Exhibit 10.1


EXECUTION COPY


CONFIDENTIAL
TREATMENT REQUESTED

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






 


COLLABORATION
AND LICENSE AGREEMENT


between


ISIS PHARMACEUTICALS, INC.


and


BRISTOL-MYERS
SQUIBB COMPANY






 
















COLLABORATION AND LICENSE AGREEMENT


THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”)
is made and entered into effective as of May 8, 2007 (the “Effective
Date”), by and between Bristol-Myers Squibb
Company, a Delaware Corporation (“BMS”)
and Isis Pharmaceuticals, Inc., a Delaware
Corporation (“Isis”).  BMS and Isis each may be referred to herein
individually as a “Party,” or collectively as
the “Parties.”


WHEREAS, Isis
possesses certain patent rights, know-how and technology with respect to certain
oligonucleotide based therapeutic compounds;


WHEREAS, Isis
and BMS each desire to collaborate in the performance of a Research Program for
the purpose of discovery and preclinical development of Compounds suitable for
development for human therapeutic uses, with the objective of identifying one
or more Compounds for BMS to advance into human clinical trials; and


WHEREAS, BMS
will have exclusive rights and will be solely responsible for the clinical
development and commercialization of Products worldwide, in each case on the
terms set forth in this Agreement.


NOW, THEREFORE,
in consideration of the foregoing and the mutual covenants herein contained,
the Parties do hereby agree as follows.


ARTICLE 1 - DEFINITIONS


The
terms used in this Agreement with initial letters capitalized, whether used in
the singular or the plural, shall have the meaning set forth in Appendix 1, or
if not listed in Appendix 1, the meaning designated in places throughout
the Agreement.


ARTICLE 2 - 

GRANT OF RIGHTS; EXCLUSIVITY


Section 2.1            License Grant to BMS.


(a)           Exclusive
License.  Subject to the terms
and conditions of this Agreement and the limitations set forth in Section 2.4
below, Isis hereby grants to BMS an exclusive license, with the limited right
to grant sublicenses as set forth in Section 2.1(b) below, under the Isis Know-How
and Isis Patent Rights to research, develop, make, have made, use, sell, offer
for sale, have sold, export and import Compounds and Products in the Field in
the Territory.  Without limiting the
representations and warranties of Isis under Article 12, to the extent that
Isis is only permitted to grant BMS a nonexclusive license with respect to any
Isis Know-How and Isis Patent Right that is in-licensed by Isis under the
applicable Third Party in-license agreement, the foregoing license to BMS shall
be nonexclusive.


(b)           Sublicenses.  The licenses granted to BMS under this
Section 2.1 are sublicensable only in connection with a license of a Compound
or Product to any Affiliate of BMS or to any Third Party, in each case for the
continued Development and Commercialization of such Compound or Product in
accordance with the terms of this Agreement, provided
that (i) such Affiliate or Third Party shall agree in writing to be bound by
and subject to all applicable terms and conditions of this Agreement in the
same manner and to the same extent as BMS, (ii)













BMS shall remain responsible
for the performance of this Agreement and shall cause such Affiliate or Third
Party to comply with the applicable terms and conditions of this Agreement,
(iii) BMS names Isis as a third party beneficiary with the right to directly
enforce Article 7 (Confidentiality) of this Agreement against such Affiliate or
Third Party and (iv) BMS promptly notifies Isis in writing specifically identifying
the Isis Know-How to be disclosed to such Third Party and identifying by
name such Third Party.  In addition to
the requirements and limitations set forth above, with respect to the Isis
Manufacturing Technology, BMS (or its Affiliate or Licensee) may only
sublicense the Isis Permitted Manufacturing Technology, and in each case, BMS
(or its Affiliate or Licensee) will use appropriate precautions and include
provisions in such sublicense to protect the Isis Know-How such that the
sublicensee will not use any Isis Know How to manufacture any other ASOs for
Third Parties.  In addition, the rights
granted to BMS under Section 2.1 may be sublicensed or extended by BMS to Third
Party contractors solely for purposes of having activities performed by such
Third Party contractor on BMS’ (or its Affiliate’s or Licensee’s) behalf for
the Development and Commercialization of Compounds and Products.


Section 2.2            Exclusivity.  During the Research Term and
continuing thereafter so long as the exclusive license granted to BMS under
Section 2.1 is in effect and subject to the limitations set forth in Section
2.4 below, Isis agrees that it will not work independently of this Agreement
for itself or any Third Party (including the grant of any license to any Third
Party) with respect to discovery, research, Development and/or
Commercialization activities with respect to ASOs (or conjugates or prodrugs
thereof) that [***] mRNA or pre-mRNA or that are designed to [***] mRNA or pre-mRNA
or products containing such ASOs (or conjugates or prodrugs thereof).


Section 2.3            Covenant Not to Sue. 
Isis understands that
Isis will be sharing and exposing BMS to the Isis Technology as part of this
Agreement and that, from time to time, [***] (but not [***]) using certain Isis
Technology.  As such and in recognition
of the significant collaborative relationship between Isis and BMS under this
Agreement, Isis covenants, for itself and its Affiliates and their successors,
not to either directly or indirectly make, file, bring or maintain any claim,
demand or lawsuit (a “Claim”)
against BMS or its Affiliates, which Claim asserts [***] any of (i) the [***]
through the Research Term, (ii) the [***] or (iii) the [***].  This Section 2.3 shall survive any
termination of this Agreement other than when terminated by Isis under Section
9.3.


Section 2.4            License Conditions; Limitations.


(a)           During the Research Term, in order to
maintain the license granted to BMS under Section 2.1, BMS must meet its
obligations to fund the Research Program in accordance with Section 3.5 and
Section 5.2.  If BMS fails to meet such
obligations to fund the Research Program, Isis shall have the right, as set
forth in Section 9.3, to terminate the Agreement, including the licenses
granted to BMS under Section 2.1.


(b)           After the expiration of the Research
Term, in order to maintain the license granted to BMS under Section 2.1, BMS
must meet its obligations to use Commercially Reasonable Efforts under Section
4.1.  If BMS fails to meet its obligations
to use Commercially Reasonable Efforts under Section 4.1, Isis shall have the
right, as set forth in Section 9.3, to terminate the Agreement, including the
licenses granted to BMS under Section 2.1.


(c)           The licenses and exclusivity granted
under this Article 2 are subject to and limited by the (i) Isis In-License
Agreements and (ii) Prior Third Party Agreements, each as listed in Appendix 6
attached hereto and incorporated herein by reference.



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(d)           In addition, notwithstanding any
other provision of this Agreement, Isis retains the right to grant Permitted
Licenses.


ARTICLE 3 - 

RESEARCH PROGRAM


Section 3.1            Research Program. 
During the Research
Term, the Parties will collaborate in carrying out a research program to
discover and preclinically Develop Compounds suitable for further clinical
Development for human therapeutic uses (the “Research Program”).  The Research Program will be carried out in
accordance with the Research Plan.  The
Research Program will initially focus on [***]The Research Program will also
include activities directed toward[***] 
The objective of the Research Program will be to identify one or more
Compounds for BMS to advance into human clinical trials and ultimately
Commercialize as Products (the “Objective”).  As
further set forth in the Research Plan and in accordance with the other terms
and conditions of this Agreement, Isis will be responsible for (i) [***]
Compounds suitable for clinical Development, (ii) the supply of all ASO
compounds in support of the Research Program, (iii) the [***] testing of lead
Compounds (with BMS), (iv) carrying out IND-Enabling Studies for ECNs (with
BMS) and (v) the preparation of the CMC section relating to the API
manufactured by Isis for any IND.  In
addition, as described further below, Isis shall be responsible for the supply of
all API for IND-Enabling Studies and for use for clinical Development
through completion of Phase IIb Trials.


The Research Program will be conducted by each Party in good scientific
manner, and in compliance with all applicable good laboratory practices, and
applicable legal requirements, to attempt to achieve efficiently and
expeditiously the objectives of the Research Program.  Each Party will comply with all Applicable
Laws, in the performance of work under this Agreement.


Each
Party will maintain laboratories, offices and all other facilities at its own
expense and risk necessary to carry out its responsibilities under the Research
Program pursuant to the Research Plan. 
Each Party agrees to make its employees reasonably available at their
respective places of employment to consult with the other Party on issues
arising during the performance of the Research Program.  BMS and Isis will cooperate with each other in carrying out the
Research Program, and each Party will contribute its relevant know-how and
experience necessary to carry out the Research Program.


Section 3.2            Research Term.


3.2.1       The Research Program will be carried out
during the [***] year period following the Effective Date (the “Research Term”).  BMS shall have the option to extend the Research
Term for [***] additional 1 year periods on a year-by-year basis after the
initial 3 year period.  In order to
exercise its option to extend the Research Term, BMS must provide Isis a
written notice exercising BMS’ right to extend the Research Term at least [***]
days prior to the scheduled expiration of the Research Term (i.e., the
applicable anniversary of the Effective Date). 
If BMS does not provide such written notice, the Research Term will end
when scheduled (i.e., on the applicable anniversary of the Effective
Date).  In addition, at least [***] days
prior to the scheduled expiration of the Research Term (i.e., the applicable
anniversary of the Effective Date) BMS will provide Isis with a nonbinding, good
faith indication of whether or not BMS intends to extend the Research Term.


3.2.2       For each extension of the Research Term under
Section 3.2.1, the Parties will negotiate in good faith a mutually agreed
amendment and restatement of the Research Plan



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which
will include an appropriate number of FTEs committed to perform the work
required under such Research Plan.


Section 3.3            Joint Research Committee; Working Group.  The Parties will establish and maintain a joint research committee (the
“Joint Research
Committee” or “JRC”) comprised of an equal number of representatives
from each Party to oversee the conduct of the Research Program.  The JRC will be established, operated and
governed in accordance with the policies and procedures set forth in Appendix 5
attached hereto (the “JRC
Charter”).  The JRC
Charter may be amended only with the unanimous approval of the JRC members.


The JRC will be responsible
for the overall management of the Research Program, and for approving changes
and updates to the Research Plan.  The
JRC will be responsible for reviewing and approving recommendations, plans,
allocation of resources and other activities in support of the Research
Program, and preparing and implementing the Research Plan, with the objective
of expeditiously identifying Compounds and other objectives in accordance with
the Research Plan.  The JRC shall be
responsible for the monitoring, reviewing and recording the progress of the
Research Program.  In addition, the JRC
shall be responsible for setting, and monitoring the spending against, the
budget for Research Program Costs, as set forth in the Research Plan.


Any changes to the Research
Plan and assignment and allocation of work to be performed by the BMS-funded
Isis FTEs shall require the approval of the JRC.  The JRC will be responsible for review of progress of the Research Program and facilitate  the prosecution of
the Program Patent Rights in accordance with Article 8 below.


Unless the Parties agree
otherwise, the JRC will be comprised of 6 members with 3 representatives
appointed by Isis and 3 representatives appointed by BMS.  The JRC shall be co-chaired jointly by
a representative of each Party.  Either
Party may appoint substitute or replacement members of the JRC to serve as
their representatives upon notice to the other Party.  The initial members of the JRC shall be
appointed by the Parties within 10 days following the Effective Date.


As needed, the JRC shall
establish subcommittees and working groups that will report to the JRC to
further the objectives of the Research Program.


The JRC and any subcommittees
and working groups established by the JRC will dissolve at the end of the
Research Term.


Section 3.4            Research Plan.


