Exhibit 10.2

 

CONFIDENTIAL TREATMENT REQUESTED

 

EXECUTION VERSION (02/08/08)

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

 

 

 

AMENDED AND RESTATED COLLABORATION AND LICENSE AGREEMENT

 

This Amended and Restated Collaboration and License Agreement (the “Agreement”)
between ISIS PHARMACEUTICALS, INC. of 1896 Rutherford Road, Carlsbad, CA 92008,
USA (“ISIS”) and ANTISENSE THERAPEUTICS LTD., ACN 095 060 745 of Level 1, 10
Wallace Avenue, Toorak, Victoria 3142, AUSTRALIA (“ATL”) is entered into and
made effective as of February 8, 2008 (the “Amendment Date”).

 

INTRODUCTION AND OVERVIEW

 

ISIS and ATL are parties to that certain Collaboration and License Agreement
effective as of December 21, 2001 (the “Effective Date”), as amended (the
“Original Agreement”), pursuant to which, among other things, the parties agreed
to collaborate to enable ATL to develop and commercialize antisense drugs,
including, without limitation, the Antisense Inhibitor known as ATL 1102
(formerly known as ISIS 107248), VLA4 Compounds and Other VLA4 Compounds.

 

ATL proposes to enter into a sublicense agreement with Teva Pharmaceutical
Industries Ltd. (“Teva”) in the form provided to ISIS on the Amendment Date (the
“Teva Sublicense”), pursuant to which ATL would grant to Teva an exclusive,
worldwide sublicense to develop and commercialize ATL 1102, VLA4 Compounds and
Other VLA4 Compounds, and VLA4 Products, subject to the terms and conditions set
forth therein.

 

As a condition to Teva’s willingness to enter into the Teva Sublicense, Teva has
requested that ATL and ISIS implement certain amendments to the Original
Agreement.

 

In order to facilitate ATL’s entry into the Teva Sublicense, the parties wish to
amend and restate the Original Agreement as set forth in this Agreement,
effective as of the Amendment Date.

 

Therefore, in consideration of the foregoing premises and the mutual covenants
herein contained, the parties hereby agree as follows.

 

AGREEMENT

 

ARTICLE 1

 

DEFINITIONS

 

                Capitalized terms used in this Agreement have the meanings set
forth in Exhibit 1.

 

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ARTICLE 2

 

DRUG DEVELOPMENT PROGRAM

 

2.1          General.

 

Under the Drug Development Program, ATL will develop and commercialize antisense
drugs arising out of the Collaborative Research Program conducted hereunder, as
well as ATL1102 (a Collaboration Compound discovered by ISIS), VLA4 Compounds
and Other VLA4 Compounds and VLA4 Products.  In general, ATL will be responsible
for all development and commercialization activities for Collaboration
Compounds.  ISIS has performed, and, pursuant to the Teva/ISIS Agreements, may
continue to perform, certain activities in support of the development of
ATL1102, VLA4 Compounds and Other VLA4 Compounds, but it is the intent of the
parties that ATL will assume responsibility for all preclinical and IND-enabling
activities with respect to other Collaboration Compounds, as more specifically
provided in this Agreement.  ATL will be responsible for all costs of
development and commercialization of Collaboration Compounds including, without
limitation, the reimbursement of ISIS’ expenses as provided herein.

 

2.2          Development of VLA4 Compounds and Other VLA4 Compounds.

 

(a)           General.  ATL will use commercially reasonable efforts to develop
at least one VLA4 Compound to maximize its commercial value.  ATL will conduct
the development of VLA4 Compounds and  VLA4 Products in a good scientific manner
and in compliance in all material respects with all requirements of applicable
laws, rules and regulations to achieve the objective specified in the first
sentence of this subsection (a) efficiently and expeditiously.  ATL will proceed
diligently with the development of VLA4 Compounds  and VLA4 Products using
commercially reasonable efforts to provide sufficient time, effort, equipment,
facilities and skilled personnel.

 

(b)           VLA4 Compound Development Diligence.

 

(i)            During Term of Teva Sublicense.  The parties agree that, during
the term of the Teva Sublicense: (A) no Development Milestones will be
applicable to ATL 1102, VLA4 Compounds, Other VLA4 Compounds or VLA4 Products;
(B) the only diligence obligations applicable to the development of ATL 1102,
VLA4 Compounds, Other VLA4 Compounds and VLA4 Products will be those set forth
in Section 2.2(a) above; and (C) notwithstanding the definition of Active
Program set forth in Exhibit 1 hereto, compliance with the diligence obligations
set forth in Section 2.2(a) will satisfy the “Active Program” and “Active
Development” criteria with respect to ATL 1102, VLA4 Compounds, Other VLA4
Compounds and VLA4 Products.

 

(ii)           After Term of Teva Sublicense.  In the event of termination or
expiration of the Teva Sublicense prior to Marketing Approval of a VLA4 Product
in each of the Major Markets (and prior to the termination or expiration of this
Agreement), then ATL and ISIS will, as promptly as practicable, mutually agree
in writing upon

 

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Development Milestones for ATL 1102, VLA4 Compounds, Other VLA4 Compounds and
VLA4 Products that ATL will commit to reach, in which event the parties agree as
follows with respect to such Development Milestones.  If a Development Milestone
is not met, [***] extension on such Development Milestone, provided that ATL
(x) gives the JDC members at least [***] prior written notice that it is
unlikely to achieve the relevant milestone on the date specified above, and
(y) demonstrates to the JDC that [***] agreed upon by the parties.  If the JDC
cannot agree on this issue, the matter will be referred to the designated
officers of ATL and ISIS for resolution, consistent with the provisions of
Section 16.6(a).

 

2.3          Development of Collaboration Compounds Other Than VLA4 Compounds.

 

(a)           General.  The provisions of this Section 2.3 will apply solely to
Collaboration Compounds other than ATL 1102, VLA4 Compounds or Other VLA4
Compounds.

 

(i)            As provided herein, during the term of this Agreement, ATL will
advance additional Collaboration Compounds through the various stages of an
Active Program hereunder, i.e., from the research phase through preclinical and
IND-enabling studies to human clinical studies and commercialization.  To
maintain any Collaboration Compound in Active Development status, ATL must meet
the Development Milestones for each such Collaboration Compound.

 

(ii)           The terms under which ISIS and ATL will collaborate to develop
such additional Collaboration Compounds will be in accordance with the terms set
forth herein.  Within 60 days of ATL’s providing written notice to ISIS that ATL
has initiated IND enabling studies on a Collaboration Compound, ATL will prepare
a mutually-agreed-upon Development Plan for that Collaboration Compound, with
ISIS’ assistance, consistent with the terms of this Agreement.

 

(b)           [***] Studies.  While it is the intent of the parties that ATL
will assume responsibility for all [***] activities with respect to
Collaboration Compounds other than ATL 1102, VLA4 Compounds or Other VLA4
Compounds, ISIS will be available to assist with [***] other than ATL 1102, VLA4
Compounds and Other VLA4 Compounds, if requested to do so by ATL.  Should ATL
request ISIS’ assistance in this regard, the parties will agree on terms
pertaining to ISIS’ participation, which terms will be included in the
Development Plan referenced in (a).  With the possible exception of an [***]
Collaboration Compound, ISIS will not be requested to participate in the [***].

 

2.4          Annual Reports.

 

ATL will provide ISIS with an annual written report describing all activities
performed by the parties and the results achieved during the relevant year with
respect to each Collaboration Compound in Active Development hereunder
including, without limitation, ATL 1102, VLA4 Compounds and Other VLA4
Compounds.  Each such report will include details regarding the stage of
development a Collaboration Compound has reached within an Active Program
including, without limitation, what Development Milestones (if applicable) have
been achieved.

 

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To the extent that it is feasible to do so, ATL will also include the projected
goals and Development Milestones it anticipates achieving during the coming year
with respect to such Collaboration Compound in each such report. 
Notwithstanding the foregoing, ISIS acknowledges that ATL will not necessarily
have access to all information regarding activities conducted by Teva and that
this Section 2.4 only obligates ATL to report to ISIS with respect to
information known to ATL.

 

2.5          Commercialization.

 

(a)           General.  ATL will use commercially reasonable efforts to bring
Products into commercial use as quickly as is reasonably possible, in a manner
designed to maximize the commercial potential of such Products worldwide.  ATL
will use commercially reasonable efforts to Manufacture, market, promote,
distribute, and sell the Product on a worldwide basis.  ATL will provide
resources and expend funds in connection with such activities in a manner and to
an extent comparable to the efforts of similar companies that manufacture,
market, and sell pharmaceutical products of similar commercial potential at a
similar stage of the product life cycle.

 

(b)           Product Plan.

 

(i)            ATL.  Except as set forth in subsection (ii) below, prior to the
launch of any Product, ATL will prepare a global integrated Product plan
outlining the key aspects of market launch and commercialization (the
“Integrated Product Plan” or “IPP”).  Each IPP will be updated annually in
accordance with ATL’s internal planning and budgeting process.  ATL will provide
ISIS a copy of the final draft of each IPP (original and updates) for each Major
Market.  Each IPP will also include appropriate milestones and the dates upon
which such milestones must be met by ATL.

 

(ii)           Teva and Other Sublicensees.  If a Sublicensee of ATL (including
Teva) bears primary responsibility for commercialization of any Product in one
or more Major Markets, then ATL need not prepare an IPP covering such Product in
such Major Market(s) and any other territory in which such Sublicensee has
primary commercialization responsibility (collectively, the “Sublicensee
Market”); provided, however, that:

 

(A)          the sublicense agreement between ATL and such Sublicensee will
require that, prior to the launch of any Product, such Sublicensee will prepare
a written plan outlining the key aspects of market launch and commercialization
of such Product in the Sublicensee Market (a “Sublicensee Product Plan” or
“SPP”), which will be updated at least annually;

 

(B)           ATL will provide ISIS with true and complete copies of each SPP
and update thereto that ATL receives, whether in draft or final form, promptly
following receipt thereof from the Sublicensee; and

 

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(C)           the sublicense agreement between ATL and such Sublicensee will
expressly provide that (1) ATL is permitted to transmit copies of all SPPs and
updates thereto to ISIS; (2) [***] (3) such Sublicensee will [***]

 

(c)           Commercialization by Sublicensees.  If a Sublicensee of ATL bears
primary responsibility for commercialization of any Product in the applicable
Sublicensee Market, the sublicense agreement will require that such Sublicensee
will use commercially reasonable efforts to Manufacture, market, promote,
distribute, and sell the Product in such Sublicensee Market and will require
that the Sublicensee provide resources and expend funds in connection with such
activities in a manner and to an extent comparable to the efforts of similar
companies that manufacture, market, and sell pharmaceutical products of similar
commercial potential at a similar stage of the product life cycle.  Consistent
with Section 4.3 below, if ATL elects to meet any of its responsibilities and
obligations under this Section via sublicense agreements, ATL will ensure that
such agreements are subject to and will be consistent with the terms and
conditions of this Agreement including, without limitation, the provisions of
this Section.

 

(d)           Failure to Meet Diligence Obligations.  If ATL or a Sublicensee of
ATL anticipates any difficulty in meeting its commercialization obligations
under this Section including, without limitation, the milestones set forth in
the IPP, ATL or its Sublicensee will provide ISIS with prompt notice thereof, in
order that the parties may endeavor to work out an appropriate and acceptable
resolution prior to pursuing other remedies hereunder.

 

(e)           Acknowledgment Regarding Teva Sublicense.  ISIS acknowledges and
agrees that the Teva Sublicense, in the form provided to ISIS on the Amendment
Date, satisfies the requirements of this Section 2.5 applicable to sublicense
agreements between ATL and Sublicensees.

 

2.6          Effect of Change of Control and Competing Products

 

(a)           Change of Control of ATL: ISIS acknowledges and agrees that,
notwithstanding anything else in this Agreement, if a Change of Control of ATL
in which the Third Party acquiring control of ATL or its assets relating to VLA4
Products is a [***], then:

 

(i)            ATL will procure that Teva’s reports regarding any development
plan, commercialization plan or SPP relating to VLA4 Products will be provided
by Teva directly to ISIS; and

 

(ii)           for so long as Teva provides such reports, ATL will not be
required to separately provide to ISIS annual reports and other information
relating to the development and commercialization of VLA4 Products.

 

(b)           Change of Control of ISIS.  Notwithstanding anything contained
herein to the contrary, in the event of a Change of Control of ISIS in which
[***] then:

 

(i)            ISIS (or the successor entity) will not be allowed to [***] and

 

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(ii)           ATL will not be required to provide to ISIS (or the successor
entity) with any [***], other than (A) reports and information required to be
made available under Sections 5.6 and 5.8 of this Agreement and (B) summary
annual reports regarding Teva’s development and commercialization activities
with respect to VLA4 Products in sufficient detail to allow ISIS to ascertain
ATL’s compliance with its diligence obligations under this Agreement.

 

(c)           Competing products:  ISIS acknowledges and agrees that if ATL
Exploits a product that is [***], then:

 

(i)            ATL will procure that Teva’s reports regarding any development
plan, commercialization plan or SPP relating to VLA4 Products will be provided
by Teva directly to ISIS; and

 

(ii)           for so long as Teva provides such reports, ATL will not be
required to separately provide to ISIS annual reports and other information
relating to the development and commercialization of VLA4 Products.

 

ARTICLE 3

 

COLLABORATIVE RESEARCH PROGRAM

 

3.1          General; Collaboration Term.

 

(a)           ATL and ISIS will work together under the Collaborative Research
Program described herein and as further detailed in the Collaborative Research
Plan, as described in Section 3.2, to discover and develop antisense
therapeutics.  The parties will collaborate to assess Research Targets that may
be important in the prevention or treatment of a disease or condition,
consistent with Sections 3.2 - 3.5.  If contracted by ATL, ISIS will discover
and design antisense oligonucleotides to modulate the Research Targets as
provided in Section 3.6 and will provide them to ATL.  Also, if contracted by
ATL, ISIS will evaluate the antisense oligonucleotides in various functional
assays.  ATL will perform in vitro and in vivo studies utilizing the antisense
oligonucleotides provided by ISIS.  It is the intent of the parties that
Collaboration Compounds will be identified during the Collaboration Term and
that pursuant to Active Programs hereunder, such Collaboration Compounds will
progress through research and preclinical development, meeting the relevant
Development Milestones (see Exhibit 1, Section 1.2), and will each become the
focus of a Development Plan hereunder, except as expressly set forth in
Section 2.2(b) hereof.

 

(b)           The Collaboration Term will begin on the Effective Date and will
continue until December 21, 2008, unless earlier terminated due to termination
of the Agreement under Sections 12.2 or 12.3, or unless terminated or extended
upon mutual agreement of the parties.

 

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3.2          Joint Research Committee.

 

(a)           The parties have established a Joint Research Committee of
4 people, consisting of 2 representatives nominated by each party, to facilitate
the research collaboration called for herein.  Each party will designate a
representative as a project leader to serve as the principal contact person for
that party.  The parties may agree to add additional members to the JRC, as long
as equal representation is maintained.  As ISIS’ participation will largely be
to [***] will designate one of its representatives as chairman of the JRC. In
the event of a tied vote, [***] will have the tie-breaking vote.

