Exhibit 10.1

 

LICENSE AND CO-DEVELOPMENT AGREEMENT

 

BY AND BETWEEN

 

GENZYME CORPORATION

 

AND

 

ISIS PHARMACEUTICALS, INC.

 

June 24, 2008

 

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TABLE OF CONTENTS

 

Article 1. DEFINITIONS

1

 

 

Article 2. LICENSES

18

 

 

 

2.1.

Product License

19

 

 

 

 

 

2.2.

Limited Right to Sublicense

19

 

 

 

 

 

2.3.

Additional Rights after Prior Agreement Execution Date

19

 

 

 

 

 

2.4.

Follow-On Compound

20

 

 

 

 

 

2.5.

Retained Rights

21

 

 

 

 

 

2.6.

Isis’ Right of First Negotiation

21

 

 

 

 

 

2.7.

Third Party Agreements

22

 

 

 

 

 

2.8.

No Implied License

23

 

 

 

 

Article 3. EXCLUSIVITY

23

 

 

 

3.1.

Non-Compete

23

 

 

 

 

 

3.2.

[**] Technology

23

 

 

 

 

Article 4. JOINT COMMITTEES

23

 

 

 

4.1.

Joint Development Committee

23

 

 

 

 

 

4.2.

Joint Patent Committee

24

 

 

 

 

 

4.3.

Expenses

25

 

 

 

 

Article 5. DEVELOPMENT

25

 

 

 

5.1.

Development Plan and Development Budget

25

 

 

 

 

 

5.2.

Roles and Responsibilities

26

 

 

 

 

 

5.3.

Clinical and Launch Supplies

26

 

 

 

 

 

5.4.

Know-How Transfer

27

 

 

 

 

 

5.5.

Subcontracting

28

 

 

 

 

Article 6. COMMERCIALIZATION AND REGULATORY MATTERS

28

 

 

 

6.1.

Commercialization Responsibilities

28

 

 

 

 

 

6.2.

Regulatory Matters and Filings

28

 

 

 

 

 

6.3.

Commercial Manufacture

31

 

 

 

 

 

6.4.

Isis Safety Database

31

 

 

 

 

 

6.5.

Safety Reporting

32

 

ii

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6.6.

Commercial Forecasts & Plans

32

 

 

 

 

Article 7. RESEARCH RELATED TO THE PRODUCT

33

 

 

 

7.1.

Research Programs

33

 

 

 

 

 

7.2.

Research Funding

33

 

 

 

 

 

7.3.

Research Efforts

33

 

 

 

 

Article 8. FINANCIAL PROVISIONS

34

 

 

 

8.1.

Upfront License Fee

34

 

 

 

 

 

8.2.

Milestones

34

 

 

 

 

 

8.3.

Financial Provisions Relating to Development Activities

37

 

 

 

 

 

8.4.

Sharing of Net Revenue

38

 

 

 

 

 

8.5.

Sharing of Net Profits

39

 

 

 

 

 

8.6.

Periodic Reporting and Reconciliation

40

 

 

 

 

 

8.7.

Accounting and Allocation Methods

41

 

 

 

 

 

8.8.

Audits and Interim Reviews

42

 

 

 

 

 

8.9.

Withholding Taxes

43

 

 

 

 

 

8.10.

Interest on Late Payments

43

 

 

 

 

 

8.11.

Currency; Payment

43

 

 

 

 

 

8.12.

Material Safety Warnings

44

 

 

 

 

Article 9. INTELLECTUAL PROPERTY MATTERS

44

 

 

 

9.1.

Product-Specific Patents

44

 

 

 

 

 

9.2.

Program IP

45

 

 

 

 

 

9.3.

Manufacturing Improvements

46

 

 

 

 

 

9.4.

Filing, Prosecution and Maintenance of Patents

49

 

 

 

 

 

9.5.

Enforcement of Patents and Know-How

52

 

 

 

 

 

9.6.

Claimed Infringement of Third Party Rights

56

 

 

 

 

 

9.7.

Other Infringement Resolutions

57

 

 

 

 

 

9.8.

Patent Term Extensions

57

 

 

 

 

 

9.9.

Orange Book Listings

58

 

 

 

 

 

9.10.

Cooperative Research and Technology Act Acknowledgement

58

 

 

 

 

 

9.11.

Common Interest

58

 

 

 

 

 

9.12.

Product Trademarks

58

 

iii

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Article 10. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

59

 

 

 

10.1.

Representations and Warranties of Both Parties

59

 

 

 

 

 

10.2.

Isis’ Representations and Warranties

59

 

 

 

 

 

10.3.

Indemnification

62

 

 

 

 

 

10.4.

Insurance

64

 

 

 

 

Article 11. TERM AND TERMINATION

64

 

 

 

11.1.

Term

64

 

 

 

 

 

11.2.

Termination

64

 

 

 

 

 

11.3.

Consequences of Termination

67

 

 

 

 

 

11.4.

Remedies for Isis’ Material Breach

68

 

 

 

 

Article 12. CONFIDENTIALITY; PUBLIC DISCLOSURE

70

 

 

 

12.1.

Non-Disclosure

70

 

 

 

 

 

12.2.

Authorized Disclosure and Use

71

 

 

 

 

 

12.3.

Terms of Agreement

71

 

 

 

 

 

12.4

Public Disclosures

71

 

 

 

 

Article 13. DISPUTE RESOLUTION

73

 

 

 

13.1.

Escalation

73

 

 

 

 

 

13.2.

Mediation

74

 

 

 

 

 

13.3.

Jurisdiction; Venue; Service of Process

75

 

 

 

 

Article 14. MISCELLANEOUS

76

 

 

 

14.1.

Change of Control of Isis

76

 

 

 

 

 

14.2.

Specific Performance

77

 

 

 

 

 

14.3.

Governing Law

78

 

 

 

 

 

14.4.

Waiver; Remedies Cumulative

78

 

 

 

 

 

14.5.

Notices

78

 

 

 

 

 

14.6.

Entire Agreement

79

 

 

 

 

 

14.7.

Binding Effect; Assignment

79

 

 

 

 

 

14.8.

Severability

79

 

 

 

 

 

14.9.

Further Assurances

79

 

 

 

 

 

14.10.

Independent Contractors

79

 

 

 

 

 

14.11.

Interpretation

80

 

 

 

 

 

14.12.

Counterparts

80

 

 

 

 

 

14.13.

Rights in Bankruptcy

80

 

iv

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Schedules and Exhibits

 

Schedule 1.35

 

Isis Methodology for Determining its Cost of Manufacture

Schedule 1.49

 

Example of Calculation of Internal Development Expenses

Schedule 1.52

 

Isis Core Technology Patents

Schedule 1.56

 

Isis Manufacturing and Analytical Patents

Schedule 1.99

 

Product-Specific Patents

Schedule 1.113

 

Special Isis Core Technology Patents

Schedule 2.1

 

Licenses to Third Parties

Schedule 10.2.2

 

Third Party Agreements

 

 

 

Exhibit A

 

Development Plan

Exhibit B

 

Development Budget

Exhibit C

 

Form of Supply Agreement

Exhibit D

 

Form of Quality Agreement

Exhibit E

 

Form of Patent Assignment

Exhibit F

 

Disclosure Schedule

 

v

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LICENSE AND CO-DEVELOPMENT AGREEMENT

 

This License and Co-Development Agreement (together with all Exhibits, Schedules
and other attachments hereto, this “Agreement”), is dated as of the 24th day of
June, 2008 (the “Execution Date”), by and between Genzyme Corporation, a
Massachusetts corporation (“Genzyme”) and Isis Pharmaceuticals, Inc., a Delaware
corporation (“Isis”).  Genzyme and Isis each may be referred to herein
individually as a “Party” or collectively as the “Parties.”

 

WITNESSETH:

 

WHEREAS, the Parties entered into a License and Research Agreement dated
January 7, 2008 and effective as of January 30, 2008 (the “Prior Agreement”)
pursuant to which Isis granted to Genzyme an exclusive license to certain Isis
intellectual property to advance mipomersen, formerly known as ISIS 301012, and
related compounds targeting apoB, through human clinical trials and ultimately
commercialize it as a product;

 

WHEREAS, pursuant to Section 2.1.2 of the Prior Agreement, the Parties agreed to
negotiate and enter into a more detailed written license and co-development
agreement containing additional terms and conditions that are reasonable and
customary for license and co-development agreements of this type (the “More
Detailed Product Agreement”); and

 

WHEREAS, the Parties desire to enter into this Agreement to supersede and
replace the Prior Agreement and evidence the More Detailed Product Agreement.

 

NOW, THEREFORE, in consideration of the respective covenants, representations,
warranties and agreements set forth herein, the Parties hereto agree as follows:

 

Article 1.
DEFINITIONS

 

For purposes of this Agreement, the following capitalized terms have the
following meanings.

 

1.1.        “Action” has the meaning set forth in Section 13.3.1 (Jurisdiction).

 

1.2.        “Additional Third Party Agreement” has the meaning set forth in
Section 2.3 (Additional Rights after Prior Agreement Execution Date).

 

1.3.        “Affiliate” of an entity means any other entity that, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with such first entity. For purposes of this definition
only, “control” (and, with correlative meanings, the terms “controlled by” and
“under common control with”) means the possession of the actual power to direct
the management or policies of an entity, whether through the ownership of voting
securities or by contract relating to voting rights or corporate governance. 
For clarity, as of the Execution Date, [**], which is engaged in the discovery,
development and commercialization of microRNA therapeutics, is not an Affiliate
of Isis because Isis has entered into an agreement pursuant to which Isis does

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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not have control of Regulus.

 

1.4.        “API” means the active pharmaceutical ingredient of the Product.

 

1.5.        “apoB” means apolipoprotein B.

 

1.6.        “Approval” means, with respect to any Product in any regulatory
jurisdiction, approval from the applicable Regulatory Authority sufficient for
the manufacture, distribution, use and sale of the Product in such jurisdiction
in accordance with Applicable Laws.  In jurisdictions where the applicable
Regulatory Authority sets the pricing authorizations for a Product, Approval
will not be deemed to have occurred until the earlier of (a) Genzyme or its
Sublicensee and the Regulatory Authority have determined pricing, or (b) ninety
(90) days after approval (whether national or centralized) is received for the
applicable Regulatory Authority sufficient for the manufacture, distribution,
use and sale of the Product in such jurisdiction (other than pricing
authorization for the Product) in accordance with Applicable Laws.

 

1.7.        “Applicable Law” or “Law” means all applicable laws, statutes,
rules, regulations and other pronouncements having the effect of law of any
federal, national, multinational, state, provincial, county, city or other
political subdivision, agency or other body, domestic or foreign, including but
not limited to any applicable rules, regulations, guidelines, or other
requirements of the Regulatory Authorities that may be in effect from time to
time, but excluding patent and copyright laws.

 

1.8.        “ASO Product” any preparation in final form for sale by
prescription, over-the-counter or any other method for any indication, including
human or animal use, which contains one or more oligonucleotides or an analog
thereof that [**].

 

1.9.        “Bankruptcy Code” has the meaning set forth in Section 14.13 (Rights
in Bankruptcy).

 

1.10.      “Calendar Quarter”         means the respective periods of three
(3) consecutive calendar months ending on March 31, June 30, September 30 or
December 31.

 

1.10.                   “Change of Control” means, with respect to a Party,
(a) a merger or consolidation of such Party with a Third Party which results in
the voting securities of such Party outstanding immediately prior thereto
ceasing to represent at least fifty percent (50%) of the combined voting power
of the surviving entity immediately after such merger or consolidation, or
(b) except in the case of a bona fide equity financing in which a Party issues
new shares of its capital stock, a transaction or series of related transactions
in which a Third Party, together with its Affiliates, becomes the beneficial
owner of fifty percent (50%) or more of the combined voting power of the
outstanding securities of such Party, or (c) the sale or other transfer to a
Third Party of all or substantially all of such Party’s business to which the
subject matter of this Agreement relates, but excluding any financial factoring
arrangements.

 

1.12.                   “Commercially Reasonable Efforts” means, (a) with
respect to the research, development or commercialization by Genzyme of a
Product, at any given time as the case may be,

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

2

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efforts reasonably used by Genzyme or its Affiliates (giving due consideration
to relevant industry standards) for Genzyme’s own products (including internally
developed, acquired and in-licensed products) with similar commercial potential
at a similar stage in their lifecycle (assuming continuing development of such
product), taking into consideration their safety, tolerability and efficacy, the
profitability (taking into account any payments payable under this Agreement),
the extent of market exclusivity, patent protection, cost to develop the
product, promotable claims and health economic claims and (b) with respect to
the research and development by Isis of a Product, at any given time as the case
may be, efforts reasonably used by an entity in the biotechnology/pharmaceutical
industry of similar resources and expertise as Isis, for such similar entity’s
own products (including internally developed, acquired and in-licensed products)
with similar commercial potential at a similar stage in their lifecycle
(assuming continuing development of such product), taking into consideration
their safety, tolerability and efficacy, the profitability (taking into account
any payments payable under this Agreement), the extent of market exclusivity,
patent protection, cost to develop the product, promotable claims and health
economic claims.

 

1.13.                   “Commercial Scale Manufacturing IP” means any
confidential or patented scientific or technical data, information, method,
technique, protocol, invention or processes that has been found to be useful for
commercial scale manufacturing facility but is not generally useful for
manufacturing oligonucleotides on a non-commercial scale, including all
manufacturing plant designs, plans diagrams and descriptions and also including
all regulatory filings.

 

(a)                                  For illustrative purposes only and not as a
limitation, the following would be considered to be Commercial Scale
Manufacturing IP:

 

(i)       Piping and Instrumentation Diagrams (P&ID) for a Genzyme manufacturing
facility;

 

(ii)      Design plans and schematics for a Genzyme manufacturing facility
(including tank farms, synthesis and purification suites, and analytical testing
laboratories);

 

(iii)     Operating Documents, for example batch records, SOPs, validation
master plans;

 

(iv)     Floor plans and equipment layout drawings for a Genzyme manufacturing
facility; and

 

(v)      Regulatory filings.

 

(b)                                 For illustrative purposes only and not as a
limitation, the following would not be considered to be Commercial Scale
Manufacturing IP:

 

(i)       Discovery that a particular side reaction leads to an unexpected
impurity;

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

3

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(ii)      Discovery regarding how to avoid the impurity or how to remove it.

 

(iii)     Development of the use of alternative reagents;

 

(iv)     Discovery of recycle possibilities;

 

(v)      Discovery to enhance yields;

 

(vi)     Discovery of the Mipomersen oxidant;

 

(vii)    Development and validation of QbD/Design Space filing strategy.

 

(viii)   Development and validation of PAT measures.

 

1.14.      “Confidential Information” has the meaning set forth in Section 12.1
(Non-Disclosure).

 

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

 

1.16.      “Cover,” “Covered” or “Covering” means, with respect to a Patent and
the subject matter at issue, that, but for a license granted under an issued
claim included in such Patent, the manufacture, use, sale, offer for sale or
importation of the subject matter at issue would infringe such claim or, in the
case of a Patent that is a patent application, would infringe a claim in such
patent application if it were to issue as a patent.

 

1.17.      “Development Budget” means the initial written development budget
attached hereto as Exhibit B setting forth, for the time period covered by the
Development Plan, the budget for the development of the Product during the
applicable time period, as it may be updated and amended by the JDC or the
Parties during the Term in accordance with this Agreement.

 

1.18.                   “Development Expenses” means internal or external
expenses incurred in accordance with the Development Plan and the Development
Budget, including the costs of all clinical trials and preclinical studies,
including post-marketing trials. The types of expenses included in this category
are investigator grants, laboratory services, clinical PK assays,
carcinogenicity studies, CMC studies, CRO services and pass-throughs,
pharmacovigilence and risk management activities, costs for packaging,
distribution and reconciliation (including labels and translations, inventory
control, IVRS, off-site storage and destruction), data management (including
EDC), clinical study reports, drug costs (API & DP), investigator meetings,
monitoring, SAB costs, DSMB costs, key opinion leader costs, program specific
travel, metabolomics assays, courier services and clinical trial liability
insurance costs. Development Expenses include quality assurance costs for
auditing clinical trial activities and preclinical studies support (report
reviews and CMC

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

4

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review).  When a Party is a manufacturer of the Product under development,
Development Expenses include such Party’s Fully Absorbed Cost of Goods.

 

1.19.                   “Development Plan” means the initial written development
and regulatory plan attached hereto as Exhibit A for the Product as it may be
updated and amended during the Term by the JDC or the Parties in accordance with
this Agreement.

 

1.20.                   “Development Program” means the program to be conducted
by the Parties in accordance with an approved Development Plan to develop and
obtain Approval of the Product in the Territory, all as more fully described in
Article 5 (Development).

 

1.21.                   “Disclosure Schedule” means the schedule delivered by
Isis to Genzyme that includes exceptions to Isis’ representations and warranties
in Section 10.2 (Isis Representations and Warranties) hereof.

 

1.22.                   “Dispute” has the meaning set forth in Section 13.1
(Dispute Resolution Mechanism).

 

1.23.                   “Effective Date” means January 30, 2008.

 

1.24.                   “Execution Date” has the meaning set forth in the
preamble.

 

1.25.                   “EMEA” means the European Regulatory Authority known as
the European Medicines Agency and any successor agency thereto.

 

1.26.      “Encumbered Follow-On Compound” has the meaning set forth in
Section 2.4 (Follow-On Compound).

 

1.27.      “Executives” has the meaning set forth in Section 13.1 (Escalation to
Senior Management).

 

1.28.                   “External Development Expenses” means Development
Expenses other than Internal Development Expenses.  For clarity, External
Development Expenses include the manufacturing Party’s Fully Absorbed Cost of
Goods.

 

1.29.      “External Sales & Marketing Expenses” means Sales & Marketing
Expenses other than Internal Sales & Marketing Expenses.

 

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

 

1.31.                   “FH” means familial hypercholesterolemia.

 

1.32.                   “Fixed Costs” means the cost of facilities, utilities,
insurance (including any accrual for self-insurance), facility and equipment
depreciation, and other fixed costs directly attributable to the applicable
activity, allocated based upon the proportion of such costs directly
attributable to the support or performance of the applicable activity in
accordance with the Development Plan or the Product’s manufacturing or
commercialization plan, as

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

5

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the case may be.  Fixed Costs will be determined in accordance with GAAP.

 

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

 

1.34.                   “Follow-On Compound Encumbrances” has the meaning set
forth in Section 2.4.2.

 

1.35.                   “Fully Absorbed Cost of Goods” means:

 

(a)      with respect to units of Product produced by Genzyme, the Variable
Costs and Fixed Costs incurred by Genzyme to the extent associated with the
manufacture (inclusive of finishing processes including filling, packaging,
labeling and other preparation), quality assurance, quality control and other
testing, storage and shipping of batches of such units of Product;

 

(b)      with respect to units of Product manufactured by Isis, the costs
incurred by Isis as determined using the methodology set forth in Schedule 1.35,
which Schedule will be updated by Isis on an annual basis in advance of each
fiscal year (with material changes to such methodology subject to Genzyme’s
prior agreement); and

 

(c)      with respect to units or components of Product that are not
manufactured by the Parties, the amounts paid to the vendor plus costs
associated with acquisition from such vendor.

 

If a facility that is used to manufacture Product has the capacity to
manufacture products for other programs of either Genzyme or Isis outside of the
activities contemplated by this Agreement, the Fixed Costs component of the
Fully Absorbed Cost of Goods will be allocated in proportion to the actual use
of such facility for the manufacture of Product pursuant to this Agreement and
the capacity to manufacture products for such other programs outside of this
Agreement in a manner that is mutually agreeable to the Parties.  No idle
capacity of a manufacturing facility, or a proportionate use thereof, will be
included in Fully Absorbed Cost of Goods unless such capacity or facility was
built specifically to manufacture Product and is not being used to manufacture
any other products, in which case the depreciation associated with such idle
capacity will be included in Fully Absorbed Cost of Goods to the extent that
such facility is in service.  Fully Absorbed Cost of Goods will exclude all
costs otherwise reimbursed pursuant to this Agreement.  Fully Absorbed Costs of
Goods will be determined in accordance with GAAP.  Genzyme will use commercially
reasonable efforts to minimize and mitigate circumstances that would result in
idle capacity being included in Fully Absorbed Cost of Goods.

 

1.36.                   “G&A Costs” will mean the costs of general and
administration services (including legal, finance, accounting, human resources
and other general and administrative support services) as reasonably required to
support the activities of the Parties under this

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

6

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Agreement, which costs will be determined and reported in accordance with GAAP
and in good faith by each Party.

 

1.37.                   “GAAP” means then-current United States generally
accepted accounting principles, consistently applied.

 

1.38.                   “Genzyme” has the meaning set forth in the preamble.

 

1.39.      “Genzyme Indemnitees” has the meaning set forth in Section 10.3.2
(Indemnification by Isis).

 

1.40.      “Genzyme Manufacturing Improvements” has the meaning set forth in
Section 9.3.2(b) (Terms of Sharing Program).

 

1.41.                   “Genzyme Program IP” means the Genzyme Program Patents,
Genzyme Program Know-How and any work-of-authorship authored in the performance
of the Development Program or Research Programs solely by Genzyme’s employees or
Third Parties acting on Genzyme’s behalf.

 

1.42.                   “Genzyme Program Know-How” means any and all Know-How
which is made or conceived during and in connection with the conduct of the
Development Program or the Research Programs or commercializing the Product
solely by Genzyme’s employees or Third Parties acting on Genzyme’s behalf.

 

1.43.      “Genzyme Program Patents” means any and all Patents Controlled by
Genzyme that Cover Genzyme Program Know-How.

 

1.44.                   “IND” means an Investigational New Drug Application, as
defined in the US Federal Food, Drug, and Cosmetic Act, as amended from time to
time (21 U.S.C. Section 301 et seq.), together with any rules and regulations
promulgated thereunder, or similar application or submission that is required to
be filed with any Regulatory Authority before beginning clinical testing of a
Product in human subjects.

 

1.45.      “Indemnitee” has the meaning set forth in Section 10.3.3
(Indemnification Procedure).

 

1.46.      “Indemnifying Party” has the meaning set forth in Section 10.3.3
(Indemnification Procedure).

 

1.47.      “Infringement Claim” has the meaning set forth in Section 9.6.1
(Notice).

 

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

 

1.49.                   “Internal Development Expenses” means Development
Expenses attributable to the internal costs of base salary plus a factor for
reasonable and customary employee benefits and payroll taxes for those employees
and temporary employees directly responsible for performing the development
activity, plus program specific travel for such employees

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

7

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and temporary employees, plus G&A Costs, or other overhead costs; provided,
however, that where the Product is being manufactured by a Party, Internal
Development Expenses will not include such Party’s Fully Absorbed Cost of
Goods.  A hypothetical example illustrating the methodology Genzyme currently
uses to calculate its Internal Development Costs is set forth in Schedule 1.49.

 

1.50.                   “Internal Sales & Marketing Expenses” means Sales &
Marketing Expenses attributable to the internal costs of base salary and
commissions payable to employees plus a factor for reasonable and customary
employee benefits and payroll taxes for those employees directly responsible for
performing the sales and marketing activity, plus sales and marketing specific
travel for such employees, plus G&A Costs or other overhead costs.

 

1.51.      “Isis” has the meaning set forth in the preamble.

 

1.52.                   “Isis Core Technology Patents” means all Patents
Controlled by Isis or any of its Affiliates as of the Prior Agreement Execution
Date or during the Term, including Isis Program Patents and Joint Patents, that
are necessary or useful for the development and commercialization of Product,
including the Patents identified on Schedule 1.52, in each case other than
Product-Specific Patents, Licensed Product Patents and Isis Manufacturing and
Analytical Patents.

 

1.53.      “Isis Database” has the meaning set forth in Section 6.4 (Isis Safety
Database).

 

1.54.      “Isis Indemnitees” has the meaning set forth in Section 10.3.1
(Indemnification by Genzyme).

 

1.55.                   “Isis Manufacturing and Analytical Know-How” means
Know-How other than Product Know-How Controlled by Isis or its Affiliates as of
the Prior Agreement Execution Date or during the Term, including Isis Program
Know-How and Joint Know-How, that relates to the synthesis or analysis of
Products independent of sequence or chemical modification.

 

1.56.                   “Isis Manufacturing and Analytical Patents” means
Patents Controlled by Isis or its Affiliates as of the Prior Agreement Execution
Date or during the Term, including Isis Program Patents and Joint Patents, that
claim methods and materials used in the synthesis or analysis of Products
independent of sequence or chemical modification, including the Patents
identified on Schedule 1.56.  Isis Manufacturing and Analytical Patents do not
include the Product-Specific Patents, Licensed Product Patents and the Isis Core
Technology Patents.

 

1.57.                   “Isis Manufacturing and Analytical IP” means the Isis
Manufacturing and Analytical Know-How and Isis Manufacturing and Analytical
Patents solely to the extent necessary or useful to manufacture a Product.

 

1.58.      “Isis Manufacturing Improvements” has the meaning set forth in
Section 9.3.2(c) (Terms of Sharing Program).

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

8

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

 

1.59.                   “Isis Program IP” means the Isis Program Patents and
Isis Program Know-How and any works-of-authorship authored in the performance of
the Development Program or Research Programs solely by Isis’ employees or Third
Parties acting on Isis’ behalf.

 

1.60.                   “Isis Program Know-How” means any and all Know-How which
is made or conceived in the performance of the Development Program or the
Research Programs solely by Isis’ employees or Third Parties acting on Isis’
behalf.

 

1.61.      “Isis Program Patents” means any and all Patents Controlled by Isis
that Cover Isis Program Know-How.

 

1.62.      “Joint Development Committee” or “JDC” has the meaning set forth in
Section 4.1.1 (Establishment of JDC).

 

1.63.                   “Joint Know-How” means any and all Know-How that is made
or conceived in the performance of the Development Program or the Research
Programs jointly by Isis’ and Genzyme’s employees or others acting on Isis’ and
Genzyme’s behalf.

 

1.64.      “Joint Patent Committee” or “JPC” has the meaning set forth in
Section 4.2.1 (Establishment of the JPC).

 

1.65.      “Joint Patents” means any and all Patents that Cover Joint Know-How.

 

1.66.                        “Joint Program IP” means Joint Patents, Joint
Know-How and any works-of-authorship authored in the performance of the
Development Program or Research Programs jointly by Isis’ and Genzyme’s
employees or others acting on their behalf.

 

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

 

1.68.                   “Licensed IP” means the Licensed Patents, the Product
Know-How, the Isis Manufacturing and Analytical Know-How; provided, however,
that (a) for any such Know-How or Patent that becomes Controlled by Isis after
the Prior Agreement Execution Date pursuant to an Additional Third Party
Agreement, the provisions of Section 2.3 (Additional Rights after Prior
Agreement Execution Date) will govern whether such Know-How or Patent will be
included as Licensed IP and (b) with respect to any Follow-On Compound, the
provisions of Section 2.4 (Follow-On Compound) will govern the extent to which
In-Licensed Third Party IP will be included in Licensed IP.

 

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

 

1.70.                   “Licensed Product Patents” means (i) the [**] Patent,
and (ii) any Patent Controlled by

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

9

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

 

Isis during the Term, including any Isis Program Patents and Joint Patents,
claiming (a) [**] apoB, (b) the sequence of apoB, (c) the specific composition
of matter of a Product, or (d) methods of using Product as a therapeutic,
methods of using Product to modulate apoB, and methods of using the Product to
inhibit expression of apoB; and also claiming or describing (x) [**], or
(y) methods of using such nucleic acids as a therapeutic or to modulate a gene
target [**].  Notwithstanding the foregoing, a Patent that has been issued for
at least two years that claims (a), (b), (c) or (d) above and that also
describes, but does not claim, (x) or (y) above, will be a Product-Specific
Patent, not a Licensed Product Patent

 

1.71.                   [**].

 

1.72.      “[**] Manufacturing Improvements” has the meaning set forth in
Section [**].

 

1.73.                   “MAA” means a marketing authorization application filed
with (a) the EMEA under the centralized EMEA filing procedure or (b) a
Regulatory Authority in any Major European Country if the centralized EMEA
filing procedure is not used, after completion of clinical trials to obtain
marketing approval.

 

1.74.      “MAA Approval” means the Approval of a MAA for the applicable Product
in any of the Major European Countries.

 

1.75.      “Major European Country” means France, Germany, Italy, Spain, or the
United Kingdom.

 

1.76.      “Major Market Countries” means Canada, the United States, Japan and
each Major European Country.

 

1.77.                   “Manufacturing Improvements” means any and all
scientific and technical data, information, methods, techniques, protocols,
inventions, and processes that have been found to be useful in the manufacture
of ASO Products, excluding Commercial Scale Manufacturing IP.

 

1.78.                   “Mipomersen” means mipomersen sodium, formerly known as
ISIS 301012, including all pharmaceutically acceptable salts, solvates,
hydrates, hemihydrates, metabolites, pro-drug forms, stereoisomers, enantiomers,
racemates and all optically active forms thereof.

 

1.79.                   “NDA” means a New Drug Application filed with the FDA
after completion of clinical trials to obtain marketing approval for the
applicable Product in the United States.

 

1.80.      “NDA Approval” means the Approval of an NDA by the FDA for the
applicable Product in the U.S.

 

1.81.      “NDA Filing” means the acceptance by the FDA of the filing of an NDA
for the applicable Product.

 

1.82.                   “Net Profits or Losses” means Net Revenues less Program
Costs. To the extent Net

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

10

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

 

Revenues exceed Program Costs for the relevant period, the amount of such
difference will be deemed “Net Profits,” and, to the extent Program Costs exceed
Net Revenues for the relevant period, the amount of such difference will be
deemed “Net Losses.”

 

1.83.                   “Net Revenue” during the relevant period means the sum
of (a) Net Sales, if any, of Products in the Territory during such period, plus
(b) all revenue received by either Party or their respective Affiliates from a
Third Party in consideration for the grant of a right to make, use, sell, offer
for sale or import a Product in the Territory, including monies received
pursuant to a license with a Third Party such as upfront fees, milestones and
royalties, and monies received for marketing rights or distribution rights.  If
Genzyme or its Affiliates receives non-cash consideration for the grant of a
right to make, use, sell, offer for sale or import a Product in the Territory,
the Parties will agree in good faith on the valuation of such consideration to
be included in Net Revenue.

 

1.84.                   “Net Sales” means the gross invoiced sales amount of the
Product billed by Genzyme or its Affiliates or Sublicensees, in each case to
independent Third Parties, including to distributors and end-users, for the sale
or other commercial disposition of the Product in the Territory, less the
following items (“Net Sales Adjustments”) as applicable to such Product to the
extent actually taken or incurred with respect to such sale:

 

(a)

 

credits or allowances for returns, rejections or recalls (due to spoilage,
damage, expiration of useful life or otherwise), retroactive price reductions or
billing corrections;

 

 

 

(b)

 

invoiced freight, postage, shipping and insurance, handling and other
transportation costs;

 

 

 

(c)

 

sales, use, value added and other similar taxes (excluding income taxes),
tariffs, customs duties, surcharges and other governmental charges levied on the
production, sale, transportation, delivery or use of the Product in the
Territory that are incurred at time of sale or are directly related to the sale
(which in all cases will be the direct responsibility of the selling Party); and

 

 

 

(d)

 

quantity, cash or other trade discounts, rebates, refunds, charge backs, fees,
credits or allowances (including amounts incurred in connection with
government-mandated rebate and discount programs, Third Party rebates and charge
backs, and hospital buying group/group purchasing organization administration
fees and payor organizations), distribution fees, sales commissions, and
commissions paid to Third Parties;

 

all in accordance with standard allocation procedures, allowance methodologies
and accounting methods consistently applied, in accordance with GAAP.

