholders, when the
information or assistance is provided to or the investigation is conducted by a
federal regulatory or law enforcement agency, any Member of Congress or
Congressional committee, or a person with supervisory authority over the
employee or (2) have filed, caused to be filed, testified, participated in or
otherwise assisted in a proceeding filed or about to be filed (with any
knowledge of Isis) relating to an alleged violation of the federal mail fraud,
wire fraud, or securities fraud statutes, any SEC rule or any provision of
federal law relating to fraud against stockholders.  An employee who alleges
such discharge or discrimination may file a civil complaint with the Secretary
of Labor.

 

CONSEQUENCES OF VIOLATING ISIS’ CODE OF ETHICS

 

If you violate the law, the Isis Code of Ethics or Isis’ policies, you may be
subject to disciplinary action, up to and including termination.  If necessary,
Isis may suspend your employment during an investigation into an alleged
breach.  Additional actions may include reassignment of work duties and
limitation in future job opportunities.  Isis may refer violations of law to
local or federal law enforcement authorities for possible prosecution.

 

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APPENDIX A – The Foreign Corrupt Practices Act

 

The Foreign Corrupt Practices Act

 

The Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies from making
improper payments or gifts to foreign officials.  Company policy requires that
all directors, officers, employees, agents and consultants of Isis comply with
the FCPA.

 

A.                                   Definition of Foreign Official

 

Under the FCPA, the term “foreign official” includes elected and appointed
governmental officials, candidates for public office, foreign political parties,
officers and employees of government owned or controlled enterprises, and public
international organizations.  When in doubt, Isis employees should consult the
Company’s Legal Counsel for advice on whether a potential recipient of a payment
is a “foreign official.”

 

B.                                     Prohibited Acts

 

The following acts are prohibited by the FCPA:

 

1.                                       Authorizing, paying, promising or
delivering any payment, gift or favor intended to influence any foreign official
on a matter within that person’s responsibilities.  For example, any payment to
any foreign official for the purposes of obtaining or retaining sales of
products or services to Isis, sales by Isis of Isis products or services, to win
a bid or contract, or to obtain more favorable tax treatment is prohibited.

 

2.                                       Any indirect payment to a third party
if the payor knows that the third party may make a prohibited payment.  For
example, any payment to an Isis agent or consultant where the payor is aware or
has firm belief that such agent or consultant may make an improper payment to a
foreign official is prohibited.  The Isis payor may not avoid this prohibition
by deliberately ignoring or purposefully avoiding knowledge that a bribe may be
paid.

 

3.                                       Establishing any undisclosed or
unrecorded “slush” funds or assets; making any false or artificial entries in
company books or records; failing to keep books, records and accounts in
reasonable detail to reflect accurately the handling of money and other assets;
and failing to maintain internal accounting controls sufficient to verify that
no improper payments have been made.

 

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C.            Permissible Payments

 

The following payments may be made:

 

1.                                       Payments to a foreign official for the
purpose of expediting or securing the performance of a routine governmental
action.  Payments for the following routine governmental actions are
permissible:  obtaining permits, licenses or other official documents to qualify
to do business in a foreign country; processing governmental papers, such as
visas and work orders; assuring police protection, mail pickup and delivery, or
scheduling inspections associated with contract performance or inspections
related to the transit of goods across country; and providing phone service,
power and water supply, loading and unloading cargo or protecting perishable
products or commodities from deterioration.  Routine governmental action does
not include any decision by a foreign official to encourage, to award, to
continue or to modify the terms relating to any business with any Isis entity.

 

2.                                       Any payment that is lawful under the
written laws and regulations of the foreign country.

 

3.                                       Any reasonable expenditure directly
related to the promotion, demonstration or explanation of Isis products or
services or the execution or performance of a contract with a foreign government
or agency, such as the travel and lodging expenses of a foreign official on a
trip for such purposes.

 

D.            Penalties

 

Violations of the anti-bribery provisions of the FCPA may result in criminal
fines of up to $2,000,000 for corporations and $100,000 and five years
imprisonment for individuals.  Violations of the accounting provisions may
result in fines of up to $2,500,000 for corporations and $1,000,000 and ten
years imprisonment for individuals.  Under alternative fine provisions, a
violator may be fined up to twice the amount of the gain or loss resulting from
a violation.

 

Payments and the FCPA

 

Neither Isis nor any director, officer, employee, agent or consultant of the
Company will directly or indirectly make or promise illegal payments or
contributions, or engage in any other illegal conduct in order to influence
customers, suppliers or governmental entities, including their officials or
employees, to secure or retain business, to encourage any such employees or
officials to fail to perform or to perform improperly their official functions
or to influence legislation, nor undertake any of the acts prohibited by the
FCPA, as summarized above.  Neither Isis nor any director, officer, employee,
agent or consultant of the Company will submit to extortion as a condition of
doing business.

 

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