3.4.1       The Research Program will be carried out in
accordance with a written research plan (the “Research Plan”). 
The initial Research Plan, that has been agreed to by the Parties as of the
Effective Date is hereby incorporated into this Agreement by reference and is
made a part of this Agreement.  The purpose of the Research Plan is to detail
the responsibilities and activities of Isis and BMS with respect to carrying
out the Research Program.  The Research
Plan will include a description of the specific activities to be performed by
the Parties in support of the Research Program, the allocation of Isis FTEs to
perform such activities, and projected timelines for completion of such
activities and the desired specifications for the Compounds.  In April of each Research Year (starting in
2008), the JRC will review and update the Research Plan.  The Research Plan may only be amended with
the approval of the JRC (as permitted by the JRC Charter) and is subject to
Section 3.5.1 below.  The Research Plan
will be updated and amended from time to time, but at least annually.



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3.4.2       In addition, at least [***] months prior to
the beginning of the 3rd Research Year of the Research Term and at least [***]
months prior to the beginning of any 1 year extension of the Research Term, the
JRC will begin the process of updating the Research Plan for such 3rd Research
Year or extension (as applicable).  At
least [***] months prior to the beginning of the 3rd Research Year of the
Research Term, and at least [***] months prior to the beginning of any 1 year
extension of the Research Term, the JRC will have agreed on an updated Research
Plan for such 3rd Research Year or extension (as applicable).


Section 3.5            Research Staffing; Funding.


3.5.1       Staffing.  BMS
will fund at the FTE Rate, and Isis will supply, [***] Isis FTEs per Research
Year during the initial [***] year period of the Research Term to perform
activities in support of the Research Program, in accordance with the
then-current Research Plan.    The number
of Isis FTEs dedicated to the Research Program [***] reduced in the [***] of
the Research Program.  The JRC may reduce
the number of funded Isis FTEs during the [***] of the Research Term and any
extension of the Research Term, provided that
(i) the Research Plan has been updated and agreed to in accordance with Section
3.4.2 above and (ii) the number of funded Isis FTEs will be consistent with the
amount of work required under the Research Plan and not be less than [***]
qualified FTEs during the 3rd Research Year of the Research Term or less than
[***] qualified FTEs per year during any such extension of the Research Term.  Additionally, the JRC may increase the number
of BMS-funded Isis FTEs to perform activities in support of the Research
Program with a minimum of [***] months prior notice.  At least [***] months prior to the beginning
of the 3rd Research Year of the Research Term, the JRC will make a nonbinding,
good faith estimate of the number of Isis FTEs to be provided and funded by BMS
to perform the Research Program during the 3rd Research Year of the Research
Term, and at least [***] months prior to the beginning of any 1 year extension
of the Research Term, the JRC will make a nonbinding, good faith estimate of
the number of Isis FTEs to be provided and funded by BMS to perform the
Research Program during such Research Year of the Research Term.  At least [***] months prior to the beginning
of the 3rd Research Year of the Research Term, the JRC shall determine the
number of Isis FTEs to be provided and funded by BMS to perform the Research
Program during the 3rd Research Year of the Research Term, and at least [***]
months prior to the beginning of any 1 year extension of the Research Term, the
JRC shall determine the number of Isis FTEs to be provided and funded by BMS to
perform the Research Program during such Research Year of the Research Term.


3.5.2       Funding;
Expenses.


(a)           Within 10 Business Days following the
Effective Date and thereafter within 10 Business Days following the [***] of
each Calendar Quarter, BMS will pay Isis [***] for the BMS-funded Isis FTEs
assigned to the Research Program in accordance with Section 3.5.1 for such Calendar
Quarter (a prorated amount shall be payable for any portion of a Calendar
Quarter).  Such FTE payment obligation of
BMS will be subject to Isis providing such qualified FTE scientists.  No later than 60 days following the end of
each Calendar Quarter, Isis will provide BMS with a report of the number of
FTEs assigned to the Research Program with a summary of their activities.  Any overpayment by BMS may be applied by BMS
to the funding of Isis FTEs in a subsequent Calendar Quarter.  If the activities contemplated by the
Research Plan at any time do not justify the number of Isis FTEs allocated to
the Research Program, the Parties will work in good faith to mutually agree to
modify the scope of the Research Plan or adjust the number of BMS-funded
FTEs, provided that the minimum number of
BMS-funded FTEs shall not be less than the minimum numbers set forth in Section
3.5.1 without the written agreement of both Parties.



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(b)           Isis will bear its own costs,
including costs related to research supplies, consumables and applicable
overhead costs, in performing its obligations under the Research Program, provided that BMS will make a payment to Isis for (i) [***]
(ii) the costs of manufacturing ASOs in excess of an initial [***] quantity as
set forth in Section 3.5.2(c) below and (iii) the costs of manufacturing
approximately [***] of API for a lead Compound in accordance with Section 4.2
and as set forth in the Research Plan. 
[***]  For each project under the
Research Plan, the JRC will set a budget for the above costs and will update
the Research Plan such that it includes such budget.  At the end of each Calendar Quarter during
the Research Term, Isis shall invoice BMS for the above costs incurred during
such Calendar Quarter, provided, however,
that (x) for any particular item of such cost in excess of the greater of
$[***] or [***]% of the amount allocated for such item in the budget shall
require the written approval of BMS prior to being incurred and (y) BMS shall
not be responsible for payment for those items of such cost in excess of the
greater of $[***] or [***]% of the amount allocated for such item in the budget
that are incurred by Isis without BMS’ prior written consent.  BMS shall pay any such correct invoices
within 30 days after receipt thereof.  At
BMS’ option, Isis agrees to deliver to BMS, at BMS’ expense, or to dispose of
such Research Program-specific animals in Isis’ possession following
completion of the Research Term or earlier termination of this Agreement.  The Parties agree that if Isis wishes to
retain any such Research Program-specific animals, BMS will consider reasonable
offers from Isis to purchase such Research Program-specific animals from
BMS.  Isis shall afford BMS a reasonable
opportunity, from time to time, to verify [***] incurred by Isis.


(c)           Responsibility
for Supply of ASO and Costs for ASO Supply.  Isis shall be responsible for the manufacture
and supply of all ASOs for use in support of the Research Program, and all such
manufacture will be performed at Isis’ facilities.  Isis shall not use a Third Party
(sub)contractor for the manufacture of ASOs without the prior written approval
of BMS.  Isis shall bear its own costs
for the manufacture of up to [***] of each ASO. 
For quantities in excess of such [***] for any ASO, BMS shall order such
additional quantities in [***] increments. 
Isis will be responsible for the first $[***] cost to manufacture such
additional quantities of ASOs in the aggregate, and thereafter, BMS will
reimburse Isis for its costs of manufacturing such ASOs (subject to Section
3.5.2(b) above).  The cost to manufacture
such additional quantities of ASOs will be negotiated and agreed to in good
faith by the Parties, but shall not exceed $[***] per gram for MOE Gapmers.  As set forth in Section 4.2 and 4.3, Isis
shall manufacture and supply API for use in IND-Enabling Studies and for use
for clinical Development through completion of Phase IIb Trials, which cost
shall not exceed $[***] per gram.  All
such API manufacture will be performed at Isis’ facilities.  Isis shall not use a Third Party
(sub)contractor for the manufacture of such API without the prior written
approval of BMS.


Section 3.6            Research Program Records.  Isis will maintain complete and accurate records of all work conducted
in the performance of the Research Program and all results, data, inventions
and developments made in the performance of the Research Program.  Such records will be in sufficient detail and
in good scientific manner appropriate for patent and regulatory purposes.  Isis shall maintain appropriate records
sufficient to document the work performed by each of the individuals comprising
the FTEs working in support of the Research Program and the time such
individuals spent working in support of the Research Program.  Isis shall provide BMS the right to inspect
such records, and shall provide copies of all requested records, to the extent
reasonably required for the performance of BMS’ rights and obligations under
this Agreement; provided however,
that BMS shall maintain such records and the information of Isis in confidence
in accordance with Article 7 hereof and shall not use such records or
information except to the extent otherwise permitted by this Agreement.



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In
order to protect the Parties’ Patent rights under U.S. law in any inventions
conceived or reduced to practice during or as a result of the Research Program,
each Party agrees to maintain a policy that requires its employees to record
and maintain all data and information developed during the Research Program in
such a manner as to enable the Parties to use such records to establish the
earliest date of invention and/or diligence to reduction to practice.  At a minimum, the policy shall require such
individuals to record all inventions generated by them in standard laboratory
notebooks or other suitable means that are dated and corroborated by non-inventors
on a regular, contemporaneous basis.


Section 3.7            Disclosure of Results of Research Program.                The results of all work performed
by the Parties as part of the Research Program shall be promptly disclosed to
the other Party in a reasonable manner as such results are obtained.  Isis shall periodically provide BMS with
written reports of the work performed under the Research Program and the
results achieved by Isis.  Isis and BMS
will provide reports and analyses at each JRC meeting, and more frequently on
reasonable request by the JRC, detailing the current status of the Research
Program, including but not limited to the utilization of the Isis FTE
resources.  Within 30 days following the
end of each Calendar Quarter, Isis and BMS shall each exchange and provide to
the JRC a written report summarizing in reasonable detail the work performed by
it under the Research Program and results achieved during the preceding
Calendar Quarter.  In addition, on
reasonable request by a Party, the other Party will make presentations of its
activities in the performance of the Research Program to inform such Party of
the details of the work done in the performance of the Research Program.  The results, reports, analyses and other
information regarding the Research Program disclosed by one Party to the other
Party pursuant hereto may be used only in accordance with the rights granted
and other terms and conditions under this Agreement.  Upon reasonable request by BMS, Isis shall
provide BMS with additional data, results and other information with respect to
the work performed by Isis in the performance of the Research Program.  Any reports required under this Section 3.7
may take the form of and be recorded in minutes of the JRC that will contain
copies of any slides relating to the results and presented to the JRC.


In
addition, at BMS’ request Isis will transfer to BMS all data, results, and
information related to testing and studies of the Compounds (including
analytical test results and non-clinical pharmacology and safety data) in the
possession of Isis to the extent such data, results and/or information is
necessary or useful for the continued Development and Commercialization of
Products, including but not limited to any and all information directly
relating to manufacturing methods (including related analytical methods) of the
Compounds or Products.


Section 3.8            Research Efforts.  Each Party shall use good faith
Commercially Reasonable Efforts to perform the Research Program, including its
responsibilities under the Research Plan.


Throughout the Research
Term, Isis shall assign no less than the number of FTE qualified scientists
specified in Section 3.5 to perform the work set forth in the then-applicable
Research Plan.  The mixture of skills and
levels of such FTEs shall be appropriate to the scientific objectives of the
Research Program.  No later than 60 days
following the end of each Calendar Quarter, during the Research Term Isis shall
report to the JRC a listing of the Isis scientists comprising such FTEs and
their percentage of time devoted to working on the Research Program.  If BMS has concern regarding any specific
scientist assigned to the Research Program, such concerns shall be communicated
to the JRC for its consideration.


Section 3.9            Responsibility for Expenses for Conduct of Research
Program.  Except as set forth in Section 3.5.2 or
specified in the budget of the Research Plan and as may be



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otherwise
specifically agreed to in writing by Isis and BMS, BMS shall not be responsible
for reimbursing Isis for other costs and expenses.