 

(b)           During the Collaboration Term, the JRC will be the primary vehicle
for interaction between the parties with respect to the collaborative research
conducted hereunder.  The JRC will be responsible for preparing an annual budget
and plan for the collaborative research activities to be conducted during each
year of the Collaborative Research Program (the “Collaborative Research Plan”)
and for managing that program.  The JRC will be responsible for updating the
Collaborative Research Plan as needed and will also be responsible for
prioritizing work contracted to ISIS under Section 3.6.

 

(c)           The JRC will meet as needed during the Collaboration Term. 
Meetings will be via teleconference or videoconference, or as the parties may
otherwise agree.  The JRC will review the progress of the activities carried out
under the Collaborative Research Program and will consider and decide on
proposed modifications to the strategy and goals of that program.  The
frequency, dates and times of all meetings will be mutually agreed upon by the
parties.  At its first meeting the JRC will determine such procedures as it will
reasonably require to conduct its business.

 

3.3          Research Targets: General.

 

As noted above, ATL and ISIS will collaborate to assess Research Targets that
may be important in the prevention or treatment of a disease or condition.

 

3.4          Research Targets: Designation.

 

(a)           The collaborative research hereunder will be focused on specific
gene targets thought to be attractive for the development of antisense drugs. 
ATL will choose targets in accordance with the provisions of this Section 3.4 as
the basis for its antisense drug discovery efforts.  ATL commits to use
commercially reasonable efforts to conduct research and drug discovery
activities with respect to each Research Target to maximize its commercial
value.

 

(b)           Exhibit 3.4 hereto contains a list of the targets that are the
object of Licenses to Research as of the Amendment Date (the “Research
Targets”), as well as [***] Research Targets listed on Exhibit 3.4 that are
[***] Targets are listed in Section B, and all other Research Targets are listed
in Section A of Exhibit 3.4.  During the Collaboration Term, targets may be
added to and removed from Exhibit 3.4 in accordance with the terms of this
Section and Section 3.5.

 

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3.5          Research Targets: Selection, Removal, Replacement and Approval
Process.

 

(a)           Exhibit 3.4 lists the Research Targets agreed upon by the parties
as of the Amendment Date.  ATL warrants and represents that if it has not
provided ISIS with the nucleic acid sequences for the corresponding human genes
for any of the Research Targets listed in Exhibit 3.4 by the Amendment Date, it
will do so promptly thereafter.  Consistent with the terms of this Agreement,
ISIS will have no obligation to conduct any activities with respect to such
Research Targets until the required materials, information and/or payments (if
applicable) have been submitted to ISIS by ATL.  The addition of new Research
Targets to the list in Exhibit 3.4 is at ISIS’ sole discretion.

 

(b)           If ATL wishes to designate a new Research Target, it will provide
ISIS with written notice of the target it wishes to add to the list set forth in
Exhibit 3.4.  Such written notice will include the gene name, the NCBI accession
number or nucleic acid sequence, and one or more mammalian cell lines that
express the Research Target.  ISIS will not, and is not required to, accept a
proposed Research Target without such information.  In addition, ATL will inform
ISIS of whether or not to the best of ATL’s knowledge the proposed target is in
the public domain or is proprietary to a Third Party.

 

(i)            ATL will not propose a target for consideration as a possible
Research Target if [***].

 

(ii)           If ATL proposes a target that is [***], but ATL is able to
provide ISIS with [***] the proposed target, ATL will also provide ISIS with a
copy of any [***]  ATL also warrants that any [***] required to be made to a
Third Party in order to [***] activities in support of the Collaborative
Research Program will be the sole responsibility of ATL. For the purpose of this
Section, Third Party restrictions do not include [***].

 

(iii)          If a target proposed by ATL is subject to an ISIS drug discovery
and development program or a contractual obligation of ISIS to a Third Party
with respect to that target, then the proposed target will not be approved as a
Research Target hereunder.

 

(c)           Within [***] days after receipt of the ATL notice under
subsection (b), ISIS will notify ATL, in writing, of its decision either to
approve or to reject a proposed target.

 

(i)            If a proposed target is not approved as a Research Target, the
notice provided by ISIS will advise ATL of the reason(s) the target was not
approved, and ATL will be invited to submit a different proposed target for
consideration.

 

(ii)           If a proposed target is approved as a Research Target, ISIS’
notice to ATL will indicate this and will also indicate whether or not the new
Research Target is a [***] Target.  ISIS will add the Research Target to the
list in Exhibit 3.4 (as well as the nucleic acid sequence of the gene) and will
provide ATL with an amended copy of Exhibit 3.4.  If ISIS has [***], ISIS will
add that information to Exhibit 3.4 and will provide ATL with a copy of the
amended exhibit.

 

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(iii)          Upon receipt of written notice from ISIS that a proposed target
has been approved as a Research Target and added to Exhibit 3.4, ATL will begin
Active Development of such Research Target, consistent with the terms of this
Agreement.

 

(d)           After the Effective Date, Research Targets may be removed from the
list in Exhibit 3.4 as follows.

 

(i)            If ATL wishes to remove a Research Target from the approved list
in Exhibit 3.4, it will provide ISIS with prompt written notice of its election
to do so.  Upon ISIS’ receipt of such notice, it will remove the Research Target
from the list.

 

(ii)           Upon receipt of notice at any time during the term of this
Agreement that a Research Target is no longer in Active Development, ISIS will
remove the target from the list set forth in Exhibit 3.4 and will provide ATL
with prompt written notice of same.

 

(iii)          The License to Research or License to Exploit applicable to any
Research Target removed pursuant to (i) or (ii) herein (each an “Abandoned
Research Target”) will immediately terminate, consistent with the provisions of
Sections 4.1 or 4.2, as applicable.  Notwithstanding the foregoing, an Abandoned
Research Target may still bear royalty or other payment obligations, as
described in Sections 5.1 – 5.3 herein.

 

(iv)          Once a target has been removed from the list of Research Targets,
Exhibit 3.4 will be amended to delete such target and a copy of amended
Exhibit 3.4 will be sent to ATL by ISIS.

 

(v)           Upon termination of a License to Research or a License to Exploit
for any reason, a Research Target will be automatically removed from Exhibit 3.4
and will thereafter be considered an Abandoned Research Target.

 

(e)           At no time during the term of this Agreement or the Collaboration
Term will there be any more than [***] designated Research Targets.  ATL may not
substitute more than [***] Research Targets in any year during the Collaboration
Term.

 

3.6          Discovery and Evaluation of Antisense Inhibitors.

 

(a)           Research Services.  During the Collaboration Term, ATL may request
from time to time that ISIS perform Research Services with respect to one or
more Research Targets.  If ISIS agrees to provide any requested Research
Services to ATL, such Research Services will be described in a written work plan
to be negotiated in good faith by the parties, which would include the
compensation to be made by ATL for such Research Services.  ATL will be
responsible for conducting further in in vitro and in vivo studies of Antisense
Inhibitors provided by ISIS as a result of such Research Services.  The number,
quantity and price of Antisense Inhibitors to be provided by ISIS to ATL for use
in such studies will be set forth in the applicable work plan.  If ATL requests
additional quantities of any such Antisense Inhibitor, the terms of supply will
be mutually agreed upon by the parties

 

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in writing.  The ownership and use of all materials, including Antisense
Inhibitors, and of all data and information generated as a result of services
provided to ATL by ISIS pursuant to this Agreement is governed by the provisions
of Article 6.  There will be no minimum or maximum amount of Research Services
that ATL is obligated or entitled to request or ISIS is obligated or entitled to
provide.

 

(b)           Project Coordinators.  ATL and ISIS will each select one employee
to serve as the Project Coordinator for that party, with respect to services to
be performed under Section 3.6(a).  The Project Coordinators will facilitate the
selection, prioritization, removal and replacement of Research Targets.  The
Project Coordinators will each have appropriate technical credentials, knowledge
and ongoing familiarity with the foregoing activities.  The Project Coordinators
will meet on an as-needed basis via teleconference or videoconference, at times
mutually agreed upon by the parties.  Decisions of the Project Coordinators will
be unanimous.  If the Project Coordinators cannot agree on an issue, the issue
will be submitted to the JRC for resolution.

 

3.7          Other Collaborative Research Program-Related Activities.

 

(a)           During the Collaboration Term, ISIS will provide ATL with
reasonable amounts of preclinical and research advice free of charge (phone
consultation or visit at ISIS only) in support of any Active Program hereunder
that involves a Collaboration Compound made using ISIS Standard Chemistry for
which a License to Research exists.

 

(b)           If ATL requests additional amounts or types of consulting support
or training not specified above in this Article 3 and if ISIS agrees to provide
such support or training, the parties will negotiate appropriate terms
including, without limitation, the scope, timing, duration and cost of such
support or training, in good faith.

 

ARTICLE 4

 

LICENSE GRANTS AND OTHER RIGHTS

 

4.0          License Term.  As used herein, “License Term” means the term
beginning on the Effective Date and ending on the date on which all obligations
to pay royalties hereunder have expired.

 

4.1          Licenses to Research.  A License to Research is a license to
perform research and development activities relating to a Research Target until
the filing of an NDA or non-US equivalent on a Product that modulates such
Research Target.

 

(a)           License Grant.

 

(i)            For each Research Target, ISIS will grant to ATL and its
Affiliates when ATL takes a License to Research, an exclusive, worldwide license
under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent
Rights, the Manufacturing Patent Rights, the Research Target Patent Rights and
the Third Party Patent Rights solely to conduct research and clinical
development for all human indications for Collaboration Compounds that modulate
such Research Target.

 

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For Collaboration Compounds that modulate Dermatology Targets, the license is
limited to topical dermatological indications only.  These rights will only be
sublicensable as explicitly provided in Section 4.3.  The license grant
described hereunder will commence automatically on grant of the License to
Research and will terminate upon termination of the corresponding License to
Research.

 

(ii)           For each Research Target, ISIS will grant to ATL and its
Affiliates when ATL takes a License to Research, a nonexclusive, worldwide
license under the Research Target Patent Rights, the ISIS C5-Propyne Patent
Rights, and the ISIS Formulation Patent Rights solely to conduct research and
clinical development for all therapeutic and cosmetic applications for Research
Target Compounds that modulate such Research Target.  For Research Target
Compounds that modulate Dermatology Targets, the license is limited to topical
dermatological indications only.  These rights will only be sublicensable as
explicitly provided in Section 4.3.  The license granted hereunder will commence
automatically on grant of the License to Research and will not terminate upon
termination of the corresponding License to Research.

 

(b)           As of the Amendment Date, ISIS grants to ATL a License to Research
with respect to each Research Target listed in Exhibit 3.4.  ATL will receive
additional Licenses to Research with respect to Research Targets when added to
Exhibit 3.4.  Licenses to Research may only be obtained during the Collaboration
Term.  No License to Research will be granted to ATL on any Research Target
after the Collaboration Term ends.

 

(c)           [***].

 

(d)           ATL may terminate a License to Research with respect to a Research
Target for any reason, at any time during the term of this Agreement, by
providing ISIS with written notice that the Research Target is being removed
from Exhibit 3.4.

 

(e)           With the exception of the License to Research applicable to ATL
1102, VLA4 Compounds and Other VLA4 Compounds, which is governed by the
provisions of subsections (f) and (g) below, if a Research Target is no longer
part of an Active Program, ISIS may terminate the License to Research applicable
to that Research Target at any time during the term of this Agreement upon
written notice to ATL.

 

(f)            Once ATL has elected and obtained [***] Licenses to Exploit
pursuant to Section 4.2, all remaining Licenses to Research will immediately
terminate, and all rights to the remaining Research Targets licensed to ATL will
revert to ISIS; provided, however, that the licenses granted pursuant to
Section 4.1(a)(ii) will remain in effect.

 

(g)           ISIS will provide ATL with a semiannual report summarizing the
status of Research Target Patent Rights subject to a License to Research
hereunder and will include updates to any Exhibits that are affected.

 

4.2          Licenses to Exploit.  A License to Exploit is a license to perform
research, development and commercialization activities on, and otherwise
Exploit, Products that modulate a Research Target.

 

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(a)           ISIS grants ATL the option to convert any active License to
Research hereunder into a License to Exploit, as set out below.  Notwithstanding
the foregoing, ATL may convert not more than [***] Licenses to Research into
Licenses to Exploit, and each License to Exploit must be requested by ATL prior
to the filing of an NDA (or non-US equivalent) for the relevant Research
Target.  The option to convert Licenses to Research to Licenses to Exploit
expires [***] years after the end of the Collaboration Term.

 

(b)           If ATL elects to convert a License to Research into a License to
Exploit, ATL will provide ISIS with written notice effecting the exercise of the
option, which will identify the particular Research Target to which the License
to Research applies and will include written verification that all applicable
milestones and obligations of ATL with respect to that Research Target have been
timely met.  Upon ISIS’ receipt of such written notice, ISIS will have
[***] days to object if it believes that ATL has not timely met all applicable
milestones and obligations with respect to that Research Target.  At the end of
such [***]-day period, the License to Exploit will be granted with respect to
the relevant Research Target if ISIS has not objected.  [***].

 

(c)           License Grants and Assignments.

 

(i)            VLA4 Compounds and Other VLA4 Compounds.

 

(A)          Subject to the terms and conditions of this Agreement, effective as
of the Amendment Date, ISIS hereby grants to ATL an exclusive, worldwide license
under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent
Rights, the Manufacturing Patent Rights, the Research Target Patent Rights
(other than the VLA4 Compound Patent Rights, which are covered by
Section 4.2(c)(i)(C) below) and the Third Party Patent Rights solely to  Exploit
ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products for all human
indications.  These rights will only be sublicensable as explicitly provided in
Section 4.3.  This license will terminate only in accordance with Section 12.2
hereof.

 

(B)           Subject to the terms and conditions of this Agreement, effective
as of the Amendment Date, ISIS hereby grants to ATL a nonexclusive worldwide
license under the ISIS [***] and the ISIS Formulation Patent Rights  to Exploit
ATL1102, Other VLA4 Compounds and VLA4 Products for all human indications. 
These rights will only be sublicensable as explicitly provided in Section 4.3. 
This license will terminate only in accordance with Section 12.2 hereof.

 

(C)           Subject to the terms and conditions of this Agreement (including,
without limitation, Section 4.8(c) hereof), effective as of the Amendment Date,
ISIS hereby assigns to ATL all of ISIS’ right, title and interest in and to the
VLA4 Compound Patent Rights.  ISIS agrees to execute all assignment and other
documents, testify and take all other actions reasonably necessary or
appropriate to transfer, effect, confirm, perfect, record, preserve, protect and
enforce ATL’s right, title and interest in the  VLA4

 

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Compound Patent Rights throughout the world, at the reasonable request and
expense (to the extent of any out-of-pocket costs incurred by ISIS) of ATL.  ATL
covenants not to sell, transfer or assign any of the  VLA4 Compound Patent
Rights to any Affiliate or Third Party, except in connection with a permitted
assignment by ATL of this Agreement and ATL’s rights and obligations hereunder
to an Affiliate or Third Party in accordance with Section 16.2.