 

Notwithstanding the foregoing, the following will not be included in Net Sales:
(1) Genzyme’s transfer of Product to an Affiliate, (2) Product provided by
Genzyme or an Affiliate for administration to patients enrolled in clinical
trials or distributed through a not-for-profit foundation at no charge to
eligible patients, provided, however, that

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

11

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

 

Genzyme or its Affiliate receive no consideration from such clinical trials or
not-for-profit foundation for such use of Product and (3) Product used as
samples to promote additional Net Sales, in amounts consistent with normal
business practices of Genzyme.

 

1.85.                   “[**]” has the meaning set forth in Section [**].

 

1.86.                   “[**] Process” has the meaning set forth in
Section [**].

 

1.87.                   “Participating Isis Partner” means any Third Party that
has a then-current contractual relationship with Isis pursuant to which (i) such
Third Party is required to disclose to Isis on at least an annual basis any
Manufacturing Improvements invented or developed by such Third Party, and
(ii) Isis has the right to license such Third Party’s Manufacturing Improvements
to Genzyme under this Agreement and in accordance Section 9.3.2 (Terms of
Sharing Arrangement), and (iii)  such Third Party is either (A) [**] or [**],
(B) manufacturing at least 50% of its requirements for the active pharmaceutical
ingredient for an ASO Product under license from Isis on its own behalf or
through Isis (i.e., it is not using a Third Party manufacturer to manufacture
such portion of such active ingredient) or (C) maintaining an ongoing and
substantial internal process development program related to the manufacture of
ASO Products.

 

1.88.                   “Party and Parties” has the meaning set forth in the
preamble.

 

1.89.                   “Patent(s)” means (a) patents, patent applications and
similar government-issued rights protecting inventions in any country or
jurisdiction however denominated, (b) all priority applications, divisionals,
continuations, substitutions, continuations-in-part of and similar applications
claiming priority to any of the foregoing and (c) all patents and similar
government-issued rights protecting inventions issuing on any of the foregoing
applications, together with all registrations, reissues, renewals,
re-examinations, confirmations, supplementary protection certificates, and
extensions of any of (a), (b) or (c).

 

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

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

12

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

1.91.                   “Pivotal Trial” means a clinical study (whether or not
denominated as a “Phase III” clinical study under applicable regulations) in
human patients that is of size and design agreed to by a Regulatory Authority to
be appropriate to establish that the Product is safe and effective for its
intended use, to define warnings, precautions and adverse reactions that are
associated with the Product in the dosage range to be prescribed, and to support
Regulatory Approval of such Product.

 

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

 

1.93.      “Primary Safety Contact Person” has the meaning set forth in
Section 6.5 (Safety Reporting).

 

1.94.      “Prior Agreement” has the meaning set forth in the recitals.

 

1.95.      “Prior Agreement Execution Date” means January 7, 2008.

 

1.96.                   “Product” means all pharmaceutical compositions,
formulations, dosage forms, delivery systems and presentations that contain
Mipomersen or any Follow-On Compound as an active ingredient.

 

1.97.                   “Product Know-How” means Know-How Controlled by Isis on
the Prior Agreement Execution Date or during the Term, including Isis Program
Know-How and Joint Know-How, relating to or otherwise necessary for the
development and commercialization of Product.  Product Know-How does not include
the Isis Manufacturing and Analytical Know How.

 

1.98.      “Product License” means the license granted to Genzyme in Section 2.1
(Product License).

 

1.99.                   “Product-Specific Patents” means Patents Controlled by
Isis or any of its Affiliates as of the Prior Agreement Execution Date and
during the Term, including any Isis Program Patents and Joint Patents, claiming
(a) [**] apoB, (b) the [**] of apoB, (c) the specific composition of matter of a
Product, or (d) methods of using Product as a therapeutic, methods of using
Product to modulate apoB, or methods of using the Product to inhibit expression
of apoB, including the Patents identified on Schedule 1.99, other than Licensed
Product Patents.

 

1.100.             “Product Trademarks” means the trademark(s), service mark(s),
accompanying logos, trade dress and/or indicia of origin used in connection with
the distribution, marketing, promotion and commercialization of the Product in
the Territory.  For purposes of clarity, the term Product Trademark(s) will not
include the corporate names and logos of either Party and will include any
internet domain names incorporating such Product Trademarks.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

13

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

 

1.101.             “Program Costs” during the relevant period means all actual
costs and expenses (including accruals chargeable against profits under GAAP)
incurred (a) by either Party in the conduct of the Development Program
(including all Development Expenses) (or the Research Program to the extent
permitted under Section 7.2) and (b) by Genzyme, its Affiliates or Sublicensees
pursuant to the manufacturing, sale, promotion and marketing of the Product in
the Territory.

 

Program Costs will be determined and accounted for in accordance with
Section 8.7.1 (Accounting).  Each component of Program Costs will be allocated
according to the allocation method mutually agreed to by the Parties under
Section 8.7.2 (Allocation Methods).  Program Costs will include:

 

(a)

 

direct, out-of-pocket external costs and expenses, including clinical grants,
clinical laboratory fees, positive controls and the cost of pre-clinical and
clinical studies conducted and services provided by contract research
organizations;

 

 

 

(b)

 

Fully Absorbed Cost of Goods associated with the manufacture of preclinical,
clinical and commercial grade materials;

 

 

 

(c)

 

depreciation and/or amortization relating to (i) capital investments,
(ii) process improvements or, (iii) any other capital expenditure for the
construction or renovation of any manufacturing facility for the production of
the Product;

 

 

 

(d)

 

costs and expenses related to the conduct of clinical studies, including costs
and expenses associated with data management, statistical designs and studies,
document preparation and other expenses associated with the clinical testing
program for the Product;

 

 

 

(e)

 

costs and expenses associated with pharmacovigilence and risk management
activities associated with the Product;

 

 

 

(f)

 

costs and expenses of samples (without any mark-up) of Product provided by
Genzyme to Isis;

 

 

 

(g)

 

costs and expenses of preparing, submitting, reviewing or developing data or
information for the purpose of submission of applications to obtain Approvals
for the Product or maintenance of such Approvals (including user fees,
establishment fees, product fees, or similar international maintenance fees);

 

 

 

(h)

 

all royalties, milestones and license fees payable to Third Parties, including
(i) those owed by Isis to [**] and [**] under the existing Third Party
Agreements set forth on Schedule 10.2.2, and (ii) Genzyme’s allocable portion of
amounts due under any Additional Third Party Agreement in accordance with to
Section 2.3 (Additional Rights after Prior Agreement Execution Date); provided,
however that royalties, milestones and license fees payable under any Additional
Third Party Agreement entered into in violation of Section 2.3 (Additional
Rights After Prior Agreement Execution) will not be included in Program Costs;

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

14

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

 

(i)

 

Sales and Marketing Expenses;

 

 

 

(j)

 

costs and expenses associated with shipping, storage and distribution of the
Product in the Territory, including (i) invoice, freight, postage, shipping,
insurance, handling and other transportation charges to fulfill orders and not
otherwise accounted for as Net Sales Adjustments, (ii) customer services,
including collection of data about sales to hospitals, prescribers and end
users, order entry, billing and adjustments, inquiry, credit and collection,
(iii) cost of labor utilized for the distribution of the Product, (iv) duties
and other monies paid to Third Parties pursuant thereto and (v) amounts paid to
Third Parties with respect to storage or distribution of the Product;

 

 

 

(k)

 

G&A Costs to the extent they are attributable to a Product;

 

 

 

(l)

 

bad debt expense as calculated in accordance with GAAP;

 

 

 

(m)

 

costs and expenses associated with any write-offs relating to (i) inventory,
(ii) manufacturing costs and expenses, if applicable, (iii) product failures or
(iv) associated regulatory compliance costs and expenses (each such write-off
will be deemed Program Costs in the period in which they are incurred);

 

 

 

(n)

 

damages (including out-of-court settlements) and out-of-pocket legal expenses
(collectively “Damages”) reasonably incurred by a Party or its Affiliates with
respect to a Third Party claim or action arising out of the research,
development, manufacture, use, distribution, marketing or sale of the Product
within the scope of this Agreement (including Third Party Infringement Claims);
provided, however, that such Damages (i) do not arise out of a claim or action
that is subject to any indemnification obligation of Genzyme under
Section 10.3.1 (Indemnification by Genzyme) or Isis under Section 10.3.2
(Indemnification by Isis), and (ii) are not incurred by either Party for
activities conducted after the Term or conducted outside the scope of this
Agreement;

 

 

 

(o)

 

costs and expenses incurred in challenging Patents owned by Third Parties in
accordance with Section 9.6.2 (Defense of Infringement Claim; Declaratory
Judgment Actions) or 9.6.3 (Other Challenges);

 

 

 

(p)

 

costs and expenses incurred enforcing intellectual property rights against Third
Parties to the extent provided in Section 9.5.4 (Procedures and Expenses);

 

 

 

(q)

 

costs and expenses relating to the filing, prosecution, maintenance and
enforcement of Joint Patents and as provided in Section 9.4.2 (Election Not to
Continue Prosecution; Abandonment), in each case in the Territory; and

 

 

 

(r)

 

costs and expenses of insurance (including any product liability insurance or
accrual for self-insurance).

 

For clarity, the following costs will not be considered Program Costs:

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

15

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

 

(a)

 

the license fee or milestone payments payable by Genzyme to Isis pursuant to
Section 8.1 or Section 8.2, respectively;

 

 

 

(b)

 

Isis’ costs and expenses of prosecuting and maintaining the Isis Core Technology
Patents and Isis Manufacturing and Analytical Patents (other than as provided in
Section 9.6.3 (Other Challenges));

 

 

 

(c)

 

Genzyme’s costs and expenses of prosecuting and maintaining the Product-Specific
Patents and the Licensed Product Patents (other than as provided in
Section 9.6.3 (Other Challenges));

 

 

 

(d)

 

the costs and expenses of the mutually agreed upon Research Programs as
described in Article 7 (Research Related to the Product);

 

 

 

(e)

 

costs and expenses associated with stock-based compensation expenses or other
pro forma adjustments to either Party’s financials determined in accordance with
U.S. GAAP;

 

 

 

(f)

 

any costs and expenses of corporate overhead expenses, other than G&A Costs;

 

 

 

(g)

 

unless otherwise deemed necessary for activities under this Agreement and
mutually agreed by the Parties:

 

 

 

 

 

(A)        amortization and depreciation expenses (unless consistent with
Section 1.32 (Fixed Costs) hereof), deductions, credits, expenses including
taxes and extraordinary or nonrecurring losses customarily deducted by a Party
in calculating and reporting consolidated net income, manufacturing facility
capital costs, capital expenditures, including purchases of facilities, property
or equipment; and

 

 

 

 

 

(B)         property taxes and any other taxes not related to the research,
development, manufacture, commercialization or distribution of a Product in the
Territory.

 

In addition, in no event will any amounts deducted from gross sales (Net Sales
Adjustments) for the purpose of calculating Net Sales also be counted toward the
amount of Program Costs.

 

Each of the following will be accounted for as a credit against Program Costs:

 

(a)

 

to the extent provided in Section 9.5.5 (Recoveries), amounts recovered from an
infringer of the Licensed IP;

 

 

 

(b)

 

amounts received as insurance payments for damages, losses, costs or expenses
previously included in the calculation of Program Costs; and

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

16

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(c)

 

tax refunds received to the extent they relate to tax payments previously
deducted from Net Sales as a Net Sales Adjustment or Program Costs.

 

1.102.             “Program IP” means Genzyme Program IP, Isis Program IP and
Joint Program IP, collectively.

 

1.103.             “Regulatory Authority” means any governmental authority,
including the FDA, EMEA or Koseisho (i.e., the Japanese Ministry of Health and
Welfare, or any successor agency thereto), that has responsibility for granting
any licenses or approvals or granting pricing and/or reimbursement approvals
necessary for the marketing and sale of a Product in any country.

 

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

 

1.105.             “Reporting Period” has the meaning set forth in Section 8.6.1
(Reports).

 

1.106.             “Research Programs” has the meaning set forth in Section 7.1
(Research Programs).

 

1.107.             “Responsible Party” has the meaning set forth in either
Section 9.4.1(b)(i) or 9.4.1(d) as the context requires.

 

1.108.             “Reversion” has the meaning set forth in
Section 11.3.5(a)(iii) (Isis Reversion Rights).

 

1.109.             “Sales & Marketing Expenses” means sales and marketing costs
and expenses (including labor costs) incurred in connection with the sale,
promotion and marketing of the Product in the Territory including (i) costs and
expenses related to performing market research, post-marketing studies,
advertising, producing promotional literature, sponsoring seminars and symposia,
sales training meetings and seminars, originating sales, providing
reimbursement, and other similar sales, marketing, and patient support services
and (ii) all costs and expenses incurred for the sales force and sales force
management by Genzyme, including costs and expenses related to salaries,
commissions, current period reasonable and customary employee benefits and
payroll taxes, sales incentive payments, sales training expenses, and travel
expenses, all in accordance with GAAP.

 

1.110.             “Sharing Agreement” means an agreement between Isis and a
Participating Isis Partner pursuant to which (i) the Participating Isis Partner
is required to disclose to Isis on at least an annual basis any Manufacturing
Improvements invented or developed by such Third Party, and (ii) Isis has the
right to license such Participating Partner’s Manufacturing Improvements to
Genzyme under this Agreement and in accordance Section 9.3.2 (Terms of Sharing
Arrangement).

 

1.111.             “Sharing Period” has the meaning given to it in
Section 9.3.2(a) (Terms of Sharing Arrangement).

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

17

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1.112.             “[**] Patent” means Patent No. PCT/US[**].

 

1.113.             “Special Isis Core Technology Patents” means (a) the Isis
Core Technology Patents identified on Schedule 1.113 and all divisionals,
continuations, substitutions, continuations-in-part of and similar applications
claiming priority to any of the foregoing and all patents and similar
government-issued rights protecting inventions issuing on any of the foregoing
applications, together with all registrations, reissues, renewals,
re-examinations, confirmations, supplementary protection certificates, and
extensions of any of the foregoing, and (b) any other Isis Core Technology
Patent that is similar to the Patents identified on Schedule 1.113 that Isis or
its Affiliates come to Control after the Execution Date during the Term that
Genzyme reasonably requests in writing be designated as a Special Isis Core
Technology Patent.

 

1.114.             “Sublicensee” means a Third Party who receives a sublicense
of the Product License in accordance with Section 2.2 (Limited Right to
Sublicense).

 

1.115.             “Supply Agreement” means the Supply Agreement entered into
between Genzyme and Isis pursuant to Section 5.3 (Clinical and Launch Supplies).

 

1.116.             “Territory” means worldwide.

 

1.117.             “Term” has the meaning set forth in Section 11.1 (Term).

 

1.118.             “Third Party” means a person or entity other than the
Parties, their respective Affiliates and their employees.

 

1.119.             “Third Party Agreement” means any agreement with a Third
Party now existing or entered into during the Term pursuant to which Isis
obtains rights applicable to the development or commercialization of a Product.

 

1.120.             “Third Party Claim” has the meaning set forth in
Section 10.3.3 (Indemnification Procedure).

 

1.121.             “Third Party Services Agreement” has the meaning set forth in
Section 6.2.2 (Third Party Services Agreements).

 

1.122.             “Variable Costs” means the cost of labor (which includes
salaries and wages plus a factor for reasonable and customary employee benefits
and payroll taxes for the applicable employees), raw materials, scrap,
obsolescence, supplies, services, fees and other resources directly consumed or
used in the conduct of the applicable activity in accordance with the
Development Plan, or Genzyme’s manufacturing or commercialization plan, as the
case may be.  All such cost determinations will be made in accordance with GAAP.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

18

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Article 2.
LICENSES

 

2.1.        Product License.  Isis hereby grants to Genzyme an exclusive
license, with the limited right to sublicense as set forth in Section 2.2
(Limited Right to Sublicense), under the Licensed IP to research, develop, make,
have made, use, sell, offer for sale, have sold, import and export Products in
the Territory for therapeutic purposes.  Notwithstanding the foregoing, (a) the
exclusive license to the Isis Core Technology Patents will be subject to the
licenses granted by Isis to Third Parties identified on Schedule 2.1 and Isis’
right to grant Permitted Licenses and (b) with respect to any Follow-On
Compound, the provisions of Section 2.4 (Follow-On Compound) will govern the
extent to which In-Licensed Third Party IP is included within Licensed IP.

 

2.2.                         Limited Right to Sublicense.

 

2.2.1.                The Product License is sublicensable only in connection
with a sublicense of a Product to any Affiliate of Genzyme or to any Third
Party, in each case for the continued research, development or commercialization
of such Product in accordance with the terms of the Product License.

 

2.2.2.                Notwithstanding the foregoing, the licenses granted to
Genzyme under the Isis Manufacturing and Analytical IP are sublicensable to a
Third Party [**] only in accordance with Section 6.3.1 (Manufacture).

 

2.3.        Additional Rights after Prior Agreement Execution Date.  After the
Prior Agreement Execution Date, Isis may wish to in-license or acquire rights to
Know-How or Patents Controlled by Third Parties (such a Third Party in-license
or acquisition agreement being an “Additional Third Party Agreement”) which, if
so licensed or acquired, may be included in the Licensed IP licensed to Genzyme
under Section 2.1.  In such event (and to the extent permitted by Isis’
confidentiality agreement with the applicable Third Party), Isis will notify
Genzyme regarding the nature of the technology and status of negotiations
related to the Additional Third Party Agreement through the JDC.  Once Isis has
executed such Additional Third Party Agreement, Isis will offer such Third Party
Patents or Know-How to Genzyme (which offer will include a description of the
payments paid or potentially payable by Isis thereunder).  At such time, if
Genzyme wishes to include such Third Party Patents or Know-How under the license
granted under Section 2.1, Genzyme will notify Isis of its desire to do so and
the Parties will fairly and in good faith allocate upfront payments or ongoing
payment obligations between Products and compounds that are not Products, if
any, and other Isis licensees, if appropriate.  As part of this allocation
process, Isis will share with Genzyme, in reasonable detail, the assumptions and
methodology Isis used to create the proposed allocation.  If Genzyme does not
agree to reimburse Isis for the amount of any upfront or similar acquisition
payments fairly allocated to Product, and to be responsible for the payment of
its share of any upfront, milestone, and royalty payments, then the Know-How or
Patents acquired or in licensed by Isis under the Additional Third Party
Agreement will not be considered Licensed IP licensed to Genzyme under the
Product License.  When Genzyme pays its share of any upfront, milestone, and
royalty payments assumed by Genzyme under this Section 2.3, such payments will
be considered Program Costs for the applicable Product.  Except for Patents
acquired by Isis as part of an acquisition of a Third Party’s business,

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

19

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before Isis in-licenses or acquire rights to any Patent Controlled by Third
Parties which, if acquired, would be a Product-Specific Patent, Isis will first
notify Genzyme in writing and allow Genzyme to license or acquire such Patent on
the terms offered Isis.  If Genzyme informs Isis that Genzyme is not interested
in licensing or acquiring such Patent or does not license or acquire such Patent
within 180 days of Isis’ notice to Genzyme, then Isis will be free to in-license
or acquire such Patent.

 

2.4.        Follow-On Compound.  The Parties contemplate that after the
Effective Date Genzyme, either on its own or in collaboration with Isis, may
wish to research, develop, and commercialize Follow-On Compounds.  The scope of
the In-Licensed Third Party IP included in Licensed IP under the Product License
with respect to such Follow-On Compounds will be determined in accordance with
the procedures set forth in this Section 2.4.  At the time Genzyme intends to
designate a Follow-On Compound as a development candidate, Genzyme will notify
Isis in writing of such intention and will describe in reasonable detail the
applicable Follow-On Compound.  Subject to Section 2.3 (Additional Rights after
Prior Agreement Execution Date), if a Follow-On Compound utilizes any
In-Licensed Third Party IP (an “Encumbered Follow-On Compound”), such
In-Licensed Third Party IP will be included in Licensed IP only to the extent
set forth below:

 

2.4.1.

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

 

 

2.4.2.

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

 

 

2.4.3.

If the applicable Third Party Agreement does not contain the obligations or
encumbrances described in Sections 2.4.1 and 2.4.2 above, the In-Licensed Third
Party IP that is the subject of such Third Party Agreement will automatically be
included in Licensed IP.

 

 

2.4.4.

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

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Compound Encumbrances associated with such Third Party Agreement.

 

 

 

2.4.5.

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

 

2.5.        Retained Rights.  Subject to the terms and conditions of this
Agreement, Isis retains the non-exclusive, non-transferable, non-licensable
right under the Licensed IP only to the extent necessary for Isis to perform its
obligations under this Agreement and the Supply Agreement.

 

2.6.        Isis’ Right of First Negotiation.  With respect to any Genzyme
Program IP  that would be relevant to antisense therapies as a whole, including
but not limited to, manufacturing, formulation and delivery technologies or
oligonucleotide chemical modifications or the design of antisense therapeutics
generally, then Genzyme hereby grants to Isis a right of first negotiation with
respect to any exclusive license that Genzyme may elect to grant under such
Genzyme Program IP  (each, an “Antisense License”) on the following terms and
conditions:

 

2.6.1.                   General.  Genzyme will not grant an Antisense License
to any Third Party (or enter into discussions with, or solicit interest from,
any Third Party regarding an Antisense License) unless and until:

 

(a)                                  Genzyme gives written notice (the
“Antisense License Notice”) to Isis of Genzyme’s interest in granting an
Antisense License, which notice will identify in reasonable detail the proposed
scope and terms and conditions of the license Genzyme proposes to grant; and

 

(b)                                 (i) Isis notifies Genzyme that it declines
the opportunity to negotiate with Genzyme regarding such a license, (ii) Isis
does not indicate to Genzyme a desire to proceed with negotiations within
forty-five (45) days after receipt of the Antisense License Notice, or
(iii) Genzyme is otherwise permitted to enter into an Antisense License with a
Third Party pursuant to Section 2.6.3 (Look Back).

 

2.6.2.                   Negotiation Period.  If Isis notifies Genzyme, within
forty-five (45) days after receipt of the Antisense License Notice, that it
desires the opportunity to negotiate with Genzyme regarding such an Antisense
License, the Parties will negotiate exclusively with each other for ninety (90)
days (or such longer period as mutually agreed by the Parties) (the “Exclusive
Negotiation Period”) and will use commercially reasonable efforts to reach
agreement regarding a mutually satisfactory Antisense License on commercially
reasonable terms.  During the Exclusive Negotiation Period, Genzyme will not
enter into negotiations regarding an Antisense License with any Third Party.

 

2.6.3.                   Look Back.  In the event that the Exclusive Negotiation
Period expires before Genzyme and Isis have entered into an Antisense License,
Genzyme will have no further obligation to negotiate with Isis with respect to
any Antisense License in

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

21

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any country in the Territory, and Genzyme will be free to grant one or more
Antisense Licenses to one or more Third Parties in any country or countries in
the Territory at Genzyme’s sole discretion; provided, however, that for a period
equal to the longer of (i) the Term plus one (1) year or (ii) three (3) years
following the expiration of the Exclusive Negotiation Period, Genzyme will not
offer any Third Party an Antisense License containing a license scope and
financial terms that are more favorable to the Third Party than the license
scope and financial terms that Genzyme last offered to Isis during the
Negotiation Period unless Genzyme first offers an Antisense License with such
more favorable scope and terms to Isis in writing and Isis fails to accept such
offer within fourteen (14) days after receiving it.

 

2.6.4.                   Non-Exclusive License.  If Genzyme grants any Third
Party a non-exclusive license under any Genzyme Program IP  that would be
relevant to antisense therapies as a whole, including but not limited to,
manufacturing, formulation and delivery technologies or oligonucleotide chemical
modifications or the design of antisense therapeutics generally, then Genzyme
will promptly notify Isis of such license and will offer Isis a non-exclusive
license under such licensed Genzyme Program IP with substantially similar scope
and financial terms.

 

2.7.                         Third Party Agreements.

 

2.7.1.                   Exercise of Rights.  Isis will exercise its rights
under the Third Party Agreements in a manner that is as consistent as possible
with the terms of this Agreement and in consultation with and as reasonably
requested by Genzyme.  Isis covenants that it will not, without Genzyme’s prior
written consent, agree, consent or acquiesce to any amendment, supplement or
other modification to any Third Party Agreement or take any action under such
Third Party Agreement or with respect to the intellectual property licensed
thereunder that would adversely affect the rights granted to Genzyme under this
Agreement, including under the Product License.  Isis will immediately notify
Genzyme of (a) any event that adversely affects the rights granted to Isis under
a Third Party Agreement that are, in turn, sublicensed to Genzyme pursuant to
this Agreement or (b) receipt by Isis of any notice of breach or termination of
any Third Party Agreement.  Isis will take all reasonable actions necessary, or
permit Genzyme to take such actions, to maintain and enforce its rights under
the Third Party Agreements in a manner that is consistent with the terms of this
Agreement.

 

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

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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2.8.

 

No Implied License. Except as expressly provided in this Agreement, neither
Party will be deemed by estoppel or implication to have granted the other Party
any license or other right with respect to any intellectual property of such
Party. Without limiting the generality for the foregoing, a license to use
Know-How will not be interpreted as an implied license under any Patent Rights
other than as expressly provided in this Agreement.

 

Article 3.
EXCLUSIVITY

 

3.1.

 

Non-Compete. During the Term, Isis and its Affiliates will not, directly or
indirectly, and will not collaborate with, license or otherwise authorize any
Third Party to, research, develop or commercialize any nucleic acid that
(i) [**] apoB or (ii) [**] apoB, except pursuant to (a) the agreements
identified on Schedule 2.1, as they existed on the Prior Agreement Execution
Date, (b) Permitted Licenses, or (c) this Agreement.

 

 

 

3.2.

 

[**] Technology. Without first obtaining Genzyme’s written consent, which will
not be unreasonably withheld, Isis will not license to a Third Party any
technology that (a) is specifically useful in researching, developing or
commercializing therapeutics whose primary purpose at the time of the license or
primary therapeutic benefit at the time of commercialization is [**], (b) is not
broadly applicable to other [**] and (c) was invented by Isis while performing
activities pursuant to the Development Plan or pursuant to the Research Programs
under Article 7 (Research).

 

Article 4.
JOINT COMMITTEES

 

4.1.

 

Joint Development Committee.

 

4.1.1.

 

Establishment of JDC. The Parties will establish a Joint Development Committee
(the “JDC”), which will consist of a total of eight (8) members, with four
(4) members from each Party, to oversee the Development Program. Members of the
JDC may be represented at any meeting by a designee appointed by such member for
such meeting. Each Party will be free to change its members on prior written
notice to the other Party. The JDC will remain in place for four (4) years
following the Effective Date; provided, however that if the commercial launch of
the Product for a non-FH indication has not occurred by the end of such 4-year
period, the Parties will mutually agree upon an appropriate extension of the
JDC.

 

 

 

4.1.2.

 

Responsibilities of the JDC. In addition to any responsibilities expressly
described elsewhere in this Agreement, the JDC will:

 

 

 

 

 

(a)           On a Calendar Quarter basis, review and evaluate progress under
the Development Plan and expenditures relative to the Development Budget;

 

 

 

 

 

(b)          Develop updates or amendments to the Development Plan and the
Development Budget;

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

23

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(c)                                Perform any other activities related to the
Development Plan as jointly requested by both Parties from time to time;

 

 

 

 

 

(d)                               Review and approve a scientific and medical
publication plan and medical affairs plan for the Product;

 

 

 

 

 

(e)                                Appoint one or more working group(s) to
oversee particular activities to be performed under the Development Plan or
create the scientific and medical publication plan and medical affairs plan for
the Product, which working group(s) will dissolve no later than the date of the
dissolution of the JDC.

 

 

 

 

 

For the avoidance of doubt, the JDC will have no authority to amend this
Agreement.

 

 

 

4.1.3.

 

Meetings; Minutes.  During the course of implementing the Development Plan, the
JDC will meet at least once each Calendar Quarter, and more frequently as the
Parties mutually agree is appropriate, on such dates, in such places and at such
times as the Parties will agree.  The JDC will be chaired by Genzyme as of the
Effective Date.  The role of the chairperson will be to convene and preside at
meetings of the JDC, but the chairperson will not be entitled to prevent items
from being discussed or to cast any tie-breaking vote.  Reasonably detailed
written minutes will be kept of all JDC meetings and will reflect without
limitation material decisions made at such meetings.  The chairperson of the JDC
will have responsibility for keeping minutes.  Draft meeting minutes will be
sent to each member of the JDC for review and approval within ten (10) business
days after a meeting.  Minutes will be deemed approved unless a member of the
JDC objects to the accuracy or completeness of such minutes within thirty (30)
calendar days of receipt.

 

 

 

4.1.4.

 

Decision-Making and Dispute Resolution.  The JDC will act by unanimous consent. 
The representatives of each Party will have collectively one vote on behalf of
such Party; provided, however, that no such vote taken at a meeting will be
valid unless at least one representative of each Party is present and
participating in the vote.  In the case of any matter which cannot be resolved
unanimously by the JDC, at the written request of either Party, the dispute will
be referred to senior management of the Parties in accordance with Section 13.1
(Escalation to Senior Management).

 

4.2.

 

Joint Patent Committee.

 

4.2.1.

 

Establishment of JPC. The Parties will establish a Joint Patent Committee (the
“JPC”) to discuss the continued prosecution of the Licensed Patents and
Product-Specific Patents, (including Joint Patents).  The JPC will be comprised
of at least one (1) senior patent attorney from each Party.  Each Party will be
free to change its members at its sole discretion.  The JPC will exist for so
long as the JDC exists.  Thereafter, the Parties will meet from time to time as
necessary, or as may

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

24

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be mutually agreed by the Parties, to discuss patent related issues.

 

 

 

4.2.2.

 

Responsibilities of the JPC. At least once per Calendar Quarter, the JPC will
meet (in person or by phone) to discuss prosecution strategy for the Licensed
Patents and Product-Specific Patents (including Joint Patents) with the goal of
maintaining the broadest coverage for the Product in accordance with Section 9.3
(Filing, Prosecution and Maintenance of Patents). Subject to Section 9.5
(Enforcement of Patents and Know-How) and Section 9.6 (Claimed Infringement by
Third Parties), the JPC will also discuss any (a) potential Third Party
infringement of the Licensed Patents and Product-Specific Patents (including
Joint Patents) that might affect the Product and (b) Third Party intellectual
property right that the Parties may want to license or challenge.

 

 

 

4.2.3.

 

Decision-Making and Dispute Resolution. Subject to Section 9.3 (Filing,
Prosecution and Maintenance of Patents), in the event a dispute relates to the
prosecution or maintenance of a Patent, Genzyme will have the ultimate sole
decision-making authority with respect to the Product-Specific Patents and
Licensed Product Patents and Isis will have the ultimate sole decision-making
authority with respect to the Isis Core Technology Patents and the Isis
Manufacturing and Analytical Patents. Any other dispute at the JPC will be
referred to the JDC for resolution.

 

4.3.

 

Expenses. Each Party will be responsible for all of its own travel and related
costs and expenses for its members (or designees) of the JDC and JPC and such
expenses will not be treated as Program Costs.

 

Article 5.
DEVELOPMENT

 

5.1.