Section 3.10         Materials Transfer.  In order to facilitate the
Research Program, either Party may provide to the other Party certain materials
for use by the other Party in furtherance of the Research Program.  All such materials shall be used by the
receiving Party in accordance with the terms and conditions of this Agreement
solely for purposes of performing its rights and obligations under this
Agreement, and the receiving Party shall not transfer such materials to any
Third Party unless expressly contemplated by this Agreement or upon the written
consent of the supplying Party.  Upon
request by BMS during the Research Term Isis shall provide BMS with samples of
Compounds for use by BMS in accordance with the terms and conditions of this
Agreement.  Any materials provided by BMS to Isis in
support of the Research Program, including but not limited to any biological
materials with respect to screening assays, including any progeny,
expression products, mutants, replicates, derivatives and modifications thereof, (such materials being
individually and collectively referred to as the “BMS Materials”) shall be used by Isis solely for
purposes of performing the Research Program and for no other purpose, and any
remaining BMS Materials (including, as applicable, any progeny,
expression products, mutants, replicates, derivatives and modifications thereof) will be returned to
BMS (or destroyed as may be requested by BMS in writing) promptly following the
end of the Research Term or earlier upon request by BMS.  All information related to such BMS Materials
shall be BMS Confidential Information.  All
such materials must be used with prudence and appropriate caution in any
experimental work, since all of their characteristics may not be known.  If Isis develops any assays used in the
Research Program, upon request by BMS during the Research Term, Isis shall
transfer to BMS the materials and information to enable BMS to use such assays
in support of BMS’s internal research and development activities consistent
with BMS’ rights under Section 2.3.


Section 3.11         Subcontracting.  Except as provided in the
Research Plan or as may be specifically permitted by the JRC, Isis shall not
(sub)contract any of the work for which it is responsible in the performance of
the Research Program.  In the case of any
(sub)contracting of Research Program activities by a Party to a Third Party,
such Third Party must have entered into a written agreement with such Party
that includes terms and conditions protecting and limiting use and disclosure
of Confidential Information and Know-How at least to the same extent as under
this Agreement.  Each Party is responsible
for compliance by such Third Party with the applicable terms and conditions of
this Agreement in the same way and to the same extent as such Party.  As set forth in Section 3.5.2(c), all ASOs
provided by Isis under this Agreement shall be manufactured at Isis’ facilities
and Isis shall not use a Third Party (sub)contractor for the manufacture of
such ASOs without the prior written approval of BMS.


Section 3.12         Alliance Managers.  Each Party shall appoint one
senior representative who possesses a general understanding of the scientific
and business issues relevant to this Agreement to act as its respective
alliance manager (each, an “Alliance
Manager”) for the relationship of the Parties under this
Agreement.  Each Party may change its
designated Alliance Manager, who may not be a member of the JRC, from time to
time upon notice to the other Party.  Any
Alliance Manager may designate a substitute to temporarily perform the
functions of that Alliance Manager.  Each
Alliance Manager will take responsibility for ensuring that governance
activities occur as set forth in this Agreement, in particular ensuring that
the JRC meetings occur, and that any conflict is given prompt attention as set
forth in Section 13.4.


The
Alliance Managers shall be entitled to attend meetings of the JRC, but shall
not have, or be deemed to have, any rights or responsibilities of a member of
the JRC.  Similarly, the Alliance
Managers may attend meetings of the Working Group or any subcommittees of the
JRC.  



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Each Alliance Manager may
bring any matter to the attention the JRC where such Alliance Manager
reasonably believes that such matter requires such attention.  For purposes of clarification, in no event
will the Alliance Managers have the power or authority to amend any provision of
this Agreement.


Section 3.13         Animal Testing.  In order to assure the
appropriate care and use of animals used in the performance of the Research
Program by Isis, Isis agrees to the following:


(a)           If Isis is AAALAC accredited, it will
follow procedures established as the basis of that accreditation.  Isis represents and covenants that it will
use all reasonable efforts to maintain such AAALAC accreditation during the
Research Term.  Further, upon request by
BMS, Isis will provide BMS with a copy of the most recent accreditation letter
and annual report.  If during the course
of the Research Program Isis loses its accreditation or receives any notice,
warning or reprimand from AAALAC or any governmental or regulatory agency
related to animal care and use, Isis will promptly notify BMS in writing.


(b)           If Isis is not AAALAC accredited or
loses its AAALAC accreditation at any time during the Research Term, it will,
prior to the commencement (or continuation) of Research Program studies using
animals provide BMS with sufficient documentation in such manner, format and
frequency as BMS may require in its sole reasonable discretion, to assure
appropriate care and use of animals. 
Such documentation may include, without limitation, government
inspection reports, animal test methods, animal use protocols and any other
written descriptions of animal care and use. 
Isis will also comply with all Applicable Laws governing animal
research.


(c)           Whenever possible, live animals used
as part of the Research Program should remain the property of the applicable
contract facility.  Upon reasonable
advance notice during the Research Term, representatives of BMS shall have the
right to inspect the research facilities and to audit the care, treatment and
use of the animals used in the Research Program.  This includes the right to review any
correspondence with or reports from governmental agencies or accrediting
organizations responsible for animal welfare or quality assurance.


ARTICLE 4 - 

DEVELOPMENT, COMMERCIALIZATION & MANUFACTURING


Section 4.1            Development, Commercialization and Regulatory
Responsibilities.  Other than Isis’ responsibilities under the
Research Program, BMS shall have sole responsibility, including without
limitation sole responsibility for all funding, resourcing and decision-making,
for all further Development and Commercialization with respect to the Compounds
and Products.  BMS hereby assumes all
regulatory responsibilities in connection with Compounds and Products,
including sole responsibility for all Regulatory Documentation and for
obtaining all Approvals.  BMS will comply
with all Applicable Laws in connection with the Development and
Commercialization of Compounds and Products. 
BMS (by itself or through its Affiliates, Licensees, (sub)contractors or
agents, as applicable) shall use Commercially Reasonable Efforts to Develop and
Commercialize at least one Compound or Product. 
For
clarity, it is understood and acknowledged that Commercially Reasonable Efforts in the Development of a Product
in a particular country may include sequential implementation of clinical
trials and/or intervals between clinical trials for data interpretation and
clinical program planning and approval, to the extent such implementation is
consistent with the scientific, technical and commercial factors relevant to
Development of such Product in such country. 
All INDs, NDAs, MAAs and other regulatory filings and Approvals for
Products shall be owned by BMS.  In
addition to Isis’ responsibilities with respect to the CMC section of the IND
in accordance with the Research Plan, 



 9
 









upon
request by BMS, Isis shall provide BMS with a reasonable level of assistance in
the preparation of regulatory filings for Products and in interactions with any
Regulatory Authority in connection with the Development of Products; provided that if BMS requests such
assistance in excess of [***] aggregate hours of assistance, BMS shall
reimburse Isis for its time incurred in providing such assistance in excess of
such [***] hour limit at the at the then-applicable Isis FTE Rate per hour,
plus any reasonable out-of-pocket expenses incurred by Isis in providing such
assistance.  Such reimbursement shall be
made to Isis within 30 days after submission of an invoice by Isis reasonably
detailing Isis’ time expended, together with reasonable substantiation of any
out-of-pocket expenses incurred.


Section 4.2            IND-Enabling and Initial Phase I Supply of API.  Isis
will be responsible for the manufacture and supply of an approximately [***]
batch of API for the lead Compounds identified under the Research Plan and designated
by the JRC to enter IND-Enabling Studies as specified in the Research
Plan.  Such API shall be manufactured
with systems, processes and procedures consistent with cGMP practices.  Such API shall be delivered and provided as a
service for BMS with a supply services fee being $[***] per gram of API (which
is Isis’ good faith estimate of its fully burdened cost of manufacture of such
API).  BMS shall be entitled to conduct
quality inspections of manufacturing areas, warehouses, laboratories and any related
facilities upon reasonable notice to Isis and at mutually convenient times in
connection with the manufacture of API by Isis under this Agreement.  BMS shall be permitted to observe operations
related to API manufacturing and testing. 
BMS shall be entitled to review Isis procedural documents and any
related supporting documentation for compliance with cGMP regulations.  BMS shall be entitled to conduct batch record
audits on site at the manufacturing facility, or any other site where the batch
records are stored, of each batch of API manufactured by Isis under this
Agreement.  If, following a GMP audit of
a facility by BMS, BMS reasonably believes that a default or deficiency on the
part of Isis exists, BMS shall be entitled to conduct additional quality audits
(at mutually convenient times and consistent with what is reasonable and
customary in the pharmaceutical industry) in order to satisfy itself that
appropriate remedial measures have been, or are being, taken by Isis regarding
the matters in question.  In addition, if
Isis has performed a comparable audit with respect to contract service
providers involved in the manufacture of API, upon request by BMS, Isis will
share the results of those audits with BMS, unless pre-existing agreements
between Isis and the service provider preclude doing so.  BMS will respect the confidentiality of Isis
and any service providers during any audit or visit (including entering into an
appropriate confidential disclosure agreement as necessary).  Isis’ obligation to supply BMS API under this
Section 4.2 will expire upon the [***] year anniversary of the expiration of
the Research Term (i.e., at [***] years following the expiration of the
Research Term).  Any API requested by BMS
after the end of the Research Term will be manufactured pursuant a separate
Clinical Supply Agreement as described in Section 4.3 below.


Section 4.3            Clinical Supply of API Through Completion of Phase II
and Phase IIb Trials.  BMS will obtain API for all clinical
Development activities under this Agreement through the completion of Phase IIb
Trials (the “Phase II Clinical Supply”) from Isis. 
Isis shall be responsible for the manufacture and supply of BMS’
requirements of the Phase II Clinical Supply. 
Such API shall be delivered and provided as a service for BMS with a
supply services fee being $[***] per gram of API (which is Isis’ good faith
estimate of its fully burdened cost of manufacture of such API).  The Parties may negotiate in good faith and
mutually agree upon a reduction to this fee to the extent Isis’ manufacturing
costs decrease after the Effective Date. 
In addition, if Isis supplies active pharmaceutical ingredient for a
similar ASO to a Third Party at similar volumes on terms when taken as a whole
are more favorable than the terms provided BMS under this Agreement, BMS will
have the right to receive the clinical supply of API on the same terms offered
by Isis to such Third Party.  Isis and
BMS will enter into a manufacture and supply agreement for the Phase II
Clinical Supply, including the related CMC activities and/or 



 10
 









any
API requested by BMS after the end of the Research Term under Section 4.2 (the “Clinical Supply Agreement”).  Such Clinical Supply Agreement shall include
the quality audit provisions set forth in Section 4.2 and other customary terms
and conditions to be negotiated in good faith. 
Isis will not have any obligation under this Section 4.3 to negotiate or
enter into any manufacturing or supply agreement or similar agreement beyond
the scope set forth in this Section 4.3, including without limitation any
agreement covering clinical supply for Phase III Trials or commercial scale-up
or supply.  As part of the Phase II
Clinical Supply, Isis will enable BMS’ regulatory function to test and release
all supplies of such API.


Section 4.4            Failure to
Supply.  In the case where Isis is
unable or for any reason otherwise fails to supply API to BMS in accordance
with the Clinical Supply Agreement, upon written request by BMS, Isis shall
transfer to BMS all documentation and information, and permit BMS to reference
and use any regulatory filings, and otherwise fully cooperate with BMS to
enable BMS to make or have made API for use by BMS in accordance with this
Agreement.


Section 4.5            [***] and Commercial
Manufacturing and Supply of Compound and Product.