 

(D)          Isis hereby covenants that for so long as the licenses granted in
Sections 4.2(c)(i)(A) and 4.2(c)(i)(B) above remain in effect, Isis will not
[***] with respect to [***] however, if a VLA4 Product has not [***] (or such
later date as is mutually agreed by the parties), then [***] will terminate as
of such date.

 

(ii)           Other Research Targets and Collaboration Compounds.

 

(A)          For each Research Target (other than CD49d) for which a License to
Exploit is granted ISIS will grant to ATL an exclusive, worldwide license under
the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the
Manufacturing Patent Rights, the Research Target Patent Rights and the Third
Party Patent Rights solely to develop, make, have made, use, sell, have sold,
offer for sale and import Collaboration Compound Products that modulate such
Research Target for all therapeutic and cosmetic applications.  For
Collaboration Compound Products that modulate [***], the license is limited to
[***] only.  These rights will only be sublicensable as explicitly provided in
Section 4.3.  This license will commence automatically on grant of the
corresponding License to Exploit and will terminate upon termination of the
corresponding License to Exploit.

 

(B)           For each Research Target (other than CD49d) for which a License to
Exploit is granted ISIS will grant to ATL a nonexclusive worldwide license under
the [***] and the [***] solely to develop, make, have made, use, sell, have
sold, offer for sale and import Research Target Compound Products for all
therapeutic and cosmetic applications.  For Research Target Compound Products
that modulate [***], the license is limited to [***] only.  These rights will
only be sublicensable as explicitly provided in Section 4.3.  This license will
commence automatically on grant of the corresponding License to Exploit and will
not terminate upon termination of the corresponding License to Exploit.

 

(d)           No substitutions may be made on Licenses to Exploit.  Once a
License to Exploit has been taken with respect to a Research Target, a different
Research Target may not be substituted thereunder.

 

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(e)           Subject to the terms and conditions of the Teva Sublicense, ATL
may terminate a License to Exploit with respect to a Research Target, for any
reason, at any time during the term of this Agreement, by providing ISIS with
written notice.

 

(f)            The party bearing primary responsibility for the prosecution,
maintenance and defense of any Research Target Patent Rights pursuant to
Article 8 herein will provide the other party hereto with a semiannual report
summarizing the status of Research Target Patent Rights subject to a License to
Exploit hereunder for which such party is responsible and will include updates
to any Exhibits listing rights in any Patents licensed hereunder that are
affected, if appropriate.

 

4.3          Sublicenses Under ISIS Patent Rights and Third Party Patent Rights.

 

(a)           Any sublicense granted by ATL and its Affiliates under this
Agreement is subject to and will be consistent with the terms and conditions of
this Agreement and with the terms of the agreements pursuant to which ISIS
obtained its rights in Third Party Patent Rights.  The grant of any such
sublicense hereunder will not relieve ATL or its Affiliates of its obligations
under this Agreement.  ATL will promptly provide ISIS with copies of all
sublicenses granted by ATL or its Affiliates (including, without limitation, the
Teva Sublicense), as well as Sublicensee contact information.

 

(b)           Subject to the terms and conditions of this Agreement and during
the License Term, ATL and its Affiliates will have the right to grant
sublicenses (each an “ATL Sublicense”) under the licenses from ISIS set forth in
Sections 4.1 and 4.2 to Third Parties as follows.

 

(i)            Teva Sublicense.

 

(A)          ATL may enter into the Teva Sublicense, in the form provided to
ISIS on the Amendment Date.

 

(1)           ATL hereby covenants that, except with ISIS’ prior written
consent, ATL will not amend the Teva Sublicense in any manner that would
(a) conflict with this Agreement, (b) expand the scope of the sublicense granted
to Teva under ATL’s rights hereunder to include any compound or product other
than ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products;
(c) diminish any rights of ATL thereunder that would result in any direct or
indirect diminution of ISIS’ rights under this Agreement, or (d) diminish any
rights expressly conferred upon ISIS under the Teva Sublicense.  ATL will obtain
the written covenant of Teva not to amend the Teva Sublicense in any of the
foregoing ways.

 

(2)           Each party to this Agreement hereby covenants that, except with
Teva’s prior written consent, such party will not amend this Agreement in any
manner that would (a) diminish any rights of ATL hereunder that would result in
any direct or indirect diminution of Teva’s rights under the Teva Sublicense,
(b) diminish any rights expressly conferred upon Teva under this

 

14

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Agreement, or (c) directly or indirectly impose any additional financial or
other obligations upon Teva beyond those specified in the Teva Sublicense.

 

(B)           ATL and its Affiliates acknowledge and agree that: (1) the
sublicense granted to Teva under the ISIS Core Technology Patent Rights, the
ISIS Formulation Patent Rights, the Manufacturing Patent Rights, and the Third
Party Patent Rights may be practiced solely for  Exploiting the ATL 1102, VLA4
Compounds, Other VLA4 Compounds and VLA4 Products for all human indications; and
(2) any further sublicense granted by Teva (or any of its sublicensees) to
another Third Party under any of the foregoing Patent Rights will be subject to
the restriction set forth in the preceding clause (1).  ATL will obtain the
foregoing written acknowledgment and agreement from each Sublicensee (including
Teva).

 

(C)           In the event of a material default by Teva under the Teva
Sublicense, ATL will promptly inform ISIS in writing and take commercially
reasonable efforts to cause Teva to cure the default.  Alternatively, ATL will
have the right to cure such default on Teva’s behalf.  If ATL elects to cure
such default on Teva’s behalf, ATL will promptly provide to ISIS a written plan
outlining the steps ATL will undertake in order to cure such default, including
ATL’s good faith estimate of the period of time for ATL to do so.  If Teva does
not timely cure such material default and ATL does not elect to cure such
default on Teva’s behalf (or elects to cure such default but does not timely
comply with the written cure plan described above), ATL will terminate the Teva
Sublicense.

 

(D)          In the event of a material default by ATL under this Agreement that
relates to CD49d, ATL 1102 or any VLA4 Compounds, Other VLA4 Compounds or  VLA4
Product (including, without limitation, any fundamental breach of this Agreement
by ATL with respect to which ISIS provides written notice to ATL under
Section 12.2), ISIS will promptly inform Teva in writing (in accordance with the
notice provisions of the Teva/ISIS Agreements), and the parties agree that Teva
will have the right to cure such default on ATL’s behalf.

 

(E)           If Teva wishes to have ISIS generate any Other VLA4 Compound, ISIS
will be not obligated to generate any such Other VLA4 Compound unless and until
Teva and ISIS mutually agree in writing upon a research plan specifically
describing the activities to be undertaken by ISIS, including the amounts to be
reimbursed by Teva to ISIS for performing such activities.  In addition, to the
extent that ATL has the right to develop and commercialize any Other VLA4
Compound, ATL may request that ISIS generate such Other VLA4 Compound in
accordance with Section 3.6 hereof.

 

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(F)           ATL acknowledges and agrees that this Agreement does not grant to
ATL any license or right under ISIS Patent Rights to develop, make, have made,
use, sell, have sold, offer for sale or import any [***].  ATL further
acknowledges and agrees that if Teva wishes to have ISIS generate any [***],
ISIS will be not obligated to generate any such [***] Compound unless and until:
(i) Teva and ISIS mutually agree in writing upon a research plan specifically
describing the activities to be undertaken by ISIS, including the amounts to be
reimbursed by Teva to ISIS for performing such activities; (ii) TEVA and ISIS
mutually agree in writing upon license terms [***] with respect to products
utilizing the [***]; and (iii) only if and to the extent such [***](s) is(are)
within the scope of the license(s) granted by ISIS to ATL hereunder, ATL and
ISIS mutually agree in writing upon the [***] would be payable by ISIS to ATL
with respect to products developed utilizing such [***].

 

(ii)           Other ATL Sublicenses.

 

(A)          In addition to ATL’s right to grant the Teva Sublicense, ATL and
its Affiliates may grant an ATL Sublicense to a Third Party collaborator under
the Research Target Patent Rights solely for the purpose of enabling such Third
Party to collaborate with ATL on bona fide research, development and
commercialization work on a Research Target Compound and, after such
collaborative work, to make, have made, use, offer for sale and sell a Product
containing such Research Target Compound.

 

(B)           ATL and its Affiliates may grant an ATL Sublicense to a Third
Party collaborator under the ISIS Core Technology Patent Rights, the ISIS
Formulation Patent Rights, the Manufacturing Patent Rights, the Research Target
Patent Rights and the Third Party Patent Rights solely for the purpose of
making, developing or using a Collaboration Compound or making, having made,
using, developing, offering for sale or selling a Collaboration Compound
Product.

 

(C)           In the event of a material default by any Sublicensee under an ATL
Sublicense, ATL will inform ISIS and take commercially reasonable efforts to
cause the Sublicensee to cure the default or will terminate the ATL Sublicense. 
ATL will specifically state that ISIS is a third party beneficiary in any ATL
Sublicense(s) hereunder.

 

4.4          Maximum Number of Licenses.

 

Not more than [***] Licenses to Research or Licenses to Exploit (including such
licenses with respect to CD49d) may be in existence at any time during the term
of this Agreement.  Each such license is to a discrete Research Target.

 

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4.5          Right of First Refusal.

 

(a)           During the term of this Agreement, if ATL is approached by a Third
Party regarding, or elects to offer to a Third Party, the opportunity to
collaborate on the development of a compound that modulates a Research Target
other than IGF-1R, ATL will provide written notice of same to ISIS. Such notice
will include information identical to that presented by ATL to a Third Party
including, at a minimum, (i) information possessed and disclosable by ATL that
supports the development of such a compound and is reasonably necessary for ISIS
to assess the commercial potential of such compound; and (ii) a proposal that
ATL would be prepared to accept.  Within [***] days of receipt of such notice,
ISIS will provide written notice to ATL indicating whether it is interested in
negotiating with ATL to obtain the rights to develop and commercialize such
compound with ATL.

 

(b)           If ISIS fails to respond to ATL’s notification within [***] days
or indicates that it is not interested in developing and commercializing such
compound with ATL, ATL will thereafter be free to enter into discussions with
one or more Third Parties regarding the development and commercialization of
such compound.

 

(c)           If ISIS timely indicates its interest in obtaining such rights to
develop and commercialize such compound with ATL, the parties will negotiate in
good faith the terms of a separate development and commercialization agreement,
which terms will be commercially reasonable, including without limitation
license fees, milestone payments, and royalties, during the period up to
[***] days following receipt of ISIS’ notice.  If the parties are unable to
execute such an agreement within such time period, despite good faith
negotiations by each party, ATL will thereafter be free to develop and
commercialize such compound with one or more Third Parties, provided that the
terms offered to such Third Party include financial terms that are no more
favorable than those offered to ISIS.

 

(d)           Notwithstanding the foregoing, this Section 4.5 will not apply to
the Teva Sublicense.

 

4.6          Rights Retained by ISIS.

 

ISIS will retain the right to practice under all patent rights licensed to ATL
hereunder as necessary to carry out ISIS’ obligations under this Agreement and
the Teva/ISIS Agreements, and for any purpose other than  Exploiting the
Collaboration Compound Products, except as provided otherwise herein.  ATL will
not practice any of the patent rights licensed to ATL hereunder other than as
expressly licensed in this Article 4.

 

4.7          Access to Additional Technology.

 

(a)           If, after the Effective Date and during the Collaboration Term,
ISIS comes to own, or acquires a license with the right to grant sublicenses
thereunder, any new or additional ISIS Core Technology Patent Rights or
Manufacturing Patent Rights, and ATL desires access to such rights, ISIS agrees
to negotiate in good faith with ATL regarding such access, provided that any
licenses or sublicenses from ISIS to ATL under such Patents pursuant to
Sections 4.1 and 4.2 are conditioned on ATL’s agreement (i) to pay, on a
flow-through basis, any royalties, milestones or other financial obligations
owed to ISIS’

 

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licensor arising from a license or sublicense grant to ATL and the practice
under such license or sublicense by ATL, its Affiliates or Sublicensees; and
(ii) to abide by all terms of the agreement under which a Third Party license is
granted to ISIS.

 

(b)           If, after the Effective Date and during the Collaboration Term, a
change in the manufacturing process as a result of a change in the master batch
records for ATL 1102 requires access of ATL to Manufacturing Patent Rights that
were not practiced in the manufacture of the ATL 1102 API prior to such change,
and if ISIS has obtained ownership or control of such Manufacturing Patent
Rights by way of a license from or via collaboration with a Third Party, then
any license or sublicense granted to ATL under such Manufacturing Patent Rights
is conditioned on the prior agreement to be negotiated in good faith by the
parties regarding (i) the assumption by ATL of all financial obligations owed to
such Third Party arising from the grant of a license or sublicense to ATL and
the practice under such license or sublicense by ATL, its Affiliates or
Sublicensees; (ii) the payment to ISIS of an equitable portion of acquisition
costs incurred by ISIS; and (iii) an agreement by ATL to abide by all terms of
the agreement under which such Manufacturing Patent Rights were acquired, if
applicable.

 

4.8          Effect of Termination of Licenses to Research and Licenses to
Exploit.

 

(a)           Return of ISIS-Provided Information.  Upon termination of any
License to Research or License to Exploit applicable to a Collaboration Compound
or Collaboration Compound Product (including, without limitation, ATL 1102, VLA4
Compounds, Other VLA4 Compounds and VLA4 Products), ATL will promptly return to
ISIS, at no cost to ISIS, all information and materials provided to ATL by ISIS
relating to such Collaboration Compound or Collaboration Compound Product.

 

(b)           Return of API.  Upon termination of any License to Research or
License to Exploit applicable to a Collaboration Compound or Collaboration
Compound Product (including, without limitation, ATL 1102, VLA4 Compounds, Other
VLA4 Compounds and VLA4 Products), ATL will promptly, subject [***] to ISIS all
quantities of such Collaboration Compound API provided by ISIS that have not
been used.

 

(c)           Assignment Back to ISIS of VLA4 Compound Patent Rights.  Upon
termination of the License to Exploit ATL 1102, VLA4 Compounds, Other VLA4
Compounds and VLA4 Products, ATL will promptly assign to ISIS all of ATL’s
right, title and interest in and to the VLA4 Compound Patent Rights.  In
connection therewith, ATL agrees to promptly execute all assignment and other
documents, testify and take all other actions reasonably necessary or
appropriate to transfer, effect, confirm, perfect, record, preserve, protect and
enforce ISIS’ right, title and interest in the VLA4 Compound Patent Rights
throughout the world, at the reasonable request and expense (to the extent of
any out-of-pocket costs incurred by ATL) of ISIS.

 

(d)           Transition Plan for Research Targets Other Than CD49d.  If a
License to Research or License to Exploit, other than any such license with
respect to ATL 1102, VLA4 Compounds and Other VLA4 Compounds and VLA4 Products,
is terminated for any reason, promptly upon any such termination, the parties
will prepare a transition plan to

 

18

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ensure the seamless transition of any clinical studies and distribution and
sales activities relating to any Antisense Inhibitor, Collaboration Compound,
and/or Collaboration Compound Product from ATL to ISIS.  In addition, ATL will
provide ISIS with any and all data relating to such Antisense Inhibitor,
Collaboration Compound, Product using ISIS Standard Chemistry and/or to any ISIS
Patent Rights relating to any Research Target that are in ATL’s possession or
control.