 

Development Plan and Development Budget. The initial Development Plan and
Development Budget through the end of 2009 that have been agreed to by the
Parties as of the Execution Date are attached to this Agreement as Exhibit A and
Exhibit B, respectively. The Parties acknowledge and agree that the Development
Plan and Development Budget as of the Execution Date will need to be updated and
augmented by the JDC on a quarterly basis and also from time to time in the
discretion of the JDC. The purpose of the Development Plan is to (a) set forth a
strategy and plan for development, manufacturing and Approval for the Product,
(b) detail the responsibilities and activities of Isis and Genzyme with respect
to the development of the Product and (c) specify the expected timing of such
activities, including the estimated dates of the initiation and completion of
such activities. The Development Budget contains the estimated costs associated
with the tasks outlined in the Development Plan. The JDC (or directly by the
written mutual agreement of the authorized representatives of the Parties) may
amend the Development Plan and Development Budget at any time, but, in any
event, the JDC will review and update the Development Plan and Development
Budget by agreeing to a Development Budget for each calendar year during the
Term not later than November 15th of the prior calendar year and prior to the
commencement of each successive

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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calendar quarter during such calendar year. Any update or amendment to the
Development Plan or Development Budget must be in writing. After the JDC has
disbanded, if requested by either Party, Genzyme and Isis will meet as necessary
at least annually on a mutually agreed schedule to review and evaluate progress
under the Development Plan and expenditures relative to the Development Budget
and to develop updates or amendments to the Development Plan and Development
Budget, with decisions made by the Parties consistent with the principles
contemplated for JDC decision making in Section 4.1.4 (Decision Making and
Dispute Resolution).

 

 

 

5.2.

 

Roles and Responsibilities.

 

5.2.1.

 

Clinical Trials. The Development Budget includes the preclinical work and
clinical trials to be conducted in and initiated in calendar year 2008 and
classifies each item of preclinical work and clinical trials as “Isis Funded” or
“Non Isis Funded.” The JDC will assign specific responsibilities with respect to
the conduct of such work and trials and will develop a written plan for
transitioning responsibility between the Parties; provided, however, that such
transition plan will not delegate the JDC’s decision making authority to a
Party. Except as otherwise determined by the JDC, Genzyme will conduct all
clinical trials and all preclinical work for Mipomersen initiated in calendar
year 2009 and thereafter. If pursuant to Section 4.1.4 (Decision-Making and
Dispute Resolution) the JDC amends the Development Plan so as to increase the
size or scope of a clinical study designated as “Isis Funded” (such as by
increasing the number of patients or increasing the dosing period of a clinical
study) and as a result of such increase the actual expenses associated with such
study exceed [**]% of the amount budgeted for such study in the Development
Budget as of the Execution Date, then the incremental cost and expenses for such
study in excess of [**]% of such Development Budget amount will be considered
“Non Isis Funded” (i.e. not “Isis Funded”) for purposes of Section 8.3
(Financial Provisions Related to Development Activities).

 

 

 

5.2.2.

 

Performance of the Development Program. Each Party will use Commercially
Reasonable Efforts to conduct all activities and responsibilities assigned to it
under the Development Plan and in accordance with the Development Budget and to
cooperate with and provide reasonable support to the other Party in such other
Party’s conduct of activities under the Development Plan. Each Party will
undertake its respective development activities, including its obligation to
conduct clinical trials, in accordance with all Applicable Laws.

 

 

 

5.2.3.

 

Responsibility. Except for those certain clinical trial responsibilities
allocated to Isis as set forth in the Development Plan or other written document
approved by the JDC, Genzyme will be responsible for all other aspects of the
development of the Product.

 

5.3.

 

Clinical and Launch Supplies. Isis will be responsible for manufacturing and
supplying API for the Phase II clinical trials, the Pivotal Trial(s) and the
initial commercial launch

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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of the Product, pursuant to a Supply Agreement the form of which is set forth on
Exhibit C and a Quality Agreement the form of which is set forth on Exhibit D. 
In accordance with Section 8(a) and (b) of the Supply Agreement, the transfer
price for the Product under the Supply Agreement will be Isis’ Fully Absorbed
Cost of Goods, and all amounts paid by Genzyme to Isis under the Supply
Agreement will be Program Costs under this Agreement.  The quantity of API that
Isis will be required to supply for commercial launch will be mutually agreed by
the Parties and set forth in the Supply Agreement.  If Isis cannot manufacture
as set forth above, upon written request by Genzyme, Isis will transfer to
Genzyme all documentation and information, and permit Genzyme to reference and
use any regulatory filings, and otherwise fully cooperate with Genzyme to enable
Genzyme to make or have made the API for use by Genzyme in accordance with the
Agreement.  Genzyme  will be responsible for all finished drug product and
placebo needed for clinical trials of Product and finished drug product for
commercial sale.

 

5.4.

 

Know-How Transfer.

 

5.4.1.

 

Transfer to Genzyme.  During the existence of the JDC (or after the dissolution
of the JDC at Genzyme’s request), Isis will transfer to Genzyme and its
representatives all material Product Know-How and Isis Manufacturing and
Analytical Know-How within the possession or Control of Isis or any of its
Affiliates, including all Regulatory Materials related to the Product; provided,
however, that Isis will be required to deliver Isis Manufacturing and Analytical
Know-How only to Genzyme or a Third Party manufacturer approved by Isis in
accordance with Section 6.3 (Commercial Manufacture).  Without limiting the
generality of the foregoing:

 

(a)

 

Before or promptly following the Execution Date, Isis will transfer any
preclinical pharmacology and safety data, clinical data that then exists and any
other information related to the Product that Genzyme may reasonably request.
Thereafter during the Term, Isis will provide copies of all data from Isis’
clinical or preclinical activities undertaken pursuant to the Development Plan.

 

 

 

(b)

 

Isis will promptly disclose in reasonable detail and in a reasonable manner
specified by Genzyme the Product Know-How and Isis Manufacturing and Analytical
Know-How learned, discovered, developed, acquired or otherwise coming within the
Control of Isis during the Term.

 

 

 

(c)

 

At Genzyme’s request from time to time during the Term, Isis will deliver to
Genzyme copies (for documents and information) and samples (for materials) of
any documents, files, diagrams, plans, specifications, designs, recipes,
schematics, reports, models, prototypes, chemical or biologic materials, assays,
reagents, or other tangible documentation or material in Isis’ possession
recording or embodying the Product Know-How and Isis Manufacturing and
Analytical Know-How in Isis’ or its Affiliate’s possession.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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(d)

 

At Genzyme’s request from time to time during the Term, and on a commercially
reasonable schedule and at a commercially reasonable venue to be agreed on by
the Parties, technically qualified personnel from each Party (and, if
applicable, any Third Party manufacturer approved by Isis in accordance with
Section 6.3 (Commercial Manufacture)) will meet and/or participate in telephone
conference calls as reasonably necessary to exchange knowledge necessary to
fully transfer all such Know-How.

 

 

 

(e)

 

Section 2.2 (Limited Right to Sublicensee) and Article 12 (Confidentiality and
Public Disclosures) will apply to any transfer of such Know How by Genzyme to a
Third Party.

 

5.4.2.

 

Transfer from Genzyme to Isis.  Upon Isis’ reasonable request, Genzyme will
provide to Isis copies of any and all data from Genzyme’s clinical or
preclinical studies with the Product.

 

5.5.

 

Subcontracting.  Each Party may contract with one or more Third Party
contractors to perform any or all of its obligations under the Development Plan;
provided, however, that (a) except as otherwise agreed to by the JDC, each Third
Party contractor will be approved by the JDC for the proposed work, such
approval not to be unreasonably withheld, delayed or conditioned; and (b) the
contracting Party provides the other Party with a true and accurate copy of each
agreement pursuant to which such Third Party contractor is engaged promptly
after execution thereof.

 

Article 6.
COMMERCIALIZATION AND REGULATORY MATTERS

 

6.1.

 

Commercialization Responsibilities.  Genzyme will have the exclusive right to
commercialize any Product itself or through one or more Affiliates or Third
Parties selected by Genzyme in the Territory and will have sole discretion,
authority and responsibility in all matters relating to the commercialization of
any Product in the Territory; provided, however, that Genzyme must use
Commercially Reasonable Efforts to commercialize at least one Product in each of
the Major Market Countries upon obtaining Approval in such country.

 

6.2.

 

Regulatory Matters and Filings.

 

6.2.1.

 

Regulatory Responsibility.  Genzyme will be responsible for all regulatory
matters relating to the Product in the Territory.  Isis will transfer to Genzyme
(or to a Genzyme Affiliate designated by Genzyme) the IND(s), orphan drug
designation(s) and other existing Regulatory Materials for Mipomersen within
thirty (30) days of the Execution Date.  Between the Execution Date and the
transfer to Genzyme of the IND related to the Product, Isis will not file or
send any Regulatory Material related to the Product with or to any Regulatory
Authority without Genzyme’s prior written consent, which consent will not
unreasonably withheld or delayed. Genzyme will prepare and file, in its own
name, all NDAs, MAAs and other Regulatory Materials for the Product in the

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

28

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Territory.  Genzyme will have sole authority with respect to (a) obtaining
Approvals for the Product and subsequently maintaining such Approvals,
(b) communicating with Regulatory Authorities about the Product and
(c) preparing and submitting supplements, communications, annual reports,
adverse event reports, manufacturing changes, supplier designations and other
related regulatory filings and Regulatory Materials.  Isis will provide Genzyme
with reasonable access to and copies of any documents or other materials
Controlled by Isis that are useful for such regulatory filings and
correspondence and maintenance of Approvals for the Product in the Territory and
will otherwise cooperate with Genzyme’s efforts to obtain and maintain Approval
for the Product.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

29

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6.2.2.

 

Third Party Services Agreements.

 

(a)

 

Isis will exercise its rights under any agreement with a Third Party now
existing or entered into during the Term pursuant to which Isis obtains services
applicable to the pre-clinical or clinical development of a Product, including
without limitation any agreement with a contract research organization (each a
“Third Party Services Agreement”) in a manner that is as consistent as possible
with the terms of this Agreement and in consultation with and as reasonably
requested by Genzyme. Isis covenants that it will not, without Genzyme’s prior
written consent, (i) agree, consent or acquiesce to any amendment, supplement or
other modification to any Third Party Services Agreement or (ii) take any action
under any Third Party Services Agreement, in each case that may adversely affect
Genzyme as the holder of the Regulatory Materials related to the Product. Isis
will take all reasonable actions necessary, or permit Genzyme to take such
actions, to maintain and enforce its rights under the Third Party Services
Agreements in a manner that is consistent with the terms of this Agreement.

 

 

 

(b)

 

In connection with the transfer of the Regulatory Materials for Mipomerson and
Genzyme’s assumption of responsibility for regulatory matters related to the
Product, at Genzyme’s written request Isis will use commercially reasonable
efforts to promptly assign and transfer to Genzyme any Third Party Services
Agreements solely related to the pre-clinical or clinical development of the
Products. If the terms of any Third Party Services Agreement requires the
consent of the other party thereto to effect such assignment, then upon
Genzyme’s request for an assignment, Isis will use commercially reasonable
efforts to obtain such consent. In the event of any assignment to Genzyme under
this Section 6.2.2, Genzyme will assume full responsibility for satisfying all
obligations of Isis under any assigned agreement to the extent arising after
such assignment and assumption, and Isis will remain responsible for satisfying
all obligations under any assigned agreement to the extent arising prior to such
assignment and assumption. If a Third Party Services Agreement relates both to
the pre-clinical or clinical development of the Product and to the development
of some other Isis product not licensed to Genzyme under this Agreement, then at
Genzyme’s request, the Parties will use commercially reasonable efforts to enter
into such amendment(s) or new agreement(s) with the Third Party service provider
to effect the transfer to Genzyme of all rights and obligations related to the
Product under such Third Party Services Agreement.

 

6.2.3.

 

Regulatory Audit.  If a Regulatory Authority desires to conduct an inspection or
audit of a Party’s facility, or a facility under contract with a Party, with
regard to a Product, then such Party will promptly notify the other Party and
permit and cooperate with such inspection or audit, and will cause the contract
facility to permit and cooperate with such Regulatory Authority and such other
Party during such inspection or audit.  Genzyme will have the right to have a
representative observe such inspection or audit of a facility operated by Isis
or under contract with Isis.  Following receipt of the inspection or audit
observations of such Regulatory Authority (a copy of which the audited Party
will immediately provide to the other Party), the audited Party will prepare the
response to any such

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

30

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 observations, and will provide a copy of such response to the other Party.

 

 

 

6.2.4.

 

Class Generic Label Claims.  Notwithstanding the foregoing, to the extent
Genzyme intends to make any claims in a Product label that are of general
applicability to antisense oligonucleotides, Genzyme will provide such claims to
Isis in advance and will consider any proposals and comments made by Isis.

 

6.3.

 

Commercial Manufacture.

 

6.3.1.

 

Manufacture. Subject to Isis’ obligation to manufacture and supply API for the
commercial launch of the Product pursuant to Section 5.3 (Clinical and Launch
Supplies) and the Supply Agreement, Genzyme will be responsible for securing
commercial quantities of API and finished drug product for the Product. If
Genzyme chooses not to manufacture the API for Product itself, then prior to
using any Third Party manufacturer to supply commercial quantities of the API
for Product, Genzyme must obtain Isis’ prior written consent to the identity of
the Third Party manufacturer and the material terms and conditions on which such
Third Party manufacturer will supply commercial quantities of the API for
Product, which consent will not be unreasonably withheld, conditioned or
delayed; provided, however, that Isis will not withhold its consent to a Third
Party manufacturer if its basis for doing so is an objection to the country in
which such manufacturing will take place and the country in question is a member
country of the European Union or Switzerland. In any event, Isis will cooperate
with and provide commercially reasonable assistance to Genzyme and any approved
Third Party manufacturer, including by transferring relevant Know-How in
accordance with Section 5.4 (Know-How Transfer).

 

 

 

6.3.2.

 

Assignment of Agreements With Third Parties. At Genzyme’s written request in
connection with the transfer of responsibility for manufacture, Isis will use
commercially reasonable efforts to promptly assign and transfer to Genzyme any
existing supply or other agreements solely related to the manufacture of the
Products. Concurrent with the Execution of this Agreement, Isis will assign and
transfer to Genzyme its agreement with [**] related to the preparation and
packaging of drug product. If the terms of any of the agreements referred to in
the previous two sentences require the consent of the other party thereto to
effect such assignment, then upon Genzyme’s request for an assignment, until
Isis is able to obtain such consent and effect such assignment, Isis will
exercise its rights under such agreements for the benefit of Genzyme and as
reasonably requested by Genzyme. In the event of any assignment to Genzyme under
this Section 6.3.2, Genzyme will assume full responsibility for satisfying all
obligations of Isis under any assigned agreement to the extent arising after
such assignment and assumption, and Isis will remain responsible for satisfying
all obligations under any assigned agreement to the extent arising prior to such
assignment and assumption.

 

6.4.

 

Isis Safety Database. Isis maintains a database that includes information
regarding the

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

31

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tolerability of its drug compounds, individually and as a class, including
information discovered during pre-clinical and clinical development (the “Isis
Database”). In an effort to maximize understanding of the safety profile and
pharmacokinetics of Isis’ drug compounds, Genzyme will reasonably cooperate in
providing information to Isis to populate the Isis Database by providing Isis
with copies of toxicology, pharmacokinetic and serious adverse event final
reports related to the Product, as well as any supporting data reasonably
requested by Isis. Genzyme’s obligation under this Section 6.4 will be subject
to Applicable Law, any necessary informed consents and obligations to Third
Parties.

 

 

 

6.5.

 

Safety Reporting. Each Party will designate a primary contact person for the
receipt of all reports called for in this Section 6.5 (the “Primary Safety
Contact Person”) and promptly notify the other Party of such designation or any
change thereto. Each Party will notify the other Party’s Primary Safety Contact
Person of (a) all available information concerning any serious adverse event
(SAE) occurring in patients treated with the Product, for any indication,
(b) any information, regardless of source, which is relevant to known or
potential human safety risks associated with the Product, (c) signals of human
risk including information from in vitro or animal studies which may suggest a
significant hazard to humans, including any findings from tests in laboratory
animals that suggest a significant risk to human beings, including reports of
mutagenicity, teratogenicity or carcinogenicity, and (d) information related to
other products that are chemically similar to the Product or that have a
pharmacologically similar mechanism of action (e.g., antisense oligonucleotides)
that suggests a significant hazard for humans related to the Product. For
purposes of this Section 6.5, a “serious adverse event (SAE)” is one which has
an outcome which (i) is fatal or life threatening, (ii) requires or prolongs
in-patient hospitalization, (iii) is a persistent or significant
disability/incapacity, (iv) is a congenital anomaly/birth defect, or (v) is an
important medical event, e.g., required medical or surgical intervention to
prevent one of the other serious outcomes listed above. Each Party will promptly
(but no later than twenty-four (24) hours after it becomes aware of the serious
adverse event (SAE) or such other information and as necessary for compliance
with regulatory requirements) provide the other Party with all such safety
information through the receiving Party’s Primary Safety Contact Person. Isis
will conduct all safety reporting for the Product in accordance with Genzyme
standard operating procedures communicated to Isis in writing. Upon transfer of
the IND(s) to Genzyme and assumption by Genzyme of regulatory responsibilities
under the IND(s), Genzyme will assume responsibility for the global safety
database related to the Product. Genzyme will be solely responsible for
reporting to Regulatory Authorities in accordance with the Applicable Law for
expeditable adverse events and for periodic safety reporting relating to the
safety of the Product and will furnish copies of such reports to Isis.

 

 

 

6.6.

 

Commercial Forecasts & Plans.

 

6.6.1.

 

In addition to the reports required under Section 8.6 (Periodic Reporting and
Reconciliation), beginning on the last year in which the JDC is in place and
each calendar year thereafter (1) not later than October 1st of the applicable
year, Isis

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

32

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will provide Genzyme with a non-binding, good-faith forecast of Isis’ aggregate
Program Costs for the following calendar year if any; and (2)  not later than
November 15th of the applicable year (i) Genzyme will provide Isis with a
non-binding, good-faith forecast of Genzyme’s aggregate Program Costs for the
following calendar year, (ii) Isis will provide Genzyme with an updated
non-binding, good-faith forecast of Isis’ aggregate Program Costs for the
following calendar year, if any, and (iii) based upon the Parties’ non-binding
forecasts of aggregate Program Costs, Genzyme will provide Isis with a
non-binding, good-faith forecast of the Net Sales, Net Revenue and Net Profit
for such year. Each Party’s forecasts will include sufficient supporting detail
to allow the other Party an opportunity to review and understand the forecasts.

 

 

 

 

 

 

 

6.6.2.

Prior to the initial commercial launch of the Product and on an annual basis
thereafter, Genzyme will provide Isis with a reasonably detailed written summary
of its marketing plan and budget and will consider in good faith all comments
and suggestions provided by Isis on such plans and budgets.

 

Article 7.
RESEARCH RELATED TO THE PRODUCT

 

7.1.

 

Research Programs.  The Parties will agree to conduct research programs related
to the Product that may include, but are not limited to, the following research
topics:  (a) [**], (b) [**], (c) [**] and (d) [**]  (collectively, the “Research
Programs”).  The nature and scope of the Research Programs will be determined
within sixty (60) days of the Execution Date by a subcommittee to be appointed
the JDC.

 

 

 

 

 

7.2.

 

Research Funding.  Isis will fund all external research expenses incurred in
calendar years [**] in connection with the Research Programs.  Genzyme will fund
all external research expenses incurred in connection with the Research Programs
in calendar year [**].  Thereafter, the Parties will agree upon allocation of
any external research expenses incurred in connection with the Research
Programs.  Each Party will be responsible for their own internal research
expenses incurred in connection with the Research Programs, and, unless
otherwise agreed in writing by the Parties, internal and external research
expenses incurred in connection with the Research Program will not be included
as Program Costs.  For the purposes of this Section 7.2, “internal research
expenses” means costs and expenses incurred in connection with the Research
Programs attributable to the internal costs of base salary plus a factor for
reasonable and customary employee benefits and payroll taxes for those employees
directly responsible for performing the research activity plus G&A Costs and
other overhead expenses reasonably required to support the activities of the
Parties under the Research Programs as allocated consistent with the
methodologies agreed to under Section 8.7.2.  Meanwhile, “external research
expenses” means expenses incurred in connection with the Research Programs other
than internal research expenses.

 

 

 

 

 

7.3.

 

Research Efforts.  If at any time during the Term no Product has received
Approval in any Major Market Country and no Product is being developed pursuant
to a Development

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

33

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Plan, Genzyme will use Commercially Reasonable Efforts to conduct research
activities designed to advance a Product to the stage where it can be developed
pursuant to a Development Plan.

 

 

 

 

 

Article 8.
FINANCIAL PROVISIONS

 

 

 

 

 

8.1.

 

Upfront License Fee.  Genzyme will pay to Isis a non-refundable, non-creditable
license fee of one hundred and seventy-five million dollars ($175,000,000)
within five (5) days after the Execution Date.

 

 

 

 

 

8.2.

 

Milestones.

 

 

 

 

 

 

 

 

8.2.1.

Development Milestones.

 

 

 

 

 

 

 

 

 

(a)         Mipomersen in FH.  Within thirty (30) days after the achievement of
the following indicated events by Genzyme, its Affiliate or its Sublicensee,
Genzyme will pay Isis the following development milestone payments:

 

Milestone Event

 

Milestone
Payment

 

NDA Filing for the use of Mipomersen to treat homozygous FH and/or patients who
would be eligible under then-approved FDA labeling to receive low-density
lipoprotein apheresis

 

$

[**]

 

NDA Approval for the use of Mipomersen to treat patients who have homozygous FH
and/or who would be eligible under then-approved FDA labeling to receive
low-density lipoprotein apheresis

 

$

[**]

 

MAA Approval for the use of Mipomersen to treat patients who have heterozygous
FH or an otherwise comparably sized eligible patient population

 

$

[**]

 

 

 

 

 

(b)        Mipomersen in Other Indications.  Within thirty (30) days after the
achievement of the following indicated events by Genzyme, its Affiliate or its
Sublicensee, Genzyme will pay Isis the following development milestone payments:

 

Milestone Event*

 

Milestone
Payment

 

NDA Approval for the use of Mipomersen to treat patients who have polygenic
hypercholesterolemia or any patient population of a size comparable to the
patient population deemed to be at “high risk” as determined in accordance with
the National Cholesterol Education Program’s clinical practice guidelines on

 

$

[**]

 

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

34

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

 

cholesterol management with LDL-C greater than or equal to [**] mg/dL

 

 

 

MAA Approval for the use of Mipomersen to treat patients who have polygenic
hypercholesterolemia or any patient population of a size comparable to the
patient population deemed to be at “high risk” as determined in accordance with
the National Cholesterol Education Program’s clinical practice guidelines on
cholesterol management with LDL-C greater than or equal to [**] mg/dL

 

$

[**]

 

Approval of a Japanese New Drug Application for the use of Mipomersen to treat
patients who have polygenic hypercholesterolemia or any patient population of a
size comparable to the patient population deemed to be at “high risk” as
determined in accordance with the National Cholesterol Education Program’s
clinical practice guidelines on cholesterol management with LDL-C greater than
or equal to [**] mg/dL

 

$

[**]

 

 

 

 

 

The Parties acknowledge that the current Development Plan contemplates [one or
more] Pivotal Trials, that, if successful, are currently intended to achieve the
milestones set forth in Section 8.2.1(b).  To minimize the likelihood of any
disagreement between the Parties around whether an Approval based upon a
successful Pivotal Trial is sufficient to satisfy any of the milestones set
forth in Section 8.2.1(b), the Parties agree to adopt the following process:

 

 

 

 

 

 

 

 

(1)

Prior to final approval of any Pivotal Trial protocol or any material change to
the protocol of an ongoing Pivotal Trial by the JDC, Genzyme will notify the JDC
in writing if Genzyme believes, were a Regulatory Authority to grant an Approval
for the treatment of a patient population that is co-extensive with the patient
population(s) included for enrollment in such Pivotal Trial, that such approval
will not qualify to meet the milestones set forth in Section 8.2.1(b).

 

 

 

 

 

 

 

 

(2)

If Genzyme fails to provide the JDC with the notice contemplated by subsection
(1) above, an Approval in the relevant jurisdiction for the treatment of a
patient population that is co-extensive with the patient population(s) included
for enrollment in the Pivotal Trial will be deemed to satisfy the applicable
milestone in Section 8.2.1(b).

 

 

 

 

 

 

 

 

(3)

In addition, in the event a Regulatory Authority proposes a limitation that
would, in Genzyme’s view, preclude the achievement of one of the milestones in
Section 8.2.1(b), Genzyme will notify the JDC and in good faith attempt to avoid
such restriction, to the extent practical under the circumstances. In such
event, Genzyme will also reasonably consult with Isis regarding the best
strategy to attempt to avoid such restrictions.

 

 

 

 

 

 

 

 

(c)           Follow-On Compound.  Within thirty (30) days after the achievement
of the following indicated events by Genzyme, its Affiliate or its Sublicensee,
Genzyme will pay Isis the following development milestone payments:

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

35

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Milestone Event

 

Milestone
Payment

 

NDA Approval for the Follow-On Compound

 

$

[**]

 

MAA Approval for the Follow-On Compound

 

$

[**]

 

Approval of a Japanese New Drug Application for the Follow-On Compound

 

$

[**]

 

 

 

 

8.2.2.

Commercial Milestones.  Within thirty (30) days after the achievement of the
following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme
will pay Isis the following commercial milestone payments:

 

Milestone Event

 

Milestone
Payment

 

Annual Net Revenues for all Products equals or exceeds three billion dollars
($3,000,000,000) in each of any two consecutive calendar years

 

$

250,000,000

 

Annual Net Revenues for all Products equals or exceeds four billion dollars
($4,000,000,000) in each of any two consecutive calendar years

 

$

250,000,000

 

Annual Net Revenues for all Products equals or exceeds five billion dollars
($5,000,000,000) in each of any two consecutive calendar years

 

$

250,000,000

 

 

 

 

 

In the event that more than one of the above commercial milestones is achieved
simultaneously, Genzyme will make only one milestone payment, which will be for
the milestone requiring the highest Annual Net Revenues.  The Annual Net
Revenues in any calendar year may be counted toward only one consecutive two
calendar year period, except that if Annual Net Revenues for all Products equals
or exceeds five billion dollars ($5,000,000,000) in any calendar year, that year
may be counted as both the last year of one two consecutive year period and the
first year of a second two consecutive year period.  For the purpose of
illustration, it will require at least five (5) years before Genzyme has been
required to pay Isis the total of the seven hundred and fifty million dollars
($750,000,000) in milestone payments pursuant to this Section 8.2.2 (Commercial
Milestone) unless Annual Net Revenue exceeds five billion dollars
($5,000,000,000) for three (3) or more consecutive years, in which case it would
require four (4) years (assuming there was at least three billion dollars
($3,000,000,000) in sales in the first or fourth year during the four year
period).

 

 

 

 

 

 

 

8.2.3.

Hybrid Milestones.  Within thirty (30) days after the achievement of the
following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme
will pay Isis the following milestone payments:

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

36

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Milestone Event*

 

Milestone
Payment

 

The earlier to occur of (A) NDA Approval for the use of Mipomersen to treat
patients who have heterozygous FH or an otherwise comparably sized eligible
patient population; or (B) annual Net Revenues for all Products equals or
exceeds two hundred and fifty million dollars ($250,000,000) in any calendar
year

 

$

[**]

 

The earlier to occur of (A) NDA Approval for the use of Mipomersen to treat
patients who have heterozygous FH or an otherwise comparably sized eligible
patient population; or (B) annual Net Revenues for all Products equals or
exceeds five hundred million dollars ($500,000,000) in any calendar year

 

$

[**]

 

 

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

* For purposes of clarification, if the first hybrid milestone above had not
already been payable, and annual Net Revenues for all Products equals or exceeds
five hundred million dollars ($500,000,000) in a calendar year, then both hybrid
milestones would be triggered.

 

 

 

 

8.2.4.

Milestones Payable Only Once. Once Genzyme has made any particular milestone
payment under this Section 8.2, Genzyme will not be obligated to make any
payment under this Section 8.2 with respect to the re-occurrence of same
milestone, whether or not such re-occurrence is with respect to a different or
the same Product or indication.

 

 

 

 

 

 

8.2.5.

Indications of Mipomersen Approval. If Mipomersen receives an Approval for a
label indication that is sufficiently broad to include the entire patient
population contemplated by one or more development milestone(s) set forth in
Sections 8.2.1(a) (Mipomersen in FH) or 8.2.1(b) (Mipomersen in Other
Indications) or 8.2.3 (Hybrid Milestones), then Genzyme will pay Isis the
milestone payment(s) for such development milestone(s), even though the
indication for which Mipomersen is approved is not identical to the
indication(s) of such development milestone(s).

 

 

 

 

 

8.3.

 

Financial Provisions Relating to Development Activities.

 

 

 

 

 

8.3.1.

Isis Funding of External Development Expenses.

 

 

 

 

 

 

 

 

(a)         Subject to Section 5.2.1 (Clinical Trials), Isis will fund the
clinical studies described as “Isis Funded” in the Development Budget.

 

 

 

 

 

 

 

 

(b)        In addition to its funding obligations under Section 8.3.1(a) above,
Isis will fund the first one hundred and twenty-five million dollars
($125,000,000) of the External Development Expenses for the Product that will be
incurred by the Parties in accordance with the Development Plan starting as of
January 1, 2008, including expenses for (a) the clinical studies described as
“Non Isis Funded” in the Development Budget, (b) future clinical studies
undertaken in accordance with the Development Plan, (c) toxicology studies
undertaken in accordance with the Development Plan (except for those described
as “Isis Funded” in the Development Budget), (d) pharmacokinetic studies
undertaken in accordance with

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

37

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the Development Plan, (e) the manufacturing of API, as well as the packaging and
distribution of the final Product and (f) the scientific advisory board and drug
safety monitoring board.  Any External Development Expenses that are recouped by
Isis pursuant to Section 8.4 (Sharing of Net Revenue) will not be counted toward
the fulfillment of this $125 million funding commitment.  For purposes of
clarity, in the event that Net Profit is achieved prior to the exhaustion of the
Isis $125 million funding commitment set forth in this section 8.3.1, then for
so long as Net Profit is maintained, Isis will not be obligated to fund External
Development Expenses and the provisions of Section 8.5 (Sharing of Net Profits)
will apply.

 

 

 

 

 

 

 

8.3.2.

Shared Funding of External Development Expenses. After one hundred and
twenty-five million dollars ($125,000,000) of External Development Expenses for
the Product have been funded as described in Section 8.3.1(b) above, and after
the sharing of Net Revenue in accordance with Section 8.4 (Sharing of Net
Revenue), the Parties will share equally (on a 50/50 basis) all remaining
External Development Expenses in any calendar year in which Net Profit is not
achieved. In any calendar year in which Net Profit is achieved, the External
Development Expenses will be included as Program Costs.

 

 

 

 

 

 

 

8.3.3.

Internal Development Expenses. Each Party will be responsible for their own
Internal Development Expenses with respect to development of the Product in any
calendar year in which Net Profit is not achieved. In any calendar year in which
Net Profit is achieved, the Parties’ Internal Development Expenses will be
included as Program Costs.

 

 

 

 

 

8.4.

 

Sharing of Net Revenue. In any calendar year in which there is not a Net Profit,
the Parties will share Net Revenue as follows:

 

 

 

 

 

 

 

8.4.1.

Costs of Goods. Net Revenue first will be allocated between the Parties to
reimburse them for the Fully Absorbed Cost of Goods incurred by the Parties in
such calendar year.

 

 

 

 

 

 

 

8.4.2.

External Sales & Marketing Expenses. Once the Parties have each been fully
reimbursed for the Fully Absorbed Cost of Goods, Net Revenue next will be
allocated between the Parties to reimburse them for External Sales & Marketing
Expenses incurred by the Parties in such calendar year.

 

 

 

 

 

 

 

8.4.3.