4.5.1       Product Manufacturing Responsibility. 
Except as otherwise provided in this Agreement, the Parties acknowledge
and agree that BMS shall be solely responsible for the manufacturing of
Compound and Product, including management of the overall manufacturing
strategy and tactics, formulation, contract manufacturer selection for API and
finished Product, associated audits, and stability testing.


4.5.2       Isis
Right of First Negotiation.


(a)           Isis will have a first right of
negotiation with respect to the manufacture and supply to BMS of API for use in
[***] as follows.  In the event that BMS
desires to outsource the manufacturing of the [***] supply of the API for [***]
to a Third Party manufacturer, then BMS shall provide written notice of such
desire to Isis and the Parties will negotiate in good faith with respect to an
agreement for Isis to manufacture and supply the API for BMS for the [***] of
the Product.  If the Parties do not reach
agreement within 120 days of such notice by BMS to Isis, BMS shall be free at
its discretion (and subject to Section 4.5.3(b)) to enter into an agreement
with any Third Party with respect to such [***] supply based on terms and other
considerations (such other considerations including non-financial considerations
including but not limited to quality, capacity, lead time, contingency
planning, reliability and regulatory compliance) that when taken as a whole as
reasonably determined by BMS are no less favorable to BMS than the terms and
other considerations last presented to BMS by Isis.  It is expected that such negotiations and
decision by BMS regarding the manufacture and supply of API for [***] would
need to occur at least [***] prior to the expected start of [***], in order,
for example, to allow for any required manufacturing technology transfer and
qualification of a Third Party manufacturer.


(b)           In the case where Isis and BMS enter
into an agreement for Isis to manufacture and supply BMS’ requirements of API
for [***], Isis shall have a first right of negotiation with respect to the
manufacture and supply to BMS of API for the commercial requirements of the
Product as follows.  In the event that
BMS desires to outsource the manufacturing of the commercial supply of the API
to a Third Party manufacturer, then BMS shall provide written notice of such
desire to Isis and the Parties will negotiate in good faith with respect to an
agreement for Isis to manufacture and supply the API for BMS’ commercial
requirements of the Product.  If the
Parties do not reach agreement within [***] days of such notice by BMS to Isis,
BMS shall be free at its discretion (and subject to Section 4.5.3(b)) to enter
into an agreement with any Third Party with respect to such commercial supply
on terms and other considerations



 11
 









(such other considerations
including non-financial considerations including but not limited to quality,
capacity, lead time, contingency planning, reliability and regulatory
compliance) that when taken as a whole as reasonably determined by BMS are no
less favorable to BMS than the terms and other considerations last presented to
BMS by Isis.


(c)           In advance of any negotiations
between the Parties under Section 4.5.2(a) or (b), upon request by BMS, Isis
shall provide to BMS a summary of the manufacturing technology proposed to be
used by or for Isis for the manufacturing of API, and other related information
as reasonably requested by BMS.


4.5.3       Transfer
of Manufacturing Technology.


(a)           Upon request by BMS, solely for
purposes of the manufacture and supply of BMS’ requirements of API for [***]
and/or commercial supply of Compound and/or Product pursuant to the exercise of
BMS’ rights under this Agreement, Isis shall transfer any Isis Manufacturing
Technology to BMS, and/or any Isis Permitted Manufacturing Technology to a
Third Party manufacturer selected by BMS. 
As soon as is practicable after its receipt of such request, Isis shall
transfer to BMS the Isis Manufacturing Technology, or the Isis Permitted
Manufacturing Technology to such Third Party manufacturer.  For such purpose Isis shall transfer to BMS all documentation and information, and permit
BMS to reference and use any regulatory filings, and otherwise fully cooperate
with BMS to enable BMS to make or have made API for use by BMS in accordance
with this Agreement.  All
documented out-of-pocket costs and expenses incurred by Isis in carrying out
such transfer shall be reimbursed by BMS upon successful completion and
confirmation of such transfer.  In
addition, upon request by BMS, Isis shall provide BMS with a reasonable level
of technical assistance and consultation in connection with the transfer of
such manufacturing technology to help enable BMS or such Third Party
manufacturer (as applicable) to manufacture such API.  For such purpose Isis shall provide BMS with
reasonable access by teleconference or in-person at Isis’ facilities to
Isis personnel involved in the manufacturing of API, provided
that if BMS requests such technical assistance in excess of [***] aggregate
hours of technical assistance, BMS shall reimburse Isis for its time incurred
in providing such assistance in excess of such [***] hour limit at the
then-applicable Isis FTE Rate per hour, plus any reasonable out-of-pocket
expenses incurred by Isis in providing such technical assistance requested by
BMS.  Such payment shall be made to Isis
within 30 days after submission of an invoice by Isis reasonably detailing Isis’
time expended, together with reasonable substantiation of any out-of-pocket
expenses incurred.


(b)           BMS and/or its Third Party
manufacturer shall use any Isis Know-How and other documentation and
information transferred pursuant to Section 4.5.3(a) solely for the purpose of
manufacturing API and Product for BMS’ (or its Affiliate’s or Licensee’s)
benefit pursuant to the exercise of BMS’ rights under this Agreement, and for
no other purpose.  BMS acknowledges and
agrees that any such transfer of such manufacturing technology to a Third Party
manufacturer shall satisfy the conditions set forth in Section 2.1(b) and will
be subject to a written agreement between such Third Party manufacturer and BMS
that contains obligations of confidentiality substantially equivalent to those
of this Agreement.


(c)           In the event that BMS desires to
transfer to a Third Party manufacturer any Isis Manufacturing Technology which
is not Isis Permitted Manufacturing Technology solely for purposes of the
manufacture and supply of BMS’ requirements of API for [***] and/or commercial
supply of Compound and/or Product pursuant to the exercise of BMS’ rights under
this Agreement, upon written request by BMS, Isis shall use commercially
reasonable efforts to enter into an agreement with such Third Party
manufacturer to transfer such Isis Manufacturing Technology which is not Isis
Permitted Manufacturing Technology for such purpose under terms 



 12
 









and conditions to be
negotiated in good faith by Isis with such Third Party.  Isis shall reasonably consult with BMS in
connection with such negotiation to assure that any such agreement achieves the
purpose and objectives sought by BMS in making such request.


Section 4.6            Reports by BMS.  BMS shall, on or before each
anniversary of the Effective Date following the Research Term, and continuing
until such time as Approval of all Products under Development has been obtained
in Europe, the United States and Japan, provide Isis with a summary written
report of the status of BMS’s efforts to Develop Compounds and Products
hereunder.  Such written report shall
contain sufficient information to allow Isis to reasonably determine whether
BMS is in compliance with its obligations to use Commercially Reasonable
Efforts under Section 4.1.


Section 4.7            Safety Database


(a)           Isis maintains a database that
includes information regarding the tolerability of its drug compounds,
individually and as a class, including information discovered during
pre-clinical and clinical development (the “Isis Database”).  In an effort to maximize understanding of the
safety profile and pharmacokinetics of Isis compounds, BMS will cooperate in
connection with populating the Isis Database. 
In accordance with and subject to the Pharmacovigilance Agreement,
Applicable Law and any applicable informed consents or other Third Party
obligations, BMS will provide Isis with copies of toxicology, pharmacokinetic
and serious adverse event final reports related to each PCSK9 Compound and
Product.  In addition, in connection with
any reported serious adverse event (including any follow-up or amended
reports), in accordance with and subject to the Pharmacovigilance Agreement,
Applicable Law and any applicable informed consents or other Third Party
obligations, BMS will provide Isis in a mutually acceptable format, the
following patient data: (a) basic statistics (including age, race, gender,
weight, height); (b) medical history; (c) concurrent medication usage; (d)
particulars of the event (verbatim term, MedDRA term & system organ class,
onset date, resolution date, relation to Product, severity and criteria making
event serious, outcome); (e) dosing history (dates, quantity of Product
administered, method of administration); (f) chemistry, urinalysis and
hematology lab tests; and (g) any countermeasures taken for the event.  All such information disclosed by BMS to Isis
in connection with this Section shall be BMS Confidential Information; provided, however, that Isis may disclose
any BMS Confidential Information contained in the Isis Database to any Third
Party so long as Isis does not disclose to any Third Party the identity of the
applicable Compound, the PCSK9 target or BMS (or any information that would
foreseeably reveal the identity of the applicable Compound, the PCSK9 target or
BMS) in connection with any such disclosure.


(b)           From time to time, Isis utilizes the
information in the Isis Database to conduct analyses to keep Isis and its
partners informed regarding class generic properties of ASOs, including with
respect to safety.  As such, if and when
Isis identifies safety or other related issues that may be relevant to a
Product (including potential class-related toxicity liabilities), in accordance
with and subject to the Pharmacovigilance Agreement, Isis will promptly inform
BMS of such issues, and if requested, provide the data supporting Isis’
conclusions regarding such issues.


Section 4.8            Pharmacovigilance Agreement. 
Subject to the terms of this Agreement, and within 3 months prior to the
expected date of IND filing for a Compound, BMS and Isis (under the guidance of
their respective pharmacovigilance departments, or equivalent thereof) shall
define and finalize the responsibilities the Parties shall employ to protect
patients and promote their well-being in a written pharmacovigilance agreement
(hereafter referred to as the “Pharmacovigilance Agreement”).  These responsibilities shall include mutually
acceptable 



 13
 









guidelines
and procedures for the receipt, investigation, recordation, communication and
exchange (as between the Parties) of adverse event reports and any other
information concerning the safety of any Compound or Product.  Such guidelines and procedures shall be in
accordance with, and enable the Parties and their Affiliates to fulfill, local
and national regulatory reporting obligations to government authorities.  Furthermore, such agreed procedures shall be
consistent with relevant International Council for Harmonization (ICH)
guidelines, except where said guidelines may conflict with existing local
regulatory safety reporting requirements, in which case local reporting
requirements shall prevail.  Each Party
hereby agrees to comply with its respective obligations under such
Pharmacovigilance Agreement (as it may be modified from time to time by mutual
written agreement of the Parties) and to cause its Affiliates to comply with
such obligations.  In accordance with and
subject to the Pharmacovigilance Agreement, each Party shall provide the other
Party with information available to such Party that such other Party may
reasonably require to comply with its pharmacovigilance responsibilities under
Applicable Law, including notice of any adverse drug experiences from pre-clinical
or clinical laboratory, animal toxicology and pharmacology studies, clinical
trials and commercial experiences.


ARTICLE 5 - 

FINANCIAL PROVISIONS


Section 5.1            Up-Front Payment by BMS.  In
partial consideration for the licenses and other rights granted under this
Agreement, within 10 Business Days following the Effective Date, BMS will pay
Isis an irrevocable, non-creditable and nonrefundable signing payment equal to
$15,000,000.


Section 5.2            Research Program Payments. 
Research funding shall be provided by BMS to Isis as set forth in
Section 3.5


Section 5.3            Milestone Payments by BMS.


(a)           The milestone
payments under Column 1 of Table 1 below shall be payable by BMS to Isis within
30 days after the first achievement of the specified milestone events by BMS,
its Licensees or their Affiliates for the first Compound to reach the specified
milestone event.  The milestone payments
under Column 2 of Table 1 below shall be payable as set forth below after the
first achievement of the specified milestone events by BMS, its Licensees or
their Affiliates for each subsequent Compound (i.e., each Compound after the
first Compound) to reach the specified milestone event.