 

(e)           Independently-Generated Information.  Upon termination of any
License to Research or License to Exploit applicable to a Collaboration Compound
or Collaboration Compound Product (including, without limitation, ATL1102, VLA4
Compound, Other VLA4 Compounds and VLA4 Products), ATL will promptly assign and
transfer to ISIS all information and materials (including, without limitation,
preclinical and clinical data, regulatory submissions and Patents) relating to
such Collaboration Compound or Collaboration Compound Product that were
independently generated by ATL or any of its Affiliates, contractors and
Sublicensees (collectively, “Independently-Generated Information”), excluding
any such information independently generated by a Sublicensee (including Teva)
that ATL is prohibited from providing to ISIS.  ATL will obtain the written
agreement of each Sublicensee (including Teva) to comply with the provisions of
this Section 4.8(e).  With respect to Independently-Generated Information
provided to ISIS in the event of termination of a License to Research or License
to Exploit, ISIS will compensate ATL as follows:

 

(1)           If such termination occurs before the [***] of the Collaboration
Compound or Collaboration Compound Product to which such Independently-Generated
Information relates, ISIS or its Sublicensees will pay to ATL [***] using such
Independently-Generated Information, for [***].

 

(2)           If such termination occurs after the [***] of the Collaboration
Compound or Collaboration Compound Product to which such Independently-Generated
Information relates, ISIS or its Sublicensees will pay to ATL a [***] using such
Independently-Generated Information, for [***].

 

(3)           Any reasonable out-of-pocket costs payable by ATL to Third Parties
(excluding any Sublicensee or any further sublicensee of a Sublicensee)
associated with the physical transfer of Independently-Generated Information to
ISIS pursuant to this Section 4.8(e) (e.g., copying, shipping) will be borne by
ISIS.

 

ARTICLE 5

 

ROYALTIES AND PAYMENTS

 

5.1          Minimum Royalties Payable to ISIS by ATL on Sales of Products by
ATL or its Affiliates.

 

Subject to the terms and conditions of, and during the term of, this Agreement,
ATL will pay to ISIS royalties on sales of Products by ATL or its Affiliates,
according to the terms set forth below.

 

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(a)           The minimum royalty payable to ISIS by ATL for sales of any VLA4
Product by ATL or its Affiliates is [***] of Net Sales for as long as there are
issued and unexpired claims within the patent rights applicable to such VLA4
Product (including, without limitation, the VLA4 Compound Patent Rights) and
[***] of Net Sales thereafter for the life of such VLA4 Product.

 

(b)           There is [***]for sales of any Product that contains a compound
that modulates IGF-1R[***].

 

(c)           Except as otherwise provided above, the minimum royalty payable to
ISIS for sales of any Product by ATL or its Affiliates comprising a compound
that modulates a Research Target or Abandoned Research Target for which ISIS has
not established efficacy in an animal model and has not conducted preclinical
toxicology studies is [***] of Net Sales.  Such minimum royalty is due and
payable for the life of the Product.

 

(d)           Except as otherwise provided above, the minimum royalty payable to
ISIS by ATL for sales of any Product by ATL or its Affiliates for which ISIS has
established efficacy in an animal model or has conducted preclinical toxicity
studies will be negotiated in good faith by the parties on a case-by-case basis,
but will not be less than [***] of Net Sales.

 

(e)           For Products under (a) or (c), in addition to any minimum
royalties due under (a) or (c), the royalty payable to ISIS by ATL for sales of
any Product by ATL or its Affiliates, the manufacture, use, sale, or importation
of which would, but for the licenses granted hereunder, infringe an issued and
unexpired claim under the ISIS Formulation Patent Rights is [***]

 

(f)            The minimum royalties payable as described in Sections 5.1
(a)-(e) are in addition to any royalties payable to ISIS for Third Party Patent
Rights as set forth in Section 5.3 below.

 

5.2          Sublicense Income Payable to ISIS by ATL or its Affiliates on
Products sold by Sublicensee(s).

 

Subject to the terms and conditions of, and during the term of, this Agreement,
ATL or its Affiliates will pay to ISIS certain shares of Sublicense Income
received by ATL or its Affiliates, according to the terms set forth hereinbelow.

 

(a)           The share of Sublicense Income payable to ISIS by ATL or its
Affiliates on Sublicensee sales of a VLA4 Product is [***]

 

(b)           [***].

 

(c)           Except for VLA4 Products and products containing a compound that
modulates IGF-1R, ATL will pay ISIS a [***] royalty on Net Sales of any Product
by Sublicensee and [***] of Sublicense Income exclusive of royalties.  Such
amounts are due and payable for the life of the Product.

 

(d)           In addition to amounts payable under (a) or (c), ATL will pay ISIS
[***] of Sublicense Income for sales of Products by Sublicensees containing
compounds that modulate a

 

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Research Target other than IGF-1R and that that would, but for the licenses
granted hereunder, infringe the ISIS Formulation Patent Rights.  Such amounts
are due and payable for the term of issued and unexpired claims within the ISIS
Formulation Patent Rights.

 

(e)           Except as otherwise provided above, the share of Sublicense Income
payable to ISIS by ATL or its Affiliates for the license of rights to and/or
sale of a Product for which ISIS has established efficacy in an animal model or
has conducted preclinical studies will be negotiated in good faith by the
parties, but will not be less than [***] of the Sublicense Income.

 

5.3          Royalties payable to ISIS for Third Party Patent Rights.

 

(a)           In addition to the royalties and other payments set forth in
Sections 5.1 and 5.2, as of the Amendment Date, the following royalties
(percentages of Net Sales) are payable to ISIS by ATL for sales of Products
(including Products that modulate IGF-1R), whether sold by ATL, its Affiliates,
or Sublicensees, the manufacture, use, sale, or import of which would, but for
the licenses granted hereunder, infringe an issued and unexpired claim of the
following patent rights on a Product by Product basis:

 

[***]

 

(b)           In addition to (a), for Collaboration Compound Products, including
those that modulate IGF-1R, the manufacture, use, sale, or importation of which
would, but for the licenses granted hereunder, [***].

 

(c)           [***] Third Party Royalty Obligations.  If, after the Amendment
Date during the Collaboration Term, ISIS is successful in eliminating or
reducing the requirement to pay a royalty under the Third Party license under
which ISIS has obtained access to the [***], ISIS will so notify ATL.
Thereafter, the royalty rate payable by ATL hereunder for the [***] will be
[***]

 

5.4          Royalty Cap.

 

(a)           Should the royalty payable by ATL to ISIS pursuant to Sections 5.1
and 5.3 with respect to sales of a VLA4 Product exceed [***] of Net Sales, the
total royalty ATL must pay ISIS for such VLA4 Product will be [***] of Net
Sales.

 

(b)           Should the royalty payable by ATL to ISIS pursuant to Sections 5.1
and 5.3 with respect to sales of a Product other than a Product comprising a
CD49d-modulating compound, exceed [***] of Net Sales, the total royalty ATL must
pay ISIS for such Product will be [***] of Net Sales.

 

(c)           The foregoing royalty caps apply only to the royalty rates set
forth in Sections 5.1 and 5.3 and thus do not apply to any new technology or
patent rights acquired or accessed by ISIS after the Effective Date, as
described in Sections 4.7 and 8.4 or to the royalties owed pursuant to
Section 5.2.

 

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5.5          Examples.

 

(a)           Example of Calculation of Royalty Rate for Sales of VLA4 Products
by ATL or its Affiliates:

 

The royalty payable to ISIS for sales of VLA4 Product by ATL or its Affiliates
(as a percentage of Net Sales) comprising non-topically-administered
formulations of ATL 1102 is calculated as follows (assuming all relevant patent
rights are issued and unexpired):

 

[***]

 

(b)           Example of Royalties and Sublicense Income Payable to ISIS by ATL
or its Affiliates on Sales of VLA4 Products by Sublicensees:

 

[***]

 

5.6          Payment of Royalties and Income; Reports.

 

ATL will make royalty payments to ISIS for each Product sold during a Calendar
Quarter within [***] days after the last day of that Calendar Quarter.  Each
royalty payment will be preceded by a written report for that Calendar Quarter
showing the calculation of Net Sales of the Product sold by ATL, its Affiliates
and its Sublicensees worldwide during the quarterly reporting period and the
calculation of the royalties and Sublicense Income payable under this Agreement,
all on a country-by-country and Product-by-Product basis, which report will be
delivered within 15 days of the last day of that Calendar Quarter.

 

5.7          Payment Modalities; Foreign Currency Conversion; Late Payment
Charges.

 

(a)           Payments.  All payments to ISIS under this Agreement will be made
in United States Dollars by bank wire transfer in next day available funds to
such bank account in the United States designated in writing by ISIS from time
to time.  All amounts payable to ISIS hereunder are noncreditable and
nonrefundable.

 

(b)           Late Payments; Collections.  In the event that any payment,
including royalty, milestone or research payments, due hereunder is not made
when due, the payment will bear interest from the date due at the lesser of
(i) [***] per month, compounded monthly, or (ii) the highest rate permitted by
law; provided, however, that in no event will such rate exceed the maximum legal
annual interest rate.  If ATL disputes the amount of an invoice presented by
ISIS within [***] days of receipt of such invoice, the late fees will only apply
to the correct amount as later determined or agreed.  The payment of such
interest will not limit a party from exercising any other rights it may have as
a consequence of the lateness of any payment.  In addition, ATL agrees to pay
all costs of collection, including reasonable attorneys’ fees, incurred by ISIS
in enforcing the payment obligations of ATL after a due date has passed under
this Agreement.

 

(c)           Currency Conversion.  Net Sales outside the United States will
first be determined in the currency of the country in which they are earned and
must then be converted into an

 

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amount in United States dollars based on the average relevant rate of exchange
throughout the then Calendar Quarter as reported in the Wall Street Journal (or
if the Wall Street Journal ceases to be published, a comparable alternate
publication agreed by the Parties).

 

5.8          Audits Requested by ISIS.

 

(a)           Upon the written request of ISIS, and not more than once in each
calendar year, ATL will permit ISIS’ independent certified public accountant to
have access during normal business hours to such of the records of ATL as may be
reasonably necessary to verify the accuracy of the royalty reports hereunder for
the current year and the preceding 2 years prior to the date of such request. 
The accounting firm will disclose to ISIS only whether the royalty reports are
correct or incorrect, the specific details concerning any discrepancies, and the
corrected amount of Net Sales and Sublicense Income.  No other information will
be provided to ISIS.

 

(b)           At the request of ISIS, ATL will direct its Affiliates to permit
audits of the Affiliates’ records in accordance with the provisions of
subsection (a) above.  Further, ATL will include in each sublicense granted by
it pursuant to this Agreement a provision requiring the Sublicensee to submit
reports to ATL, to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by ISIS’ independent accounting
firm, to the same extent required of ATL hereunder.  ISIS’ independent
accounting firm will also be granted access to such reports in ATL’s possession
as part of the audit referenced in subsection (a) above.

 

(c)           If such accounting firm concludes that additional royalties were
owed during such period, ATL will pay the additional royalties within [***] days
of the date ISIS delivers to ATL such accounting firm’s written report.  The
fees charged by such accounting firm will be paid by ISIS unless the additional
royalties, milestones or other payments owed by ATL exceed [***] of the
royalties, milestones or other payments paid for the time period subject to the
audit, in which case ATL will pay the reasonable fees and expenses charged by
the accounting firm.

 

(d)           ISIS will treat all financial information subject to review under
this Section 5.8 or under any sublicense agreement in accordance with the
confidentiality provisions of Article 9, and will cause its accounting firm to
enter into an acceptable confidentiality agreement with ATL and its Sublicensees
obligating such firm to retain all such financial information in confidence
pursuant to such confidentiality agreement.

 

5.9          Audits Requested by ATL.

 

(a)           Upon the written request of ATL, and not more than once in each
calendar year, ISIS will permit ATL’s independent certified public accountant to
have access during normal business hours to such of the records of ISIS as may
be reasonably necessary to verify the accuracy of the invoices submitted to ATL
hereunder for the 12 months preceding the date of such request.  The accounting
firm will disclose to ATL only whether the invoiced amounts are correct or
incorrect, the specific details concerning the basis for the

 

23

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invoiced amounts, and the corrected amount, if applicable.  No other information
will be provided to ATL.

 

(b)           If such accounting firm concludes that any amounts invoiced were
in error during such period and ATL is entitled to a refund of such amounts,
ISIS will refund to ATL the amounts overcharged within [***] days of the date
ATL delivers to ISIS such accounting firm’s written report.  The fees charged by
such accounting firm will be paid by ATL unless the additional refunded amounts
owed by ISIS exceed [***] of the total amount for which ATL was invoiced during
the time period subject to the audit, in which case ISIS will pay the reasonable
fees and expenses charged by the accounting firm.

 

(c)           ATL will treat all financial information subject to review under
this Section 5.9 in accordance with the confidentiality provisions of Article 9
and will cause its accounting firm to enter into an acceptable confidentiality
agreement with ISIS obligating such firm to retain all such financial
information in confidence pursuant to such confidentiality agreement.

 

5.10        Taxes.

 

If laws, rules or regulations require withholding of income taxes or other taxes
imposed upon payments set forth in this Article 5, ATL will make such
withholding payments as required and subtract such withholding payments from the
payments set forth in this Article 5.  ATL will submit appropriate proof of
payment of the withholding taxes to ISIS within a reasonable period of time.

 

ARTICLE 6

 

USE OF MATERIALS, DATA AND INFORMATION

 

6.1          Unless provided otherwise herein, all Antisense Inhibitors and any
related research materials delivered to ATL under this Agreement will be used
only in furtherance of a Development Program or Collaborative Research Program,
will not be used or delivered to or for the benefit of any Third Party (other
than Teva) without the prior written consent of ISIS, and will not be used in
research or testing involving human subjects.  The Antisense Inhibitors and any
related research materials supplied under this Agreement must be used with
prudence and appropriate caution in any experimental work, since not all of
their characteristics may be known.  ATL agrees to comply with all applicable
laws, rules and regulations in connection with its use of Antisense Inhibitors
and related research materials provided hereunder.

 

6.2          All Antisense Inhibitors and related research materials provided to
ATL hereunder are proprietary to ISIS.

 

6.3          ATL may use data and information provided to ATL by ISIS hereunder
for internal drug discovery purposes only, consistent with the terms of this
Agreement.  Except as provided otherwise herein, all data and information
provided to ATL by ISIS pursuant to

 

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this Agreement is confidential and proprietary to ISIS and will not be disclosed
to Third Parties, consistent with the provisions of Article 9 herein.  ISIS
acknowledges that ATL may wish to provide such data and/or information to a
Third Party in connection with ATL’s bona fide development, commercialization or
partnering activities under this Agreement; ISIS will not unreasonably withhold
its consent to such a transfer of data and information, provided that the
receiving party is advised of the confidentiality provisions hereunder and
agrees to be bound thereby.  Notwithstanding the foregoing, ISIS reserves the
absolute right to withhold consent if ATL wishes to transfer such data or
information to an antisense company or other competitor of ISIS.