Internal Sales & Marketing Expenses. Once the Parties have each been fully
reimbursed for the Fully Absorbed Cost of Goods and External Sales & Marketing
Expenses, Net Revenue next will be allocated between the Parties to compensate
them for Internal Sales & Marketing Expenses incurred by the Parties in such
calendar year.

 

 

 

 

 

 

 

8.4.4.

External Development Expenses. Once the Parties have each been fully reimbursed
for the Fully Absorbed Cost of Goods, External Sales & Marketing Expenses and
Internal Sales & Marketing Expenses, Net Revenue next will be

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

38

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allocated between the Parties to compensate them for External Development
Expenses incurred by the Parties in such calendar year (other than Fully
Absorbed Cost of Goods already reimbursed under Section 8.4.1 above).

 

 

 

 

 

 

 

8.4.5.

Internal Development Expenses. Once the Parties have each been fully reimbursed
for the Fully Absorbed Cost of Goods, External Sales & Marketing Expenses,
Internal Sales & Marketing Expenses and External Development Expenses, Net
Revenue next will be allocated between the parties to compensate them for
Internal Development Expenses incurred by the Parties in such calendar year.

 

 

 

 

 

 

 

8.4.6.

Revenue Sharing Proportional to Expenses. For each category of cost or expense
set forth in this Section 8.3, if Net Revenue is sufficient to only partially
compensate the Parties for particular category of cost or expense, then the
Parties will allocate the Net Revenue that may be allocated for such category
between the Parties on a pro rata basis in proportion to the relative amounts of
such category of cost or expense incurred by each Party.

 

 

 

 

8.5.

 

Sharing of Net Profits.

 

 

 

 

 

 

8.5.1.

Responsibility for Net Loss. Except as set forth in Section 8.4 (Sharing of Net
Revenue), in any calendar year in which there is a Net Loss, Genzyme’s share of
Net Revenue will be one hundred percent (100%) and, subject to Section 8.3
(Financial Provisions Related to Development Activities), Genzyme will be solely
responsible for all Program Costs. Isis will not be required to compensate
Genzyme for any Net Loss.

 

 

 

 

 

 

 

8.5.2.

Sharing of Net Profits. In any calendar year in which there is a Net Profit, the
Parties will share such Net Profit in accordance with the following allocation
based on Net Revenue for such calendar year:

 

 

Annual Net Revenue

 

Genzyme Percentage

 

Isis Percentage

 

 

 

$1 to < $200 M

 

70%

 

30%

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

[**]

 

[**]

 

[**]

 

 

 

>$2 B

 

50%

 

50%

 

 

 

 

 

 

 

 

 

 

 

Notwithstanding the foregoing, in any calendar year in which Net Profits are
generated in an amount greater than or equal to [**] of Net Revenue, Isis’ share
of

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

39

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Net Profits will not fall below an amount equal to [**] of Net Revenue.

 

 

 

 

8.6.

 

Periodic Reporting and Reconciliation.

 

 

 

 

 

 

 

8.6.1.

Reports. Within thirty (30) days after the end of each Calendar Quarter during
the Term (a “Reporting Period”), each Party will submit a written report to the
other Party setting forth in reasonable detail the following, as applicable:
(a) External Development Expenses incurred by Isis in accordance with
Section 8.3.1 (Isis Funding of External Development Expenses) for each month
during such Reporting Period, if any; (b) Fully Absorbed Costs of Goods,
External Sales & Marketing Expenses, Internal Sales & Marketing Expenses,
External Development Expenses, and Internal Development Expenses incurred by
each Party for each month during such Reporting Period (if any); (c) actual Net
Revenues, Net Sales and Program Costs incurred by or on behalf of the reporting
Party for each month during such Reporting Period, if any, and (d) forecasts for
the next four (4) Reporting Periods of Program Costs attributable to such Party
(including, for each Party, the Fully-Absorbed Cost of Goods, External Sales &
Marketing Expenses, Internal Sales & Marketing Expenses, External Development
Expenses, and Internal Development Expenses) and, for Genzyme, Genzyme’s
estimate of Net Revenues. Such written reports will provide supporting detail
for actual Net Revenues, Net Sales and Program Costs. The Parties recognize that
the forecasts provided pursuant to subsection (d) are estimates only, and the
Party providing such forecasts for the next Reporting Period will have no
liability to the other Party based thereon. The Parties agree to consider in
good faith the utilization of more rapid and detailed reporting mechanisms in
order to meet the reporting requirements of the Parties. Development Expenses
reported pursuant to this Section 8.5.1 will be included in Program Costs for
determining Net Profits or Net Losses (and any revenue sharing or resulting
funding obligations under Sections 8.3 and 8.4), as applicable, only to the
extent made or incurred in accordance with the Development Plan and to the
extent that they do not exceed the amount budgeted for such expense in the
then-current Development Budget (if any) by more than [**] for a calendar year
or as otherwise approved by the JDC. Costs and expenses included in Program
Costs, as well as the deductions taken from Net Sales, will not be double
counted (i.e., any item of expense included in any expense category will not
also be included in any other expense category).

 

 

 

 

 

 

 

8.6.2.

Reconciliation.

 

 

 

 

 

 

 

 

(a)         Within forty-five (45) days following the exchange of the reports
under Section 8.6.1 (Reports), Genzyme will send to Isis a written report
setting forth the calculation of any net amount owed by Genzyme to Isis (or by
Isis to Genzyme), in order to ensure that (i) Isis fulfills its funding
obligations under Section 8.3 (Financial Provisions Relating to Development
Activities) and (ii) the Parties share Net Revenue as specified in Section 8.4
(Sharing of Net Revenue) or Net Profits as specified in Section 8.5.2 (Sharing
of Net Profits). The Parties will

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

40

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

 

 

 

 

use the most recent forecasts for Annual Net Revenue and Net Profit provided
pursuant to Section 8.6.1 (Reports) to determine the applicable Net Profit share
in any given Calendar Quarter (other than in the final Calendar Quarter of any
calendar year). The Parties will use the actual Annual Net Revenue and Net
Profit for the calendar year to determine the applicable Profit Share percentage
for the last Calendar Quarter in any calendar year.

 

 

 

 

 

 

 

 

(b)           This reconciliation report will, among other things, contain (i) a
tally of Isis’ fulfillment of its funding obligations under Section 8.3
(Financial Provisions Relating to Development Activities), which tally will
include any necessary adjustments, (ii) appropriate retroactive adjustments for
prior Calendar Quarters in the same calendar year to take into account increases
(or decreases) in Isis’ share of Net Profits or Isis’ fulfillment of its funding
obligations under Section 8.3 (Financial Provisions Relating to Development
Activities) and (iii) appropriate credit for Program Costs directly incurred by
Isis.

 

 

 

 

 

 

 

8.6.3.

Payments. If the reconciliation conducted under Section 8.6.2 (Reconciliation)
results in a payment being owed by Genzyme to Isis, then the net amounts payable
will be paid by Genzyme to Isis within forty-five (45) days of Genzyme receiving
confirmation from Isis that Genzyme’s report required by Section 8.6.2
(Reconciliation) is accurate. If the reconciliation conducted under
Section 8.6.2 (Reconciliation) results in a payment being owed by Isis to
Genzyme, then the net amounts payable will be paid by Isis within forty-five
(45) days of its receipt of the reconciliation report.

 

 

 

 

 

 

 

8.6.4.

Disputes. In the event of a dispute regarding any amount reported by a Party
pursuant to Section 8.6.1 (Reports) or the amount owed under Section 8.6.2
(Reconciliation), the Parties will promptly meet and negotiate in good faith a
resolution to such dispute. In the event that the Parties are unable to resolve
such dispute within sixty (60) days after notice by the disputing Party, the
Parties will (a) use commercially reasonable efforts to reach agreement on the
appointment of one internationally-recognized independent accounting firm to
determine the matter or (b) if the Parties cannot reach agreement on such
accounting firm, then each Party will appoint one internationally-recognized
accounting firm and such firms will choose a third internationally-recognized
independent accounting firm to make the final determination. Interest will be
payable on any disputed amounts determined to be due in the same manner as
provided for in Section 8.10 (Interest on Late Payments), with interest accruing
from the end of the thirty (30) day period during which such payment should have
been made.

 

 

 

 

 

8.7.

 

Accounting and Allocation Methods.

 

 

 

 

 

 

 

8.7.1.

Accounting. To the extent possible in accordance with the terms and conditions
of this Agreement, the Parties will account for all amounts required to be
determined under this Agreement (including Net Profits, Net Revenues, Program
Costs, and all elements of any of the foregoing) in accordance with GAAP,

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

41

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consistently applied. Where more than one accounting treatment is possible
consistent with the terms and conditions of this Agreement and GAAP, each Party
will account for amounts in a manner that is consistent with the manner in which
such Party accounts for similar amounts for the purposes of its publicly
reported financial statements.

 

 

 

 

 

 

 

8.7.2.

Allocation Methods. Promptly upon the execution of this Agreement and before the
start of each successive fiscal year of the Term, the Parties will agree upon a
consistently applied methodology for determining and allocating to Program Costs
(including Development Expenses and Sales and Marketing Expenses) for such year
an appropriate portion of each of their respective (i) costs and expenses that
relate both to the Product and any of the Parties’ other products or programs
and (ii) G&A Costs and other overhead attributable to this Agreement.

 

 

 

 

 

8.8.

 

Audits and Interim Reviews. Each Party will maintain accurate books and records
regarding Program Costs, Fully-Absorbed Cost of Goods, External Sales &
Marketing Expenses, Internal Sales & Marketing Expenses, External Development
Expenses, and Internal Development Expenses, Net Revenues and Net Sales, as
applicable, sufficient to enable the calculation of amounts payable hereunder to
be verified, and will retain such books and records for each quarterly period
for three (3) years after submission of the corresponding report pursuant to
this Agreement.  Either Party will have the right to request that an independent
certified public accountant selected by it (but excluding its own accountant)
and reasonably acceptable to the other Party perform an audit, not more than
once in any four (4) consecutive Calendar Quarters during the Term, but
including one post-termination audit and, if any such audit results in a
material restatement of records (i.e., a discrepancy of 5% or more for any
calendar year), such Party will be permitted an additional examination within
such four (4) quarter period, of the other Party’s books of accounts covering
the preceding three (3) year period for the sole purpose of verifying compliance
with the payment provisions of this Agreement.  Such audits will be conducted at
the expense of the requesting Party at reasonable times during regular business
hours and upon at least twenty (20) business days’ prior notice.  Audit results
will be shared with both Parties, subject to Article 12 (Confidentiality);
provided, however, that the accounting firm may not disclose copies of the
audited Party’s books of accounts (or excerpts thereof) to the other Party.  Any
accounting firm conducting such an audit will enter into a confidentiality
agreement with both Parties containing restrictions substantially similar to the
confidentiality provisions of Article 12 (Confidentiality) limiting the
disclosure and use of information contained in such books and records for the
purposes expressly permitted by this Section 8.8.  Any inspection or audit
pursuant to this Section 8.8 will be at the expense of the Party initiating the
audit; provided, however, that if the Party’s accountants reasonably determine
that Net Profits or Net Revenues have been understated or Program Costs
(including associated labor costs, reimbursable costs and expenses) or
Fully-Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal
Sales & Marketing Expenses, External Development Expenses, and Internal
Development Expenses have been overstated by an amount equal to or greater than
five percent (5%), for any calendar year, the audited Party will pay the
reasonable fees of such accountants for such audit, in addition to remitting the
Net Profits

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

42

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or refund of Net Losses, Program Costs, Fully-Absorbed Cost of Goods, External
Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External
Development Expenses, or Internal Development Expenses with interest thereon
computed in accordance with Section 8.10 (Interest on Late Payments).

 

8.9.                             Withholding Taxes.  If Applicable Law requires
that taxes be withheld from payments made hereunder, or from Net Revenue or Net
Profits, the Party making such payments or otherwise responsible for such
withholding (the “Withholding Party”) will (a) deduct such taxes from any
payments to which they relate or in the case of taxes withheld from the other
Party’s share of Net Revenues or Net Profits account for such taxes as amounts
paid on behalf of the other Party, (b) timely pay such taxes to the proper
authority and (c) send written evidence of payment to the Party with respect to
which such taxes were withheld or paid within sixty (60) days after payment. 
Taxes withheld from payments made hereunder will be treated as amounts received
by the Party with respect to which such taxes were withheld for all purposes
under this Agreement.  If the Withholding Party is required to withhold and pay
over taxes on the other Party’s share of Net Revenues or Net Profits, the other
Party will promptly reimburse or otherwise make whole the Withholding Party for
any amounts so withheld upon receipt of written evidence of the payment of such
taxes.  Any taxes paid (excluding income taxes) by the Withholding Party on the
other Party’s share of Net Revenues or Net Profits for which the Withholding
Party has not been reimbursed or otherwise made whole within thirty (30) days
after the end of each Reporting Period will be treated as an amount received by
the other Party (and not by the Withholding Party) for purposes of determining
amounts owed under Section 8.6.2 (Reconciliation).  Each Party will assist the
other Party or Parties in claiming tax refunds, deductions or credits at such
other Party’s request and will cooperate to minimize any withholding tax as
permitted by Applicable Law.

 

8.10.                       Interest on Late Payments.  Any payments to be made
hereunder that are not paid on or before the date such payments are due under
this Agreement will bear interest at a rate per annum equal to the lesser of
(x) the rate announced by Bank of America (or its successor) as its prime rate
in effect on the date that such payment would have been first due plus one
percent (1%) or (y) the maximum rate permissible under applicable law.

 

8.11.                       Currency; Payment.  All amounts payable under this
Agreement will be paid in United States dollars in immediately available funds,
and will be directly deposited to a bank account designated for this purpose
from time to time by the Party to receive payment.  Isis will provide the
necessary bank account information to Genzyme no later than the Execution Date
and may update such information from time to time by written notice.  The
Parties may vary the method of payment set forth herein at any time upon mutual
agreement, consistent with Applicable Law.  As applicable, Net Sales, Net Sales
Adjustments, and other elements of Net Revenue and Program Costs will be
translated into United States dollars at the exchange rate used by Genzyme for
public financial accounting purposes in accordance with GAAP.  If, due to
restrictions or prohibitions imposed by national or international authority,
payments cannot be made as provided in this Article 8 (Financial Provisions)
with respect to sales occurring outside of the United States, the Parties will
consult with a view to finding a prompt and acceptable solution,

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

43

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and Genzyme will deal with such monies as Isis may lawfully direct.

 

8.12.                       Material Safety Warnings.  Notwithstanding the
financial provisions contained in this Article 8 (Financial Provisions), in the
event that the approved label for the Product [**], which is not anticipated by
the Parties as of the Effective Date, the Parties will discuss in good faith
(without obligation) the extent to which such [**] change the [**] for the
Product.

 

Article 9.

INTELLECTUAL PROPERTY MATTERS

 

9.1.                             Product-Specific Patents.

 

9.1.1.                    Assignment of Product-Specific Patents.  Isis will
assign and transfer, and hereby does assign and transfer, to Genzyme, all
rights, title, and interests in and to the Product-Specific Patents and all
claims and causes of action arising from or relating to the Product-Specific
Patents, including all rights to recovery for damages from infringement arising
prior to, on or after the Execution Date.  Simultaneously with the execution of
this Agreement, Isis will execute and deliver a confirmatory assignment relating
to all Product-Specific Patents in existence on the Execution Date in the form
attached to this Agreement as Exhibit E.

 

9.1.2.                    Disclosure of Future Product-Specific Patents.  Upon
becoming aware of any potentially patentable invention Controlled by Isis that
would, if patented, be included within the definition of Product-Specific
Patents or Licensed Patents, Isis will promptly disclose such invention to
Genzyme in writing in reasonable detail.

 

9.1.3.       Covenants in Support of Assignment.  Isis will provide all further
cooperation which Genzyme reasonably determines is necessary to accomplish the
complete transfer of the Product-Specific Patents and all associated rights to
Genzyme, and to ensure Genzyme the full and quiet enjoyment of the
Product-Specific Patents including executing and delivering further assignments,
consents, releases and other commercially reasonable documentation, and
providing good faith testimony by affidavit, declaration, deposition, in-person
or other proper means and otherwise assisting Genzyme in support of any effort
by Genzyme to establish, perfect, defend or enforce its rights in the
Product-Specific Patents through filing and prosecution of Product-Specific
Patents, interferences, oppositions, other regulatory proceedings, litigation,
or other means.  Isis will obtain the cooperation of the individual inventors of
any inventions disclosed in the Assigned Product Specific Patents, including
(a) obtaining signatures of such inventors on any patent applications or other
documentation reasonably necessary to obtain patent protection for such
inventions and (b) procuring (at Genzyme’s expense) such inventors’ good faith
testimony by affidavit, declaration, deposition in-person or other proper means
in support of Genzyme’s efforts in establishing,

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

44

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perfecting, defending or enforcing patent rights to such inventions.  To the
extent Isis cannot transfer and assign the Product-Specific Patents, or any
portion thereof, as of the Execution Date, then Isis will transfer and assign
such Product-Specific Patents to Genzyme at its first opportunity to do so and
pending such transfer and assignment such Product-Specific Patents will be
deemed to be Licensed Patents for the purposes of Section 2.1 (Product
License).  To the extent further transfer or assignment of the Product-Specific
Patents is required or permitted and Isis has not executed and returned to
Genzyme the form of assignment reasonably requested by Genzyme within ten
(10) business days of the delivery of such assignment to Isis at the address for
notices set forth in Section 14.5 (Notices), then Isis hereby irrevocably
appoints Genzyme as its attorney-in-fact with the right, authority and ability
to execute and enter into such assignment on behalf of Isis.  Isis stipulates
and agrees that such appointment is a right coupled with an interest and will
survive the unavailability of Isis at any future time.

 

9.1.4.                    Grant-Back License.  Subject to the terms and
conditions of this Agreement, Genzyme hereby grants Isis a non-exclusive,
non-transferable license (with no right to sublicense) under the
Product-Specific Patents to the extent necessary to perform Isis’ obligations
under this Agreement and the Supply Agreement.

 

9.2.                             Program IP.

 

9.2.1.                    Ownership.  Unless prohibited by Applicable Law,
inventorship and authorship will be determined in accordance with U.S. patent
and copyright law.  Genzyme will own all Genzyme Program IP .  Subject to the
terms and conditions of this Agreement including Section 2.1 (Product License)
and Section 9.1 (Product-Specific Patents), Isis will own all Isis Program IP,
and Isis and Genzyme will jointly own all Joint Program IP.  Subject to the
terms and conditions of this Agreement including Section 2.1 (Product License),
Section 9.1 (Product-Specific Patents), 9.2.3 (No Encumbrances) and Article 3
(Exclusivity), each Party will have the right to practice and license the Joint
Program IP without consent of the other Party (where consent is required by law,
such consent is deemed hereby granted) and without a duty of accounting to the
other Party; provided, however that Isis will not grant a license to a Third
Party under Joint Program IP to develop or commercialize any nucleic acid
molecule whose primary purpose at the time of the license or primary therapeutic
benefit at the time of commercialization is to cause the [**], without Genzyme’s
prior written consent.  Notwithstanding the foregoing, Isis will not be in
breach of the preceding sentence if, despite exercising commercially reasonable
efforts, it inadvertently licenses Joint Know-How to such a Third Party without
Genzyme’s prior written consent, unless, prior to Isis disclosing such Joint
Know-How to such a Third Party licensee, Genzyme provides Isis with a written
summary description of such Joint Know-How that clearly indicates it is Joint
Know-How under this Agreement.  Subject to the terms and conditions of this
Agreement, each Party will cooperate with the other Party’s efforts to
establish, perfect, defend and

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

45

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enforce its rights in its Program IP in the Territory.  This Section 9.2.1 will
be subject to the terms and conditions of Section 9.3.2 (Terms of Sharing
Arrangement).

 

9.2.2.                    Cooperation/Compensation of Employees.  Each Party
represents and agrees that (a) all of its employees and all of its Affiliates’
employees acting under its or its Affiliates’ authority in the performance of
this Agreement or pursuant to the Product License will be obligated under a
binding written agreement or established corporate policy to assign to such
Party, or as such Party will direct, all Technology and Patents discovered,
made, conceived by such employee as a result of such employee’s employment, and
(b) both it and its Affiliates have taken all appropriate actions under the
Applicable Law in the Territory to ensure proper compensation to any employee
for the assignment of such Technology and Patents as contemplated hereunder.  In
the case of all others acting in the performance of the Development Program or
Research Programs or pursuant to the Product License, such as consultants,
subcontractors, licensees, sublicensees, outside contractors, clinical
investigators, agents, or non-employees working for non-profit academic
institutions, such others will also be obligated under an agreement that meets
the criteria of the preceding sentences, unless otherwise approved by the
Parties.  The Parties agree reasonably to undertake to enforce the agreements
referenced in this Section 9.2.2 (including, where appropriate, by legal action)
considering, among other things, the commercial value of such Technology and
Patents.

 

9.2.3.                    No Encumbrances.  Except as expressly provided in this
Agreement, neither Party will sell, transfer, assign, mortgage, pledge, lease,
grant a security interest in (e.g., as collateral for a loan or other financing)
or otherwise encumber in the Territory any Joint Program IP necessary or useful
for the research, development, manufacture or commercialization of the Product
in the Territory without the prior written consent of the other Party; provided,
however, that nothing contained in this Section 9.2.3 will prohibit an
assignment permitted by Section 14.7 (Binding Effect; Assignment) or a license
permitted by Section 9.2.1 (Ownership).

 

9.3.                             Manufacturing Improvements.

 

9.3.1.                    Background.  As part of its collaborations with other
pharmaceutical partners, Isis has an arrangement where Isis can share
manufacturing technology improvements made by such pharmaceutical partners with
other third parties so long as such third parties similarly agree to share their
manufacturing technology improvements.  After reviewing the proposed terms of
such arrangement, Genzyme is willing to participate in the arrangement only with
the clarifications and under the terms set forth in this Section 9.3
(Manufacturing Improvements).

 

9.3.2.                    Terms of Sharing Arrangement.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

46

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(a)           During the period beginning on the Effective Date and ending [**]
(the “Sharing Period”), the Parties will meet at least annually to review
Manufacturing Improvements developed by either of the Parties during the Sharing
Period during and in connection with the conduct of the Development Program or
the Research Programs or commercializing the Product and, in the case of Isis,
any Manufacturing Improvements made by or on behalf of Isis or any Participating
Isis Partners and disclosed to Isis pursuant to a Sharing Agreement.  The
Parties will disclose all Manufacturing Improvements Controlled by such Party
(including, in the case of Isis, Manufacturing Improvements made by other
Participating Isis Partners and disclosed to Isis pursuant to a Sharing
Agreement) in reasonable detail as to enable the other Party to use such
Manufacturing Improvements in the manufacture of ASO Products.  All such
disclosures will be subject to appropriate confidentiality obligations.  Isis
will have the right to disclose and sublicense any Manufacturing Improvements
Controlled by Genzyme only to Third Parties that are licensees of Isis with
respect to the commercialization of one or more ASO Products and are
Participating Isis Partners and only in accordance with Section 9.3.2(b).

 

(b)           Without limiting the generality of Section 9.2.1 (Ownership), all
rights, title, and interests in and to all Manufacturing Improvements developed
or invented during the Sharing Period during and in connection with the conduct
of the Development Program or the Research Programs or commercializing the
Product solely by Genzyme’s employees or Third Parties acting on Genzyme’s
behalf (“Genzyme Manufacturing Improvements”) will be the sole and exclusive
property of Genzyme.  Genzyme hereby grants Isis a worldwide, royalty-free,
perpetual, non-exclusive license to practice under Genzyme’s rights to any
Know-How in or Patent Covering such Genzyme Manufacturing Improvements
Controlled by Genzyme to make and have made ASO Products other than the
Product.  The license granted under this Section 9.3.2(b) is sublicensable by
Isis to Participating Isis Partners solely in connection with a license to
develop, make, use, import, offer for sale and sell an ASO Product developed or
commercialized by a Participating Isis Partner.  Such Participating Isis
Partners may not further disclose or sublicense Genzyme Manufacturing
Improvements except in connection with a sublicense of the ASO Product being
developed or commercialized under license from Isis.  The license granted under
this Section 9.3.2(b) will survive the termination of this Agreement with
respect to any Genzyme Manufacturing Improvements made prior to such
termination.

 

(c)           Without limiting the generality of Section 9.2.1 (Ownership), all
rights, title, and interests in and to all Manufacturing Improvements developed
or invented during the Sharing Period solely by Isis’s employees or Third
Parties acting on Isis’ behalf (“Isis Manufacturing Improvements”) will be the
sole and exclusive property of Isis.  Without limiting the rights granted to
Genzyme in Article 2, Isis hereby grants Genzyme a worldwide, royalty-free,
perpetual, non-exclusive license to practice under Isis’ rights to any Know-How
in or Patent Covering any Manufacturing Improvements Controlled by Isis
(including any

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Manufacturing Improvements made by or on behalf of any Participating Isis
Partners) to make and have made the Product and other ASO Products developed or
commercialized by Genzyme.  The license granted under this Section 9.3.2(c) is
sublicensable by Genzyme solely in connection with a license to develop, make,
use, import, offer for sale and sell an ASO Product developed or commercialized
by Genzyme under license from Isis (including the Product).  The license granted
under this Section 9.3.2(c) will survive the termination of this Agreement or
any Sharing Agreement with respect to any Manufacturing Improvements (including
any Manufacturing Improvements made by Participating Isis Partners) made prior
to such termination.

 

(d)           Notwithstanding Section 9.2.1 (Ownership) and subject to
Section 9.1 (Product-Specific Patents), all rights, title, and interests in and
to all Manufacturing Improvements developed or invented during the Sharing
Period jointly by Isis’ and Genzyme’s employees or Third Parties acting on Isis’
and Genzyme’s behalf will be the joint property of Isis and Genzyme with each
party having an undivided joint interest in such Manufacturing Improvements. 
Each Party may license its rights under such Manufacturing Improvements for its
own account and without the consent of the other Party (where consent is
required by law, such consent is deemed hereby granted) and without a duty of
accounting to the other Party, subject in all cases to the licenses granted to
Genzyme under Article 2 (Licenses).

 

9.3.3.                    [**].

 

9.3.4.                    [**] Manufacturing Improvements.  If Isis does not
[**] of the Execution Date, Isis will [**].  In such event, Isis will be solely
responsible for all costs and expenses associated with such development effort
and will reimburse Genzyme for any such costs and expenses incurred by Genzyme. 
Failure of Isis to reimburse Genzyme for such costs and expenses will be deemed
to be a material breach of this Agreement entitling Genzyme to setoff such
amounts pursuant to Section 11.4.2 (Genzyme’s Right of Setoff).

 

9.3.5.                    Representations Regarding [**].  Isis represents and
warrants to Genzyme as follows:

 

(a)           [**], Isis will Control all Know-How [**] that is [**] the
manufacture, development or commercialization of Mipomersen, including the [**]
Manufacturing Improvements and will have the sufficient legal and/or beneficial
title and ownership or rights to grant the Product License to Genzyme under such
Know-How and the grant of such license to Genzyme does not violate the terms of
any Third Party Agreement or any other agreement Isis has with a Third Party
[**].

 

(b)           If [**], Isis will Control all Know-How [**] that is [**] the
manufacture, development or commercialization of Mipomersen as of such date and
will have

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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the sufficient legal and/or beneficial title and ownership or rights to grant
the Product License to Genzyme under such Know-How and the grant of such license
to Genzyme does not violate the terms of any Third Party Agreement or any other
agreement Isis has with a Third [**].

 

9.3.6.                    [**] Sharing Agreement.  Isis will use reasonable
efforts to [**].

 

9.3.7.                    Cooperation.  Genzyme will provide reasonable
cooperation with Isis’ efforts to [**].  In no event, however, will Genzyme be
required to enter into any agreement that (i) [**] in any way or (ii) imposes
any material obligations, liabilities or constraints on Genzyme except those
contemplated by this Agreement.

 

9.4.                              Filing, Prosecution and Maintenance of
Patents.

 

9.4.1.                    Responsibility.

 

(a)           Product-Specific Patents and Genzyme Program Patents.  Genzyme,
through counsel of its choosing and at its sole expense, will be responsible for
and have control over obtaining, prosecuting (including any interferences,
reissue proceedings, re-examinations and oppositions), and maintaining
throughout the Territory the Product-Specific Patents and Genzyme Program
Patents in Genzyme’s name and Isis will cooperate with Genzyme in regard
thereto.  Without limiting the generality of the foregoing, Genzyme may, in its
sole discretion, elect not to pursue patent protection for any Product-Specific
Patent(s) and Genzyme Program Patent(s) in one or more countries in the
Territory.  Genzyme will consider input from the JPC regarding prosecution
strategy for the Product-Specific Patents and Genzyme Program Patents, but will
make all decisions relating to the prosecution and maintenance of
Product-Specific Patents and Genzyme Program Patents.

 

(b)           Licensed Product Patents.

 

(i)                                    Primary Responsibility.  Subject to
Section 9.4.2(a) (Election Not to Continue Prosecution; Abandonment) and this
Section 9.4.1(b), Genzyme, through counsel of its choosing and at its sole
expense, will have primary responsibility for and control over obtaining,
prosecuting (including any interferences, reissue proceedings, re-examinations
and oppositions), and maintaining throughout the Territory the Licensed Product
Patents and Isis will cooperate with Genzyme in regard thereto; provided,
however that Genzyme will prosecute such Licensed Product Patents such that they
do not claim (x) [**] other than apoB, or (y) methods of using such nucleic
acids as a therapeutic or [**] other than apoB.  Genzyme will consider input
from Isis regarding prosecution strategy for the Licensed Product Patents, but
will make all decisions relating to the prosecution and maintenance of Licensed
Product Patents.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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(ii)                                 Prosecution Strategy.  In prosecuting
Licensed Product Patents, the Parties will avoid filing patent applications that
both claim (a) [**] apoB, (b) the [**] of apoB, (c) the specific composition of
matter of a Product, or (d) methods of using Product as a therapeutic, methods
of using Product to modulate apoB, or methods of using the Product to inhibit
expression of apoB, and also claim (x) [**] other than apoB, or (y) methods of
using such nucleic acids as a therapeutic or [**] other than apoB.

 

(c)           Isis Core Technology Patents and the Isis Manufacturing and
Analytical Patents.  Subject to Section 9.4.2(b) (Election Not to Continue
Prosecution; Abandonment), Isis, through counsel of its choosing and at its sole
expense, will have primary responsibility for and control over obtaining,
prosecuting (including any interferences, reissue proceedings, re-examinations
and oppositions), and maintaining throughout the Territory the Isis Core
Technology Patents and the Isis Manufacturing and Analytical Patents (in each
case, other than Joint Patents), and Genzyme will cooperate with Isis in regard
thereto.  Isis will consider input from the JPC regarding prosecution strategy
for the Isis Core Technology Patents, Isis Manufacturing and Analytical Patents
(in each case, other than Joint Patents) and will consult with Genzyme before
taking any action that would have an adverse impact on the scope of claims
within the Special Isis Core Technology Patents (other than Joint Patents). 
However, Isis will make all decisions relating to the prosecution and
maintenance of the Isis Core Technology Patents and Isis Manufacturing and
Analytical Patents (in each case, other than Joint Patents).  For clarity, this
Section 9.4.1(c) will not apply to Joint Patents that are Isis Core Technology
Patents or Isis Manufacturing and Analytical Patents, which will be governed
Section 9.4.1(d) below.