 14















Table 1


	
   

  	
   

  	
  Column 1

  	
   

  	
  Column 2

  	
   

  
	
  Milestone Event

  	
   

  	
  Payment for First Compound

  	
   

  	
  Payment for Each Subsequent Compound

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


(b)           If development is
discontinued for a Compound, any previously paid milestone payments for that
Compound will be applied and credited toward the milestone payments for the
next subsequent Compound in development upon achievement of such
milestones.  Only one set of milestone
payments will be due (but payable as set forth in this paragraph) for a given
Compound (i.e., for a given chemical entity). 
In addition, in order to trigger and be eligible for a milestone payment
under this Section 5.3, the making, using or selling of the applicable Compound
must be Covered by a Valid Claim of an Isis Patent Right in the U.S. or the
European Patent Office.


(c)           By way of example,
in accordance with the foregoing, if the development of a first Compound is
discontinued after the [***] milestone event is completed (with such milestone
payment and earlier milestone payments having been paid for such first
Compound), and a second follow-on Compound is subsequently advanced through
development, no milestone payments would be payable for the second Compound
through the [***] milestone, but milestone payments under Column 1 of Table 1
would be payable for any subsequent milestone events achieved by such second Compound
(since such Compound would be the first Compound to achieve these subsequent
milestone events).


Section 5.4            Royalty Payments by BMS. 
Subject to the other provisions of this Agreement, BMS shall pay to Isis
royalties based on the Net Sales of each Product during the applicable Royalty
Term.  The royalty payable with respect
to each particular Product shall be based on the level of aggregate annual
worldwide Net Sales of such Product in a given Calendar Year period by BMS, its
Affiliates and Licensees, with the royalty rate tiered based upon the level of
such aggregate worldwide Net Sales in such Calendar Year period as set forth in
the table below.



 15
 









 


	
  Royalty

  Rate

  	
   

  	
  Annual
  Worldwide Net Sales

  
	
  [***]

  	
   

  	
  of annual worldwide Net Sales less than or equal to
  $[***]

  
	
  [***]

  	
   

  	
  of annual worldwide Net Sales greater than $[***]
  and less than $[***]

  
	
  [***]

  	
   

  	
  of annual worldwide Net Sales equal to or greater
  than $[***] billion

  



 


Royalties shall be calculated on a Product-by-Product and
country-by-country basis using the applicable royalty rate or rates set out
above and shall be determined based on the annual Net Sales of the relevant
Product for the Calendar Year in question, and shall be paid at the rate
applicable to the portion of Net Sales within each of the above Net Sales tiers
during such Calendar Year.  By way of
example, for a particular Product in a given Calendar Year period, if the total
worldwide Net Sales of such Product in such Calendar Year period is $[***], the
royalty payable by BMS to Isis will be ([***]% x $[***] million) + ([***]% x
$[***] million) = $[***] million (plus any applicable financial Pass Through
Obligations and subject to any applicable reductions under Section 5.5 or 5.7).


Notwithstanding
the foregoing or any other provision of this Agreement, a Product shall only be
eligible for a royalty payment under this Section 5.4 in a given country, if,
as of the date of the First Commercial Sale of such Product in such country,
the making, using or selling of such Product (or the Compound contained in such
Product) in the U.S. or a Major European Country is Covered by a Valid Claim of
an Isis Patent Right in the U.S. or the European Patent Office.  Accordingly, no royalty will be payable under
this Section 5.4 on Net Sales of a Product in a country where, as of the date
of the First Commercial Sale of such Product in such country, the making, using
or selling of such Product (or the Compound contained in such Product) in the
U.S. or a Major European Country was not then Covered by a Valid Claim of an
Isis Patent Right in the U.S. or the European Patent Office.  Once a Product is determined to be eligible
for a royalty payment in accordance with the foregoing, it shall continue to be
eligible for the applicable Royalty Term, subject to the other terms and
conditions of this Agreement.


Section 5.5            Third Party Payment
Obligations.


5.5.1       Isis
In-License Agreements.


(a)           Certain of the Isis Patent Rights
Controlled by Isis as of the Effective Date that are licensed to BMS under
Section 2.1 are in-licensed or were acquired by Isis under agreements
with Third Party licensors or sellers, and certain milestone and/or royalty
payments may become payable by Isis to such Third Party under such license or
purchase agreements based on the Development and Commercialization of a
Compound and Product by BMS under this Agreement (such license or purchase
agreements in effect as of the Effective Date being the “Isis In-License Agreements”).  The Parties acknowledge that whether a
milestone and/or royalty becomes payable by Isis to such Third Party licensor
depends on the terms and conditions of the Isis In-License Agreement and on the
properties of the Compound and Product being Developed or Commercialized by BMS
under this Agreement.  Isis represents
and warrants that the Isis In-License Agreements that Isis considers in
good faith to be most relevant to the manufacture, use or sale of Compounds and
Products as contemplated under the initial Research Plan (together with any
associated potential Pass Through Obligations) are included in the list of
agreements identified in Appendix 6.


(b)           BMS will be responsible for and
hereby agrees to assume [***]% of the [***] Royalties, if any, with respect to
any Product, provided however, that the amount
of such [***] Royalties shall in no event exceed [***]% of net sales of a
Product.  Section 5.5.1(c) shall 



 16
 









not apply to the [***]
Royalties and BMS shall not be entitled to reduce the royalty payable under
Section 5.4 based on the payment of any [***] Royalties.


(c)           During the Research Term, as changes
are made to the Research Plan and as Compounds and Products are being
considered by the JRC, and for each lead Compound and for each ECN (at such
time that a Compound is being considered for designation as an ECN), Isis shall
promptly inform BMS in writing through the JRC regarding any Isis Patent Rights
licensed to BMS under Section 2.1 that are subject to Isis In-License
Agreements and potential Pass Through Obligations that are potentially relevant
to the manufacture, use or sale of such Compounds, Products, lead Compounds and
ECN.  BMS will be responsible for the
payment of all financial Pass Through Obligations with respect to Compounds and
Products, provided that BMS’ obligation to pay
royalties under Section 5.4 (including any reduction under Section 5.7) shall
be reduced by [***]% of the amount of any such Pass Through Obligations paid by
BMS, subject to Section 5.5.4 (with the amount of any non-royalty Pass Through
Obligations not so applied by BMS to such reduction in a given Calendar
Quarter, because of Section 5.5.4, to be [***]).  If BMS does not agree to be responsible for
the payment of any such Pass Through Obligation, then the applicable Isis
In-License Patent will not be considered an Isis Patent Right licensed to BMS
under this Agreement.


(d)           Any royalties or milestones BMS is
responsible for paying under subsection (b) or (c) of this Section 5.5.1 will
be in addition to the royalties and milestones payable by BMS under Section 5.3
and 5.4 (including any reduction under Section 5.7 and any reduction as set
forth in Section 5.5) and BMS shall satisfy such obligation by paying Isis
directly.


5.5.2       Additional
Third Party Agreements.


(a)           After the Effective Date, Isis may
in-license or acquire rights to Third Party Patents (such a Third Party
in-license or acquisition agreement being an “Additional Third Party Agreement”) which would be
included in the Isis Patent Rights licensed to BMS under Section 2.1.  In such event, Isis shall notify BMS
regarding such Additional Third Party Agreement through the JRC (including the
payments paid or potentially payable by Isis thereunder) and the Parties shall
confer and discuss in good faith regarding the sharing of any upfront or
similar acquisition payments that Isis paid or that would be payable to such
Third Party.  At such time, if BMS wishes
to include such Third Party Patents under the licenses granted under Section
2.1, BMS will notify Isis of its desire to do so and the Parties will fairly
allocate between Compounds (and Products) and compounds that are not Compounds
(and products that are not Products) any upfront payments or similar
acquisition payments made by Isis to such Third Party under the Additional
Third Party Agreement.  If BMS does not
agree to reimburse Isis for [***]% of such amount of any upfront or similar
acquisition payments fairly allocated to Compound and Products, and to be
responsible for the payment of its share of any milestone and royalty payments
as set forth below, then the Third Party Patents acquired or in-licensed
by Isis under the Additional Third Party Agreement will not be considered an
Isis Patent Right licensed to BMS under this Agreement.


(b)           In the event that a milestone payment
or a royalty on net sales of Product becomes payable by Isis to a Third Party
under such Additional Third Party Agreement with respect to a Product Developed
and Commercialized by BMS under this Agreement, and such milestone or royalty
payment obligation is based on the Product being Covered by an Isis Patent
Right which is licensed to BMS under Section 2.1 and which is licensed to or
acquired by Isis under such Additional Third Party Agreement (such milestone
and/or royalty payments being the “Isis
Third Party Payment”), then BMS shall be responsible for the
payment of such Isis Third 



 17
 









Party Payment obligation, provided that BMS’ obligation to pay royalties under Section
5.4 (including any reduction under Section 5.7) shall be reduced by [***]% of
the Isis Third Party Payment paid by BMS, subject to Section 5.5.4 (with the
amount of any non-royalty Isis Third Party Payment not so applied by BMS to
such reduction in a given Calendar Quarter, because of Section 5.5.4,
[***]).  If BMS does not agree to be
responsible for the payment of any such Isis Third Party Payment, then the applicable
Isis In-License Patent will not be considered an Isis Patent Right licensed to
BMS under this Agreement.


(c)           Any royalties or milestones BMS is
responsible for paying under subsection (a) or (b) of this Section 5.5.2 will
be in addition to the royalties and milestones payable by BMS under Section 5.3
and 5.4 (including any reduction under Section 5.7 and any reduction as set
forth in Section 5.5) and BMS shall satisfy such obligation by paying Isis
directly.


5.5.3       BMS
Third Party Licenses.  BMS will be responsible for negotiating and
entering into any Third Party licenses that BMS determines may be necessary or
useful or may relate to the Development or Commercialization of Products.  If BMS, in its reasonable judgment, is
required to obtain a license from any Third Party (such Third Party shall
include Isis and its Affiliates with respect to any patent that is not licensed
to BMS under this Agreement) under any patent covering technology necessary or
useful for the Development or Commercialization of a Product (including but not
limited to technology for the delivery or formulation of a Product), and the
infringement of such patent cannot reasonably be avoided by BMS, and (i) such
infringement has been proved in a court of competent jurisdiction or (ii) BMS
has settled the infringement with the relevant Third Party by way of
out-of-court agreement; and if BMS is required to pay to such Third Party in
consideration for such license for a Product any milestone payments with
respect to a Product or a royalty calculated on sales of a Product, or if BMS
is required by a court of competent jurisdiction to pay such milestone or
royalty payments to such a Third Party (such milestone and royalty payments
collectively being a “BMS
Third Party Payment”; such BMS Third Party Payment shall also
include any upfront payments paid to such Third Party in consideration for such
license where the license is limited to Compounds and Products), then BMS may
reduce the royalty payable to Isis under Section 5.4 by up to [***]% of the
amount of the BMS Third Party Payment (subject to Section 5.5.4) (with the
amount of any such non-royalty BMS Third Party Payment not so applied by BMS to
such reduction in a given Calendar Quarter, because of Section 5.5.4, [***]).  Notwithstanding the foregoing, no reduction
of the royalties payable to Isis under Section 5.4 shall be permitted with
respect to BMS Third Party Payments with respect to any Third Party patent
covering (x) methods or materials used in the [***] or (y) any active ingredient
which is not a Compound (i.e., a non-Compound active ingredient in a
Combination Product).