 

6.4          Notwithstanding Section 6.3, ISIS acknowledges and agrees that ATL
may disclose to TEVA any data, information and know-how provided to ATL by ISIS
under this Agreement that are relevant to ATL1102, VLA4 Compounds, Other VLA4
Compounds and VLA4 Products without any requirement to obtain the further
consent of ISIS, provided that all such data, information and know-how will
remain subject to the provisions of this Article 6 and Article 9 hereof.

 

6.5          Consistent with the foregoing provisions, if ATL conducts studies
comparing ISIS Standard Chemistry with the chemistry of a Third Party, all data
and information incorporating or relating to ISIS Standard Chemistry that result
from such studies is confidential and proprietary to ISIS and will not be
disclosed to Third Parties, consistent with the provisions of Article 9 herein.

 

ARTICLE 7

 

FUNDING PROVISIONS

 

7.1          Funding for Development Activities.

 

(a)           ATL will pay for all development activities that ISIS performs on
ATL’s behalf [***] including any such development activities with respect to
VLA4 Compounds and Other VLA4 Compounds (except to the extent Teva is obligated
to pay for such activities under the Teva/ISIS Agreements) and any such
development activities described in any Development Plan hereunder or approved
by the JDC in the course of any Development Program.  Labor will be billed
[***].  Materials and out of pocket expenses incurred by ISIS will be passed
through to ATL at cost.

 

(b)           ISIS will submit an invoice for such expenditures to ATL after
each Calendar Quarter, and ATL will submit payment to ISIS within [***] days
from the date of invoice, consistent with the provisions of Section 5.7.

 

7.2          Funding for Collaborative Research Program Activities.

 

(a)           Except as specifically provided otherwise herein, as of the
Effective Date, ATL will pay for all activities performed by ISIS in the course
of the Collaborative Research Program hereunder [***].  Labor will [***]. 
Materials and out of pocket expenses incurred by ISIS will be [***]

 

25

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(b)           ISIS will submit an invoice for such expenditures to ATL after
each Calendar Quarter, and ATL will submit payment to ISIS within [***] days
from the date of invoice, consistent with the provisions of Section 5.7.

 

7.3          Funding for Other ATL Activities.

 

ATL will also pay for any other activities ATL deems necessary to research,
develop or commercialize a Collaboration Compound or Product, or which are
otherwise required for ATL to fulfill its obligations hereunder, [***].  Labor
will [***].  Materials and out of pocket expenses incurred by ISIS will be
[***].

 

ARTICLE 8

 

INTELLECTUAL PROPERTY

 

8.1          Ownership of Inventions.

 

(a)           Neither party hereto will be deemed by this Agreement to have been
granted any license or other rights to the other party’s rights in any
inventions, technology, discoveries, or other proprietary property
(collectively, “Inventions”), except as expressly provided herein.  Without
limiting the generality of the foregoing, as between the parties, ISIS will at
all times remain the sole and exclusive owner of the ISIS Patent Rights.

 

(b)           Except as provided otherwise herein, each party will solely own
all Inventions that are made (as determined by U.S. rules of inventorship)
solely by employees of or Consultants to that party pursuant to the
Collaborative Research Program or any Development Program under this Agreement. 
Such an Invention will be an “ISIS Invention” or an “ATL Invention,” as the case
may be, and Patents claiming such Inventions will be “ISIS Patents” or “ATL
Patents,” respectively.

 

(c)           ISIS agrees to assign to ATL its rights in any ISIS Inventions or
Joint Inventions claiming Antisense Inhibitors that modulate IGF-1R and methods
of using same, provided that a License to Research or License to Exploit for
IGF-1R exists.  If ATL does not convert the License to Research for IGF-1R into
a License to Exploit IGF-1R, or if the License to Research or License to Exploit
applicable to IGF-1R is terminated for any reason, ATL will assign back to ISIS
the latter’s rights in any such ISIS Inventions and Joint Inventions, as well as
ISIS’ rights in any Patents filed on such Inventions.  Notwithstanding the
foregoing, if such assignment of rights back to ISIS would interfere with ATL’s
ability to practice any ATL Inventions or ATL Patent Rights pertaining to
IGF-1R, ISIS agrees to sublicense, in favor of ATL, only that portion of any
such Invention or Patent, and only for that time period, as is required for ATL
to practice an ATL Invention or ATL Patent that would otherwise infringe the
ISIS Invention or ISIS Patent, on a nonexclusive, mutually agreeable basis that
is consistent with the royalties set out in this Agreement, provided that ISIS
is not otherwise precluded from doing so.

 

(d)           Except as provided otherwise herein, ISIS and ATL will jointly
hold title to all Inventions, whether or not patentable, that are made (as
determined by the U.S. rules of inventorship) jointly by employees of or
Consultants to ISIS and ATL pursuant to the

 

26

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Collaborative Research Program or any Development Program under this Agreement,
as well as to Patents filed thereon.  Such Inventions will be “Joint
Inventions,” and Patents claiming such Joint Inventions will be “Joint Patents.”
ISIS and ATL will promptly provide each other with notice whenever a Joint
Invention is made.  The parties agree and acknowledge that, except insofar as
this Agreement provides otherwise, the default rights conferred on joint owners
under US patent law, including the right of each party to independently
practice, license and use a Joint Patent, will apply in relation to the Joint
Patents throughout the world as though US patent law applied worldwide.

 

(e)           The parties understand that if ATL or a Third Party collaborator
of ATL provides a proprietary gene sequence or utility not known to ISIS, the
discovery of inhibitors of that sequence may be a Joint Invention.  Similarly,
the parties understand that the discovery of a method of treating human disease
by inhibiting a particular gene product, where ISIS’ Antisense Inhibitor data is
used to support the claims of the Patent, may be a Joint Invention.

 

(f)            The parties agree, upon reasonable request, to execute any
documents reasonably necessary to effect and perfect each other’s ownership of
any Invention.

 

8.2          Filing, Prosecution, Maintenance, Enforcement and Defense of
Patents Owned or Controlled by ISIS and of Certain Joint Patents.

 

(a)           Except as provided otherwise herein, ISIS will have the sole and
exclusive right to file, prosecute, maintain, enforce and defend any Research
Target Patent Rights and any ISIS Patents or Joint Patents filed on Inventions
claiming an Antisense Inhibitor to a Research Target or a method of treatment
using an antisense molecule that modulates a Research Target subject to a
License to Research or License to Exploit hereunder, regardless of
inventorship.  ISIS will consider ATL’s input with respect to the prosecution,
maintenance, enforcement and defense of any such Patents.  ISIS will also
consider any supporting information provided by ATL that relates to the Research
Target and its uses, as well as any supporting in vivo or in vitro efficacy data
generated from experiments performed by ATL or its collaborators.  As used
herein, Patent prosecution includes, without limitation, the handling of
interference proceedings, oppositions, reexaminations and reissues.

 

(b)           In the event ATL proposes the filing of a Joint Patent pursuant to
subsection (a) and ISIS does not wish to file and prosecute such Joint Patent,
ATL will have the right to file, prosecute, maintain, enforce and defend such
Joint Patent.  ATL will consider ISIS’ input with respect to the prosecution,
maintenance, enforcement and defense of any such Joint Patents.

 

(c)           ISIS will also have the sole and exclusive right, in its sole
discretion, to file, prosecute, maintain, enforce and defend any Patents within
the ISIS Core Technology Patent Rights, the Manufacturing Patent Rights, and the
ISIS Formulation Patent Rights.

 

(d)           ISIS will pay for its own labor costs incurred in the filing,
prosecution, maintenance, enforcement and defense of any Patents for which ISIS
is responsible hereunder.

 

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(e)           ATL will reimburse ISIS for reasonable materials and out of pocket
expenses incurred in connection with the activities recited in subsections (a),
(c) and (d).  As used herein, materials and out of pocket expenses means costs,
other than ISIS’ labor costs, [***].  ISIS will invoice ATL on a quarterly basis
and ATL will submit payment to ISIS consistent with the provisions of Article 7
herein.

 

(f)            Should ATL elect not to pay expenses relating to Patent
protection in a particular country, ATL will provide ISIS with written notice of
same, and ATL’s payment obligations with respect to that country will cease once
ISIS has received such notice, provided that all noncancelable costs and
expenses incurred by ISIS prior to such date will nevertheless be reimbursed by
ATL. Immediately upon ISIS’ receipt of such written notice from ATL, the
applicable License to Research or License to Exploit will be terminated with
respect to such country.

 

(g)           With respect to any ISIS Patent Rights exclusively licensed to ATL
under a License to Exploit, ISIS will promptly advise ATL if ISIS becomes aware
of any suspected or actual infringement of such ISIS Patent Rights by any
person.  Similarly, ATL will promptly advise ISIS if ATL becomes aware of any
suspected or actual infringement of such ISIS Patent Rights by any person.

 

(h)           If ISIS fails to initiate proceedings against any actual or
suspected infringement of the ISIS Patent Rights where such infringing activity
involves an Antisense Inhibitor of a Research Target that ATL has a License to
Exploit, or to defend any claim of infringement against the parties pertaining
to such rights, within [***] days of receipt of a notice from ATL asking ISIS to
do so, ATL will be entitled to initiate those proceedings at ATL’s expense.

 

(i)            Except as provided otherwise herein, ISIS will endeavor to take
all action necessary to ensure that the ISIS Patent Rights that are or become
subject to a License to Research or License to Exploit are maintained and
diligently prosecuted.

 

8.3          Filing, Prosecution, Maintenance, Enforcement and Defense of
Patents Owned or Controlled by ATL.

 

(a)           ATL will have the sole and exclusive right and responsibility, in
its sole discretion, to file, prosecute, maintain, enforce and defend (including
the exclusive right to sue and exclude others from infringing) any Patents filed
on Inventions made solely by ATL (i.e., ATL Patents) and VLA4 Compound Patent
Rights.  ATL will provide ISIS with a semiannual report summarizing the status
of any such ATL Patents and VLA4 Compound Patent Rights.  ATL hereby grants ISIS
a worldwide, royalty-free, sublicensable, perpetual, nonexclusive license to
practice under ATL’s rights to any such ATL Patents and  VLA4 Compound Patent
Rights to carry out the activities contemplated by this Agreement and to make,
have made, use, import, offer for sale and sell products other than a Product,
provided that ATL is not contractually prohibited from doing so.  If ATL decides
to discontinue the maintenance, enforcement or defense of any such patent
entirely, or in a particular country, it will notify ISIS in writing of that
decision in sufficient time for ISIS to assume those responsibilities with
respect to the relevant

 

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patents (at ISIS’ sole option), and will, on request by ISIS, transfer the
relevant patent files to ISIS or a third party nominated by ISIS.  ATL agrees
not to narrow the scope of any existing VLA4 Compound Patent Rights unless
agreed with ISIS in writing.

 

(b)           If a License to Exploit is granted to ATL with respect to a
Research Target or Collaboration Compound hereunder, ISIS will promptly
thereafter transfer to ATL the sole and exclusive right to file, prosecute,
maintain, enforce and defend any Patents owned, controlled by ISIS or to which
ISIS has prosecution rights that are within the Research Target Patent Rights. 
ATL will consider ISIS’ input with respect to the prosecution, maintenance,
enforcement and defense of any such Patents.  If ATL decides to discontinue the
filing, prosecution, maintenance, enforcement or defense of any such Patent
entirely or in a particular country, it will inform ISIS thereof with sufficient
time for ISIS to assume those responsibilities with respect to such Patent and
will thereafter transfer the relevant Patent files to ISIS or its designee.

 

8.4          Infringement of Third Party Patents.

 

If either party receives notice that a Product infringes a Third Party Patent,
and the parties hereto agree to settle with and pay royalties to such Third
Party, the additional royalty burden will be allocated as follows.

 

(a)           If the alleged infringement is due to ATL’s practice of ISIS Core
Technology Patent Rights, Manufacturing Patent Rights, or VLA4 Compound Patent
Rights, [***].

 

(b)           If the alleged infringement is due to ATL’s practice of any other
Patent Rights licensed hereunder, [***].

 

8.5          Patent Coordinators.

 

(a)           Within 30 days of the Effective Date, the parties will each select
a Patent Coordinator (“PC”) to facilitate and coordinate the preparation,
filing, prosecution and maintenance of Patents pursuant to this Agreement.  The
parties may agree to name additional Patent Coordinators, as long as equal
representation is maintained.

 

(b)           During the Collaboration Term, the PCs will be the primary
contacts for interaction between the parties with respect to the activities
referenced in (a).

 

(c)           The PCs will meet as needed during the Collaboration Term. 
Meetings will be via teleconference or videoconference, or as the parties may
otherwise agree.  The frequency, dates and times of all meetings will be
mutually agreed upon by the parties.  At their first meeting, the PCs will
determine such procedures as they will reasonably require to conduct their
activities.

 

(d)           The parties further agree that to facilitate the activities
described in this Section, ATL’s Patent Coordinator may, upon prior written
notice to ISIS’ Patent Coordinator and at such times as are mutually agreed upon
by the Patent Coordinators, obtain access to and make copies of Patent file
documents that are relevant to filing, prosecution, maintenance, enforcement and
defense of Patents licensed to ATL hereunder.  Any and all such documents will
be maintained by ATL in confidence, pursuant to the provisions of Article 9
below.

 

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ARTICLE 9

 

CONFIDENTIALITY

 

9.1          Nondisclosure Obligation.

 

All Confidential Information disclosed by one party to the other party hereunder
will be maintained in confidence by the receiving party and will not be
disclosed to a Third Party or Affiliate or used for any purpose except as set
forth below.

 

9.2          Permitted Disclosures.

 

Except as otherwise provided herein, a party may disclose Confidential
Information received from the other party:

 

(a)           to governmental or other regulatory agencies in order to obtain
Patents or approval to conduct clinical trials, or to gain Marketing Approval;
provided that such disclosure may be made only to the extent reasonably
necessary to obtain such patents or approvals;

 

(b)           to Affiliates, Sublicensees (including Teva), agents, consultants,
and/or other Third Parties to allow the Exploitation of Products (or for such
parties to determine their interest in performing such activities) in accordance
with this Agreement on the condition that such Affiliates and Third Parties
agree to be bound by confidentiality obligations no less stringent than those
contained in this Agreement, provided the term of confidentiality for such
Affiliates and Third Parties will be no less than 7 years; or

 

(c)           if such disclosure is required by law or court order, provided
that notice is promptly delivered to the other party in order to provide an
opportunity to challenge or limit the disclosure obligations.

 

ARTICLE 10

 

PUBLICATION AND PUBLICITY

 

10.1        Publication.

 

(a)           The parties agree that it is customary in the industry to publish
results obtained from clinical trials and other studies of a Collaboration
Compound or Product, and that each party may publish such information obtained
by such party in the performance of the Development Program, subject to the
provisions of this Section.