 

(d)           Joint Patents.  Subject to Section 9.4.1(a) (Product-Specific
Patents and Genzyme Program Patents) and Section 9.4.1(b) (Licensed Product
Patents), with respect to any Joint Patent (other than Product-Specific Patents
and Licensed Product Patents), the JPC will designate one Party (the
“Responsible Party”) who will have primary responsibility for the preparation,
filing, prosecution and maintenance of any such Joint Patent in the Territory
(in both Genzyme’s and Isis’ name), using patent counsel selected by the JPC or
otherwise agreed by the Parties.  If the JPC has disbanded, the Parties will
mutually agree on a Responsible Party.  Each Party will assist the Responsible
Party in the preparation, filing, prosecution and maintenance of such Joint
Patents.  The Responsible Party will consult with and keep the other Party
(through the JPC if possible) informed of important issues relating to the
preparation, filing, prosecution and maintenance of the Joint Patents (other
than Product-Specific Patents or Licensed Product Patents) and will furnish the
other Party (through the JPC if possible) with copies of documents relevant to
such preparation, filing, prosecution or maintenance in sufficient time prior to
filing such document or making any payment due thereunder to allow for review
and comment by the other Party and, to the extent possible in the reasonable
exercise of its discretion,

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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the Responsible Party will incorporate all such comments.  If the Responsible
Party decides to discontinue the preparation, filing, prosecution or maintenance
of a Joint Patent (other than a Product-Specific Patent or Licensed Product
Patent), the Responsible Party will notify the other Party at least sixty (60)
days prior to any deadline that, if missed, would materially prejudice the Joint
Patent, and the other Party will have the right to prepare, file, prosecute and
maintain such Patent.  The Parties will share equally the reasonable costs and
expenses of the preparation, filing, prosecution and maintenance of such Joint
Patents (other than Product-Specific Patents and Licensed Product Patents), and
such costs and expenses will be considered Program Costs.  Neither Party will
make any statements or omissions or take any other action during prosecution or
enforcement of any Joint Patent (other than Product-Specific Patents and
Licensed Product Patents) which admits or concedes that any of the Licensed
Patents (or any Product-Specific Patent) is invalid or unenforceable, which
adversely affects or limits the scope of any claims in any such Patent, or which
adversely affects the other Party’s rights under this Agreement in any way,
without the prior written consent of the other Party.  For clarity, this
Section 9.4.1(d) does not apply to Joint Patents that are Product-Specific
Patents or Licensed Product Patents, which are governed by Section 9.1
(Product-Specific Patents) and Section 9.4.1(a) and Section 9.4.1(b) above, but
does apply to Joint Patents that are Isis Core Technology Patents or Isis
Manufacturing and Analytical Patents.

 

9.4.2.                    Election Not to Continue Prosecution; Abandonment.

 

(a)           If Genzyme elects not to file for or continue the prosecution
(including any interferences, oppositions, reissue proceedings and
re-examinations) or maintenance of a Licensed Product Patent in a particular
country in the Territory, then Genzyme will notify Isis promptly in writing of
its intention in good time to enable Isis to meet any deadlines by which an
action must be taken to establish or preserve any such rights in such Patent in
such country and Isis will have the right, but not the obligation, to file for
or continue the prosecution or maintenance of such Patent in such country, and
Genzyme will cooperate with Isis in regard thereto.  In such event, Isis’
expenses incurred in connection with the prosecution or maintenance of such
Patent in such country will be Program Costs.

 

(b)           If Isis elects not to file for or continue the prosecution
(including any interferences, oppositions, reissue proceedings and
re-examinations) or maintenance of a Special Isis Core Technology Patent (other
than Joint Patents), then, Isis will notify Genzyme promptly in writing of its
intention in good time to enable Genzyme to meet any deadlines by which an
action must be taken to establish or preserve any such rights in such Patent in
such country and Genzyme will have the right, but not the obligation, to file
for or continue the prosecution or maintenance of such Patent in such country,
and Isis will cooperate with Genzyme in regard thereto.  In such event,
Genzyme’s expenses incurred in connection with the prosecution or maintenance of
such Patent in such country will be Program Costs.  For clarity, this
Section 9.4.2(b) will not apply to Joint

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Patents that are Special Isis Core Technology Patents, which will be governed
Section 9.4.1(d) (Joint Patents).

 

9.4.3.                    Cooperation.  Each Party hereby agrees: (a) to make
its employees, agents and consultants reasonably available to the other Party
(or to the other Party’s authorized attorneys, agents or representatives), to
the extent reasonably necessary to enable such Party to undertake patent
prosecution as contemplated by this Agreement; (b) to cooperate, if necessary
and appropriate, with the other Party in gaining patent term extensions wherever
applicable to Patents that are subject to this Agreement; and (c) to endeavor in
good faith to coordinate its efforts with the other Party to minimize or avoid
interference with the prosecution and maintenance of the other Party’s patent
applications that are subject to this Agreement.

 

9.5.                             Enforcement of Patents and Know-How.

 

9.5.1.                    Notification.  Each Party will promptly report in
writing to the other Party during the Term any (a) known or suspected Third
Party infringement of any Product-Specific Patents, Licensed Product Patents,
Special Isis Core Technology Patent, or (b) known or suspected Third Party
infringement of any Isis Core Technology Patents or Isis Manufacturing and
Analytical Patents to the extent the infringement relates to a product that
contains a nucleic acid that hybridizes to a nucleic acid molecule encoding
apoB, or (c) unauthorized use or misappropriation of any Product Know-How or
other Confidential Information by a Third Party of which it becomes aware, and
will provide the other Party with all available evidence supporting such
infringement or unauthorized use or misappropriation.

 

9.5.2.                    Rights to Enforce.

 

(a)           Genzyme First Right.  Genzyme will have the first right, but not
the obligation, to take any reasonable measures it deems appropriate to stop
activities in the Territory infringing the Product-Specific Patents, Licensed
Product Patents or the use without proper authorization of any Product Know-How
or the infringement of any Isis Core Technology Patent by a Third Party product
that contains a [**] encoding apoB, including (i) initiating or prosecuting an
infringement or other appropriate suit or action against or (ii) granting
adequate rights and licenses necessary for continuing such activities in the
Territory to any Third Party who at any time has infringed, or is suspected of
infringing, any Product-Specific Patents or Licensed Product Patents or has used
or is suspected of using without proper authorization the Product Know-How.  If
Genzyme desires to assert an Isis Core Technology Patent pursuant to this
Section 9.5.2(a) and the infringing product is also Covered by a
Product-Specific Patent, then Genzyme will assert both the Product-Specific
Patent and the Isis Core Technology Patent, unless it obtains Isis’ written
consent to assert only the Isis Core Technology Patent.  In such a case, at
Genzyme’s request Isis’ representatives will meet with Genzyme’s representatives
to discuss whether it

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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would be advisable to assert an Isis Core Technology Patent without also
asserting a Product-Specific Patent.

 

(b)           Isis First Right.  Subject to Section 9.5.2(a) (Genzyme First
Right to Enforce), Isis will have the first right, but not the obligation, to
take any reasonable measures it deems appropriate to stop activities in the
Territory infringing the Isis Core Technology Patents or Isis Manufacturing and
Analytical Patents  (in each case, other than Joint Patents) or the use without
proper authorization of any Isis Manufacturing and Analytical Know-How (other
than Joint Know-How), including (i) initiating or prosecuting an infringement or
other appropriate suit or action against or (ii) granting a Permitted License to
any Third Party who at any time has infringed, or is suspected of infringing,
any Isis Core Technology Patents or Isis Manufacturing and Analytical Patents
(other than Joint Patents) or has used or is suspected of using without proper
authorization the Isis Manufacturing and Analytical Know-How (other than Joint
Know-How).  For clarity, this Section 9.5.2(b) will not apply to Joint Patents
that are Isis Core Technology Patents or Isis Manufacturing and Analytical
Patents, which will be governed Section 9.5.2(c) (Joint Patents and Know-How).

 

(c)           Joint Patents and Know-How.  Subject to Section 9.5.2(a) (Genzyme
First Right to Enforce), Isis and Genzyme will confer and may agree jointly to
take any reasonable measures they deem appropriate to stop activities in the
Territory infringing the Joint Patents (other than Product-Specific Patents and
Licensed Product Patents) or the use without proper authorization of any Joint
Know-How and any expenses of taking such measures will be included as Program
Costs.  If the Parties do not agree on whether or how to proceed with
enforcement activity within either (i) sixty (60) days following the notice of
alleged infringement or (ii) ten (10) days before the time limit to respond, if
any, set forth in the Applicable Law for the filing of such actions, whichever
comes first, then either Party may commence litigation with respect to the
alleged or threatened infringement at its own expense.  In the event a Party
brings an infringement action, the other Party will cooperate reasonably at the
litigating Party’s expense, including being joined as a party-plaintiff and
providing good faith testimony.  The other Party will have the right, at its
expense, to retain its own counsel to monitor such litigation, and the costs
associated with such monitoring will not be Program Costs.  Neither Party will
have the right to settle any patent infringement or Know-How misappropriation
litigation under this Section in a manner that diminishes the rights or
interests of the other Party without the express written consent of such other
Party.  For purposes of clarification, the grant of a license under a Joint
Patent to a Third Party that would not otherwise result in a breach under this
Agreement will not be considered to diminish the rights or interests of the
other Party.  Notwithstanding the foregoing, this Section 9.5.2(c) will not
apply to Joint Patents that are Product-Specific Patents or Licensed Product
Patents or to the infringement of any Joint Patent that is a Isis Core
Technology Patent by a Third Party product that [**] encoding apoB, each of
which will be governed by Section 9.5.2(a) (Genzyme First Right to Enforce)
above.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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9.5.3.       Election Not to Enforce.

 

(a)           Isis Second Right.  In the event that Genzyme elects not to take
action pursuant to Section 9.5.2(a) (Genzyme First Right to Enforce), Genzyme
will so notify Isis in writing of its intention within ninety (90) days of
Genzyme’s notice of such infringement activities to enable Isis to meet any
deadlines by which an action must be taken to establish or preserve any
enforcement rights, and Isis will have the right, but not the obligation, to
take any such reasonable measures to stop such infringing activities by such
alleged infringer.  Notwithstanding the foregoing, Genzyme will have the
exclusive right to bring actions with respect to infringement of
Product-Specific Patents or Licensed Product Patent.  Accordingly, Genzyme will
not be required to notify Isis with respect to any election not to take action
with respect to a Product-Specific Patent, and Isis will have no right to take
reasonable measure to stop any infringement of Product-Specific Patents.

 

(b)           Genzyme Second Right.  In the event that Isis elects not to take
action pursuant to Section 9.5.2(b) (Isis First Right to Enforce), Isis will so
notify Genzyme in writing of its intention within ninety (90) days of Isis’
notice of such infringement activities to enable Genzyme to meet any deadlines
by which an action must be taken to establish or preserve any enforcement
rights, and Genzyme will have the right, but not the obligation, to take any
such reasonable measures to stop any such infringing activities that involves a
product that causes the [**].   If Genzyme desires to assert an Isis Core
Technology Patent pursuant to this Section 9.5.3(b) and the infringing product
is also Covered by a Product-Specific Patent, then Genzyme will assert both the
Product-Specific Patent and the Isis Core Technology Patent, unless it obtains
Isis’ written consent to assert only the Isis Core Technology Patent.

 

(c)           Due Consideration.  In any event, if one Party has elected not to
take action pursuant to Section 9.5.2 (Right to Enforce), then it will explain
its reasons for such decision to the other Party, and the other Party will
consider these reasons in good faith prior to determining whether to exercise
its second right to take action.

 

9.5.4.       Procedures and Expenses.

 

(a)           The Party having the right to initiate any infringement suit under
Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce)
above will have the sole and exclusive right to select counsel for any such suit
and will pay all expenses of the suit, including attorneys’ fees and court costs
and reimbursement of the other Party’s reasonable out-of-pocket expenses in
rendering assistance requested by the initiating Party.  If required under
Applicable Law in order for the initiating Party to initiate and/or maintain
such suit, or if either Party is unable to initiate or prosecute such suit
solely in its own name or it is otherwise advisable to obtain an effective legal
remedy, in each case,

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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the other Party will join as a party to the suit and will execute and cause its
Affiliates to execute all documents necessary for the initiating Party to
initiate litigation to prosecute and maintain such action.  In addition, at the
initiating Party’s request, the other Party will provide reasonable assistance
to the initiating Party in connection with an infringement suit at no charge to
the initiating Party except for reimbursement by the initiating Party of
reasonable out-of-pocket expenses incurred in rendering such assistance.  The
non-initiating Party will have the right to participate and be represented in
any such suit by its own counsel at its own expense.

 

(b)           If the Parties have mutually agreed that a Party should initiate
an infringement action or take such other reasonable measures it deems
appropriate to stop infringing activities under Section 9.5.2 (Rights to
Enforce) or Section 9.5.3 (Election Not to Enforce), then any expenses incurred
by such Party to take such action will be included in Program Costs.

 

9.5.5.       Recoveries.  If the Parties obtain from a Third Party infringer, in
connection with such suit, any damages, license fees, royalties or other
compensation (including any amount received in settlement of such litigation),
such amounts will be allocated as follows:

 

(a)           If the Parties mutually agreed that such Third Party infringer
should be pursued under Section 9.5.2 (Rights to Enforce) or Section 9.5.3
(Election Not to Enforce) and the expenses incurred in connection with such
action were included in Program Costs, then any amounts recovered by either
Party will be included as Net Revenues.  In such case, the Party pursuing the
Third Party infringer under Section 9.5.2 or 9.5.3 will bear all payments
awarded against or agreed to be paid by such Party pursuant to such action,
including any costs or expenses incurred that exceed the amounts recovered by
such Party, but such payments, costs and expenses will be included as Program
Costs.

 

(b)           If the Parties did not mutually agree that such Third Party
infringer should be pursued under Section 9.5.2 (Rights to Enforce) or
Section 9.5.3 (Election Not to Enforce) and the expenses incurred in connection
with such action were not included in Program Costs, then any amounts recovered
by either Party will be used to reimburse the Parties for their reasonable costs
and expenses, including attorneys’ fees incurred in making such recovery (which
amounts will be allocated pro rata if insufficient to cover the totality of such
expenses), with any remainder to be retained by the Party initiating action
under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to
Enforce).  In such case, such initiating Party will bear all payments awarded
against or agreed to be paid by such Party pursuant to such action, including
any costs or expenses incurred that exceed the amounts recovered by such Party,
and such payments will not be included as Program Costs.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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9.6.          Claimed Infringement of Third Party Rights.

 

9.6.1.       Notice.  In the event that a Third Party at any time provides
written notice of a claim to, or brings an action, suit or proceeding against,
any Party, or any of such Party’s respective Affiliates or sublicensees,
claiming infringement of its patent rights or unauthorized use or
misappropriation of its know-how, based upon the development, manufacture or
commercialization of the Product in the Territory (“Infringement Claim”), such
Party will promptly notify the other Party of the Infringement Claim or the
commencement of such action, suit or proceeding, enclosing a copy of the
Infringement Claim and all papers served.  Each Party agrees to make available
to the other Party its advice and counsel regarding the technical merits of any
such claim at no cost to the other Party and to offer reasonable assistance to
the other Party at no cost to the other Party.

 

9.6.2.       Defense of Infringement Claim; Declaratory Judgment Actions.

 

(a)           Genzyme will have the first right, but not the obligation, to
control the defense of any Infringement Claim brought against either Party or
any of its Affiliates or sublicensees arising out of the development,
manufacture or commercialization of the Product in the Territory.  Isis will
have the second right, but not the obligation to control the defense of an
Infringement Claim in the event Genzyme fails to exercise its right to assume
such defense within thirty (30) days following written notice from the other
Party of such Infringement Claim.  In addition, if applicable prior to the
initiation of an Infringement Claim, Genzyme will have the exclusive right, but
not the obligation, to bring a declaratory judgment action relating to any
Patent that a Third Party has alleged is infringed by the development,
manufacture or commercialization of the Product in the Territory.  Genzyme will
not settle any such claims or suits in a manner that admits the invalidity or
unenforceability of any Isis Core Technology Patent or Isis Manufacturing and
Analytical Patent or that agrees to any injunction or other equitable remedy
binding Isis without obtaining the prior written consent of Isis.  Similarly,
Isis will not settle any such claims or suits in a manner that admits the
invalidity or unenforceability of any Product-Specific Patent or Licensed
Product Patent or that agrees to any injunction or other equitable remedy
binding Genzyme without obtaining the prior written consent of Genzyme.  All
litigation costs and expenses incurred in connection with such Infringement
Claim or declaratory judgment action, and all damages, payments and other
amounts awarded against, or payable by, either Party, including under any
settlement with such Third Party, will be included as Program Costs.

 

(b)           The Party controlling the defense of an Infringement Claim or
bringing such declaratory judgment action will have the sole and exclusive right
to select counsel for any Infringement Claim; provided, however, that it will
consult with the other Party with respect to selection of counsel for such
defense.  The Party controlling the defense of an Infringement Claim or bringing
such declaratory judgment action will keep the other Party informed, and will
from time to time

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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consult with the other party regarding the status of any such claims and will
provide the other party with copies of all documents filed in, and all written
communications relating to, any suit brought in connection with such claims. 
The other Party will also have the right to participate and be represented in
any such claim or related suit, at its own expense.

 

9.6.3.       Other Challenges.  If the JPC determines (or if after the JPC
disbands, the Parties mutually agree) that a Patent owned by a Third Party is or
could potentially or arguably be infringed by the development, manufacture or
commercialization of the Product in the Territory, then the Parties will discuss
the matter and agree upon a strategy relating to such Third Party Patent;
provided, however, that if the Parties fail to agree upon such a strategy, then
subject to Section 9.3 (Filing, Prosecution and Maintenance of Patents) and
Section 9.5 (Enforcement of Patents and Know-How), Genzyme will determine the
appropriate strategy in its reasonable discretion.  If, consistent with such
strategy, either or both Parties challenge such Third Party Patent through
opposition, re-examination, nullity or revocation proceeding, or other available
administrative mechanism, then all costs and expenses incurred by the Parties in
connection with such challenge will be included as Program Costs.

 

9.7.          Other Infringement Resolutions.  In the event of a dispute or
potential dispute that has not ripened into a demand, claim or suit of the types
described in Section 9.5 (Enforcement of Patents and Know-How) and Section 9.6
(Claimed Infringement of Third Party Rights) (e.g., actions seeking declaratory
judgments and revocation proceedings), the same principles governing control of
the resolution of the dispute, consent to settlements of the dispute, and
implementation of the settlement of the dispute (including sharing in and
allocating the payment or receipt of damages, license fees, royalties and other
compensation) will apply.  Each Party will immediately notify the other Party of
any certification of which it becomes aware filed pursuant to 21 U.S.C. §
355(b)(2)(A) or § 355(j)(2)(A)(vii) (or any amendment or successor statute
thereto) or declaratory judgment action filed by a Third Party claiming that a
Product-Specific Patent, Licensed Product Patent, Special Isis Core Technology
Patent is invalid or that infringement of such Patent will not arise from the
development, manufacture, use or sale of any product by a Third Party.  The
provisions of Section 9.5 (Enforcement of Patents and Know-How) will thereafter
apply as if such Third Party were an infringer or suspected infringer; provided,
however, that in the event that Genzyme elects not to take action, Genzyme will
so notify Isis in writing of its intention within ten (10) days of Genzyme’s
notice of such infringement activities to enable Isis to meet any deadlines by
which an action must be taken to establish or preserve any enforcement rights.

 

9.8.          Patent Term Extensions.  The Parties will use commercially
reasonable efforts to obtain all available supplementary protection certificates
(“SPC”) and other extensions of Licensed Patents and Product-Specific Patents
(including those available under the Hatch-Waxman Act).  The Parties will
cooperate with each other in gaining patent term restorations, extensions and/or
SPCs wherever applicable to Licensed Patents and Product-Specific Patents.  If
more than one patent is eligible for extension or patent term

 

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treatment request.  An unredacted version of this exhibit has been filed
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restoration, Genzyme will determine, in its sole discretion, a strategy that
will be designed to maximize patent protection and commercial value for the
Product, and the Parties will seek patent term restorations in accordance with
that strategy.  The Party who is responsible under this Agreement for
prosecution and maintenance of the relevant Patent will make the filings for
such extensions and certificates as directed by Genzyme.  Each Party will
execute such authorizations and other documents and take such other actions as
may be reasonably requested by the other Party to obtain such extensions.

 

9.9.          Orange Book Listings.  At least fifteen (15) business days prior
to the expiration of the time period under 21 C.F.R. § 314.53, or any successor
regulation, for submitting patent information pertaining to Product-Specific
Patents, Licensed Product Patents, Isis Core Technology Patents or Isis
Manufacturing and Analytical Patents with respect to the Product, Genzyme will
submit to Isis any such draft submission, including any forms such as Form FDA
3542, Form FDA 3542a or any equivalent thereof, for Isis’ review and comment. 
Genzyme will consider in good faith any comments made by Isis pursuant to this
Section.  In the event that the Parties, after good faith discussions, cannot
agree with respect to any decision to be made concerning such submission of
patent information, Genzyme will make such decision.

 

9.10.        Cooperative Research and Technology Act Acknowledgement.  The
Parties acknowledge and agree that this Agreement is a joint research agreement
for the purposes of Section 35 U.S.C. 103(c).

 

9.11.        Common Interest.  All information exchanged between the Parties
representatives regarding the preparation, filing, prosecution, maintenance, or
enforcement of the Product-Specific Patents and Licensed Patents will be deemed
Confidential Information.  In addition, the Parties acknowledge and agree that,
with regard to such preparation, filing, prosecution, maintenance, and
enforcement of the Product-Specific Patents and Licensed Patents, the interests
of the Parties as collaborators and licensor and licensee are to obtain the
strongest patent protection possible, and as such, are aligned and are legal in
nature.  The Parties agree and acknowledge that they have not waived, and
nothing in this Agreement constitutes a waiver of, any legal privilege
concerning the Product-Specific Patents and the Licensed Patents, including
privilege under the common interest doctrine and similar or related doctrines.

 

9.12.        Product Trademarks.  Genzyme will select and own the Product
Trademarks for the Product and will be solely responsible for applying for and
maintaining registrations the Product Trademarks in the Territory (including
payment of costs associated therewith), and all goodwill associated therewith
will inure to the benefit of Genzyme.  All costs incurred by Genzyme to apply
for and maintain Product Trademarks, will be included as Program Costs.  Genzyme
will assume full responsibility, at its sole cost and expense, for any
infringement of a Product Trademark by a Third Party, and will defend and
indemnify Isis for and against any claims of infringement of the rights of a
Third Party by the use of a Product Trademark in connection with the Product in
accordance with Section 10.3 (Indemnification).

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Article 10.

REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

10.1.        Representations and Warranties of Both Parties.  Each Party hereby
represents and warrants to the other Party as of the Execution Date that:

 

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

 

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

 

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

 

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

 

10.2.        Isis’ Representations and Warranties.  Isis represents and warrants
to Genzyme that the statements contained in this Section 10.2 are true and
correct as of the Execution Date with each such representation and warranty
subject only to such exceptions, if any, as are set forth in the particular
section in the Disclosure Schedule attached hereto as Exhibit F that corresponds
to the particular section number in this Agreement:

 

10.2.1.     Schedule 1.52, Schedule 1.56 and Schedule 1.99 set forth true,
correct and complete lists of all Isis Core Technology Patents, Isis
Manufacturing and Analytical Patents, and Product-Specific Patents,
respectively, and all Licensed Patents used in the development or
commercialization of Mipomersen and existing as of the Execution Date and
indicates whether each such Patent is owned by Isis or licensed by Isis from a
Third Party and if so, identifies the licensor or sublicensor from which the
Patent is licensed.

 

10.2.2.     A true, correct and complete list of any Third Party Agreements
related to Mipomersen and a true and accurate calculation of the royalty burden
for Mipomersen (as it exists on the Execution Date) is set forth on Schedule
10.2.2.

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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10.2.3.     With respect to the Licensed Patents and all Know-How that is
developed by Isis or received by Isis under an agreement with a Third Party that
is used in the development or commercialization of Mipomersen [**], Isis has the
sufficient legal and/or beneficial title and ownership or rights to grant the
Product License to Genzyme under such Licensed Patents and Know-How and the
grant of such license to Genzyme does not violate the terms of any Third Party
Agreement or any other agreement Isis has with a Third Party.

 

10.2.4.     Isis exclusively owns all rights, title, and interests in, and has
good and marketable title to, (a) the Product-Specific Patents and the
[**]Patent (b) any other Patent identified on Schedule 1.52 or Schedule 1.56 as
being owned by Isis, free of any lien, encumbrance, restriction, or other right
or interest granted to any Third Party.  Isis owns or Controls all Know-How
developed by Isis or received by Isis under an agreement with a Third Party that
is used in the development or commercialization of Mipomersen [**].

 

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

 

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

 

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

 

10.2.8.     Isis is not aware of any Patents or Know-How owned or Controlled by
a Third Party that would be infringed by Genzyme during the development or
commercialization of Mipomersen in its current form.  To the best of Isis’
knowledge, Isis has not misappropriated from any Third Party any Know-How used
in the development or commercialization of Mipomersen.

 

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

 

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separately with the Commission.

 

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

 

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

 

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

 

10.2.13.   Isis has not assigned, licensed, sublicensed, granted any interest in
or options to, or entered into an agreement with respect to the Licensed IP with
a Third Party that would adversely impair Genzyme’s exclusive rights under this
Agreement, except for the agreements identified on Schedule 2.1.

 

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

 

10.2.15.   Isis holds, and is operating in material compliance with, such
exceptions, permits, licenses, franchises, authorizations and clearances of any
governmental entity required in connection with the current development of
Mipomersen.  Isis has not received any warning letters or written correspondence
from any governmental entity requiring the termination, suspension or
modification of any clinical or pre-clinical studies or tests with respect to
Mipomersen.  Isis has conducted and required its contractors to conduct all
clinical studies related to Mipomersen in accordance with cGCP, cGLP and
Applicable Law.

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

10.2.17.   Except for the agreements identified on Schedule 2.1, Isis has not
granted to any Third Party rights under the Licensed IP to research, develop or
commercialize any nucleic acid that hybridizes to a nucleic acid molecule
encoding apoB.

 

10.3.        Indemnification.

 

10.3.1.     Indemnification by Genzyme.  Genzyme will indemnify, hold harmless,
and defend Isis, its Affiliates, and their respective directors, officers,
employees and agents (“Isis Indemnitees”) from and against any and all action,
losses, liabilities, damages, costs, fees and expenses (including reasonable
attorneys’ fees) arising from a claim, suit, proceeding or other action of a
Third Party (collectively, “Losses”) arising out of or resulting from, (a) any
breach of, or inaccuracy in, any representation or warranty made by Genzyme in
this Agreement, or any breach or violation of any covenant or agreement of
Genzyme in or pursuant to this Agreement, and (b) the gross negligence or
willful misconduct by or of Genzyme, its Affiliates and their respective
directors, officers, employees and agents.  This indemnification excludes Losses
arising out of Third Party Infringement Claims resulting from Genzyme’s exercise
in accordance with the terms of this Agreement of any intellectual property
rights granted by Isis hereunder, including Genzyme’s exercise of its rights
under the Product-Specific Patents.  Furthermore, Genzyme will have no
obligation to indemnify the Isis Indemnitees to the extent that the Losses arise
out of or result from, directly or indirectly, any breach of, or inaccuracy in,
any representation or warranty made by Isis in this Agreement, or any breach or
violation of any covenant or agreement of Isis in or pursuant to this Agreement,
or the negligence or willful misconduct by or of any of the Isis Indemnitees.

 

10.3.2.     Indemnification by Isis.  Isis will indemnify, hold harmless, and
defend Genzyme, its Affiliates and their respective directors, officers,
employees and agents (“Genzyme Indemnitees”) from and against any and all Losses
arising out of or resulting from, (a) any breach of, or inaccuracy in, any
representation or warranty made by Isis in this Agreement, or any breach or
violation of any covenant or agreement of Isis in or pursuant to this Agreement,
(b) actions taken by Isis with respect to Mipomersen, the Product, the Licensed
IP or the Product-Specific Patents prior to the Execution Date, and (c) the
gross negligence or willful misconduct by Isis, its Affiliates, and their
respective directors, officers, employees and agents.  Isis will have no
obligation to indemnify the Genzyme Indemnitees to the extent that the Losses
arise out of or result from, directly or indirectly, any breach of, or
inaccuracy in, any representation or warranty made by Genzyme in this Agreement,
or any breach or violation of any covenant or

 

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treatment request.  An unredacted version of this exhibit has been filed
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agreement of Genzyme in or pursuant to this Agreement, or the negligence or
willful misconduct by or of any of the Genzyme Indemnitees.

 

10.3.3.     Special Indemnification for Manufacturing Defects.  Each Party will
indemnify, hold harmless, and defend the other Party and its Affiliates and
their respective directors, officers, employees and agents from and against any
and all Losses arising out of or resulting from product liability claims
resulting from the failure of any API or Product manufactured by such Party (or
a Third Party on behalf of such Party) to conform to the applicable
specifications or any failure of such Party (or a Third Party on behalf of such
Party) to meet the standards of cGMP for the API or Product.  Neither Party will
have any obligation to indemnify the other Party and its related indemnitees to
the extent that the Losses arise out of or result from, directly or indirectly,
any breach of, or inaccuracy in, any representation or warranty made by the
other Party in this Agreement, or any breach or violation of any covenant or
agreement of the other Party in or pursuant to this Agreement, or the gross
negligence or willful misconduct by or of any of the other Party or its related
indemnitees.  Notwithstanding the foregoing, the indemnification obligations of
each Party set forth in this Section 10.3.3 (Special Indemnification for
Manufacturing Defects) will only apply to the extent that there would be a Net
Loss if such Damages were included in Program Costs in the applicable calendar
year.  In other words, the manufacturing Party will be required to indemnity the
other Party under this Section 10.3.3 only to the extent there are insufficient
Net Revenue in the applicable calendar year to permit such Damages to be fully
credited as Program Costs.

 

10.3.4.     Damages that are Program Costs.  The indemnification obligations of
each Party set forth in Section 10.3.1 (Indemnification by Genzyme) and 10.3.2
(Indemnification by Isis) will exclude any Losses resulting from Damages to the
extent that the Indemnitee has been reimbursed for such Damages by virtue of the
inclusion of such Damages in Program Costs.

 

10.3.5.     Indemnification Procedure.  In the event of any claim, suit,
proceeding or action of a Third Party (a “Third Party Claim”) giving rise to an
indemnification obligation under this Section 10.3, the person or entity
entitled to indemnification under this Section 10.3 (individually, an
“Indemnitee”), will promptly notify the Party from whom indemnification is
sought (the “Indemnifying Party”), in writing of the Third Party Claim (it being
understood and agreed, however, that the failure by an Indemnitee to give notice
of a Third Party Claim as provided in this Section 10.3 will not relieve the
Indemnifying Party of its indemnification obligation under this Agreement,
except and only to the extent that such Indemnifying Party is actually
prejudiced as a result of such failure to give notice).  The Indemnifying Party
will manage and control, at its sole expense, the defense of the claim and its
settlement.  Within thirty (30) days after delivery of such notification, the
Indemnifying Party may, upon written notice to the Indemnitee, assume control of
the defense of such Third Party Claim with counsel reasonably satisfactory to
the Indemnitee.  The Indemnitee may participate therein

 

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treatment request.  An unredacted version of this exhibit has been filed
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at its own expense; provided, however, that if the Indemnifying Party assumes
control of such defense and the Indemnitee reasonably concludes, based on advise
from counsel, that the Indemnifying Party and the Indemnitee have conflicting
interests with respect to such Third Party Claim, the Indemnifying Party will be
responsible for the reasonable fees and expenses of counsel to the Indemnitee
solely in connection therewith; provided further, however, that in no event will
the Indemnifying Party be responsible for the fees and expenses of more than one
counsel in any one jurisdiction for all Indemnified Parties.  If the
Indemnifying Party does not assume control of the defense of the Third Party
Claim within thirty (30) days after delivery of Indemnitee’s notice of such
claim and request for indemnification, the Indemnitee(s) may defend such Third
Party Claim. Each Party will keep the other Party advised of the status of such
Third Party Claim and the defense thereof, and the Indemnifying Party will
consider recommendations made by the other Party with respect thereto.  If the
Indemnifying Party does assume control of the defense of the Third Party Claim,
the Indemnifying Party will not agree to any settlement of such Third Party
Claim or consent to any judgment in respect thereof that does not include a
complete and unconditional release of the Indemnitee from all liability with
respect thereto or that imposes any liability or obligation on the Indemnitee
without the prior written consent of the Indemnitee.  The Indemnifying Party
will not be obligated to indemnify the Indemnitee(s) for any Third Party Claim
settled by the Indemnitee(s) without the Indemnifying Party’s prior written
consent, which consent will not be unreasonably withheld, delayed or
conditioned.