5.5.4       Except for the [***] Royalty, for any
additional payments payable by BMS under Section 5.5.1, 5.5.2 or 5.5.3, BMS may
reduce its obligation to pay Isis royalties under Section 5.4 by [***] of the
amount of such additional payments payable by BMS as set forth in Sections
5.5.1, 5.5.2 and 5.5.3; provided, however
that (i) with respect to royalties paid to Third Parties by BMS under Sections
5.5.1, 5.5.2 and 5.5.3 no such reduction(s) in the aggregate shall reduce the
royalty payments payable to Isis under Section 5.4 in any given Calendar
Quarter period below a royalty payable to Isis of [***]% of Net Sales and (ii)
with respect to non-royalty payments paid to Third Parties by BMS under
Sections 5.5.1, 5.5.2 and 5.5.3 no such reduction(s) in the aggregate shall
reduce the royalty payments payable to Isis under Section 5.4 in any given
Calendar Quarter period below a royalty payable to Isis of [***]%, [***]% and
[***]% of Net Sales, as applicable (i.e. [***] of the applicable Royalty Rates
set forth in the table in Section 5.4).



 18
 









Section 5.6            Pay-Down of [***]. 
If after the
Effective Date Isis enters an agreement to pay a fee or other payment to reduce
(in whole or in part) the [***] Royalties, Isis will present the agreement to
BMS through the JRC and the Parties shall confer and discuss in good faith
regarding the sharing of any such fee or other payment that Isis paid or is
payable under such agreement.  If BMS
agrees to share the portion of such fees and payments determined appropriate by
the mutual agreement of the Parties, BMS will be relieved of its obligation to
pay the [***] Royalty to the extent of Isis’ benefit under such new agreement
reducing the [***] Royalty.


Section 5.7            Generic Competition. 
If there are one or
more unauthorized Third Parties selling a Generic Product, BMS may reduce the
royalties due to Isis under Section 5.4 above on a country-by-country and
Product-by-Product basis by [***] the unit volume sales of such Generic
Product(s) account for the [***] of the Product plus the Generic Product in
such country as reported by IMS; provided,
however, that, in no event will the royalties payable to Isis under
Section 5.4 above be reduced below the amount of any [***].  By way of example, if the sales of a Generic
Product in a country account for [***]% of the unit volume of the Product plus
all Generic Products, BMS may reduce the royalties due to Isis under Section
5.4 by [***]% in such country.


Section 5.8            Royalty Conditions.  The royalties under Section 5.4
shall be subject to the following conditions:


(i) 
that only one royalty shall be due to Isis hereunder with respect to the
same unit of Product;


(ii) 
that no royalties shall be due upon the sale or other transfer of a
Product among BMS, its Affiliates or Licensees, but in such cases the royalty
shall be due and calculated upon BMS’s or its Affiliate’s or Licensee’s sale of
Product to the first unaffiliated Third Party customer, where Net Sales is as
defined in Appendix 1;


(iii) 
no royalties shall accrue on the disposition of Product in reasonable
quantities by BMS, its Affiliates or Licensees as part of an expanded access
program or as part of Phase IV Trials or as bona fide samples or as donations
to non-profit institutions or government agencies for non-commercial
purposes, provided, in each case, that neither
BMS, its Affiliate or Licensees receives any payment or other in-kind
consideration for such Product.


Section 5.9            Royalty Term.  Royalties payable under Section
5.4 (subject to and including any reduction set forth in Sections 5.5, 5.6 and
5.7) will be payable for each Product on a Product-by-Product and
country-by-country basis from the First Commercial Sale of the applicable Product
in such country until the date that is the later of (i) [***] years after the
First Commercial Sale of the Product in such country or (ii) the expiration of
the last to expire Valid Claim within the Product Specific Patents or Isis Core
Technology Patents which would be infringed by the sale of the applicable
Product in the applicable country by an unauthorized party or (iii) the
expiration of any applicable period of exclusivity as contemplated under
Section 8.6 for the Product in the applicable country; provided that royalties shall only accrue
so long as the exclusive license granted by Isis to BMS under Section 2.1 with
respect to such Product has not been terminated.  Such period during which royalties are
payable with respect to a Product in a country is referred to herein as the “Royalty Term” in
such country with respect to such Product.


Section 5.10         Royalty Report and Payment. 
During the term of this Agreement following the First Commercial Sale of
any Product, within 60 days after the end of each 



 19
 









Calendar
Quarter, BMS shall pay to Isis royalty payments payable for such Calendar
Quarter and provide a royalty report showing, on a Product-by-Product and
country-by-country basis:


(a)           the Net Sales of Products sold by BMS, its Licensees and
their respective Affiliates during such Calendar Quarter reporting period;


(b)           the royalties payable in United States Dollars which shall
have accrued hereunder with respect to such Net Sales;


(c)           withholding taxes, if any, required by Applicable Law to
be deducted with respect to such royalties; and


(d)           the rate of exchange used by BMS in determining the amount
of United States dollars payable hereunder.


In addition, during the term
of this Agreement following the First Commercial Sale of any Product, within 30
days after the end of each Calendar Quarter, BMS shall provide Isis a
preliminary quarterly royalty report showing the total Net Sales of Product and
royalty payable for such Calendar Quarter.


If no royalty or payment is due for any royalty period
hereunder, BMS shall so report.  BMS
shall keep, and shall require its Licensees and their respective Affiliates to
keep (all in accordance with generally accepted accounting principles,
consistently applied), complete and accurate records in sufficient detail to
properly reflect the Net Sales and to enable the royalties payable hereunder to
be determined.  Upon reasonable request
by Isis, BMS shall report to Isis the quantity of Product (not subject to
royalties) distributed by BMS, its Affiliates or Licensees as part of an
expanded access program or as part of Phase IV trials or as bona fide samples
or as donations to not-for-profit institutions or government agencies for
non-commercial purposes.  All information
disclosed by BMS to Isis under this Section 5.10 shall be BMS Confidential
Information.


Section 5.11         Manner of Payment And
Exchange Rate.  All payments to be
made by BMS to Isis under this Agreement shall be made in Dollars and shall be
paid by electronic transfer in immediately available funds to such bank account
in the United States designated in writing by Isis.  In the case of Net Sales outside the United
States, the rate of exchange to be used in computing the amount of currency
equivalent in United States Dollars payable shall be the rate of exchange used
by BMS for  its own financial reporting purposes
in connection with its other products, which shall be consistent with
GAAP.  Upon request by Isis, BMS shall
inform Isis regarding BMS’s then-current currency exchange policy.


Section 5.12         Audits of Royalty Reports.


Upon
the written request of Isis and not more than once in each Calendar Year, BMS
shall permit an independent certified public accounting firm of nationally
recognized standing selected by Isis and reasonably acceptable to BMS, at Isis’
expense and upon execution of a confidentiality agreement with BMS, to have
access during normal business hours to such records of BMS and/or its
Affiliates as may be reasonably necessary to verify the accuracy of the royalty
reports hereunder for any Calendar Year ending not more than 36 months prior to
the date of such request.  These audit
rights (but not any obligation to pay unpaid royalties for such periods) with
respect to any Calendar Year shall terminate 3 years after the end of any such
Calendar Year.  Isis shall provide BMS
with a copy of the accounting firm’s written report within 30 days of
completion of such report.


If
such accounting firm correctly concludes that an overpayment or underpayment
was made, then the owing Party shall pay the amount due within 30 days of the
date Isis delivers to 



 20
 









BMS such accounting firm’s
written report so correctly concluding. 
Isis shall bear the full cost of such audit unless such audit correctly
discloses that the additional payment payable by BMS for the audited period is
more than [***] of the amount of the royalties paid for that audited period, in
which case BMS shall pay the reasonable fees and expenses charged by the
accounting firm.


BMS
shall include in each sublicense granted by it to any Licensee a provision requiring
the Licensee to maintain records of sales made pursuant to such license and to
grant access to such records by BMS’s independent accountant to the same extent
and under the same obligations as required of BMS under this Agreement.  BMS shall advise Isis in advance of each
audit of any Licensee with respect to Product sales.  BMS will provide Isis with a summary of the
results received from the audit and, if Isis so requests, a copy of the audit
report with respect to Product sales. 
BMS shall pay the reasonable fees and expenses charged by the accounting
firm, except that Isis shall pay for all additional services requested
exclusively by Isis from BMS’s independent accountant unless the audit
discloses that the additional payments payable to Isis for the audited period
differ by more than [***] from the amount of the royalties otherwise paid.


All
financial information subject to review under this Section or under any license
agreement with a Licensee shall be BMS Confidential Information and shall be
treated in accordance with the confidentiality provisions of this
Agreement.  As a condition precedent to
Isis’ audit rights under this Section, Isis’ accounting firm will enter into a
confidentiality agreement with BMS obligating it to treat all such financial
information in confidence pursuant to such confidentiality agreement.  Isis may provide Third Parties to which Isis
owes Pass Through Royalties on Products information in such audit report that
are relevant and required to comply with such Third Party’s audit rights under
the applicable license agreement between Isis and such Third Party, provided that such Third Party agrees in
writing to keep such information confidential under terms no less restrictive
than Isis’ obligations of confidentiality under this Agreement.


Section 5.13         Taxes.  Isis will pay any and all taxes levied on
account of all payments it receives under this Agreement.  If laws or regulations require that taxes be
withheld with respect to such payments, BMS will: (i) deduct those taxes from
the remittable payment; (ii) pay the taxes to the proper taxing authority; and
(iii) send evidence of the obligation together with proof of tax payment to
Isis on a timely basis following that tax payment.  Each Party agrees to cooperate with the other
Party in claiming refunds or exemptions from such deductions or withholdings
under any relevant agreement or treaty which is in effect.  Such cooperation may include BMS making
payments from a single source in the U.S., where not impracticable.  The Parties shall discuss applicable
mechanisms for minimizing such taxes to extent possible in compliance with
Applicable Law.  In addition, the Parties shall
cooperate in accordance with Applicable Law to minimize indirect taxes (such as
value added tax, sales tax, consumption tax and other similar taxes) in
connection with this Agreement.


Section 5.14         Blocked Currency.  In each country where the local
currency is blocked and cannot be removed from the country, royalties accrued
in that country will be paid to Isis in the country in local currency by
deposit in a local bank designated by Isis, unless the Parties otherwise agree.


Section 5.15         Sublicenses.  In the event BMS grants
licenses or sublicenses to a Licensee to sell Products which are subject to
royalties under Section 5.4, such licenses or sublicenses will include an
obligation for the Licensee to account for and report its sales of Products on
the same basis as if such sales were Net Sales by BMS, and BMS will pay, or
will ensure that Licensee will pay, to Isis, with respect to such sales,
royalties as if such sales of the Licensee were Net Sales of BMS.



 21
 









Section 5.16         Interest.  If BMS fails to make any
payment due to Isis under this Agreement, then interest will accrue on a daily
basis at the greater of an annual rate equal to 1.0% above the then-applicable
prime commercial lending rate of CitiBank, N.A. San Francisco, California, or
at the maximum rate permitted by Applicable Law, whichever is the lower.


ARTICLE 6 - 

PRESS RELEASES & PUBLICATIONS


Section 6.1            Press Releases; Public
Disclosure.