 

(b)           Except as provided otherwise herein, the parties will be entitled
to publish or present on the results of any Development Program or other
development activities hereunder, including, without limitation, the development
of any ATL1102, VLA4 Compound, Other VLA4 Compound or other Collaboration
Compound, or any Product, provided that

 

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the party seeking to publish will deliver to the other party for its review a
copy of any proposed publication or an abstract of any oral presentation of
clinical results at scientific meetings involving any ATL1102, VLA4 Compound or
Other VLA4 Compound or other Collaboration Compound, or any Product hereunder,
or the Proprietary Information of the other party, at least 30 days prior to
submission of scientific publications or abstracts of oral presentations.  The
reviewing party will have the absolute right to request that any of its
Proprietary Information be deleted from such publication or presentation, and
the disclosing party will comply with that request.  If the disclosing party
does not receive any feedback from the reviewing party within that 30-day
period, the disclosing party will be free to proceed with the publication or
presentation, with the following limitations:

 

(i)            ISIS will be permitted to publish on matters relating to  ATL1102
or any VLA4 Compound or Other VLA4 Compound or other Collaboration Compound, or
any Product developed by ATL hereunder during the term of this Agreement only
upon the prior written approval of ATL, which may be reasonably withheld by ATL.

 

(ii)           ATL will be permitted to publish on matters relating to any
Manufacturing Technology or Manufacturing Technology Improvements relating to a
specific Collaboration Compound or Product developed hereunder during the term
of this Agreement only upon the prior written approval of ISIS, which may be
given at ISIS’ sole discretion.

 

(c)           For the avoidance of doubt, the provisions of this Section 10.1
will apply to Sublicensees (including Teva) to the same extent as they apply to
ATL.

 

(d)           Notwithstanding anything in this Section 10 ISIS acknowledges and
agrees that, other than in respect of the ATL1102 Phase IIa Trial, ISIS does not
have the right to publish information obtained in the performance of development
activities conducted by or on behalf of Teva relating to ATL1102, VLA4 Compounds
and Other VLA4 Compounds.

 

10.2        Publicity.

 

(a)           The parties will issue a joint press release regarding the
execution of this Agreement.

 

(b)           Except as otherwise provided herein or required by law, neither
party will originate any publication, news release or other public announcement,
written or oral, whether in the public press, or stockholders’ reports, or
otherwise, relating to this Agreement, and neither party will use the name,
trademark, trade name, logo or likeness of the other party or its employees in
any publicity, news release or disclosure relating to this Agreement, or its
subject matter, without the prior express written permission of the other party.

 

(c)           ATL will inform ISIS of any press releases relating to a Product
permitted hereunder or required to be made by law in advance of general release
to the public.

 

(d)           For the avoidance of doubt, the provisions of this Section 10.2
will apply to Sublicensees (including Teva) to the same extent as they apply to
ATL.

 

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ARTICLE 11

 

INDEMNIFICATION

 

11.1        Indemnification by ATL.

 

ATL will indemnify, defend and hold ISIS and its agents, employees, officers and
directors (the “ISIS Indemnitees”) harmless from and against any and all
liability, damage, loss, cost or expense (including reasonable attorneys’ fees)
arising out of Third Party claims or suits related to (a) ATL’s performance of
its obligations under this Agreement; (b) breach by ATL of its representations
and warranties set forth in Article 13; (c) patent infringement allegations or
claims asserted by a Third Party against ISIS arising out of ISIS’ performance
of activities for ATL pursuant to this Agreement; (d) ATL’s choice of Research
Targets pursuant to Section 3.4 or 3.5; or (e) the development, manufacture,
use, handling, storage, sale or other disposition of any Collaboration Compound
or Product by ATL or any of its Affiliates, contractors or Sublicensees
(including Teva); provided, however, that ATL’s obligations pursuant to this
Section 11.1 will not apply to the extent such claims or suits result from the
gross negligence or willful misconduct of any of the ISIS Indemnitees. 
Notwithstanding the foregoing, ATL will have no obligation to indemnify the ISIS
Indemnitees with respect to claims arising out of breach by ISIS of its
representations and warranties set forth in Section 13.1.

 

11.2        Indemnification by ISIS.

 

ISIS will indemnify, defend and hold ATL and its Affiliates and each of their
respective agents, employees, officers and directors (the “ATL Indemnitees”)
harmless from and against any and all liability, damage, loss, cost or expense
(including reasonable attorney’s fees) arising out of Third Party claims or
suits related to (a) ISIS’ performance of its obligations under this Agreement;
or (b) breach by ISIS of its representations and warranties set forth in
Article 13; provided however, that ISIS’ obligations pursuant to this
Section 11.2 will not apply to the extent that such claims or suits result from
the gross negligence or willful misconduct of any of the ATL Indemnitees. 
Notwithstanding the foregoing, ISIS will have no obligation to indemnify the ATL
Indemnitees with respect to claims arising out of (i) a breach by ATL of its
representations and warranties set forth in Sections 3.5(b)(i) and 13.1, or
(ii) ISIS’ performance of development or other activities with respect to
ATL 1102 on behalf of ATL or Teva in accordance with ATL’s or Teva’s
instructions or specifications.

 

11.3        Notification of Claims; Conditions to Indemnification Obligations.

 

As a condition to a party’s right to receive indemnification under this
Article 11, it will (i) promptly notify the other party as soon as it becomes
aware of a claim or action for which indemnification may be sought pursuant
hereto, (ii) cooperate with the indemnifying party in the defense of such claim
or suit, and (iii) permit the indemnifying party to control the defense of such
claim or suit, including without limitation the right to select defense
counsel.  In no event, however, may the indemnifying party compromise or settle
any claim or suit in a manner which admits fault or negligence on the part of
the indemnified party without the prior written consent of the indemnified
party.  The indemnifying party will have no liability under this Article 11 with
respect to claims or suits settled or compromised without its prior written
consent.

 

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ARTICLE 12

 

TERM AND TERMINATION OF AGREEMENT

 

12.1        Term and Termination of Agreement.

 

This Agreement will be effective as of the Effective Date and unless terminated
earlier pursuant to Sections 12.2 below, the term of this Agreement will
continue in effect until expiration of the License Term.

 

12.2        Termination upon Fundamental Breach.

 

(a)           General.  Subject to subsections (b) and (c) below, this Agreement
may be terminated upon written notice by either party to the other at any time
during the term of this Agreement if the other party is in fundamental breach of
its obligations hereunder (i.e., a breach which goes to the heart of the
Agreement) and has not cured such breach within 90 days after written notice
requesting cure of the breach; providing, however, that in the event of a good
faith dispute with respect to the existence of such a fundamental breach, the
90-day cure period will be stayed until such time as the dispute is resolved
pursuant to Section 16.6 hereof.  Material breaches that are not fundamental
give rise solely to a right of damages but not a right to terminate the
Agreement.

 

(b)           Fundamental Breach by ATL.

 

(i)            Relating to CD49d.  If ATL commits a fundamental breach of this
Agreement that relates to CD49d, ATL 1102 or any VLA4 Compounds, Other VLA4
Compounds or VLA4 Product for which ISIS provides written notice under
Section 12.2(a), ISIS will concurrently provide a copy of such notice to Teva in
accordance with the notice provisions of the Teva/ISIS Agreements, and Teva will
have the right to cure such breach on ATL’s behalf.

 

(ii)           Not Relating to CD49d.  Notwithstanding the provisions of
Section 12.2(a), if ATL commits a fundamental breach of this Agreement unrelated
to CD49d, ATL 1102 or any VLA4 Compounds, Other VLA4 Compounds or VLA4 Product
for which ISIS provides written notice under Section 12.2(a), ISIS will
concurrently provide a copy of such notice to Teva in accordance with the notice
provisions of the Teva/ISIS Agreements, and if such breach is not timely cured
in accordance with Section 12.2(a), this Agreement will: (A) terminate as it
relates to Research Targets other than CD49d, ATL1102 and Collaboration
Compounds other than VLA4 Compounds and Other VLA4 Compounds; and (B) remain in
full force and effect in accordance with its terms (including, without
limitation, this Section 12.2) as it relates to CD49d, ATL 1102, VLA4 Compounds
and Other VLA4 Compounds.

 

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(c)           Fundamental Breach by ISIS.  If ISIS commits a fundamental breach
of this Agreement for which ATL provides written notice under Section 12.2(a),
and such breach is not timely cured in accordance with Section 12.2(a), ATL may,
at its option, terminate this Agreement either: (i) in its entirety; or
(ii) solely as it relates to Research Targets other than CD49d, ATL 1102 and
Collaboration Compounds other than VLA4 Compounds and Other VLA4 Compounds, in
which event this Agreement will remain in full force and effect in accordance
with its terms (including, without limitation, this Section 12.2) as it relates
to CD49d, ATL 1102, VLA4 Compounds and Other VLA4 Compounds.  ATL’s notice under
Section 12.2(a) will specify which of the foregoing termination options ATL
elects.

 

12.3        Rights in Bankruptcy.

 

All rights and licenses granted under or pursuant to this Agreement by ISIS or
ATL are, and will otherwise be deemed to be, for purposes of Section 365(n) of
the U.S. Bankruptcy Code, licenses of right to “intellectual property” as
defined under Section 101 of the U.S. Bankruptcy Code.  The parties agree that
the parties, as licensees of such rights under this Agreement, will retain and
may fully exercise all of their rights and elections under the U.S. Bankruptcy
Code.  The parties further agree that, in the event of the commencement of a
bankruptcy proceeding-by or against either party under the U.S. Bankruptcy Code,
the party hereto which is not a party to such proceeding will be entitled to a
complete duplicate of (or complete access to, as appropriate) any such
intellectual property and all embodiments of such intellectual property, and
same, if not already in their possession, will be promptly delivered to them
(i) upon any such commencement of a bankruptcy proceeding upon their written
request therefor, unless the party subject to such proceeding elects to continue
to perform all of its obligations under this Agreement, or (ii) if not delivered
under (i) above, following the rejection of this Agreement by or on behalf of
the party subject to such proceeding upon written request therefor by the
non-subject party.

 

12.4        Accrued Rights and Surviving Obligations.

 

Expiration or termination of the Agreement will not relieve the parties of any
obligation accruing prior to such expiration or termination.  Sections 4.8, 12.4
and 16.7, and Articles 5-9, 11 and 13-15 will survive expiration or termination
of the Agreement.  Provisions concerning reporting requirements will continue in
effect in accordance with any applicable timetables set forth herein.  Any
expiration or early termination of this Agreement will be without prejudice to
the rights of either party against the other accrued or accruing under this
Agreement prior to termination, including the obligation to pay royalties for
Product sold prior to such termination.

 

ARTICLE 13

REPRESENTATIONS AND WARRANTIES; DISCLAIMER

 

13.1        Representations and Warranties of the parties.

 

Each party represents and warrants to the other party that, as of the Amendment
Date:

 

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(a)           Such party is duly organized and validly existing under the laws
of the state of its incorporation and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof;

 

(b)           Such party has taken all corporate action necessary to authorize
the execution and delivery of this Agreement and the performance its obligations
under this Agreement;

 

(c)           This Agreement is a legal and valid obligation of such party,
binding upon such party and enforceable against such party in accordance with
the terms of this Agreement The execution, delivery and performance of this
Agreement by such party does not conflict with any agreement, instrument or
understanding, oral or written, to which such party is a party or by which such
party may be bound, and does not violate any law or regulation of any court,
governmental body or administrative or other agency having authority over such
party.  All consents, approvals and authorizations from all governmental
authorities or other Third Parties required to be obtained by such party in
connection with this Agreement have been obtained;

 

(d)           Such party has the full and exclusive right, power and authority
to enter into this Agreement, to perform the Development Program, the
Collaborative Research Program and to grant the licenses granted hereunder;

 

(e)           There are no agreements between such party and any Third Parties
which would preclude or otherwise limit such party’s ability to conduct its
tasks and obligations under the Development Plan, the Collaborative Research
Program or otherwise fulfill its obligations under this Agreement; and

 

(f)            All individuals who will perform any activities on such party’s
behalf in connection with the Development Program and/or the Collaborative
Research Program have assigned to such party or its Affiliates the whole of
their rights in any intellectual property conceived or reduced to practice by
them as a result of either program.

 

13.2        Representations and Warranties by ATL.

 

ATL warrants and represents that to the best of its knowledge, none of the
Research Targets listed on Exhibit 3.4 as of the Amendment Date are encumbered
by any Third Party rights including, without limitation, intellectual property
rights, that would interfere with ISIS’ ability to carry out the activities
contemplated by the parties hereunder.  ATL further warrants and represents
that, to the best of its knowledge as of the Amendment Date, if ISIS makes an
Antisense Inhibitor to any of the Research Targets, it will not constitute an
infringement of any Third Party rights and that ATL will indemnify ISIS, as set
forth in Section 11.1 herein, should a subsequent determination be made that
Third Party rights were infringed.

 

13.3        Representations and Warranties by ISIS.

 

ISIS warrants and represents that, to the best of its knowledge as of the
Amendment Date, the practice of the technology claimed in the ISIS Core
Technology Patent Rights and the Manufacturing Patent Rights will not infringe
any Third Party patents.

 

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ISIS further warrants and represents, as of the Amendment Date, that: (a) the
VLA4 Compound Patent Rights set out in Exhibit 1.16(A) are enforceable,
including that all assignments and maintenance fees have been timely filed and
paid with respect to the VLA4 Compound Patent Rights; and (b) to the best of
ISIS’ knowledge as of the Amendment Date, without reference to a specific
development plan and without any investigation, the ISIS Core Technology Patent
Rights, ISIS Formulation Patent Rights, Manufacturing Patent Rights, Research
Target Patent Rights and VLA4 Compound Patent Rights, considered together,
constitute all of the Patents controlled by ISIS that are necessary for ATL to
develop and commercialize ATL 1102, the VLA4 Compounds and Other VLA4 Compounds
using the ISIS Standard Chemistry.

 

13.4        Disclaimers.

 

THE ANTISENSE INHIBITORS BEING PROVIDED TO ATL HEREUNDER ARE PROVIDED “AS IS”
AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY
PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT
INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, UNLESS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT.

 

ARTICLE 14

NOTICE

 

14.1        Notice.

 

All notices which are required or permitted hereunder will be in writing and
sufficient if delivered personally, sent by facsimile (and promptly confirmed by
personal delivery, registered or certified mail or overnight courier), sent by
nationally-recognized overnight courier or sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

 

if to ISIS, to:

Isis Pharmaceuticals, Inc.

 

1896 Rutherford Road

 

Carlsbad, CA 92008

 

USA

 

Attention: Chief Operating Officer

 

Fax No.:+1 (760) 931-9639

 

 

with a copy to:

Attention: General Counsel

 

Fax No.:+1 (760) 268-4922

 

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if to ATL, to:

Antisense Therapeutics, Limited

 

ACN 095 060 745 of Level 1

 

10 Wallace Avenue, Toorak

 

Victoria 3142, AUSTRALIA

 

Attention: CEO

 

Fax No.: +61 (3) 9826 4399

 

 

with a copy to:

Attention: General Counsel

 

Fax No.: +61 (3) 9826 4399

 

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.  Any such notice
will be deemed to have been given when delivered if personally delivered or sent
by facsimile on a Business Day, on the Business Day after dispatch if sent by
nationally-recognized overnight courier and on the third Business Day following
the date of mailing if sent by mail.