 

10.4.        Insurance.  The parties will obtain by the Execution Date and
maintain at all times during the term of this Agreement, Products Liability
Insurance, including Clinical Trial coverage, with reputable and financially
secure insurance carriers each having an A.M. Best rating of [**] or better, to
cover their respective indemnification obligations under Section 10.3
(Indemnification), with limits of not less than [**] dollars [**] per occurrence
and [**] dollars [**] in the aggregate.  Each party will provide the other with
a Certificate of Insurance evidencing this coverage within thirty (30) days
after the Execution Date.  Genzyme will have the right to maintain
self-insurance with respect to all or a part of its insurance obligations under
this Section 10.4.

 

Article 11.

TERM AND TERMINATION

 

11.1.        Term.  The term of this Agreement (the “Term”) commences on the
Effective Date and, unless earlier terminated in accordance with the provisions
of this Article 11, will continue in perpetuity.

 

11.2.        Termination.

 

11.2.1.     Genzyme Right to Terminate.  At any time during the Term, but
following payment by Genzyme of the upfront license fee under Section 8.1,
Genzyme will be entitled to terminate this Agreement by providing written notice
to Isis of such

 

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termination.

 

11.2.2.     Termination for Material Breach.

 

(a)           If either Party believes that the other Party is in material
breach of this Agreement (other than with respect to Genzyme’s failure to use
Commercially Reasonable Efforts under Section 5.2.2 (Performance of the
Development Program) or Section 6.1 (Commercialization Responsibilities) or
Section 7.3 (Research Efforts), which is governed by Section 11.2.3 below), then
the non-breaching Party may deliver notice of such breach to the other Party. 
In such notice, the non-breaching Party will identify the actions or conduct
that it wishes such Party to take for an acceptable and prompt cure of such
breach (or will otherwise state its good faith belief that such breach is
incurable); provided, however, that such identified actions or conduct will not
be binding upon the other Party with respect to the actions that it may need to
take to cure such breach.  If the breach is curable, the allegedly breaching
Party will have ninety (90) days to either cure such breach (except to the
extent such breach involves the failure to make a payment when due, which breach
must be cured within thirty (30) days following such notice) or, if a cure
cannot be reasonably effected within such ninety (90) day period, to deliver to
the non-breaching Party a plan for curing such breach which is reasonably
sufficient to effect a cure within a reasonable period.  If the breaching Party
fails to (a) cure such breach within the ninety (90) day or thirty (30) day
period, as applicable, or (b) use Commercially Reasonable Efforts to carry out
the plan and cure the breach, the non-breaching Party may terminate this
Agreement by providing written notice to the breaching Party.

 

(b)           Notwithstanding the foregoing, if the allegedly breaching Party
disputes in good faith the existence, materiality, or failure to cure of any
such breach which is not a payment breach, and provides notice to the
non-breaching Party (the “Other Party”) of such dispute within such ninety (90)
day period or such other reasonable cure period, as applicable, the Other Party
will not have the right to terminate this Agreement in accordance with this
Section 11.2.2 unless and until it has been determined in accordance with
Article 13 (Dispute Resolution) that this Agreement was materially breached by
the allegedly breaching Party and that Party fails to cure such breach within
the allowed cure period following such determination.  It is understood and
acknowledge that during the pendency of such dispute, all the terms and
conditions of this Agreement will remain in effect and the Parties will continue
to perform all of their respective obligations hereunder.

 

(c)           This Section 11.2.2 will be subject to and will not limit the
provisions of Section 11.2.3 (Termination by Isis for Failure of Genzyme to Use
Commercially Reasonable Efforts) and Section 11.3 (Consequences of Termination).

 

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11.2.3.     Termination by Isis for Failure of Genzyme to Use Commercially
Reasonable Efforts.

 

(a)           Subject to Sections 11.2.3(b) and 11.2.3(c) below, Isis will have
the right to terminate this Agreement on (i) a Major Market Country-by-Major
Market Country basis if Genzyme is in material breach of its obligations to use
Commercially Reasonable Efforts (A) under Section 5.2.2 (Performance of the
Development Program) to develop the Product in such Major Market Country or
(B) under Section 6.1 (Commercialization Responsibilities) to commercialize the
Product in such Major Market Country and (ii) in its entirety if Genzyme is in
material breach of its obligations to use Commercially Reasonable Efforts
(A) under Section 5.2.2 (Performance of the Development Program) to develop the
Product in all Major Market Countries or (B) under Section 6.1
(Commercialization Responsibilities) to commercialize the Product in all Major
Market Countries or (C) under Section 7.3 (Research Efforts) to conduct research
activities designed to advance a Product to the stage where it can be developed
pursuant to a Development Plan.  Notwithstanding the foregoing, the Agreement
will not so terminate (in its entirety or in any particular Major Market
Country) unless (x) Genzyme is given ninety (90) days prior written notice by
Isis of Isis’ intent to terminate, stating the reasons and justification for
such termination and recommending steps which Genzyme should take and
(y) Genzyme or its Sublicensee has not used good faith Commercially Reasonable
Efforts in such Major Market Country(ies) during the ninety (90) day period
following such notice to diligently pursue the development and/or
commercialization of the Product.

 

(b)           It is understood and acknowledged that if Genzyme (by itself or
through its Affiliates or Sublicensees) uses Commercially Reasonable Efforts to
research, develop or commercialize a Product in each and every Major Market
Country, Genzyme will be deemed to be in compliance with its obligation under
Section 5.2.2 (performance of Development Program), Section  6.1
(Commercialization Responsibilities) and Section 7.3 (Research Efforts) to use
Commercially Reasonable Efforts to research, develop and commercialize a Product
with respect to all countries in the world.

 

(c)           If Genzyme disputes in good faith the existence or materiality of
an alleged breach specified in a notice provided by Isis pursuant to
Section 11.2.3(a) above, and provides notice to Isis of such dispute within the
ninety (90) day period following such notice provided by Isis, Isis will not
have the right to terminate this Agreement unless and until the existence of
such material breach or failure by Genzyme has been determined in accordance
with Article 13 and Genzyme fails to cure such breach within ninety (90) days
following such determination.  It is understood and acknowledged that during the
pendency of such dispute, all the terms and conditions of this Agreement will
remain in effect and the Parties will continue to perform all of their
respective obligations hereunder.

 

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(d)           This Section 11.2.3 and Section 11.3 (Consequences of Termination)
set forth Isis’ sole and exclusive remedy for Genzyme’s breach of its obligation
to use Commercially Reasonable Efforts under Section 5.2.2 (Performance of the
Development Program) or Section 6.1 (Commercialization Responsibilities) or
Section 7.3 (Research Efforts).

 

11.3.        Consequences of Termination.  The following terms will apply on
termination of this Agreement:

 

11.3.1.     Licenses.  Upon termination of this Agreement by either Party
pursuant to this Article 11, the Product License will terminate and Genzyme, its
Affiliates and Sublicensees will cease selling the Product.

 

11.3.2.     Return of Information and Materials.  Upon termination of this
Agreement by either Party pursuant to this Article 11, the Parties will return
(or destroy, as directed by the other Party) all data, files, records and other
materials containing or comprising the other Party’s Confidential Information.
Notwithstanding the foregoing, the Parties will be permitted to retain one copy
of such data, files, records, and other materials for archival purposes.

 

11.3.3.     Accrued Rights. Termination of this Agreement for any reason will be
without prejudice to any rights or financial compensation that will have accrued
to the benefit of a Party prior to such termination or expiration. Such
termination or expiration will not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this Agreement. 
For clarification, (a) no milestone payments under Section 8.2 (Milestones) and
(b) no payments under Section 8.5.2 (Sharing of Net Profits) will be payable by
Genzyme following termination of this Agreement, except to the extent that the
milestone event was achieved (in the case of milestone payments) or the Net
Profits were achieved (in the case of net profit sharing) prior to such
termination.

 

11.3.4.     Survival.  The following provisions of this Agreement will survive
the expiration or termination of the Agreement:  Section 6.5 (Safety Reporting),
Section 8.8 (Audits and Interim Reviews), Section 9.3.2 (Terms of Sharing
Agreement), Section 10.3 (Indemnification), Section 11.3 (Consequences of
Termination), Section 11.4 (Remedies for Isis’ Material Breach), Article 12
(Confidentiality), Article 13 (Dispute Resolution), and Article 14
(Miscellaneous).

 

11.3.5.     Reversion.

 

(a)           Isis Reversion Rights.  If (a) Genzyme terminates the Agreement
under Section 11.2.1 (Genzyme Right to Terminate) or (b) Isis terminates the
Agreement under Section 11.2.2 (Termination for Material Breach) or
Section 11.2.3 (Termination by Isis for Failure of Genzyme to Use Commercially
Reasonable Efforts), Genzyme will:

 

(i)            grant to Isis a non-exclusive, sublicensable, worldwide license
to

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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any Product Trademarks, Genzyme Program Patents and other Patents owned or
Controlled by Genzyme as of the date of termination that Cover the Product;

 

(ii)           transfer to Isis, for Isis’ use with respect to the development
and commercialization of the Product, any data, results, Regulatory Materials
and files in Genzyme’s possession as of the date of termination that relate
solely to the Product; and

 

(iii)          re-assign to Isis the Product-Specific Patents assigned to
Genzyme pursuant to Section 9.1.1 (Assignment of Product-Specific Patents) using
a form of assignment substantially similar to the one attached as Exhibit E
hereto (collectively with clauses (i) and (ii) above, the “Reversion”).

 

(b)           Limitation.  Isis hereby agrees and acknowledges that it may only
use the license granted and the materials transferred pursuant to clauses
(a)(i) and (a)(ii) of Section 11.3.5(a) in connection with the development and
commercialization of the Product for therapeutic purposes.

 

(c)           Consideration for Reversion Rights.

 

(i)            In consideration for the rights granted and materials transferred
by Genzyme to Isis under Section 11.3.5(a) above, Isis will pay to Genzyme a
royalty on Net Revenue as follows: (a) [**] of Net Revenue if the Reversion
occurs prior to [**], (b) [**] of Net Revenue if the Reversion occurs after the
[**] but prior to the [**] and (c) [**] of Net Revenue if the Reversion occurs
after the [**] and at the time of or after the [**].

 

(ii)           Such payments will be governed by the financial provisions in
Sections 8.6 (Periodic Reporting and Reconciliation), 8.7 (Audits and Interim
Reviews), 8.9 (Withholding Taxes) and 8.10 (Interest on Late Payments).  In
addition, the definition of Net Sales will apply to Isis in the same way as they
applied to Genzyme prior to such termination of the Agreement.

 

(iii)          Notwithstanding the foregoing, in no event will the total royalty
payable to Genzyme exceed the aggregate amount of Program Costs that Genzyme has
contributed to the Product, with interest thereon at ten percent (10%) per
calendar year, compounded monthly, net of any amounts paid for by Isis or
covered by Net Revenue.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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11.4.        Remedies for Isis’ Material Breach.

 

11.4.1.     Termination of Committees and Information Sharing.  If Isis
materially breaches this Agreement and fails to cure such breach within the time
periods provided under Section 11.2.2  (Termination for Material Breach) and
Genzyme does not wish to terminate this Agreement in its entirety, then, in
addition to any other remedies Genzyme may have under this Agreement or
otherwise, Genzyme will have the right to do any or all of the following in
Genzyme’s discretion: (a) terminate Isis’ right to participate in the JDC and
JPC and any other subcommittees or working groups established pursuant to this
Agreement, each of which will be disbanded; (b) terminate the participation of
Isis in any ongoing research and development programs and Genzyme’s funding
obligations associated therewith, (c) make all decisions required to be made by
such committees or the Parties collectively under this Agreement in connection
with the development and commercialization of the Product, (d) exclude Isis from
all discussions with Regulatory Authorities regarding Isis Products, (e) require
Isis to assign to Genzyme all of Isis’ right, title and interests in any IND or
other Regulatory Materials then held by Isis pertaining to Products and any
agreements with Third Parties related solely to the development or supply of the
Product; (f) require Isis to enable Genzyme or a Third Party manufacturer to
manufacture clinical and initial commercial quantities of the Product in lieu of
Isis, with such transition occurring on a commercially reasonable timetable;
(g) terminate Genzyme’s obligation to make further disclosures of Know-How or
other information to Isis pursuant to this Agreement (including pursuant to
Section 5.4.2 (Transfer from Genzyme to Isis) and Section 6.4 (Isis Safety
Database)), other than reports required by Section 8.6 (Periodic Reporting and
Reconciliation) and as reasonably required to permit Isis to perform its
remaining obligations under this Agreement.  In addition, if Isis has not
completed the development activities that are its responsibility under this
Agreement, then Genzyme may, but will not be obligated to, assume all
responsibility for all such development activities that would have otherwise
been Isis’ responsibility under the Agreement.  Isis will cooperate with the
foregoing and provide to Genzyme and its Third Party contractors all Know-How,
assistance, assignments and other support reasonably requested to assist Genzyme
in assuming complete responsibility for the development and manufacture of the
Product in an efficient and orderly manner.

 

11.4.2.     Genzyme’s Right of Setoff.  If Isis materially breaches this
Agreement and fails to cure such breach within the time periods provided under
Section 11.2.2  (Termination for Material Breach) and Genzyme does not wish to
terminate this Agreement in its entirety, then, in addition to any other
remedies Genzyme may have under this Agreement or otherwise (an “Isis Breach
Event”), Genzyme may setoff against any amounts owed to Isis pursuant to
Article 8 (Financial Provisions) its good faith estimate of the amount of any
losses, damages and expenses incurred by Genzyme as a result of Isis’ breach of
this Agreement (the “Setoff Amount”).  If Genzyme exercises its setoff right
under this Section 11.4.2, Genzyme will provide Isis with a written certificate,
signed by Genzyme’s Chief Financial Officer, certifying that the amount setoff
by Genzyme represents

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Genzyme’s good faith estimate of such losses, damages and expenses. 
Notwithstanding the foregoing, if Isis notifies Genzyme in writing that it
disputes Genzyme’s assertion that Isis is in material breach of this Agreement
or the amount setoff by Genzyme, then (a) Genzyme will initiate the dispute
resolution process set forth in Article 13 (Dispute Resolution), and (b) pending
the Parties’ agreement regarding the appropriate setoff (if any) or a
determination by the mediator of the proper amount that Genzyme may setoff (if
any) in accordance with Section 13.2 (Mediation), Genzyme will pay the Setoff
Amount into an interest-bearing escrow account established for the purpose at a
bank.  If the Parties cannot settle their dispute by mutual agreement, then, in
accordance with Section 13.2.2 (Mediation of Setoff Disputes) the mediator will
determine (1) the amount (if any) that Genzyme may setoff against future
payments to Isis going forward, and (2) whether any portion of the escrow
account should be released to Isis.  In the event that it is finally determined
pursuant to Article 13 (Dispute Resolution) by a court of competent jurisdiction
that Genzyme has setoff an amount that exceeds the amount of losses, damages and
expenses actually incurred by Genzyme as a result of Isis’ breach of this
Agreement, then Genzyme will promptly pay Isis the amount of such excess, plus
interest on such amount as provided for in Section 8.10 (Interest on Late
Payments), with interest accruing from the time Genzyme applied such excess
setoff.

 

Article 12.

CONFIDENTIALITY; PUBLIC DISCLOSURE

 

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

 

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

 

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

 

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

 

(d)           was disclosed to the receiving Party, other than under an
obligation of

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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confidentiality, by a Third Party who had no obligation to the disclosing Party
not to disclose such information to others; or

 

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

 

12.2.        Authorized Disclosure and Use.  Notwithstanding the foregoing
provisions of Section 12.1, each Party may disclose Confidential Information
belonging to the other Party to the extent such disclosure is reasonably
necessary to:

 

(a)           prosecute or defend litigation,

 

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

 

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

 

In the event a Party deems it reasonably necessary to disclose Confidential
Information belonging to the other Party pursuant to clauses (a), (b) and (c) of
this Section 12.2, the disclosing Party will to the extent possible give
reasonable advance notice of such disclosure to the other Party and take
reasonable measures to ensure confidential treatment of such information.  Each
Party will promptly notify the other Party upon becoming aware of any
misappropriation or unauthorized disclosure or use of the other Party’s
Confidential Information.

 

12.3.        Terms of Agreement.  The Parties agree that the terms of this
Agreement are confidential and will not be disclosed by either Party to any
Third Party (except to a Party’s professional advisors, including, without
limitation, accountants, financial advisors, and attorneys) without prior
written permission of the other Party; provided, however, that (a) either Party
may make any filings of this Agreement required by Applicable Law in any country
so long as such Party uses its reasonable efforts to obtain confidential
treatment for portions of this Agreement as available, consults with the other
Party, and permits the other Party to participate, to the greatest extent
practicable, in seeking a protective order or other confidential treatment;
(b) either Party may disclose this Agreement on a confidential basis to
potential Third Party investors or acquirers or, in the case of Genzyme, to
potential Sublicensees, in each case in connection with due diligence or similar
investigations; and (c) a Party may publicly disclose, without regard to the
preceding requirements of this Article 12 (Confidentiality), information that
was previously publicly disclosed in compliance with such requirements.

 

12.4         Public Disclosures.

 

(a)           The Parties have agreed upon, and from time to time will agree
upon updates to, a communication strategy document containing detailed
substantive messaging and a detailed fact sheet with respect to the development,
regulatory

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Approval process, manufacturing and commercialization of the Product (the
“Communications Plan”).  The Communication Plan will identify agreed
spokespeople according to subject matter and will include a calendar detailing
events (investor and medical meetings, earnings dates, etc) and anticipated new
Product disclosures warranting press releases, updates to any slide presentation
or other communication materials.  If the Parties are unable to agree upon the
content of a particular disclosure in any update to the Communications Plan,
then the Party to whom the Agreement assigns primary responsibility over the
subject matter of the disclosure will have the right to decide upon the
appropriate content.  Accordingly, in the event of such a disagreement, Isis
will have the right to decide upon the appropriate disclosure on scientific
matters, and Genzyme will have the right to decide upon the appropriate
disclosure for pre-clinical and clinical development, regulatory, and commercial
matters.  If any spokesperson identified in the Communications Plan leaves the
employ of a Party or changes roles such that it is no longer appropriate for him
or her to serve as a spokesperson, the Party who employs such spokesperson may
designate a replacement.

 

(b)           In addition, from time to time the JDC will approve a scientific
and medical publication plan (the “Scientific Publication Plan”).  The Parties
will refrain from making any public communications or disclosures regarding the
Product other than those set forth in the Communications Plan or as expressly
contemplated by the Scientific Publication Plan.  Without limiting the
generality of the foregoing, except for the specific disclosures set forth in
the Communication Plan or as otherwise expressly contemplated by the Scientific
Publication Plan, each Party will refrain from making any public disclosures
concerning (i) the status of any Approval, (ii) any application for any
Approval, or (iii) any communication with or from any Regulatory Authority. 
Isis will refer to Genzyme, in its capacity as holder of the IND, NDA or other
Approval (as applicable) for the Product, any questions it may receive
concerning these matters that call for information beyond that provided in the
Communications Plan.

 

(c)           To the extent that either Party proposes to make any public
disclosure that deviates from the Communications Plan, it will submit to the
other Party an initial draft of any press release, slide presentation or other
public communication for review and comment at least five (5) Business Days in
advance of such proposed public communication.  In such event, each Party will
not make any public communication unless and until the Parties revise the
Communications Plan in accordance with Section 12.4(a) so as to include the
disclosure included in such proposed public communication.  For public
disclosures that do not deviate from the Communications Plan, each Party will
submit to the other Party a draft of any such public communication for review
and comment at least forty-eight (48) hours in advance of such public
disclosure.  Notwithstanding any other provision of this Agreement, however,
each Party may at any time make any press release or other public communication
as it determines, based upon the advice of counsel, to be necessary to comply
with any public disclosure obligations under Applicable Laws (including
securities laws), so long as the announcing Party

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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provides the other Party at least some advance notice (which will be at least
forty-eight (48) hours whenever possible) regarding the proposed public
disclosure.  Genzyme may satisfy its notice obligation under this Section 12.4
by emailing and telephoning either Isis’ Chief Executive Officer or Chief
Operating Officer, and Isis may satisfy its notice obligation under this
Section 12.4 by emailing and telephoning either the Genzyme Senior Vice
President, Cardiovascular or the Genzyme Senior Vice President of Corporate
Affairs.

 

(d)           Each Party will promptly notify (and provide as much advance
notice as possible to) the other of any event materially related to Products
(including any regulatory Approval) so that the Parties may, subject to the
provisions of subsections (a) and (b) of this Section 12.4, analyze the need to
or desirability of publicly disclosing or reporting such event.

 

(e)           In accordance with Section 2.7 (Third Party Agreements), Isis will
promptly provide Genzyme with any draft publication relating to the Product
submitted to it for review pursuant to any agreement with any Third Party and
will exercise its rights under any such agreement to comment on such publication
in consultation with and as reasonably requested by Genzyme.  Isis will not
enter into any agreement after the Execution Date that grants any Third Party
the right to make public statements regarding the Product unless the form of
such agreement is approved in advance by Genzyme.

 

(f)            Unless otherwise contemplated by the Scientific Publication Plan,
Genzyme will serve as the principal point of contact for any Third Party author
intending to publish a scientific or medical publication on matters with respect
to which Genzyme is assigned primary responsibility under this Agreement, and
Isis will serve as the principal point of contact for any such author on matters
with respect to which Isis is assigned primary responsibility under this
Agreement.

 

Article 13.

DISPUTE RESOLUTION

 

13.1.        Escalation.  In the event of any dispute (other than a dispute
regarding the construction, validity or enforcement of either Party’s Patents,
which disputes will be resolved pursuant to Section 13.3 (Jurisdiction; Venue;
Service of Process)) arising between the Parties relating to, arising out of or
in any way connected with this Agreement or any term or condition hereof, or the
performance by either Party of its obligations hereunder, whether before or
after termination of this Agreement that cannot be resolved by the Parties
(each, a “Dispute”), either Party may make a written request that the Dispute be
referred for resolution to the chief executive officers of each Party (or their
designees) (the “Executives”).  Within sixty (60) days of either Party’s written
request that the Dispute be referred to the Executives, the Executives will meet
in person at a mutually acceptable time and location or by means of telephone or
video conference to negotiate a settlement of a Dispute.  Each Party may elect
to have such Party’s JDC representatives participate in such meeting, if
desired, provided that it provides the other Party with reasonable

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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advance notice of such intent so as to enable the other Party to have its JDC
representatives also participate in such meeting, if desired.  If the Executives
fail to resolve the Dispute within such sixty (60) day period and the Dispute
concerns any matter that this Agreement delegates to the JDC for determination,
then Genzyme will be entitled to resolve the Dispute in its sole discretion. For
all other Disputes, in the event that the Executives fail to resolve the Dispute
within such sixty (60) day period the Dispute will be referred to mediation
under Section 13.2 (Mediation).

 

13.2.        Mediation.

 

13.2.1.     Mediation Generally.  If a Dispute cannot be resolved pursuant to
Section 13.1 (Escalation), the Parties agree to try in good faith to resolve any
such Dispute by non-binding mediation administered by JAMS End Dispute in
accordance with its commercial mediation rules.  The mediation will be conducted
by a single mediator appointed by agreement of the Parties who will have
previous judicial experience, or failing such agreement by JAMS End Dispute in
accordance with its commercial mediation rules.  Unless otherwise mutually
agreed upon by the Parties, the mediation proceedings will be conducted in
Chicago.  The Parties agree that they will share equally the cost of the
mediation, including filing and hearing fees, and the cost of the mediator(s). 
Each Party will bear its own attorneys’ fees and associated costs and expenses.

 

13.2.2.     Mediation of Setoff Dispute.

 

(a)           If Genzyme has exercised its setoff right under Section 11.4.2
(Genzyme’s Right of Setoff) and there is a Dispute regarding whether Isis is in
material breach of the Agreement or the proper amount of the setoff that the
Parties are unable to resolve in mediation pursuant to Section 13.2.1 (Mediation
Generally), then at the completion of such mediation the mediator will decide
the following issues, which decision will be binding on the Parties pending
final resolution of the Dispute by a court of competent jurisdiction:

 

(i)            Whether the amount placed in escrow by Genzyme pursuant to
Section 11.4.2 exceeds the mediator’s objective good faith estimate of the
amount of any losses, damages and expenses incurred or likely to be incurred by
Genzyme as a result of Isis’ breach of this Agreement;

 

(ii)           What amount (if any) may Genzyme setoff against future payments
to Isis under Section 11.4.2, which amount will represent the mediator’s
objective good faith estimate of the amount of any losses, damages and expenses
incurred or likely to be incurred by Genzyme as a result of Isis’ breach of this
Agreement.

 

(b)           If the mediator determines that the amount placed in escrow by
Genzyme pursuant to Section 11.4.2 exceeds the mediator’s objective good faith
estimate of he amount of any losses, damages and expenses incurred or likely to
be incurred

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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by Genzyme as a result of Isis’ breach of this Agreement, the Parties will
promptly cause the escrow agent to release to Isis the amount of such excess,
plus interest accruing on such amount in the escrow account.  The Parties will
promptly cause the remaining amount in the account to be returned to Genzyme.

 

(c)           If the mediator determines an appropriate amount that Genzyme may
setoff against future payments to Isis under Section 11.4.2, Genzyme may setoff
such amount directly, and will not be required to pay such amounts into any
escrow account.

 

(d)           The decisions rendered by mediator with respect to the
distribution of funds from the escrow account and amount Genzyme may setoff
going forward will be binding on the Parties pending resolution of the Dispute
by the agreement of the Parties or by a court of competent jurisdiction in
accordance with this Agreement.

 

13.2.3.     Legal Remedies.  If the Parties fail to reach an amicable agreement
pursuant to the non-binding mediation process set forth in Section 13.2
(Mediation) within sixty (60) days of the matter being referred to Mediation,
then either Party may pursue a legal remedy in accordance with Section 13.3
(Jurisdiction, Venue, Service of Process).

 

13.3.        Jurisdiction; Venue; Service of Process.

 

13.3.1.     Jurisdiction.  Each Party by its execution hereof, (a) hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court located in Chicago, Illinois for the purpose of any Dispute arising
between the Parties in connection with this Agreement (each, an “Action”) and
(b) hereby waives to the extent not prohibited by Applicable Law, and agrees not
to assert, by way of motion, as a defense or otherwise, in any such Action, any
claim that it is not subject personally to the jurisdiction of the above-named
court, that its property is exempt or immune from attachment or execution, that
any such Action brought in the above-named court should be dismissed on grounds
of forum non conveniens, should be transferred or removed to any court other
than the above-named court, or should be stayed by reason of the pendency of
some other proceeding in any other court other than the above-named court, or
that this Agreement or the subject matter hereof may not be enforced in or by
such court and (c) hereby agrees not to commence any such Action other than
before the above-named court.  Notwithstanding the previous sentence a Party may
commence any Action in a court other than the above-named court solely for the
purpose of enforcing an order or judgment issued by the above-named court.

 

13.3.2.     Venue.  Each Party agrees that for any Action between the Parties
arising in whole or in part under or in connection with this Agreement, such
Party bring Actions only in the federal courts of the United States of America
located in Chicago, Illinois and any appellate court having jurisdiction over
appeals from

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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such courts.  Each Party further waives any claim and will not assert that venue
should properly lie in any other location within the selected jurisdiction.

 

13.3.3.     Service of Process.  Each Party hereby agrees that service of
process made by registered or certified mail, return receipt requested, at its
address specified pursuant to Section 14.5 (Notices), will constitute good and
valid service of process in any such Action and (c) waives and agrees not to
assert (by way of motion, as a defense, or otherwise) in any such Action any
claim that service of process made in accordance with clause (a) or (b) does not
constitute good and valid service of process.

 

Article 14.

MISCELLANEOUS

 

14.1.        Change of Control of Isis.

 

14.1.1.     Termination of Committees and Information Sharing.  In the event of
a Change of Control of Isis, Genzyme will have the right, exercisable by written
notice to Isis or its successor in interest within ninety (90) days of the
public announcement of the completion of such Change of Control, to do any or
all of the following in Genzyme’s discretion: (a) terminate Isis’ right to
participate in the JDC and JPC and any other subcommittees or working groups
established pursuant to this Agreement, each of which will be disbanded;
(b) terminate the participation of the successor to Isis in any ongoing research
and development programs and Genzyme’s funding obligations associated therewith,
(c) make all decisions required to be made by such committees or the Parties
collectively under this Agreement in connection with the development and
commercialization of the Product, (d) exclude Isis or its successor from all
discussions with Regulatory Authorities regarding Isis Products, (e) require
Isis to assign to Genzyme all of Isis’ right, title and interests in any IND or
other Regulatory Materials then held by Isis pertaining to Products and any
agreements with Third Parties related to the development or supply of the
Product; (f) require Isis to enable Genzyme or a Third Party manufacturer to
manufacture clinical and initial commercial quantities of the Product in lieu of
Isis, with such transition occurring on a commercially reasonable timetable;
(g) terminate Genzyme’s obligation to make further disclosures of Know-How or
other information to Isis pursuant to this Agreement (including pursuant to
Section 5.4.2 (Transfer from Genzyme to Isis) and Section 6.4 (Isis Safety
Database)), other than reports required by Section 8.6 (Periodic Reporting and
Reconciliation) and as reasonably required to permit Isis to perform its
remaining obligations under this Agreement.  In addition, if Isis has not
completed the development activities that are its responsibility under this
Agreement, then Genzyme may, but will not be obligated to, assume all
responsibility for all such development activities and setoff against amounts
payable by Genzyme to Isis under this Agreement any expense incurred by Genzyme
in connection with such development activities that would have been Isis’
responsibility under the Agreement had the Change of Control not occurred.

 

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treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Isis or its successor will cooperate with the foregoing and provide to Genzyme
and its Third Party contractors all Know-How, assistance, assignments and other
support reasonably requested to assist Genzyme in assuming complete
responsibility for the development and manufacture of the Product in an
efficient and orderly manner.  For purposes of clarification, all Confidential
Information of Genzyme in Isis’ or its successor’s possession following
Genzyme’s exercise of its rights under this Section 14.1 (Change of Control of
Isis) will continue to be subject to all applicable provisions of this Agreement
(including, without limitation, Article 12 (Confidentiality).