6.1.1       Upon execution of this Agreement, the Parties
shall issue a joint press release announcing the existence of this Agreement in
a form and substance agreed to in writing by the Parties.  Each Party agrees not to issue any other
press release or other public statement disclosing other information relating
to this Agreement or the transactions contemplated hereby without the prior
written consent of the other Party, which consent shall not be unreasonably
withheld or delayed, provided however,  that each Party may make disclosures
permitted by, and in accordance with, Article 7.  Each Party agrees to provide to the other
Party a copy of any public announcement regarding this Agreement or the subject
matter thereof as soon as reasonably practicable under the circumstances prior
to its scheduled release.  Except under
extraordinary circumstances, each Party shall provide the other with an advance
copy of any such announcement at least 5 Business Days prior to its scheduled
release.  Each Party shall have the right
to expeditiously review and recommend changes to any such announcement and,
except as otherwise permitted by Article 7, the Party whose announcement has
been reviewed shall remove any information the reviewing Party reasonably deems
to be inappropriate for disclosure.  The
contents of any announcement or similar publicity which has been reviewed and
approved by the reviewing Party can be re-released by either Party without a
requirement for re-approval.


6.1.2       Each Party will immediately notify (and
provide as much advance notice as possible to) the other of any event
materially related to Products (including any regulatory approval) so that the
Parties may analyze the need to or desirability of publicly disclosing or
reporting such event.  Notwithstanding
Section 6.1.1 above, any press release or other similar public communication by
either Party related a Product’s efficacy or safety data and/or results, will
be submitted to the other Party for review and approval at least 5 Business
Days in advance of such proposed public disclosure, which approval will not be
unreasonably withheld or delayed.


Section 6.2            Publication of Research Results.


6.2.1       Publication
by Isis.  Isis shall not publish, present or otherwise disclose
to the public the Research Results exclusively licensed to BMS hereunder,
except subject to the prior review and comment by BMS as follows.  Isis shall provide BMS with the opportunity
to review any such proposed disclosure which if made would or may be considered
a public disclosure, whether written or oral, (such as an abstract, manuscript
or presentation) that contains such Research Results by delivering a copy
thereof to BMS no less than thirty (30) days before its intended submission for
publication, presentation or other public disclosure.  BMS shall have thirty (30) days from its
receipt of any such proposed disclosure in which to notify Isis in writing of
approval of the disclosure, such approval not to be unreasonably withheld or
delayed.  In the event BMS objects to the
proposed disclosure in writing within such thirty (30) days period, or requests
a delay in the disclosure beyond such thirty (30) day period for the filing of
a patent application, Isis agrees not to make the proposed disclosure or submit
the publication or abstract or make the presentation containing the objected-to
information until the Parties have agreed to the content of the proposed
disclosure, or, where applicable, such patent application has been filed, and
Isis shall delete from the proposed disclosure any Confidential Information of
BMS 



 22
 









(including
any Confidential Information of both Parties) upon request by BMS.  Once any such abstract or manuscript is
accepted for publication, at BMS’ request, Isis will provide BMS with a copy of
the final version of the presentation, manuscript or abstract.


6.2.2                                       Publication
by BMS.  BMS shall not publish, present or otherwise
disclose to the public the Research Results exclusively licensed to BMS
hereunder, except subject to the prior review and comment by Isis as
follows.  BMS shall provide Isis with the
opportunity to review any such proposed disclosure which if made would or may
be considered a public disclosure, whether written or oral, (such as an
abstract, manuscript or presentation) that contains such Research Results by
delivering a copy thereof to Isis no less than thirty (30) days before its
intended submission for publication, presentation or other public
disclosure.  Isis shall have thirty (30)
days from its receipt of any such proposed disclosure in which to notify BMS in
writing of approval of the disclosure, such approval not to be unreasonably
withheld or delayed.  In the event Isis
objects to the proposed disclosure in writing within such thirty (30) days
period, or requests a delay in the disclosure beyond such thirty (30) day
period for the filing of a patent application, BMS agrees not to make the
proposed disclosure or submit the publication or abstract or make the
presentation containing the objected-to information until the Parties have
agreed to the content of the proposed disclosure, or, where applicable, such
patent application has been filed, and BMS shall delete from the proposed
disclosure any Confidential Information of Isis  (including any Confidential Information of
both Parties) upon request by Isis.  Once
any such abstract or manuscript is accepted for publication, at Isis’ request,
BMS will provide Isis with a copy of the final version of the presentation,
manuscript or abstract.


6.2.3       For clarification, this Section 6.2 shall not
apply with respect to the use and disclosure of Confidential Information as
specifically provided for in Section 6.1 or Article 7 (i.e., a disclosure
expressly permitted and made in accordance with Section 6.1 or Article 7).


ARTICLE 7 - 

CONFIDENTIALITY


Section 7.1            Disclosure and Use Restriction.  Each
Party agrees that, for so long as this Agreement is in effect and for a period
of 5 years thereafter, a Party (the “Receiving Party”) receiving Confidential
Information of the other Party (the “Disclosing Party”) shall (i) maintain in
confidence such Confidential Information using not less than the efforts such
Receiving Party uses to maintain in confidence other proprietary industrial
information of similar kind and value, (ii) not disclose such Confidential
Information except to the Receiving Party’s employees having a need-to-know
such Confidential Information solely for purposes of performing Receiving Party’s
obligations under this Agreement, (iii) not disclose such Confidential
Information to any Third Party without the prior written consent of the
Disclosing Party, except for disclosures expressly permitted by this Agreement,
and (iv) not use such Confidential Information for any purpose except those
expressly permitted by this Agreement. 
For avoidance of doubt, Isis shall be permitted to use the BMS
Confidential Information solely for purposes of performing the Research Program
in accordance with the Research Plan and for no other purpose.  Upon completion of the Research Program or
earlier upon written request by BMS, Isis shall return to BMS or destroy any
BMS Confidential Information.


Section 7.2            Authorized Disclosure.  To
the extent (and only to the extent) that it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, a Party may disclose Confidential Information belonging to the other
Party in the following instances:


(a)           filing or
prosecuting patent applications in accordance with this Agreement;



 23
 









(b)           made to the
Regulatory Authorities as necessary for the Development or Commercialization of
a Product in a country, as required in connection with any filing, application
or request for Approval; provided, however,
that reasonable measures will be taken to assure confidential treatment of such
information;


(c)           prosecuting or
defending litigation;


(d)           complying with
applicable governmental laws and regulations (including, without limitation,
the rules and regulations of the Securities and Exchange Commission or any national
securities exchange, and compliance with tax laws and regulations) and with
judicial process, if (i) in the reasonable opinion of the Receiving Party’s
counsel, such disclosure is necessary for such compliance and (ii) such
disclosure is made in accordance with Section 7.3 or 7.4 as applicable; and


(e)           disclosure, in
connection with the performance of this Agreement and solely on a need-to-know
basis, to Affiliates, potential or actual collaborators (including potential
Licensees), potential or actual investment bankers, investors, lenders, or
acquirers,  or  employees,
independent contractors (including without limitation consultants and clinical
investigators) or agents, each of whom prior to disclosure must be bound by
written obligations of confidentiality and non-use no less restrictive than the
obligations set forth in this Article 7; provided, however,
that the Receiving Party shall remain responsible for any failure by any Person
who receives Confidential Information pursuant to this Article 7 to treat such
Confidential Information as required under this Article 7.


If and whenever any Confidential Information is disclosed in accordance
with this Section 7.2, such disclosure shall not cause any such information to
cease to be Confidential Information except to the extent that such permitted
disclosure results in a public disclosure of such information (other than by
breach of this Agreement).  Where
reasonably possible and subject to Sections 7.3 and 7.4, the Receiving Party
shall notify the Disclosing Party of the Receiving Party’s intent to make such
disclosure pursuant to clauses (a) through (d) of this Section 7.2 sufficiently
prior to making such disclosure so as to allow the Disclosing Party adequate
time to take whatever action it may deem appropriate to protect the
confidentiality of the information.


For purposes of this Article 7, for as long as and to the extent the
exclusive license granted to BMS under Section 2.1 remains in effect, the
Research Results shall be treated as Confidential Information of both
Parties.  Accordingly, each Party shall
be considered the Receiving Party with respect to the Research Results and
shall be subject to all of the restrictions and obligations of this Article 7
with respect to the disclosure and use of such Research Results to the same
extent as applicable to Confidential Information disclosed to such Party by the
other Party.


Section 7.3            Required Disclosure.  A Receiving Party may disclose
Confidential Information pursuant to interrogatories, requests for information
or documents, subpoena, civil investigative demand issued by a court or
governmental agency or as otherwise required by Law; provided however, that the Receiving Party shall notify the
Disclosing Party promptly upon receipt thereof, giving (where practicable) the
Disclosing Party sufficient advance notice to permit it to oppose, limit or
seek confidential treatment for such disclosure, and to file for patent
protection if relevant; and provided,
further, that the Receiving Party shall furnish only that portion of
the Confidential Information which it is advised by counsel is legally required
whether or not a protective order or other similar order is obtained by the
Disclosing Party.


 



 24















Section 7.4            Securities Filings.  In the event either Party
proposes to file with the Securities and Exchange Commission or the securities
regulators of any state or other jurisdiction a registration statement,
periodic report, or any other disclosure document which describes or refers to
this Agreement under the Securities Act of 1933, as amended, the Securities
Exchange Act, of 1934, as amended, or any other applicable securities Law, the
Party shall notify the other Party of such intention and shall provide such
other Party with a copy of relevant portions of the proposed filing not less
than three (3) business days prior to such filing (provided that, whenever practicable, such portions shall be
provided not less than 5 business days prior to such filing) (and any revisions
to such portions of the proposed filing a reasonable time prior to the filing
thereof), including any exhibits thereto relating to the Agreement, and shall
obtain confidential treatment of any information concerning the Agreement that
such other Party requests be kept confidential (except to the extent advised by counsel that confidential
treatment is not available for such information), and shall only disclose
Confidential Information which it is advised by counsel is legally required to
be disclosed.  No such notice shall be
required under this Section 7.4 if the substance of the description of or
reference to this Agreement contained in the proposed filing has been included
in any previous filing made by the either Party hereunder or otherwise approved
by the other Party.


Section 7.5            Terms of Agreement.  The existence and the terms and
conditions of the Agreement that the Parties have not specifically agreed to
disclose pursuant to Article 6 or Section 7.4 shall be considered Confidential
Information of both Parties.  Either
Party may disclose such terms to a bona fide
potential Licensee, investor, investment banker, acquirer, merger partner or
other potential financial partner, and their attorneys and agents, provided that each such Person to whom
such information is to be disclosed is informed of the confidential nature of
such information and has entered into a written agreement with the Party
requiring such Person to keep such information confidential.


Section 7.6            Injunctive Relief.  The Parties hereto understand
and agree that remedies at Law may be inadequate to protect against any breach
of any of the provisions of this Article 7 by either Party or their employees,
agents, officers or directors or any other person acting in concert with it or
on its behalf.  Accordingly, each Party
shall be entitled to seek injunctive relief by a court of competent
jurisdiction against any action that constitutes any such breach of this
Article 7.


ARTICLE 8 - 

PATENTS


Section 8.1            Ownership of Inventions and Patents.