 

ARTICLE 15

RECORDS

 

15.1        Records.

 

Each party will maintain records, in sufficient detail and in good scientific
manner, which will fully and properly reflect all work done and results achieved
in the development of any VLA4 Compounds, Other VLA4 Compounds or other
Collaboration Compound, or any Product, hereunder and in the performance of its
responsibilities under each Development Plan hereunder.  Each party will have
the right, during normal business hours and upon reasonable prior notice, to
inspect and copy those records of the other party referred to herein that are
necessary or useful to the inspecting party for the purposes of making any
required filings with Regulatory Authorities in order to obtain manufacturing
approvals and/or Marketing Approvals.  Each party will maintain such records and
the information disclosed therein in confidence in accordance with Article 9. 
ISIS acknowledges and agrees that ISIS’ right of inspection under this clause
15.1 does not extend to allowing ISIS to inspect any records held by Teva under
the Teva Sublicense.

 

ARTICLE 16

MISCELLANEOUS PROVISIONS

 

16.1        Relationship of the parties.

 

It is expressly agreed that ISIS and ATL will be independent contractors and
that the relationship between the two parties will not constitute a partnership,
joint venture or agency.  Neither ISIS nor ATL will have the authority to make
any statements, representations or commitments of any kind, or to take any
action, which will be binding on the other, without the prior consent of the
other party.

 

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16.2        Successors and Assigns.

 

Neither this Agreement nor any interest hereunder may be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred by either party without the
prior written consent of the other party; provided, however, that either party
may, without such consent, assign the Agreement and its rights and obligations
hereunder to an Affiliate or in connection with the transfer or sale of all or
substantially all of its assets, or in the event of its merger or consolidation
or change in control or similar transaction.  Any permitted assignee will assume
all obligations of its assignor under the Agreement, except that no intellectual
property of any Third Party acquirer of ATL or ISIS will be included in the
licenses granted hereunder.  This Agreement will be binding upon the successors
and permitted assigns of the parties.  Any attempted assignment not in
accordance with this Section 16.2 will be void.

 

16.3        Entire Agreement; Amendments.

 

This Agreement contains the entire understanding between ATL and ISIS with
respect to the license, development and commercialization of antisense APIs
hereunder.  All express or implied agreements and understandings, either oral or
written, heretofore made by ATL and ISIS on the same subject matter (including,
without limitation, the Original Agreement) are expressly superseded by this
Agreement.  The Agreement may be amended, or any term hereof modified, only by a
written instrument duly executed by both parties hereto.

 

16.4        Force majeure.

 

Neither party will be held liable or responsible to the other party nor be
deemed to have defaulted under or breached the Agreement for failure or delay in
fulfilling or performing any term of the Agreement when such failure or delay is
caused by or results from causes beyond the reasonable control of the affected
party including, without limitation, embargoes, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, or acts of God.  The affected party will notify the
other party of such force majeure circumstances as soon as reasonably practical
and will make every reasonable effort to mitigate the effects of such force
majeure circumstances.

 

16.5        Applicable law

 

The Agreement will be governed by and construed in accordance with the laws of
the State of Delaware without reference to any rules of conflict of laws.

 

16.6        Dispute resolution

 

(a)           The parties recognize that disputes may from time to time arise
between the parties during the term of this Agreement.  In the event of such a
dispute, either party, by written notice to the other party, may have such
dispute referred to the parties’ respective executive officers designated below
or their successors, for attempted resolution by good faith negotiations within
30 days after such notice is received.  Said designated officers are as follows:

 

 

For ISIS:

Chief Operating Officer

 

For ATL:

CEO

 

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(b)           In the event the designated executive officers are not able to
resolve such dispute after such 30-day period, each party may pursue its rights
and remedies in law or equity in any court of competent jurisdiction.

 

16.7        No consequential damages

 

IN NO EVENT WILL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE TO
THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT
LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR
REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH
OR OTHER DAMAGES.

 

16.8        Third party beneficiary

 

The parties hereby acknowledge and agree that Teva is an intended third party
beneficiary of this Agreement solely as it relates to CD49d, ATL1102, VLA4
Compounds, Other VLA4 Compounds and VLA4 Products.

 

16.9        Captions

 

The captions to the several Articles and Sections hereof are not a part of the
Agreement, but are merely a convenience to assist in locating and reading the
several Articles and Sections hereof.

 

16.10      Waiver

 

The waiver by either party hereto of any right hereunder, or the failure to
perform, or a breach by the other party will not be deemed a waiver of any other
right hereunder or of any other breach or failure by said other party whether of
a similar nature or otherwise.

 

16.11      Compliance with law

 

Nothing in this Agreement will be deemed to permit a party to export, re-export
or otherwise transfer any Licensed Product sold under this Agreement without
compliance with applicable laws.

 

16.12      Severability.

 

In the event any one or more of the provisions contained in this Agreement
should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein will
not in any way be affected or impaired thereby, unless the absence of the
invalidated provision(s) adversely affect the substantive rights of the
parties.  The parties will in such an instance use their best efforts to replace
the invalid, illegal or unenforceable provision(s) with valid, legal and
enforceable provision(s) which, insofar as practical, maintains the balance of
the rights and obligations of the parties under this Agreement.

 

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16.13      Waiver of Rule of Construction.

 

Each party has had the opportunity to consult with counsel in connection with
the review, drafting and negotiation of this Agreement.  Accordingly, the
rule of construction that any ambiguity in this Agreement will be construed
against the drafting party will not apply.

 

16.14      Counterparts.

 

The Agreement may be executed in two or more counterparts, each of which will be
deemed an original, but all of which together will constitute one and the same
instrument.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Amendment
Date.

 

ANTISENSE THERAPEUTICS, LIMITED

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

 

By:

/s/ Mark Diamond

 

By:

/s/ B. Lynne Parshall

 

 

 

Name:

 

Mark Diamond

 

Name:

 

B. Lynne Parshall

 

 

 

Title:

 

MD & CEO

 

Title:

 

COO & CFO

 

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CONFIDENTIAL TREATMENT REQUESTED

 

EXECUTION VERSION (02/08/08)

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

 

 

 

EXHIBIT 1

 

DEFINITIONS

 

1.1          “Abandoned Research Target” has the meaning set forth in
Section 3.5(d) herein.

 

1.2          “Active Program” in relation to a Collaboration Compound or Product
means an ongoing program for optimizing, developing and commercializing such
Collaboration Compound or Product, including preclinical studies, human clinical
studies, development activities aimed at obtaining registration for marketing,
and marketing and selling activities.  Except as set forth in Section 2.2(b), an
Active Program includes the following specific “Development Milestones” that
must be met in order for the Collaboration Compound or Product to achieve and
maintain “Active Development” status:

 

(a)           initiation of phenotypic or functional assays by ATL within 12
months of ATL’s receipt of reasonably sufficient quantities of the Antisense
Inhibitors directed to a Research Target and corresponding control
oligonucleotides;

 

(b)           initiation of IND-enabling toxicology studies by ATL within 18
months of ATL’s receipt of an Antisense Inhibitor directed to a Research Target;

 

(c)           filing of an IND not later than 6 months after the completion of
IND-enabling studies;

 

(d)           initiation of Phase I studies not later than 6 months after the
filing of the IND;

 

(e)           initiation of Phase IIa studies not later than 24 months after the
initiation of Phase I studies;

 

(f)            initiation of Phase III studies not later than 3 years after the
initiation of Phase IIa studies;

 

(g)           filing of an NDA not later than 18 months after the successful
completion of a pivotal trial; and

 

(h)           the use of commercially reasonable efforts by ATL to bring each
Product to market and to maximize the commercial value of each such Product
worldwide.

 

If ATL will not be able to meet a Development Milestone set forth above for
[***], ATL will be granted a [***]month extension on any of the milestones
identified in above, provided that ATL (i) gives the JDC members at least [***]
months’ prior written notice that it is [***], and (ii) demonstrates to the JDC
that it has [***].  If the JDC cannot agree on this issue, the matter will be
referred to the designated officers of ATL and ISIS for resolution, consistent
with the provisions of Section 16.6(a).

 

Except as set forth in Section 2.2(b)(i) herein, a compound that is in “Active
Development” is one that is in an Active Program, as defined above.

 

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1.3          “Affiliate” with respect to any person, organization, corporation
or other business entity (collectively, “Person”), means any other Person
controlling, controlled by, or under common control with such Person.  For
purposes of this definition, “control” refers to the possession, directly or
indirectly, of the power to direct the management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise, of
a Person.

 

1.4          “Amendment Date” has the meaning set forth in the first paragraph
of this Agreement.

 

1.5          “Antisense Inhibitor” means an oligonucleotide or analog thereof
that inhibits protein synthesis at the nucleic acid level by specifically
binding to the sequence of a selected messenger or viral ribonucleic acid (RNA)
by base-pairing, thus causing a selective inhibition of gene expression.

 

1.6          “Antisense Technology” means the selective modulation of protein
synthesis at the nucleic acid level caused by the binding of an oligonucleotide
or an analog thereof to a complementary sequence.

 

1.7          “ATL 1102” means the Antisense Inhibitor (also known as
ISIS 107248) that inhibits production of CD49d and comprises the sequence
claimed as [***] and ISIS Standard Chemistry as set forth in Exhibit 1.7.

 

1.8          “ATL Invention” has the meaning set forth in Section 8.1(b).

 

1.9          “ATL Patent” has the meaning set forth in Section 8.1(b).

 

1.10        “ATL Sublicense” has the meaning set forth in Section 4.3(b).

 

1.11        “Australian Approval” means approval of a Product for marketing in
Australia by the Therapeutic Goods Administration (“TGA”), without the
requirement for price having been approved.  If a Product can be sold in
Australia without TGA approval, Australian Approval will be deemed to have been
obtained on the first sale of a Product in Australia.

 

1.12        “Business Day” means any calendar day, except that if an activity to
be performed or an event to occur (including, without limitation, the receiving
of a notice under Article 14 and other communications) falls on a Friday,
Saturday, Sunday, or a recognized public or bank holiday (as determined in the
place of performance of the applicable activity or occurrence of the applicable
event), then the activity may be performed or the event may occur on the next
day that is not a Saturday, Sunday, or a public or bank holiday.

 

1.13        “Calendar Quarter” means the respective periods of 3 consecutive
calendar months ending on March 31, June 30, September 30 and December 31.

 

1.14        “Calendar Year” means each successive period of 12 months commencing
on January 1 and ending on December 31.

 

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1.15        “Change of Control” means the consummation, after the Amendment
Date, of a transaction or a related series of transactions in which: (a) any
Third Party becomes the beneficial owner, directly or indirectly, of more than
50% of the total voting power of ATL’s or ISIS’ (as applicable) stock then
outstanding normally entitled to vote in elections of directors; (b) ATL or ISIS
(as applicable) consolidates with or merges into a Third Party, or any Third
Party consolidates with or merges into ATL or ISIS, in either event pursuant to
a transaction in which more than 50% of the total voting power of the stock
outstanding of the surviving entity normally entitled to vote in elections of
directors is not held by Persons holding at least 50% of the outstanding voting
stock of ATL or ISIS preceding such consolidation or merger; or (c) ATL or ISIS
conveys, transfers or leases all or a substantial portion of its assets relating
to ATL 1102, VLA4 Compounds, Other VLA4 Compounds or VLA4 Products to a Third
Party.

 

1.16        “CD49d” means the target that is modulated by ATL 1102, which is
known as CD49d and is a Research Target hereunder.

 

1.17        “Collaboration” has the meaning set forth in Section 2.1.

 

1.18        “Collaboration Compound” means an Antisense Inhibitor of a Research
Target that is discovered or developed by ISIS that (i) incorporates Antisense
Technology; (ii) incorporates ISIS Standard Chemistry; (iii) is subject to a
License to Research or License to Exploit hereunder; and (iv) is in Active
Development, consistent with Section 1.2 herein.

 

1.19        “Collaboration Compound Product” means a product containing a
Collaboration Compound.

 

1.20        “Collaboration Term” means the term of the Collaborative Research
Program as set forth in Section 3.1.

 

1.21        “Collaborative Research Plan” has the meaning set forth in
Section 3.1, as further detailed in Exhibit 3.1.

 

1.22        “Collaborative Research Program” means the research program
described in Article 3, as modified from time to time by the parties (e.g., via
the JRC).

 

1.23        “Confidential Information” means information which is (a) of a
confidential and proprietary nature; (b) designated by either party as
Confidential Information or Proprietary Information; and (c) not readily
available to that party’s competitors and which, if known by a competitor of
that party, might lessen any competitive advantage of that party or give such
competitor a competitive advantage. Confidential Information which is disclosed
in oral, written, graphic, electronic or any other form by one party to the
other party that is clearly marked as “confidential” or “proprietary.” Oral
information must be reduced to writing and designated as “confidential” within
30 days of disclosure.

 

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For the purposes of this Agreement, “Confidential Information” includes, without
limitation, (a) information that is proprietary or confidential or which is
treated by that party as confidential and which relates either directly or
indirectly to the business of that party regardless of the form in which that
information is constituted, and which is not lawfully in the public domain; and
(b) any confidential information in relation to Patents, technology, know-how,
or any improvements owned or controlled by a party hereto.

 

“Confidential Information” will not include any information that the receiving
party can establish by written records:

 

(i)            was known by it prior to the receipt of Confidential Information
from the disclosing party;

 

(ii)           was disclosed to the receiving party by a Third Party having the
right to do so;

 

(iii)          was, or subsequently became, in the public domain through no
fault of the receiving party, its officers, directors, employees or agents;

 

(iv)          was concurrently or subsequently developed by personnel of the
receiving party without having had access to the disclosing party’s Confidential
Information;

 

(v)           as disclosed with the prior written consent of the disclosing
party; or

 

(vi)          was disclosed by the receiving party pursuant to any judicial or
governmental request, requirement or order, so long as the receiving party
provides the disclosing party with sufficient prior notice in order to allow the
disclosing party to contest such request, requirement or order.

 

1.24        “Consultant” means an individual who is not an employee of either
party hereto, but who has been engaged by a party hereto in order to perform
certain activities, wherein that individual has an obligation to assign to the
engaging party, at the time an Invention is made, all rights that individual may
have in such Invention.

 

1.25        “[***] Targets” means those Research Targets designated as [***]
Targets, as listed in Section A of Exhibit 3.4.

 

1.26        “Development Milestones” means the Development Milestones set forth
in Section 1.2 hereinabove.

 

1.27        “Development Plan” means the plan for the development of any
Antisense Inhibitor or Collaboration Compound hereunder.