 

14.1.2.     Purchase of Product Economics.  In addition to the rights set forth
in Section 14.1.1 (Termination of Committees and Information Sharing), in the
event of a Change of Control of Isis, Genzyme will have the right to purchase
all of Isis’ rights to receive payments under the Agreement.  If Genzyme elects
to pursue this right, which election may be made by written notice to Isis or
its successor of such election within one hundred and eighty (180) days of the
public announcement of the completion of such Change of Control, the Parties
will, for a period of sixty (60) days following notice of such election,
negotiate in good faith a mutually acceptable fair market value.  If the Parties
cannot agree on a purchase price, Genzyme will have the option to have a Third
Party determine the then-applicable fair market value of Isis’ rights to receive
payments under the Agreement (the “Valuation Price”).  The Parties will select a
mutually agreeable independent investment banking firm of national reputation to
ascertain the Valuation Price.  If the Parties are unable to agree on such
identity of such investment banking firm within a sixty (60) day period, then
each Party will select an independent investment banking firm of national
reputation and the two designated firms will select a mutually agreeable third
investment banking firm who will ascertain the Valuation Price.  If Genzyme
elects to purchase all of Isis’ rights to receive payments under the Agreement
at the price mutually agreed by the Parties or the Valuation Price, as
applicable, such purchase will render the rights granted to Genzyme under this
Agreement fully-paid and irrevocable, and the Parties will enter into a mutually
satisfactory amendment to this Agreement effecting this simultaneously with the
payment of such price.  If Genzyme does not exercise the right to purchase all
of Isis’ rights to receive payments under the Agreement under this
Section 14.1.2, the successor’s economic rights under this Agreement will be
unchanged.

 

14.2.        Specific Performance.  Each Party acknowledges and agrees that, in
the event of any breach of this Agreement by such Party or any of its
Affiliates, the non-breaching Party may be irreparably and immediately harmed
and may not be able to be made whole by monetary damages.  Without prejudice to
any rights and remedies otherwise available, and notwithstanding Section 13.1
(Dispute Resolution Mechanism), the non-breaching Party will be entitled to seek
equitable relief by way of injunction, specific performance or otherwise if the
breaching Party or any of its Affiliates breaches any provision of this
Agreement.

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

14.4.                      Waiver; Remedies Cumulative.  The failure by either
Party to take any action or assert any right hereunder will in no way be
construed to be a waiver of such right, nor in any way be deemed to affect the
validity of this Agreement or any part hereof, or the right of a Party to
thereafter enforce each and every provision of this Agreement.  Except as
expressly provided in this Agreement, the rights and remedies provided for in
this Agreement are cumulative and not exclusive, and the exercise of any right
or remedy under this Agreement will in no way prejudice or be construed to be a
waiver of any other right or remedy a Party may have under this Agreement or
otherwise.

 

14.5.                      Notices.  Any consent or notice required or permitted
to be given or made under this Agreement by one of the Parties hereto to the
other will be in writing and delivered by hand or sent by nationally recognized
overnight delivery service, prepaid registered or certified air mail, or by
facsimile confirmed by prepaid, registered or certified mail letter, and will be
deemed to have been properly served to the addressee upon receipt of such
written communication, in any event to the following addresses (or any updated
address provided to the notifying Party in writing in accordance with this
Section 14.5):

 

If to Genzyme:

Genzyme Corporation

 

500 Kendall Street

 

Cambridge, Massachusetts 02142

 

Attn:                    General Manager,

 

                                              Cardiovascular Business Unit

 

Fax: (617) 252-7553

 

 

with a copy to:

Genzyme Corporation

 

500 Kendall Street

 

Cambridge, Massachusetts 02142

 

Attn: General Counsel

 

Fax: (617) 252-7553

 

 

If to Isis:

Isis Pharmaceuticals, Inc.

 

1896 Rutherford Road

 

Carlsbad, CA 92008

 

Attn: COO and CFO

 

Fax: (760) 603-4650

 

 

with a copy to:

Isis Pharmaceuticals, Inc.

 

1896 Rutherford Road

 

Carlsbad, CA 92008

 

Attn: General Counsel

 

Fax: (760) 268-4922

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

14.7.                      Binding Effect; Assignment.  This Agreement will
inure to the benefit of and be binding upon the Parties and their respective
successors and permitted assigns.  Neither Party will assign this Agreement or
any of its rights or obligations hereunder without the prior written consent of
the other Party; provided, however, that (a) either Party may assign this
Agreement or its rights or obligations hereunder to any of its Affiliates or to
a purchaser or successor of substantially all the assets to which this Agreement
relates, and (b) Isis may enter into one or more financial factoring
arrangements with Genzyme’s prior written consent, such consent not to be
unreasonably withheld, delayed or conditioned.

 

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

 

14.9.                      Further Assurances.  Each Party will execute such
other instruments, give such further assurances and perform such acts which are
or may become necessary or appropriate to effectuate and carry out the
provisions and intent of this Agreement.

 

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

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

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

 

14.13.                Rights in Bankruptcy.  All rights and licenses now or
hereafter granted under or pursuant to this Agreement, including Section 2.1 of
this Agreement, are rights to “intellectual property” (as defined in
Section 101(35A) of Title 11 of the United States Code, as amended (such Title
11, the “Bankruptcy Code”)).  Isis hereby grants to Genzyme and all Affiliates
of Genzyme a right of access and to obtain possession of and to benefit from
(a) copies of research data, (b) laboratory samples, (c)  samples of Product,
(d) formulas, (e) laboratory notes and notebooks, (f) data and results related
to clinical trials, (g) regulatory filings and approvals, (h) rights of
reference in respect of regulatory filings and approvals, (i) pre-clinical
research data and results, (j) marketing, advertising and promotional materials,
all of which constitute “embodiments” of intellectual property pursuant to
Section 365(n) of the Bankruptcy Code and (k) all other embodiments of such
intellectual property, in each case, solely in connection with Genzyme’s rights
under this Agreement, whether any of the foregoing are in Isis’ possession or
control or in the possession and control of Third Parties.  Isis agrees not to
interfere with Genzyme’s and its Affiliates’ exercise of rights and licenses to
intellectual property licensed hereunder and embodiments thereof in accordance
with this Agreement and agrees to use Commercially Reasonable Efforts to assist
Genzyme and its Affiliates to obtain such intellectual property and embodiments
thereof in the possession or control of Third Parties as reasonably necessary or
desirable for Genzyme or its Affiliates to exercise such rights and licenses in
accordance with this Agreement.  The Parties hereto acknowledge and agree that
all payments by Genzyme to Isis under this Agreement, other than the commercial
milestones payable pursuant to Section 8.2.2 and the sharing of Net Profits
pursuant to Section 8.5.2, do not constitute “royalties” within the meaning of
Bankruptcy Code §365(n) or relate to licenses of intellectual property
hereunder.

 

[remainder of page intentionally left blank]

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

 

 

Genzyme Corporation

 

 

 

 

 

By:

/s/ Henri A. Termeer

 

Name:

Henri A. Termeer

 

Title:

Chairman, President

 

 

and Chief Executive Officer

 

 

 

 

 

Isis Pharmaceuticals, Inc.

 

 

 

 

 

 

 

By:

/s/ B. Lynne Parshall

 

Name:

B. Lynne Parshall

 

Title:

Chief Operating Officer and

 

 

Chief Financial Officer

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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SCHEDULE 1.35

 

ISIS METHODOLOGY FOR DETERMINING ITS COST OF MANUFACTURE

 

[**]

 

SCHEDULE 1.49

 

EXAMPLE CALCULATION OF INTERNAL DEVELOPMENT EXPENSES

 

[**]

 

SCHEDULE 1.52

 

ISIS CORE TECHNOLOGY PATENTS

 

[**]

 

SCHEDULE 1.56

 

ISIS MANUFACTURING & ANALYTICAL PATENTS

 

[**]

 

SCHEDULE 1.99

 

PRODUCT-SPECIFIC PATENTS

 

[**]

 

SCHEDULE 1.113

 

SPECIAL ISIS CORE TECHNOLOGY PATENTS

 

[**]

 

SCHEDULE 2.1

 

LICENSES TO THIRD PARTIES

 

[**]

 

SCHEDULE 10.2.2

 

THIRD PARTY AGREEMENTS

 

[**]

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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EXHIBIT A

 

DEVELOPMENT PLAN

 

[**]

 

EXHIBIT B

 

DEVELOPMENT BUDGET

 

[**]

 

EXHIBIT C

 

FORM OF SUPPLY AGREEMENT

 

MANUFACTURING AND SUPPLY AGREEMENT

 

This Manufacturing and Supply Agreement (the “Supply Agreement”) is entered into
as of the 24th day of June, 2008 (the “Effective Date”) by and between Isis
Pharmaceuticals, Inc. (“Isis”) and Genzyme Corporation (“Genzyme”).  Genzyme and
Isis may each be referred to herein as a “Party” or together as the “Parties”. 
Capitalized terms not defined herein will have the meaning given to such terms
in the License and Co-Development Agreement between the Parties dated June 24,
2008 (the “Agreement”).  The Parties agree as follows:

 

WHEREAS, the Parties have entered the Agreement to provide for the further
development and commercialization of one or more Products, including Mipomersen;

 

WHEREAS, the Agreement provides that Isis will be responsible for the
manufacture of the active pharmaceutical ingredient (API) of Mipomersen (“API”)
for the phase II clinical trials, the Pivotal Trial(s) and the initial
commercial launch of Mipomersen;

 

WHEREAS, the Parties agree that the terms of this Supply Agreement will apply to
all manufactured lots of API made and supplied under the Agreement and this
Supply Agreement.

 

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 hereto agree to this
Supply Agreement as follows:

 

1.              Scope; Second Manufacturing Suite –  Isis will produce the bulk
API for Mipomersen under cGMP conditions and in accordance with the Quality
Agreement between the Parties and referencing this Supply Agreement (the
“Quality Agreement”), in the amount specified in the applicable Firm Order for
use for the phase II clinical trials, the Pivotal Trial(s) and the initial
commercial launch of Mipomersen.

 

Isis will use commercially reasonable efforts to have [**].

 

2.              Supply as of Effective Date.        As of the Effective Date,
Isis has in its inventory the quantities of API, placebo, drug product and
clinical trial material set forth on Exhibit B attached hereto (the “Existing
Material”).

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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3.              Supply through the end of 2008.  After the Execution date until
the [**] in 2008, Isis will manufacture and supply the API consistent with the
needs of the Development Plan, which are approximately [**] kilograms (the “2008
API”).

 

4.              Supply after 2008; Forecasting Before NDA Filing.

 

(a)   After January 1, 2009 until the NDA Filing under the Agreement, Isis and
Genzyme will establish an 8 calendar quarter rolling forecast (the “Clinical
Rolling Production Forecast”) that sets forth a good faith estimate of the
quantity of API for the Mipomersen Genzyme expects to receive from Isis within
the following 8 calendar quarter period.  This Clinical Rolling Production
Forecast will be updated on the first business day of each subsequent calendar
quarter by Genzyme.  The first 4 calendar quarters of the Clinical Rolling
Production Forecast constitute a firm order (each “Clinical Firm Order”). 
Genzyme will provide one or more purchase orders for Clinical Firm Orders not
previously submitted with each new Clinical Rolling Production Forecast.  The
fifth (5th) calendar quarter of any Clinical Rolling Production Forecast shall
be binding solely to the extent that Genzyme shall be required to order (and
Isis shall only be required to supply) not more than [**]% and not less that
[**]% of the API forecast therein once such calendar quarter becomes the first
(1st) calendar quarter for the Clinical Rolling Production Forecast.  Quarters 6
through 8 are estimated quantities to be used for planning purposes only.  Not
later than 30 days after the Effective Date, Genzyme will provide Isis with the
first Clinical Rolling Production Forecast, which will initially cover the 8
quarter period beginning January 1, 2009.  The quantities set forth in a
Clinical Firm Order will be binding on both parties, and Genzyme will be
obligated to purchase from Isis, and Isis will be obligated to supply, the
specified quantities of API.

 

(b)   Notwithstanding the foregoing, each Clinical Firm Order is subject to the
following conditions:

 

·                  Isis will not be required to supply during a calendar quarter
more than an aggregate of [**] kilograms of API, unless agreed to in advance by
Isis and further that the batch size is no larger than [**] kilograms unless
agreed to in advance by Isis.

 

·                  The minimum order size is [**] kilograms per calendar quarter
unless agreed to in advance by Isis.

 

(c)   Isis agrees to use commercially reasonable efforts to supply Genzyme, upon
request, with quantities in excess of the quantity restrictions described in
this Section 4(b) above.

 

5.              Supply; Forecasting After NDA Filing.

 

(a)   After the NDA Filing under the Agreement, Genzyme will establish an eight
(8) calendar quarter rolling forecast (the “Commercial Rolling Production
Forecast”) that sets forth a good faith estimate of the quantity of API for the
Mipomersen Genzyme expects to receive from Isis within the following eight
(8) calendar quarter period.  This Commercial Rolling Production Forecast will
be updated not later than the first business day of each subsequent calendar
quarter by Genzyme.  The first [**] calendar quarters of the Commercial Rolling
Production Forecast will constitute a firm order (“Commercial Firm Order”). 
Genzyme will provide one or more purchase orders for Commercial Firm Orders not
previously submitted with each new Commercial Rolling Production Forecast.  The
[**] and [**] calendar quarters of any Commercial Rolling Production Forecast
shall be binding solely to the extent that Genzyme shall be required to order
(and Isis shall be required to supply) not more than [**]% and not less than
[**]% of the API forecast therein once those calendar quarters become the first
[**] quarters for the Commercial Rolling Production Forecast.  Quarters [**]
through [**] are estimated quantities to be used for planning purposes only. 
Not later than 30 days after the NDA Filing, Genzyme will provide Isis with the
first Commercial Rolling Production Forecast.  The quantities set forth in a
Commercial Firm Order will be binding on both parties, and Genzyme will be
obligated to purchase from Isis, and Isis will be obligated to supply, the
specified quantities of API.  Clinical Firm Orders and Commercial Firm Orders
may each be referred to herein as “Firm Orders”.

 

(b)   Notwithstanding the foregoing, each Commercial Firm Order is subject to
the following conditions:

 

·                  Isis will not be required to supply during a calendar quarter
more than an aggregate of 50 kilograms of API, unless agreed to in advance by
Isis and further that the batch size is no

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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larger than [**] kilograms unless agreed to in advance by Isis. The minimum
order size is [**] kilograms per order.

 

(c)   Isis agrees to use commercially reasonable efforts to supply Genzyme, upon
request, with quantities in excess of the quantity restrictions described in
this Section 5(b) above.

 

6.              Delivery

 

(a)   Isis will deliver the Existing Material and the 2008 API as directed by
the JDC.

 

(b)   Each order submitted in satisfaction of a Firm Order obligation set forth
in Section 4 or 5 above shall set forth Genzyme’s proposed delivery date, which
date shall not be less than 90 days after the submission of the order in
question.  Within 10 business days of receipt of an order from Genzyme, Isis
will either (i) confirm Genzyme’s proposed delivery date or (ii) enter into
discussions with Genzyme about a mutually agreeable delivery date (each, a
“Delivery Date”).  Isis will use commercially reasonable efforts to deliver the
API ordered in each Firm Order by the applicable Delivery Date (but in any event
Isis will deliver the API within thirty (30) days of the Delivery Date);
provided, however, that Isis may deliver any quantities requested in a Firm
Order thirty (30) days early. Isis will not be required to supply, nor will
Genzyme be required to purchase, API in a quantity exceeding the Firm Order. 
The quantity of API specified in each Firm Order, invoiced and paid for will be
the as-is gross mass of the API after lyophilization (i.e. including such
amounts of water, impurities, salt, heavy metals, etc not exceeding limits
permitted in the Specifications).  In addition, so long as Isis supplies the
quantity of API specified in the applicable Firm Order for Mipomersen within
plus or minus [**]%, Isis will be deemed to have satisfied the amount specified
in the Firm Order but Genzyme will nonetheless pay for the quantity of API
specified in the Firm Order, whether it is less than or greater than the amount
ordered.

 

7.              Shortfall

 

(a)   In the event that at any time Isis anticipates that it will be unable to
supply at least [**]% (as permitted by Section 6 above) of the quantities of API
set forth in an agreed-upon Firm Order in satisfaction of its obligation under
Section 4 or 5 for any reason, including without limitation force majeure, Isis
will notify Genzyme in writing as soon as possible upon the prediction or
occurrence of such non-supply.

 

(b)   If Isis cannot Manufacture as set forth in (a) above, upon written request
by Genzyme Isis will transfer to Genzyme all documentation and information, and
permit Genzyme to reference and use any regulatory filings, and otherwise fully
cooperate with Genzyme to enable Genzyme to make or have made API for use by
Genzyme in accordance with the Agreement.

 

8.              Specifications; CofA

 

(a)   For the API supplied by Isis under this Supply Agreement, Isis and Genzyme
will mutually agree on the specifications for such API and will attach and/or
reference such specifications in the applicable Firm Order (the
“Specifications”).  If no Specifications are attached to or referenced in a Firm
Order the Specifications for the Firm Order will be the same Specifications that
applied to the previous Firm Order.  The Specifications as of the effective date
of this Supply Agreement are attached hereto as Exhibit A and will apply to 2008
API and the API that is part of the Existing Material.

 

(b)   Prior to shipment of API, Isis shall provide Genzyme with a certificate
from Isis’ quality assurance department, or Isis’ equivalent thereof, that
includes the results of quality control tests that were performed on each batch
of API manufactured in accordance with the Specifications and that indicates
that the API contained in the shipment: (i) meets the Specifications and
(ii) was manufactured in compliance with cGMPs and all other applicable laws and
regulations (a “CofA”).

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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9.              API Pricing - The purchase price for API manufactured under this
Agreement in 2008 is $[**] per kilogram, except the purchase price for Lot #
CA301012-015 will be the [**] $[**] per kilogram and the purchase price set for
API manufactured in 2009 under this Section.  The purchase price for API
manufactured in each subsequent calendar year in the Term shall be determined as
follows: In September of each year, starting September of 2008, Isis will
provide Genzyme a nonbinding, good faith estimate of the purchase price for API
for the following year.  By November 15 of each year, starting November 15,
2008, Isis will provide Genzyme the final purchase price (each, a “Purchase
Price”) applicable to the manufacture and supply of API scheduled for delivery
in the following year.  Such Purchase Prices will be binding on both Parties;
provided, however, that such price will (i) not exceed $[**] per kilogram of API
and (ii) represent Isis’ good faith estimate of its fully-burdened cost to
manufacture such API.  This price includes all direct and indirect costs of
manufacturing the API, including the cost of analytical work, raw materials,
storing stability and retain samples, and, unless otherwise specifically stated
in the applicable Firm Order, all other activities specified in the
Specifications; provided, however, this price does not include stability
testing, CMC work, process validation or other work to support regulatory
filings.  All payments are in US Dollars.

 

10.       Terms of Payment –

 

(a)   On the Execution Date, Isis will apply $[**] towards External Development
Expenses under Section 8.3.1 of the Agreement for the Existing Material.

 

(b)   For the 2008 API, Genzyme shall not be required to pay for the 2008 API,
but rather upon transfer of such 2008 API Isis shall report the purchase price
for the 2008 API as its Fully Absorbed Cost of Goods in reports submitted to
Genzyme in accordance with Section 8.6 of the Agreement and such Fully Absorbed
Cost of Goods shall be credited against Isis’s obligations to fund the first one
hundred and twenty-five million ($125 million) in External Development Expenses
as contemplated by Section 8.3.1(b) of the Agreement.

 

(c)   Until the earlier of (i) the first calendar quarter in which Net Revenue
(as that term is defined in the Agreement) exceeds the aggregate Purchase Price
for API in that calendar quarter and (ii) the date Isis has fully satisfied its
obligation to fund the first one hundred and twenty-five million dollars ($125
million) of External Development Expenses in accordance with Section 8.3.1(b) of
the Agreement, Genzyme shall not be required to pay the Purchase Price for
Product ordered and transferred hereunder, but rather Isis shall report such
Purchase Price as its Fully Absorbed Cost of Goods in reports submitted to
Genzyme in accordance with Section 8.6 of the Agreement and such Fully Absorbed
Cost of Goods shall be credited against Isis’s obligations to fund the first one
hundred and twenty-five million ($125 million) in External Development Expenses
as contemplated by Section 8.3.1(b) of the Agreement.

 

(d)   Once the condition described in either clause (i) or (ii) of
Section 10(c) above has been satisfied, then the following payment terms shall
apply to Product supplied hereunder:

 

·                  A pre-payment of 50% of the Purchase Price from Genzyme is
payable in cash upon delivery of the applicable Firm Order.

 

·                  The remaining 50% of the Purchase Price is due in cash to
Isis by wire transfer or other customary means within 30 days from the date of
receipt of invoice, following title transfer from Isis to Genzyme or its
designee of the API (in accordance with Section 12 below).

 

·                  In addition to the price stated in this Supply Agreement,
Genzyme will pay to Isis all taxes and duties (except income tax) imposed upon
Isis, in connection with the API and will reimburse Isis for the insurance and
freight expenses discussed in Section 12 below.

 

11.       Term – This Supply Agreement will remain in effect as long as Isis and
Genzyme mutually agree for Isis to supply Mipomersen API as described in the
Agreement.

 

12.       Title & Transportation for Existing Material:   Title to the Existing
Material will transfer to Genzyme EXW (Incoterms 2000) Isis’ facility following
Isis’ receipt of an Authorization to Ship letter from the

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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Genzyme’s Quality Assurance Department authorizing shipment of the applicable
Existing Material.  Isis will insure against the replacement cost of the
Existing Material until title transfers. The Parties will share the Risk of loss
related to the Existing Material.

 

Isis will ship the Existing Material in accordance with the applicable
Authorization to Ship letter from Genzyme’s Quality Assurance Department.  Isis
will pay all freight for such transportation and include such costs as part of
Isis’ Fully Absorbed Cost of Goods.

 

13.       Title & Transportation for other API:   Title to the API supplied
under Section 3, 4 or 5 above will transfer to Genzyme upon the earlier of
(i) 15 days following the receipt by Genzyme of the CofA, a copy of the batch
record and the QC release testing for the applicable order (unless Genzyme
initiates formal dispute resolution regarding the API’s failure to meet the
warranty set forth in Section 17), (ii) EXW (Incoterms 2000) Isis’ facility
following Isis’ receipt of an Authorization to Ship letter from the Genzyme’s
Quality Assurance Department authorizing shipment of the applicable API order,
and (iii) the date pursuant to the dispute resolution it is determined that the
API did meet the warranty set forth in Section 17.  Isis will insure against the
replacement cost of the API until title transfers.    Risk of loss passes
simultaneously with the title.  Isis may deliver the applicable invoice to
Genzyme for API contemporaneously with title transfer.

 

Isis will ship the API to Genzyme EXW (Incoterms 2000) upon the earlier of
(i) the date such API is released by Isis’ Quality Assurance Department and
accepted by Genzyme’s Quality Assurance Department via an Authorization to Ship
letter, and (ii) 60 days following title transfer of such API.  Transportation
arrangements will be made by Isis as specified by Genzyme.  Isis will pay all
freight for such transportation and add such costs to the invoice as a separate
line item.

 

14.       Intellectual Property: The ownership and treatment of any intellectual
property generated in the course of Isis’ performance of this Supply Agreement
will be governed by the Agreement.

 

15.       CMC Work, Regulatory Support & Stability Testing –Genzyme will be
responsible for all CMC work and regulatory filings associated with the API and
drug product.  Isis will not be responsible for CMC work, process validation or
other work to support regulatory filings under this Supply Agreement.  If
Genzyme wishes to engage Isis to perform such work the Parties will mutually
agree upon an appropriate plan and budget for executing such work.

 

Isis will manage the stability testing of any API manufactured under this Supply
Agreement per Isis’ current stability protocol (whether performed by Isis or an
independent contractor).  If performed by Isis, the price for the stability
testing of the API will be $7,000 per time point per lot of API.  If performed
by a contractor, the price fro the stability testing of the API will be the
price charged by the contractor.  In either case, the price for the stability
testing will be treated as Program Costs under the Agreement.

 

16.       Hazards; Risk Sharing

 

If Isis encounters any difficulties or hazards during the manufacturing of a
batch of API such that the delivery of API to Genzyme from that batch would
constitute a breach of this Supply Agreement (including but not limited to the
failure of such API to conform to the warranty set forth in Section 17), Isis
will use commercially reasonable efforts to manufacture a replacement batch of
API, such that Genzyme receives such API as close to the originally-scheduled
delivery date as possible.

 

If the difficulty or hazard that causes the breach was not caused by Isis’ gross
negligence, the cost of the manufacture of the replacement batch will be shared
by Genzyme and Isis as follows:  Isis will be responsible for the [**]
components for such batch of API; and, to the extent not reimbursable under
Isis’ insurance policies, Genzyme will be responsible for the [**] component and
[**] expenses.  In any year in which Net Profit is achieved under the Agreement,
[**] components (and Genzyme’s expenses for [**] and [**] expenses) for such
replacement batch of API will be included as Program Costs under the Agreement
with [**] included using the methodology referred to in the definition of Fully
Absorbed Cost of Goods in the Agreement.  For purposes of clarity and assuming
none of the loss is covered

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

C-5

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

 

by Isis’ insurance, the total price payable for such API will equal the price
for such API originally specified above under Section 9 above or quoted in the
Firm Order plus the [**] component and [**] expenses attributable to such
replacement batch.  However, if the difficulty or hazard that causes the breach
was caused by Isis’ gross negligence, the cost of the manufacture of the
replacement batch will be solely Isis’ responsibility and the price payable upon
delivery of such API will equal the price for such API originally quoted in the
Firm Order without any additional costs or expenses required to produce the
replacement batch.

 

17.       Limited Warranty:  SUBJECT TO THE LIMITATIONS OF PARAGRAPHS, 18, 19
AND 21, Isis warrants, with respect to all the API, that, at the time of
delivery, any API supplied by Isis will (a) meet the Specifications; (b) meet
the standards of cGMP (for the API) and the requirements set forth in the
Quality Agreement and (c) be conveyed with good title, free from any lawful
security interest, lien or encumbrance.

 

18.       Disclaimer Of Warranties:  THE EXPRESS WARRANTIES CONTAINED IN
PARAGRAPH 17 OF THIS SUPPLY AGREEMENT (AND THOSE MADE UNDER AND AS OF THE
EFFECTIVE DATE OF THE AGREEMENT) ARE THE SOLE WARRANTIES WITH RESPECT TO THE API
AND ARE MADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER EXPRESS OR
IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON LAW OR STATUTE.

 

19.       Limitation Of Remedies: GENZYME’S EXCLUSIVE REMEDY AND ISIS’ TOTAL
LIABILITY TO GENZYME UNDER THIS SUPPLY AGREEMENT FOR CLAIMS BASED UPON SUPPLY OF
THE API (OR FAILURE TO SUPPLY) (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT
OF STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) IS EXPRESSLY LIMITED TO
THE REMEDY SET FORTH IN SECTIONS 7 AND 16 ABOVE.

 

GENZYME WAIVES ALL OTHER CLAIMS BY GENZYME AGAINST ISIS UNDER THIS SUPPLY
AGREEMENT WITH RESPECT TO SUPPLY OF THE API.  NEITHER PARTY WILL BE UNDER ANY
LIABILITY TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL,
EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM THIS SUPPLY AGREEMENT.

 

THE LIMITATIONS IN THIS SECTION 19 DO NOT APPLY TO ANY CLAIM FOR INDEMNIFICATION
UNDER SECTION 23.

 

20.       Quality Systems.  If Genzyme requests changes to Isis’ quality systems
or standard operating procedures, Isis and Genzyme will mutually agree on the
scope and form of such changes and Genzyme will pay Isis to implement such
changes at the then applicable Isis FTE Rate.  Isis will be responsible to
implement and pay for any modifications that either a Regulatory Authority
requires or the Parties mutually agree are necessary to remain compliant with
GMP or applicable ICH guidelines to manufacture API and Genzyme will pay for
such modifications specific to the manufacturing of API that are not required by
GMP or applicable ICH guidelines.  The costs of implementation will include out
of pocket costs as well as for the FTEs to implement such changes at the then
applicable Isis FTE Rate.

 

21.       Inspection And Notice Of Claims:  Promptly upon receipt of each
shipment of API, Genzyme will inspect and/or test (or cause to be inspected and
tested if API is shipped to a third party) such API for any damage, defect or
shortage.  ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF
STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) BY GENZYME WILL BE DEEMED
WAIVED UNLESS MADE BY GENZYME IN WRITING AND RECEIVED BY ISIS WITHIN THIRTY (30)
DAYS OF THE RECEIPT OF THE API.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

C-6

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

 

22.       Force Majeure: Neither Party will be liable for failures or delays in
performance of any obligation under this Supply Agreement, other than for
payment for API already transferred, to the extent that such failure or delay is
caused by force majeure, being any event, occurrence or circumstance beyond the
control of that Party (a “Force Majeure Event”), including but not limited to
the following: failure or delay caused by or resulting from acts of God,
strikes, earthquakes, fires, floods, accidents, wars, riots, acts of terrorism,
restrictions imposed by any governmental authority (including allocations,
priorities, requisitions quotas and price controls).  The Party whose
performance is affected by a Force Majeure Event will give prompt notice to the
other Party stating the details and expected duration of the event.

 

23.       Indemnity.  Section 10.3 of the Agreement will apply to this Supply
Agreement and the matters covered by this Supply Agreement.

 

24.       Assignment:  This Supply Agreement is not assignable or transferable
by either Party without the prior written consent of the other Party; provided
that a Party may assign the Supply Agreement to its successor in interest
pursuant to the acquisition, merger or sale of all or substantially all of the
assets of such Party, so long as such successor assumes in writing all of the
assigning Party’s obligations under this Supply Agreement.

 

25.       Governing Law:  The interpretation, validity, and performance of this
document will be governed by New York law, without regard to any conflict-of-law
rules.

 

26.       Termination.  Either Party will have the right to terminate this
Supply Agreement if the other Party materially breaches its obligations under
this Supply Agreement in accordance with Article 13 of the Agreement.

 

27.       Survival:  Sections 14 through 19, and 21 through 38 will survive
expiration or termination of the Agreement.  Any expiration or early termination
of this Supply Agreement will be without prejudice to the rights of either Party
against the other accrued or accruing under this Supply Agreement prior to
termination.  No expiration of this Supply Agreement will relieve a Party of its
obligation to pay fees.

 

28.       Inspections.  Genzyme shall have the right to visit and inspect Isis’
facility as further specified in the Quality Agreement. Isis’s quality assurance
department, or its equivalent, shall cooperate with Genzyme, as is reasonably
necessary and useful at Genzyme’s discretion, in any inspection conducted
pursuant to this Section 28.

 

29.       Notices:  Any notice required or permitted to be given under this
Supply Agreement by any Party will be in writing and will be (a) delivered
personally, (b) sent by registered mail, return receipt requested, postage
prepaid, (c) sent by a nationally-recognized courier service guaranteeing
next-day or second day delivery, charges prepaid, or (d) delivered by facsimile
(with the original promptly sent by any of the foregoing manners), to the
addresses or facsimile numbers of the other Parties set forth below, or at such
other addresses as may from time to time be furnished by similar notice by any
Party. The effective date of any notice under this Supply Agreement will be the
date of receipt by the receiving Party.

 

Notices will be sent to the following addresses or facsimile numbers:

In the case of Isis,

 

Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA 92008

Attention:  VP, Manufacturing/Operations

Facsimile:  760-603-4655

 

With a copy to:

1. General Counsel (fax:  760.268.4922); and

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

C-7

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

 

2.               Executive Vice President & CFO (fax:  760.603.4650)

 

In the Case of Genzyme:

 

Genzyme Corporation

200 Crossing Blvd.

Framingham, MA  01792

Attention:  Senior VP, Materials Management

Facsimile:  (508) 661-8538

 

With copy to:

 

Genzyme Corporation

500 Kendall Street

Cambridge, MA  02142

Attn:  General Counsel

Facsimile: (617) 252-7553

 

30.       Waiver:  No waiver of any term, provision or condition of this Supply
Agreement whether by conduct or otherwise in any one or more instances will be
deemed to be or construed as a further or continuing waiver of any such term,
provision or condition or of any other term, provision or condition of this
Supply Agreement.

 

31.       Counterparts:  This Supply Agreement and any amendment hereto may be
executed in any number of counterparts, each of which will for all purposes be
deemed an original and all of which will constitute the same instrument. This
Supply Agreement will be effective upon full execution by facsimile or original,
and a facsimile signature will be deemed to be and will be as effective as an
original signature

 

32.       Attachments:  All attachments referred to herein form an integral part
of this Supply Agreement and are incorporated into this Supply Agreement by such
reference.

 

33.       Inadvertent or Involuntary Omissions:  The Parties acknowledge that
they have expended substantial effort in preparing this Supply Agreement and
attempting to describe in the Attachments, as thoroughly and precisely as
possible, certain specifications and other information. However, despite these
efforts, the Parties acknowledge the possibility of involuntary or inadvertent
omissions from the Attachments.  The Parties will agree in writing to the
changes to be made to the Attachments to add these inadvertent or involuntary
omissions and any such written agreement executed by the Parties will serve as
an amendment to this Supply Agreement.

 

34.       Construction:  Each Party to this Supply Agreement and its counsel
have reviewed and revised this Supply Agreement.  The rule of construction to
the effect that any ambiguities are to be resolved against the drafting Party
will not be employed in the interpretation of this Supply Agreement or any
amendment or Attachment to this Supply Agreement.  Capitalized terms used herein
and not otherwise defined shall have the meaning ascribed to them in the
Agreement.

 

35.       Time:  Time is of the essence in this Supply Agreement.

 

36.       Preference:  Unless otherwise specifically provided for in the
Attachment, the terms of this Supply Agreement will prevail in the event of a
conflict between this Supply Agreement and any such Attachments or the Quality
Agreement.

 

37.       Dispute Resolution: Article 13 of the Agreement will apply to any
dispute under this Supply Agreement.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

C-8

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

 

38.       Entire Agreement: This Supply Agreement and the Quality Agreement
constitute the full understanding of the Parties, and is the final, complete and
exclusive statement of the terms and conditions of their agreement regarding the
subject matter hereof.  All representations, offers, and undertakings, of the
Parties made prior to the signing of this Supply Agreement are hereby
superseded.  All amendments or modifications to this Supply Agreement must be in
writing, identified as an Amendment to this Supply Agreement and signed by an
authorized representative of each Party.

 

[remainder of this page intentionally left blank]

 

The Parties executing this Supply Agreement:

 

 

ISIS PHARMACEUTICALS, INC.

 

GENZYME CORPORATION

 

 

 

 

 

 

NAME: B. Lynne Parshall

 

NAME: Henri A. Termeer

 

 

 

TITLE:

Chief Operating Officer and

 

TITLE: Chairman, President and CEO

 

Chief Financial Officer

 

 

 

 

 

SIGNATURE:

/s/ B. Lynne Parshall

 

SIGNATURE:

/s/ Henri A. Termeer

 

[**]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

C-9

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

 

EXHIBIT D

 

FORM OF QUALITY AGREEMENT

 

QUALITY AGREEMENT

Isis Pharmaceuticals and Genzyme Corporation.

 

The purpose of this Quality Agreement is to establish, clarify and communicate
quality expectations for the manufacture and testing of API performed by Isis
Pharmaceuticals, Inc., a Delaware corporation located in Carlsbad, California
(“Isis”) for Genzyme Corporation, a Massachusetts corporation with offices in
Cambridge, Massachusetts (“Genzyme”) for use in clinical trials or for launch
supplies.  For contractual responsibilities, refer to the Manufacturing and
Supply Agreement dated June 24, 2008 (the “Supply Agreement”).

 

WHEREAS, the Parties have signed the Supply Agreement contemporaneous with the
present Quality Agreement;

 

WHEREAS, the Parties agree that the terms of this Quality Agreement will apply
to all manufactured lots of active pharmaceutical ingredient (API) made and
supplied under the Supply Agreement and this Quality Agreement.   All changes to
this Quality Agreement must be documented as an addendum to the original Quality
Agreement, reviewed and approved by both parties’ Quality Assurance
representatives; and

 

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 hereto agree to this
Agreement as follows:

 

1.               Unless otherwise specified in this Agreement, the terms used in
this Agreement shall have the meaning given to such terms in the Supply
Agreement.

 

2.               Isis will manufacture, produce and test the API in accordance
with U.S. current Good Manufacturing Practices regulations (cGMP), ICH
guidelines, and EMEA guidelines, and all such operations will be fully
documented.  Specific expectations are detailed in the Responsibility Checklist
attached as Schedule 1.  Genzyme will notify Isis if it is conducting a clinical
trial that will require API to be manufactured in accordance with international
guidelines that are more stringent than or different from cGMP or ICH Guidelines
and the Parties will mutually agree on how to manufacture such API in accordance
with such more stringent or different standards.

 

3.               Isis will maintain adequately trained staff and appropriate
records of training and competence.  Isis will monitor and maintain records
respecting its compliance with cGMP, including the process of establishment and
implementation of the operating procedures and the training of staff as
necessary to assure such compliance.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-1

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

 

4.               Isis will retain, in accordance with cGMP, full records (such
as manufacturing batch records, analytical testing methods, analytical test
results and appropriate reports) related to the API being manufactured and
supplied.

 

5.               Isis will provide approval/audit of the API using routine
Quality Assurance (QA) procedures and will keep all appropriate records of such
approval/audit processes conducted.

 

6.               Isis will provide Genzyme with a copy of batch records, and a
certificate of analysis (COA) which will contain (i) analytical results from
Isis and any associated contract laboratories and (ii) a statement of compliance
with cGMP, and signed by Isis QA.  Isis will be responsible for the review,
approval, and release of the API, and Genzyme retains full responsibility for
the final release of the API for use in manufacturing Drug Product for use in
clinical trials or commercially.

 

7.               Isis will provide Genzyme with samples of the API including the
appropriate documentation, if requested by Genzyme.

 

8.               Original production and laboratory data and records will be
retained and made available for review by Genzyme or its designees on-site at
Isis.

 

9.               Material changes to master batch records, specifications, test
methods, and stability protocols (in each case as they apply to the API) will be
agreed and approved by both parties.

 

10.         Any raw material and component, which Isis will use for the
production of API, will be tested and released utilizing Isis’ cGMP compliant
and approved specifications, sampling, testing and release procedures.

 

11.         Isis will document and notify Genzyme of all significant changes to
or deviations from the process or testing procedures and the investigations
thereof. Documentation on process changes and deviations will be part of the
batch record.  A “Significant” change is understood as anything that deviates
from the approved regulatory filing and/or anything reasonably likely to
materially affect Safety, Identity, Strength, Purity or Quality (SISPQ).  (This
would not include changes such as use of a different but equivalent room, “like
for like” equipment changes, etc.).  In the event of an out of specification
(OOS) result, Isis will promptly (within 2 business days) notify Genzyme on
first confirmation of the OOS result.

 

12.         Isis will ship or will arrange for third parties to ship all API to
Genzyme or other designated site(s) in accordance with the Supply Agreement and
with appropriate documentation and in suitable, labeled containers.  This will
also include the use of temperature monitoring devices if deemed by Genzyme
necessary to ensure the quality of the API.

 

13.         Isis will make available to Genzyme at Isis’ facility, copies of all
Isis Standard Operating Procedures used by Isis in connection with the
manufacture of the API.

 

14.         Isis will be responsible for qualification and routine compliance
auditing of suppliers and subcontractors, in accordance with Isis’ current
procedures.  Except for the subcontractors listed on Appendix B attached hereto,
Isis will discuss with Genzyme in advance if Isis desires to use Subcontractors
(Third Party) outside of Isis’ approved list of subcontractors, and Genzyme will
assess and approve, in advance, each subcontractor, such approval not to be
unreasonably withheld.

 

15.         Isis will inform Genzyme within 2 business days of a notice and
result of any regulatory investigation by a Regulatory Authority (including any
Genzyme documentation requested)

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-2

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

 

relating to any API or service being provided to Genzyme.  Genzyme will have the
opportunity to review and give input to the response to such investigations.

 

16.         If Regulatory Authorities audit Genzyme, make investigations at
Genzyme or ask questions of Genzyme about the activities conducted at Isis or
third parties retained by Isis, then Isis will fully cooperate with Genzyme to
provide adequate answers to and documentation for the Regulatory Authorities. 
Isis will have the opportunity to review and give input to the response to such
investigations.

 

17.         Once every 12 months, a maximum of 3 Genzyme representatives will be
entitled to visit and inspect (“audit”) the production, manufacturing, quality
control and warehousing facilities Isis is using in connection with the API,
including the corresponding documentation.  Such audit may not exceed three
(3) business days, unless Genzyme representatives learn of a material deficiency
that reasonably warrants an extension of the audit.  Isis agrees to provide
Genzyme with the necessary assistance and information. Genzyme will provide Isis
with at least 4 weeks advanced notice of a requested inspection.  As necessary,
the Parties will mutually agree in good faith to additional inspections.  In
addition, with reasonable advance notice to Isis, Genzyme reserves the right to
have a Genzyme representative present during manufacture of Genzyme product. 
Isis may limit Genzyme’s presence at times when proprietary or confidential
information of a Third Party unrelated to the Product could be observed.

 

18.         Subject to applicable law, Isis will inform Genzyme within 2
business days, and vice-versa, on any matter which, in Isis’ reasonable
judgment, may have a bearing on drug safety or pharmaceutical quality in
relation to the API, and supply all necessary information and cooperation for
the investigation of such events.  In cases where patient/subject safety may be
concerned, Isis must inform Genzyme by telephone and in writing as soon as
practicable, and vice-versa.

 

19.         Isis will retain samples (initially at least 2X the amount needed to
run all release testing) for all API produced.

 

20.         Isis will maintain the API stability program in accordance with ICH
guidelines and provide Genzyme with copies of all necessary documentation to
establish API shelf-life. This includes the requirement to add at least one
commercial API lot per year to the ongoing stability program as required under
ICH guidelines.

 

21.         In event of an out of specification (OOS) result encountered in
release or stability testing, Isis QA shall promptly (within 2 business days of
confirmation) notify Genzyme QA.

 

22.         All product complaints, reported either from clinical studies, for
example reported by principle investigator entities, clinical monitoring bodies
or international authorities (e.g., customs) or product complaints related to
commercial batches of Drug Product will be handled principally by Genzyme and
supported by Isis in conjunction with Genzyme.  All complaint events will be
shared between both parties within 2 business days of receipt.

 

23.         All primary data (or authenticated copies thereof) and result
reports will be maintained in the Isis archives through a date specified in
writing by Genzyme, which such date will not exceed 2 years after the final
expiration date of the drug product in which the API was used.  Thereafter,
Genzyme will make arrangements for continued storage of such data at Genzyme’s
expense as is necessary.

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-3

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

 

24.         The names of each responsible contact person(s) as of the Effective
Date from Isis and Genzyme are listed in Appendix A.

 

The Parties Quality Assurance representatives executing this Agreement:

 

 

ISIS PHARMACEUTICALS, INC.

 

GENZYME CORPORATION

 

 

 

 

 

 

NAME: Jeff Jones

 

NAME: Charles Thyne

 

 

 

TITLE: Executive Vice President

 

TITLE: Vice President, Quality Operations

 

 

 

SIGNATURE:

/s/ Jeff Jones

 

SIGNATURE:

/s/ Charles Thyne

 

 

 

DATE: [illegible]

 

DATE: June 20, 2008

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-4

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

 

APPENDIX A

 

Key Contacts

 

Isis

 

Department

 

Primary Contact

 

Secondary Contact

Project Manager

 

[**], Development
Chemistry & Manufacturing
Telephone: [**]

 

[**], Development
Operations
Telephone: [**]

Analytical
Development/Quality
Control

 

[**], ADQC
Telephone: [**]

 

[**], ADQC
Telephone: [**]

Quality
Assurance/Compliance

 

[**], QA/C
Telephone: [**]

 

[**], QA/C
Telephone: [**]

Regulatory Affairs

 

[**], RA
Telephone: [**]

 

[**]. RA
Telephone: [**]

 

Genzyme

 

Department

 

Primary Contact

 

Contact Information

Quality Assurance

 

[**]
QA Director

 

 

Quality Assurance

 

[**]
Sr. Director CQC

 

[**]

Regulatory Affairs

 

[**]
Associate Director
Regulatory Affairs

 

[**]

Stability & Statistics

 

[**]
Sr. Director Stability
& Statistics

 

[**]

Project Management

 

[**]
Sr. Project Manager

 

[**]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-5

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

 

Appendix B

 

Pre-Approved Subcontractors

 

API Release

 

Test

 

Subcontractor

Bioburden

 

[**]

Endotoxin

 

[**]

Metals/Non-metals

 

[**]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-6

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

 

Schedule 1.  Responsibility Checklist

 

 

 

Responsibility

 

Genzyme

 

Isis

1.0

 

Regulatory Authorizations & cGMP Requirements

 

 

 

 

1.1

 

Maintains all licenses, registrations and other authorizations required to
operate a cGMP pharmaceutical manufacturing facility under the Applicable Laws
and will inform Genzyme of any changes covering these aspects within two
(2) Business Days.

 

 

 

x

1.2

 

Maintains and operates its Facilities in compliance with cGMPs and other
Applicable Laws.

 

 

 

x

1.3

 

Supplies all agreed upon information related to the manufacture of the API so
that Genzyme QA can make the final determination on whether to use the API in
Drug Product for clinical trials and commercial use.

 

 

 

x

1.4

 

Processes the API in accordance with cGMPs and other Applicable Laws.

 

 

 

x

1.5

 

Complies with the applicable TSE requirements (e.g. EMEA/410/01 in its current
version) for starting materials, synthesis materials and reagents.

 

 

 

x

1.6

 

Operates the facility in a manner to prevent contamination and/or
cross-contamination in conformance with cGMPs and other applicable regulations
and guidelines (e.g., FDA Guidance for Industry Quality Systems Approach to
Pharma cGMPs, Sept 2006).

 

 

 

x

1.7

 

Meets all Regulatory filing requirements for all API packaging configurations
processed at its Facilities.

 

 

 

x

1.8

 

Performs annual Product Quality Review per applicable regulations

 

x

 

 

1.9

 

Provides any API and (as applicable) Drug Product data needed to complete the
annual Product Quality Review. Provides information to Genzyme in a timely
manner, and in a format that facilitates review and inclusion in the Review
prior to its due date.

 

 

 

x

1.10

 

Provides Isis with copies of those portions of the Marketing Applications,
Marketing Authorizations and Clinical Trial Applications that are applicable to
the API and drug product processing prior to submission and after review and
approval from the applicable Regulatory Authority.

 

x

 

 

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-7

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

 

1.11

 

Responsible for maintaining those portions of the Marketing Applications,
Marketing Authorizations and Clinical Trial Application that are applicable to
the Processing of the API at the Facilities for inspectional purposes.

 

x

 

 

2.0

 

Regulatory Actions & Inspections

 

 

 

 

2.1

 

Permits inspections by the Regulatory Authorities of all relevant premises,
procedures and documentation.

 

 

 

x

2.2

 

Notifies the other party’s QA within two (2) business days of the first Day of
any FDA or other Regulatory Authority inspection or notice of inspection (or
other business, for example sample collection) of the Facilities directly
relating to the API.

 

 

 

x

2.3

 

Notifies the other party’s Quality Assurance department within two (2) business
days of any FDA or other Regulatory Authority investigation relating to the API.

 

x

 

x

2.4

 

Reviews any issued regulatory findings that directly relate to the API and
reviews formal responses to the Regulatory Agency.

 

x

 

x

2.5

 

Reviews any issued regulatory findings that directly relate to the Isis facility
and/or systems and approves formal responses to the Regulatory Agency.

 

 

 

x

2.6

 

Notifies the other Party within two (2) business days of any incident that
causes the API or its labeling to be mistaken for, or applied to, another
article or product and any information concerning any contamination or
significant chemical, physical or other deterioration of shipped API.

 

x

 

x

2.7

 

Notifies the other party within two (2) business days of any Regulatory
Authority request for API samples or API batch records prior to shipment.

 

x

 

x

2.8

 

Notifies the other party of any requests for information, notices of violation
or other communication from a Regulatory Authority relating to environmental,
occupational health and safety compliance relating directly to the API, within
two (2) business days.

 

x

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-8

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

 

3.0

 

Audits

 

 

 

 

3.1

 

Entitled to conduct one quality audit every 12 months to evaluate manufacturing,
quality control and testing processes directly related to the API. Provides the
other party with at least 4 weeks advanced notice of a requested inspection.

 

x

 

x

 

 

 

 

 

 

 

 

 

 

 

As necessary, the Parties will mutually agree in good faith to additional
inspections.

 

x

 

 

 

 

 

 

 

 

 

 

 

Reserves the right to conduct additional audits in response to
incidents/deviations associated with the manufacture/testing of the API.

 

x

 

 

 

 

 

 

 

 

 

 

 

Conducts each of the quality audits during normal business hours at mutually
agreed upon times and by no more than three (3) audit tracks for three (3) days.
Issues an audit report to the other party within 30 days of site audit.

 

 

 

x

 

 

 

 

 

 

 

 

 

Completes responses to audit findings within 30 days of receiving audit report.

 

 

 

 

3.2

 

Conducts internal audits of quality control and testing processes, in accordance
with cGMPs and Applicable SOPs.

 

 

 

x

4.0

 

Compliance of Specifications & Other Pertinent Controlled Documents & Change
Control

 

 

 

 

4.1

 

Prior to the implementation of any changes which may directly impact product
quality and prior to the submission of any such changes to the Regulatory
Authorities, submits in writing those proposed changes to the intermediate and
final product specifications, validated methods, and master manufacturing batch
records to the other party for review and incorporation into their respective
quality systems.

 

 

 

x

4.2

 

For any proposed changes related to the API and directly impacting product
quality, approves in writing those changes to the intermediate and final product
specifications, validated methods, master manufacturing batch records prior to
the implementation of such changes and prior to the submission of any such
changes to the Regulatory Authorities.

 

x

 

x

4.3

 

Notifies the other party prior to implementation of any proposed changes to the
Facilities or to the processing equipment that directly impacts the API.
Example: Introduction of new product sharing common equipment (e.g. freeze
dryer).

 

 

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-9

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

 

4.4

 

Acts as a liaison with Regulatory Authorities for the approval, maintenance and
updating of API Specifications and other pertinent information regarding
applicable Marketing Authorizations.

 

x

 

 

5.0

 

Safety

 

 

 

 

5.1

 

Maintains safety/hazard and handling data on the Raw Materials, intermediates,
and API.

 

 

 

x

5.2

 

Provides safety/hazard and handling data on the Raw Materials, intermediates,
and API to Genzyme as requested.

 

 

 

x

6.0

 

Complaints

 

 

 

 

6.1

 

Notifies the other party within two (2) business days of any product complaints
associated with manufacturing of the API.

 

x

 

 

6.2

 

Provides the other party with any information relating to the processing of the
API that is necessary to address a product complaint and make any process
changes necessary to address the complaint according to the Change Control
procedures outlined in this document.

 

 

 

x

6.3

 

Collects and logs all information relating to product complaints.

 

x

 

 

6.4

 

Investigates all product complaints.

 

x

 

x

6.5

 

Provides the other party with an investigation or interim report within 30 days
of receiving notification of any product complaint associated with manufacturing
of the API.

 

 

 

x

6.6

 

Issues all reports, customer responses and follow-up corrective actions relating
to complaints and consults with the other party prior to any Recall or Product
Withdrawal, provided Genzyme always maintains the final authority to make the
decision.

 

x

 

 

7.0

 

Recall & Product Withdrawal

 

 

 

 

7.1

 

Notifies the other party within 2 business days of any events that could
potentially result in a Recall or Product Withdrawal.

 

 

 

x

7.2

 

Notifies the other party of any Recall or Product Withdrawal which may be
attributable to the manufacture of the API.

 

x

 

 

7.3

 

Initiates and manages Recall or Product Withdrawal.

 

x

 

 

7.4

 

Notifies appropriate Regulatory Authorities of Recall or Product Withdrawal.

 

x

 

 

8.0

 

Materials

 

 

 

 

8.1

 

Maintains Specifications for procurement of, storage of, sampling of, testing of
and release of API Raw Materials and ensures such activities are conducted
according to those Specifications.

 

 

 

x

8.2

 

Keeps retain samples of API Starting Materials for one (1) year beyond last
expiration date of drug product manufactured using such API.

 

 

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-10

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

 

8.3

 

Keeps retain samples of API for three (3) years after either the completion of
the last clinical trial or formal discontinuation of the last clinical trial in
which the material was used.

 

 

 

x

8.4

 

Disposes of API waste and any regulated waste related to the processing of the
API per local, state, and federal guidelines.

 

 

 

x

8.5

 

Executes a Vendor Qualification program for Raw Materials (including Starting
Materials) that qualifies and confirms the Certificates of Analysis being relied
upon.

 

 

 

x

8.6

 

Stores API and Raw Materials in accordance with approved Specifications while at
their Facilities.

 

 

 

x

9.0

 

Production & Validation

 

 

 

 

9.1

 

Maintains, qualifies and validates the Facilities, equipment and processes
associated with Processing the API, including cleaning validation or
verification.

 

 

 

x

9.2

 

Reviews and approves validation of processes directly associated with
manufacturing of the API.

 

x

 

 

9.3

 

Stores Validation Protocols and Reports, and upon request provides a copy of API
related validation documentation to the other party. The other party must be
informed before destruction of any Validation Protocols or Reports related to
the API.

 

 

 

x

9.4

 

Manufactures and tests the API at the facilities in accordance with the Product
Master Batch Records, the SOPs referenced therein and the Specifications.

 

 

 

x

9.5

 

Makes the final determination of whether to use the API in clinical trials or
commercially.

 

x

 

 

9.6

 

Uses appropriately validated or qualified analytical methods for routine API
testing.

 

 

 

x

9.7

 

Maintains adequately trained staff and appropriate records of training and
competence.

 

 

 

x

9.8

 

Generates Master Batch Record.

 

 

 

x

9.9

 

Approves Master Batch Record.

 

x

 

x

9.10

 

Generates Product Specifications.

 

 

 

x

9.11

 

Approves Product Specifications.

 

x

 

x

9.12

 

Supplies a Certificate of Analysis for the API to the other party reporting
results versus the requirements of the Specifications.

 

 

 

x

9.13

 

Investigates, resolves and documents non-conformances and Deviations from the
Master Batch Record directly relating to the API.

 

 

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-11

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

 

 

 

Responsibility

 

Genzyme

 

Isis

9.14

 

Informs the other party in writing within 2 business days of occurrence of any
Significant Deviation that may affect quality, safety, efficacy, or compliance
with any license or Clinical Trial use of the API.

 

 

 

x

9.15

 

Notifies other party’s QA, in writing of any API investigation and involves
other party’s QA in any corrective and preventive actions for Significant
Deviations.

 

 

 

x

9.16

 

Provides copies of investigation reports to other party relating to all
Significant Deviations related to the API.

 

 

 

x

9.17

 

Notifies other party’s QA in writing before implementation of any planned
Deviation: major, experimental, temporary or permanent, directly affecting any
production of the API that may impact the IND, CTA, NDA or MAA.

 

 

 

x

9.18

 

Approves in writing any Planned Deviation: major, experimental, temporary or
permanent, affecting any production of the API that may impact the IND, CTA, NDA
or MAA.

 

x

 

x

9.19

 

Maintains all batch records for at least one (1) year after the expiry date. For
APIs with retest dates, records should be retained for at least three (3) years
after the batch is completely distributed.

 

 

 

x

9.20

 

Provides all documentation needed to maintain the Product Specification File in
accordance with the applicable Regulatory Authorities for maintenance of the
CTA, MAA.

 

 

 

x

9.21

 

Maintains the Product Specification File in accordance with applicable
Regulatory Authorities.

 

x

 

 

9.22

 

Labels API in accordance with internal procedures and regulatory requirements.

 

 

 

x

10.0

 

Lot Number Assignment

 

 

 

 

10.1

 

Assigns lot numbers using internal procedures and communicates such lot numbers
as soon as reasonable to facilitate tracking by the other party, as necessary.

 

 

 

x

11.0

 

Samples

 

 

 

 

11.1

 

Samples API according to cGMPs and internal procedures.

 

 

 

x

11.2

 

Provides all non-USP reference standards required for testing API and drug
product.

 

 

 

x

11.3

 

Samples for required applicable retain samples per Regulations and approved
procedures.

 

 

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-12

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

 

11.4

 

Samples for required stability samples per approved procedures.

 

 

 

x

11.5

 

Stores all required retain samples per approved procedures while at Isis
facilities.

 

 

 

x

11.6

 

As applicable, coordinates transfer of retain and/or stability samples for
storage at other party’s facilities.

 

x

 

 

12.0

 

Testing & Analysis

 

 

 

 

12.1

 

Performs API release and stability testing according to all approved agreements,
specifications and party’s applicable procedures.

 

 

 

x

12.2

 

Within two (2) business days, notifies the other party of any apparent OOS
result, which cannot be invalidated by an assignable laboratory cause, generated
during release or stability testing.

 

 

 

x

12.3

 

Provides a plan describing any proposed confirmatory or expanded testing of an
apparent OOS result

 

 

 

x

12.4

 

Within two (2) business days of receiving a confirmatory or expanded testing
plan, provides QA authorization to perform such testing.

 

x

 

x

12.5

 

Ensures that any confirmatory or expanded testing is performed according to an
approved plan

 

 

 

x

12.6

 

Investigates all confirmed OOS results according to party’s applicable
procedures

 

 

 

x

12.7

 

Provides complete documentation of OOS investigation to other party, including
final reported result(s), within two (2) business days of report completion.

 

 

 

x

13.0

 

Stability Testing

 

 

 

 

13.1

 

Adheres to approved Stability Protocols.

 

 

 

x

13.2

 

Maintains Stability Program and provides documentation to support storage
temperature and shelf-life for the duration of the Product life cycle.

 

 

 

x

13.3

 

Provides sample storage in temperature controlled stability chambers.

 

 

 

x

13.4

 

Provides stability data updates for time points as specified in the stability
protocol.

 

 

 

x

13.5

 

Notifies the other party within 2 working days of confirmation of any initial
stability failure of the API that has no assignable laboratory cause for the
result.

 

 

 

x

13.6

 

Trends and analyzes all stability data.

 

x

 

x

13.7

 

Reviews stability reports related to the API.

 

x

 

x

14.0

 

Release

 

 

 

 

14.1

 

Provides copies of documentation per section 15.0 pertaining to the manufacture
of the API.

 

 

 

x

14.2

 

Authorizes shipment of API upon review and acceptance

 

x

 

 

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-13

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

 

 

 

of all required documentation and provides other party with written
Authorization to Ship.

 

 

 

 

14.3

 

Provides all necessary API release documentation to approved designated Third
Party.

 

 

 

x

15.0

 

Records Required for Release

 

 

 

 

15.1

 

Provides quality documentation for each batch of API. The list of required
documents includes, but is not limited to:

· Certificate of Analysis for API

· Certificate of Conformance for API

· Manufacturing Batch Record(s) for API

· Analytical Forms / Records

· Deviation/Investigation forms as part of the batch record

· Signature of the QA representative who reviewed and approved the documentation
and who is aware of any outstanding investigational issues with respect to the
batch.

 

 

 

x

15.2

 

Provides copies of all documentation necessary for the other party to respond to
inquiries by Regulatory Authorities.

 

 

 

x

16.0

 

Storage & Transportation

 

 

 

 

16.1

 

Stores the API at the Facilities according to the Specifications pending API
release.

 

 

 

x

16.2

 

Will not ship the API to any other location without an Authorization to Ship
from other party that may include specific conditions of insurance, packaging or
courier service.

 

 

 

x

16.3

 

Transports under correct transport conditions to other or designated Third Party
site.

 

 

 

x

17.0

 

Training

 

 

 

 

17.1

 

Employees engaged in the manufacture, filling, storage and testing of Product
shall have education, training and experience or any combination thereof, to
enable that person to perform the assigned functions.

· Training on the applicable procedures shall be conducted by qualified
individuals on a continuing basis and with sufficient frequency to assure that
employees remain familiar with requirements applicable to them.

· All training will be documented in a training record for each employee.
Employees will be trained with respect to data integrity and fraud.

 

 

 

x

18.0

 

Quality Agreements

 

 

 

 

18.1

 

Review Quality Agreements every two (2) years and update as necessary.

 

x

 

x

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

D-14

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

 

EXHIBIT E

 

FORM OF PATENT ASSIGNMENT

 

PATENT ASSIGNMENT

 

WHEREAS, Isis Pharmaceuticals, Inc. (“Assignor”), a Delaware corporation with an
address of 1896 Rutherford Road, Carlsbad, California 92008, is the owner of all
rights, title, and interests in and to the patents and patent applications shown
on the attached Exhibit 1 (the “Patents”); and

 

WHEREAS, Genzyme Corporation (“Assignee”), a Massachusetts corporation with an
address of 500 Kendall Street, Cambridge, Massachusetts 02142, desires to
acquire the entire right, title, and interest in and to the Patents and all the
inventions and discoveries disclosed in the Patents (the “Inventions”);

 

NOW THEREFORE, be it known that effective as of [    ], 2008, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Assignor hereby sells, assigns, transfers, and sets over unto
Assignee (1) the entire right, title, and interest in all countries throughout
the world in and to said Patents and Inventions, including any renewals,
revivals, reissues, reexaminations, extensions, continuations,
continuations-in-part, and divisions of said Patents and any substitute
applications therefor; (2) the entire right to file patent applications (“New
Applications”) in the name of Assignee or its designee, or in the name of
Assignor at Assignee’s or its designee’s election, on the aforesaid Inventions
in all countries of the world; (3) the entire right, title, and interest in and
to any patent which issued and may issue on the Inventions in any country, and
any renewals, revivals, reissues, reexaminations, and extensions thereof, and
any patents of confirmation, registration, and importation of the same; (4) the
right to sue and recover for, and the right to profits or damages due or accrued
in connection with, any and all past, present, or future infringements of the
Patents and Inventions; and (5) the entire right, title, and interest in all
convention and treaty rights of all kinds, including without limitation all
rights of priority in any country of the world, in and to the above Patents and
Inventions;

 

AND, Assignor hereby authorizes and requests the competent authorities to grant
and to issue any and all patents on the Inventions throughout the world to
Assignee, its successors, or assigns, whose rights, title, and interests in such
patents are the same as would have been held and enjoyed by Assignor had this
assignment, sale, and transfer not been made.

 

[Remainder of Page Left Blank]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

IN WITNESS WHEREOF, the Assignor has caused this Patent Assignment to be duly
executed by its officer thereunto duly authorized as of the [      ] day of
[      ], 2008.

 

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

STATE OF

 

)

 

 

: ss.:

COUNTY OF

 

)

 

On the        day of         , 200  , before me the undersigned, personally
appeared                                                         , personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

 

 

Notary Public

 

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

 

Acknowledgement of Assignee:

 

 

 

GENZYME CORPORATION

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

STATE OF

 

)

 

 

: ss.:

COUNTY OF

 

)

 

On the        day of         , 200  , before me the undersigned, personally
appeared                                                         , personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.

 

 

 

 

Notary Public

 

 

 

[**]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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

 

EXHIBIT F

 

DISCLOSURE SCHEDULE

 

[**]

 

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

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of this exhibit has been filed
separately with the Commission.

 

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