 

1.28        “EC/EMEA Approval” means approval of a Product for marketing in the
European Commission (EC), or if ATL seeks approval through mutual recognition in
the European Union, by the Ministry of Health of the United Kingdom, France,
Germany, Italy or Spain (each a “Major European Country”), without the
requirement for price having been approved.  If a Product can be legally sold in
a Major European Country without EC or Ministry of Health approval, EC/EMEA
Approval will be deemed to have been obtained on the first sale of a Product in
a Major European Country.

 

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1.29        “Effective Date” has the meaning provided in the “Introduction and
Overview” set forth on the first page of this Agreement.

 

1.30        “Exploit” means to research, develop, test, import, export, make,
have made, use, market, manufacture, sell, offer for sale, register, record,
have sold, sublicense, commercialize, distribute and otherwise exploit.

 

1.31        [***].

 

1.32        [***].

 

1.33        “IND” means an Investigational New Drug Application or similar
application or submission for approval to conduct human clinical investigations
filed with or submitted to a Regulatory Authority or hospital ethics committee
in conformity with applicable Regulatory Authority regulations.

 

1.34        “Independently-Generated Information” has the meaning set forth in
Section 4.8(e) herein.

 

1.35        “IND-Enabling Studies” means, at a minimum, the pharmacokinetic and
toxicology studies required to meet the safety regulations for filing an IND, as
well as any additional studies required by a Regulatory Authority or hospital
ethics committee as a prerequisite to filing an IND.

 

1.36        “Integrated Product Plan” or “IPP” means a plan for the development,
commercialization and marketing of a Collaboration Compound hereunder.  The IPP
will include Product charter, strategic intent, a market analysis (event maps -
demographics, market dynamics), label need and wants (based on the applicable
Development Plan), Product life overview, geographic overview, and financial
overview.  In addition, a global marketing plan will be developed and
incorporated into the IPP which includes analysis of market (disease overview,
Product profile, archetype, patient segmentation), strategic ends (strategic
intent, product positioning, brand character, core messages, critical success
factors, marketing objectives) strategic means (global Product, place, price,
promotion, launch, market research programs), operational plan (implementation
plan, marketing activities) and budget for the execution of the plan.  Each IPP
will also include appropriate milestones and the dates upon which such
milestones must be met by ATL, as agreed upon by the parties hereto.

 

1.37        “Invention” has the meaning set forth in Section 8.1 herein.

 

1.38        [***] means all Patents owned by ISIS as of the Effective Date or
during the Collaboration Term that claim any of [***].

 

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1.39        “ISIS Core Technology Patent Rights” means the Patents owned by ISIS
as of the Effective Date or during the Collaboration Term that claim ISIS
Standard Chemistry, the cellular mechanisms of action by which phosphorothioate
antisense oligonucleotides incorporating the ISIS Standard Chemistry exert their
effect, or to methods of treatment using such oligonucleotides.  ISIS Core
Technology Patent Rights also include the [***].  The ISIS Core Technology
Patent Rights as of the Amendment Date are the Patents listed in Exhibit 1.39. 
Upon ATL’s written request no more than once per year, ISIS will update
Exhibit 1.39 and provide such updated exhibit to ATL.

 

1.40        “ISIS Formulation Patent Rights” means the Patents owned by ISIS as
of the Effective Date or during the Collaboration Term that claim topical
formulations incorporating antisense oligonucleotides made using ISIS Standard
Chemistry, methods of making formulations containing such oligonucleotides for
topical administration, or methods of treatment using such topical
formulations.  The ISIS Formulation Patent Rights as of the Amendment Date are
the Patents listed in Exhibit 1.40.

 

1.41        “ISIS FTE Rate” means the compensatory rate to be paid per FTE at
ISIS for all activities under this Agreement.  As used herein, “FTE” means the
equivalent of the scientific or technical work of at least a total of [***] on
or directly related to the Collaborative Research Program or a Development
Program hereunder, carried out by a qualified employee or consultant. 
Scientific or technical work can include, but is not limited to, [***]  The ISIS
FTE Rate is [***] for any of the following activities: [***].

 

1.42        “ISIS Invention” has the meaning set forth in Section 8.1(b).

 

1.43        “ISIS Net Royalty” means [***].

 

1.44        “ISIS Patent” has the meaning set forth in Section 8.1(b).

 

1.45        “ISIS Patent Rights” means all rights in Patents owned by ISIS that
are within the ISIS Core Technology Patent Rights, the Manufacturing Patent
Rights, the ISIS Formulation Patent Rights, or the Research Target Patent
Rights.

 

1.46        “ISIS Standard Chemistry” means the technology, whether or not
subject to a Patent, that is owned, acquired or controlled by ISIS as of the
Effective Date or during the Collaboration Term that claims or covers linkages
and sugar units in an antisense oligonucleotide, wherein such linkages include
phosphorothioate linkages and such sugar units include a combination of deoxy
sugar units and 2’-O-[methoxyethyl] (MOE) modified sugar units with natural and
methyl substituted heterocycle bases (“MOE Gapmer Technology”).  ISIS Standard
Chemistry also includes the technology owned, acquired or controlled by ISIS as
of the Effective Date that claims or covers the cellular mechanisms of action by
which MOE Gapmer Technology antisense oligonucleotides exert their effect.  ISIS
Standard Chemistry does not include any target gene-specific technology.

 

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1.47        “Japanese Approval” means the approval of a Product for marketing in
Japan by the Japanese Ministry of Health and Welfare (or any future equivalent
process), together with any other approval necessary to make and sell Product
commercially in Japan without the requirement for price having been approved. 
If a Product can be sold in Japan without Ministry of Health and Welfare
approval, Japanese Approval will be deemed to have been obtained on the first
sale of a Product in Japan.

 

1.48        “License to Exploit” has the meaning set forth in Section 4.2.

 

1.49        “License to Research” has the meaning set forth in Section 4.1.

 

1.50        “License Term” has the meaning set forth in Section 4.0.

 

1.51        “Major Market” means any one of the following countries: the United
States, Australia, Japan, the United Kingdom, France, Germany, Italy or Spain,
except that [***] and [***] will not be considered Major Markets for the
purposes of the License to Exploit the ATL 1102, VLA4 Compounds, Other VLA4
Compound and VLA4 Products.

 

1.52        “Manufacture” or “Manufacturing” or “Manufactured” means all
operations involved in the manufacturing, quality control testing (including
in-process, release and stability testing, if applicable), releasing, and
shipping a Product.

 

1.53        “Manufacturing Patent Rights” means the Patents owned by ISIS as of
the Effective Date or during the Collaboration Term that claim the Manufacturing
Technology.  The Manufacturing Patent Rights as of the Amendment Date are the
Patents listed in Exhibit 1.53.

 

1.54        “Manufacturing Process” means the process steps set forth in master
batch records for ATL 1102 in the version existing as of the Effective Date,
including reasonable minor variants and extensions of process steps thereof.

 

1.55        “Manufacturing Technology” means any and all scientific and
technical data and information including without limitation formulas, methods,
techniques, protocols, and processes owned or controlled by ISIS as of the
Effective Date or during the Collaboration Term which are necessary or useful
for performing the Manufacturing Process.

 

1.56        “Marketing Approval” means the act of a Regulatory Authority
necessary for the marketing and sale of the Product in a country or regulatory
jurisdiction, including, without limitation, the approval of the NDA by the FDA,
Australian Approval, EC/EMEA Approval, and Japanese Approval.

 

1.57        “NDA” means New Drug Application or similar application or
submission for approval to market and sell a new pharmaceutical product filed
with or submitted to a Regulatory Authority in conformity with applicable
Regulatory Authority regulations.

 

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1.58        “Net Sales” means, with respect to a Product, the gross amount
invoiced by ATL or ISIS, as appropriate, or by their Affiliates or sublicensees,
to unrelated Third Parties for the Product, less:

 

(a)           Trade, quantity and cash discounts allowed;

 

(b)           Commissions, discounts, refunds, rebates, chargebacks, retroactive
price adjustments, and any other allowances which effectively reduce the net
selling price;

 

(c)           Credits for actual Product returns;

 

(d)           Any tax imposed on the production, sale, delivery or use of the
Product, including, without limitation, sales, use, excise or value added taxes;

 

(e)           Allowance for distribution expenses at levels customary in the
industry; and

 

(f)            Any other similar and customary deductions.

 

“Net Sales” excludes:

 

(i)            The transfer of reasonable and customary quantities of free
samples of Product(s) and the transfer of Product(s) as clinical trial
materials, other than for subsequent resale;

 

(ii)           Sales or transfers of Product(s) among ATL and its Affiliates,
unless the receiving party is the consumer or user of the Product; and

 

(iii)          Use by ATL or its Affiliates or sublicensees of Product for any
use connected with the securing of regulatory approval or validating of a
manufacturing process or the obtaining of other necessary Marketing Approvals
for Product (unless such Product is subsequently sold).

 

1.59        [***] means an Antisense Inhibitor, or other antisense inhibitor
that [***].

 

1.60        [***].

 

1.61        “Original Agreement” has the meaning provided in the “Introduction
and Overview” set forth on the first page of this Agreement.

 

1.62        “Other VL4A Compound” means an Antisense Inhibitor, or other
antisense inhibitor that incorporates other Antisense Technology, discovered by
ISIS that (i) acts predominantly by hybridizing to CD49d or CD29 mRNA or
pre-mRNA or that is designed to act by hybridizing to CD49d or CD29 mRNA or
pre-mRNA, in each case to inhibit production of VLA4, and that incorporates ISIS
Standard Chemistry, (ii) does not exist as of the Amendment Date and (iii) is
not a VLA4 Compound.

 

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1.63        “Patent” or “Patents” means (a) patent applications (including
provisional applications and applications for certificates of invention);
(b) any patents issuing from such patent applications (including certificates of
invention); (c) all patents and patent applications worldwide based on,
corresponding to, or claiming the priority date(s) of any of the foregoing;
(d) any reissues, substitutions, confirmations, registrations, validations,
re-examinations, additions, continuations, continued prosecution applications,
continuations-in-part, requests for continued examination, or divisions of or to
any of the foregoing; and (e) term extension or other governmental action which
provide exclusive rights to a Product beyond the original patent expiration
date.

 

1.64        “Product” means a VLA4 Product, any other Collaboration Compound
Product or a Research Target Compound Product.

 

1.65        “Regulatory Authority” means any applicable government regulatory
authority involved in granting approvals for the marketing and/or pricing of a
Product worldwide including, without limitation, the United States Food and Drug
Administration (“FDA”) and any successor government authority having
substantially the same function, and foreign equivalents thereof.

 

1.66        “Research Services” means discovery and design of Antisense
Inhibitors of one or more Research Targets, supply of such Antisense Inhibitors
to ATL, and/or evaluation of such Antisense Inhibitors in various functional
assays.

 

1.67        “Research Target” means a gene product – usually, a protein – that
may be modulated by another molecule, such as an antisense drug.  Modulation of
a Research Target may be accomplished in a variety of ways including, without
limitation, the modulation of the synthesis, function or degradation of a
Research Target, or the expression of the corresponding gene.

 

1.68        “Research Target Compound” means a compound that modulates a
Research Target or Abandoned Research Target that was discovered by ATL alone or
as part of a bona fide drug discovery collaboration with a Third Party in which
ATL played a significant role.

 

1.69        “Research Target Compound Product” means a product containing a
Research Target Compound.

 

1.70        “Research Target Patent Rights” means the Patents owned by ISIS as
of the Effective Date or during the Collaboration Term that claim antisense
oligonucleotides that modulate a Research Target, methods of making such
oligonucleotides, or methods of treatment using such oligonucleotides.  The
Research Target Patent Rights thus include the VLA4 Compound Patent Rights set
out in Exhibit 1.16.  The Research Target Patent Rights will be updated from
time to time as new Patents are added.

 

1.71        “Sublicensee” means any Third Party (including a distributor) to
which ATL or any of its Affiliates grants any right to make, use, market, or
import and sell a Product.

 

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A Third Party who is granted only the right to import and sell a Product (such
as a wholesaler) will not be considered a Sublicensee.  Without limiting the
generality of the foregoing, during the term of the Teva Sublicense, Teva will
be considered a Sublicensee.

 

1.72        “Sublicensee Market” has the meaning set forth in
Section 2.5(b)(ii) herein.

 

1.73        “Sublicensee Product Plan” or “SPP” has the meaning set forth in
Section 2.5(b)(ii)(A) herein.

 

1.74        “Sublicense Income” means all consideration paid to ATL from
Sublicensees pursuant to a sublicense by ATL or an Affiliate of ATL including,
without limitation, up-front license fees, milestones, and royalties.  If
non-monetary consideration is received from Sublicensees by ATL or its
Affiliates, then a commercially reasonable monetary value will be assigned for
purposes of calculating Sublicense Income.

 

1.75        “Technology” means inventions (whether or not patentable), know-how,
trade secrets, research tools, materials, and technical information, including
but not limited to information in the form of research data, databases,
experimental procedures, designs, formulas, and process information.

 

1.76        “Teva” has the meaning provided in the “Introduction and Overview”
set forth on the first page of this Agreement.

 

1.77        [***].

 

1.78        “Teva/ISIS Agreements” means that certain VLA4 Partner Support
Agreement between ISIS and Teva and that certain Drug Supply, Manufacture and
Technology Transfer Agreement between ISIS and Teva, each dated as of the
Amendment Date.

 

1.79        “Teva Sublicense” has the meaning specified in the “Introduction and
Overview” set forth on the first page of this Agreement.

 

1.80        “Third Party” means any party other than ISIS or ATL and their
respective Affiliates.

 

1.81        “Third Party Intellectual Property” means any intellectual property
owned by a Third Party.

 

1.82        “Third Party Patent Rights” means the [***].

 

1.83        [***].

 

1.84        “VLA4” means the biological target known as [***].

 

1.85        “VLA4 Compounds” means Antisense Inhibitors, whether or not
including ATL1102, discovered by ISIS that (i) are covered by any claim within
the VLA4 Compound Patent Rights (including any Antisense Inhibitor targeting
CD49d or CD29) and incorporate ISIS Standard Chemistry and (ii) exist as of the
Amendment Date.

 

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1.86        “VLA4 Compound Patent Rights” means the Research Target Patent
Rights owned by ISIS as of the Amendment Date that claim ATL 1102, methods of
making ATL 1102 for therapeutic use, or methods of using ATL 1102 for
therapeutic applications, as listed in Exhibit 1.16 hereto.

 

1.87        “VLA4 Product” means a product containing ATL1102, a VLA4 Compound
or Other VLA4 Compound as an active ingredient.

 

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EXHIBIT 1.7

 

ANTISENSE INHIBITOR

 

ATL 1102

 

[***]

 

53

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EXHIBIT 1.16

 

VLA4 Compound Patent Rights

 

[***]

 

54

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EXHIBIT 1.31

 

[***]

 

55

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EXHIBIT 1.32

 

[***]

 

56

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EXHIBIT 1.39

 

[***]

 

57

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EXHIBIT 1.40

 

[***]

 

58

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EXHIBIT 1.53

 

[***]

 

59

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EXHIBIT 1.59

 

[***]

 

EXHIBIT 1.80

 

[***]

 

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EXHIBIT 3.4

RESEARCH TARGETS

 

[***]

 

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