(a)           Title to inventions, discoveries,
improvements and other technology, whether or not patentable, conceived, made
or reduced to practice in the performance of the Research Program under this
Agreement (collectively, the “Program
Inventions”) and any Patents claiming such Program Inventions (“Program Patent Rights”), are
retained by the Party that is the employer of the inventor (or, in the case of
consultants and (sub)contractors, the Party for which the consultant or
(sub)contractor is providing its services). 
The Parties agree that the United States federal patent law on
inventorship shall determine the inventorship of any invention and the names of
the inventors on any patent filings, whether sole or joint inventions, which
arise in connection with activities conducted pursuant to this Agreement.  BMS shall own Program Inventions invented
solely by employees, consultants and/or (sub)contractors of BMS (the “BMS Inventions”) and any
Patents claiming such Program Inventions (the “BMS Program Patent Rights”).  Isis shall own Program Inventions invented
solely by employees, consultants and/or (sub)contractors of Isis (the “Isis Inventions”) and any
Patents claiming such Program 



 25
 









Inventions (the “Isis Program Patent Rights”).  Isis and BMS shall own jointly such Program
Inventions invented jointly by employees, consultants and/or (sub)contractors
of Isis and BMS (the “Joint
Inventions”) and any Patents claiming such Program Inventions
(the “Joint Patents”).  Isis shall promptly disclose to BMS any such
Isis Invention or Joint Invention, and BMS shall promptly disclose to Isis any
BMS Invention or Joint Invention, arising from or made in the performance of
the Research Program and any patent or patent application claiming such Program
Invention.


(b)           This Agreement shall be understood to
be a joint research agreement to discover Compounds and associated uses and to
Develop Products in accordance with 35 U.S.C. § 103(c)(3).


(c)           Each Party has entered or will enter
into binding agreements obligating all employees, consultants and/or
(sub)contractors performing activities in the performance of the Research
Program or in the manufacture of API by Isis for BMS, to assign (or, in the
case of (sub)contractors, assign or license) the employee’s, consultant’s
and/or (sub)contractor’s interest in any invention and related intellectual
property conceived or reduced to practice in the course of such activities to
the Party for which such employee, consultant and/or (sub)contractor is
providing its services.


Section 8.2            Filing, Prosecution and Maintenance of Patent Rights.


8.2.1       Solely
Owned Patents.  Subject to the other sections of this Article
8, including the other subsections of this Section 8.2 below, each Party will
have the sole right, at its cost and expense and at its sole discretion, to
prepare, file, prosecute (including, without limitation, to control any
interferences, reissue proceedings, oppositions and reexaminations), maintain,
enforce and defend throughout the world any Patents solely owned or Controlled
by such Party, including with respect to Isis, the Isis Core Technology Patents
and the Isis Manufacturing Patents.


8.2.2       Filing,
Prosecution and Maintenance of Isis Core Technology Patents and Isis
Manufacturing Patents.


(a)           As between Isis and BMS, Isis shall
be responsible for the preparation, filing, prosecution (including, without
limitation, any interferences, reissue proceedings, oppositions and
reexaminations) and maintenance of Isis Core Technology Patents and Isis
Manufacturing Patents, and Isis shall be responsible for all costs incurred by
Isis with respect to such preparation, filing, prosecution and maintenance of
Isis Core Technology Patents and Isis Manufacturing Patents.  At BMS’ reasonable request, Isis, or its
outside counsel, shall promptly provide BMS with an update of the filing,
prosecution and maintenance status for each of the Isis Core Technology Patents
and Isis Manufacturing Patents, including without limitation an update of
Appendix 3 and 4.  In addition, Isis will
cooperate with BMS in the preparation, filing and prosecution of any Isis Core
Technology Patents and Isis Manufacturing Patents that disclose ASOs targeting
PCSK9 or Compounds or Products. 
Accordingly, Isis will not file any Isis Core Technology Patents and Isis
Manufacturing Patents that disclose ASOs targeting PCSK9 or Compounds or
Products without first consulting with BMS’ patent counsel regarding the filing
of such Patent.  Upon request by BMS’
patent counsel, a separate application shall be filed concurrently with such
Isis Core Technology Patent or Isis Manufacturing Patent with claims
specifically directed to a Compound or Product (including claims specifically
directed to a method of use or making such Compound or Product) and such
separate application will be considered and treated as a Product Specific
Patent under this Agreement, and shall be subject to without limitation the
provisions of Sections 8.2.3 and 8.4.1.



 26
 









(b)           In addition, Isis will cooperate with
BMS to prepare, file and prosecute continuing applications (including
divisionals, continuations or continuations-in-part) for any Patent within the
Isis Core Technology Patents or Isis Manufacturing Patents for the purposes of
securing claims that more directly or specifically cover a Compound or
Product.  Accordingly, Isis will not file
or add during the prosecution of any Isis Core Technology Patents or Isis
Manufacturing Patents claims specifically directed to a Compound or Product
(including claims specifically directed to a method of use or making such
Compound or Product) without first consulting with BMS’ patent counsel
regarding such claims.  Upon request by
BMS’ patent counsel, any such claims specifically directed to a Compound or
Product (including claims specifically directed to a method of use or making
such Compound or Product) shall be filed as a continuing application (such as a
divisional, continuation or continuations-in-part) of any Patent within the
Isis Core Technology Patents or Isis Manufacturing Patents.  Once filed, these continuing applications
(including divisionals, continuations or continuations-in-part) will be
considered and treated as Product Specific Patents under this Agreement, and
shall be subject to without limitation the provisions of Sections 8.2.3 and
8.4.1.


8.2.3       Filing,
Prosecution and Maintenance of Product Specific Patents.  In
accordance with this Section 8.2.3 and subject to Section 8.2.4, unless the
Parties otherwise agree in writing, BMS
shall have lead responsibility (using internal or outside counsel selected by
BMS), and Isis shall cooperate fully, with respect to the preparation, filing,
prosecution (including, without limitation, any
interferences, reissue proceedings, oppositions and reexaminations) and maintenance of the Product Specific
Patents.  BMS shall
be responsible for all out-of-pocket costs (including reasonable out-of-pocket
costs incurred by Isis in performing activities at the prior written request of
BMS) with respect to such preparation, filing, prosecution and maintenance of Product Specific Patents for which BMS assumes such lead
responsibility. 
Isis shall cooperate with BMS in the filing and prosecution of such
patent applications, including consulting with and assisting BMS and its patent
counsel in drafting patent applications and responses.  In addition, upon request by BMS, Isis will
provide such assistance and execute such documents as are reasonably necessary
to permit the filing, prosecution and/or maintenance of such patent or patent
application or the issuance, maintenance and/or extension of any resulting
patent or permit enforcement of such patent application or any such
patent.  BMS, or its outside counsel,
shall provide Isis with an update of the filing, prosecution and maintenance status
for each of the Product Specific Patents on a periodic basis for which BMS
assumes lead responsibility and shall reasonably consult with and cooperate
with Isis with respect to the preparation, filing, prosecution and maintenance
of such Product Specific Patents, including providing Isis with drafts of
proposed filings in sufficient time to allow Isis’s review and comment before
such filings are due.  BMS, or its
outside counsel, shall provide to Isis copies of any papers relating to the
filing, prosecution and maintenance of such Product Specific Patents promptly
upon their being filed or received.  In
the event that BMS elects not to pursue or continue the filing, prosecution
(including any material reduction in claim scope) or maintenance of any Patents
included in such Product Specific Patents in any country, BMS shall provide
Isis with an opportunity to assume responsibility for such filing, prosecution
or maintenance of such Product Specific Patents as set forth in Section
8.2.4.  In the case where Isis wishes to
pursue subject matter BMS has deleted from a claim (where BMS has elected to
not otherwise pursue the subject matter of such claim in the same or another
application), Isis may pursue such subject matter in a corresponding
continuation or divisional application (where permissible under law) in
accordance with and subject to Section 8.2.4. 
For so long as BMS retains responsibility under this Section 8.2.3 with
respect to a particular Product Specific Patent, BMS shall not knowingly take
any action or knowingly fail to take any action during the filing, prosecution
and/or maintenance of such Product Specific Patents that would materially
adversely affect such Product Specific Patents (including any material
reduction in claim scope), without providing Isis written notice and information
as set forth above.  In the case where
BMS assumes responsibility for the 



 27
 









preparation,
filing, prosecution or maintenance of any patent or patent application as set
forth above, and has used all good faith, reasonable efforts to comply with its
obligations to provide notice and information as set forth in this Section
8.2.3 and 8.2.4, BMS will not be liable to Isis in any way with respect to its
handling of, or the results obtained from, the filing, prosecution, issuance,
extension or maintenance of such application or any resulting patent or any
failure by it to so file, prosecute, extend or maintain.


8.2.4       Filing,
Prosecution and Maintenance of Product Specific Patents by Isis.  In no
event will BMS, for so long as BMS retains responsibility for the filing,
prosecution and maintenance of the Product Specific Patents as set forth in
Section 8.2.3, knowingly permit any such Product Specific Patent to be
abandoned in any country, or elect not to file a new patent application
claiming priority to a patent application within such Product Specific Patents
either before such patent application’s issuance or within the time period
required for the filing of an international (i.e., Patent Cooperation Treaty),
regional (including European Patent Office) or national application, without
Isis’s written consent or Isis otherwise first being given an opportunity to
assume full responsibility (at Isis’s expense) for the continued prosecution
and maintenance of such Product Specific Patents, or the filing of such new
patent application.  Accordingly, BMS, or
its outside counsel, shall provide Isis with notice of the allowance and
expected issuance date of any patent within the Product Specific Patents, or
any of the aforementioned filing deadlines, and Isis shall provide BMS with
prompt notice as to whether Isis desires BMS to file any such new patent
application.  In the event that BMS
decides either (i) not to continue the prosecution or maintenance of a patent
application or patent within Product Specific Patents in any country or (ii)
not to file such new patent application requested to be filed by Isis as
provided above, BMS shall provide Isis with  notice of this
decision at least thirty (30) days prior to any pending lapse or abandonment
thereof, and Isis may thereafter assume responsibility for such filing,
prosecution and maintenance in accordance with this Section 8.2.4.  In the event that Isis assumes such
responsibility for such filing, prosecution and maintenance, Isis shall have
the right to transfer the responsibility for such filing, prosecution and
maintenance of such patent applications and patents to patent counsel (outside
or internal) selected by Isis, and  Isis,
or its outside counsel, shall provide BMS with an update of the filing,
prosecution and maintenance status for each of the Product Specific Patents on
a periodic basis for which Isis assumes lead responsibility and shall
reasonably consult with and cooperate with BMS with respect to the preparation,
filing, prosecution and maintenance of such Product Specific Patents, including
providing BMS with drafts of proposed filings in sufficient time to allow BMS’s
review and comment (or the filing of Product Specific Patents by BMS in
accordance with Section 8.2.3) before such filings are due.  Isis, or its outside counsel, shall provide
to BMS copies of any papers relating to the filing, prosecution and maintenance
of such Product Specific Patents promptly upon their being filed or
received.  In the case where Isis takes
over the preparation, filing, prosecution or maintenance of any patent or
patent application as set forth above, and has used all good faith, reasonable
efforts to comply with its obligations to provide notice and information as set
forth is this Section 8.2.4, Isis will not be liable to BMS in any way with
respect to its handling of, or the results obtained from, the filing,
prosecution, issuance, extension or maintenance of such application or any
resulting patent or any failure by it to so file, prosecute, extend or
maintain.


8.2.5       Filing,
Prosecution and Maintenance of Certain Program Patent Rights.  This
Section 8.2.5 shall apply to Program Patent Rights that are not Product
Specific Patents (the preparation, filing, prosecution and maintenance of the
Program Patent Rights that are Product Specific Patents are governed by
Sections 8.2.3 and 8.2.4).  In accordance
with this Section 8.2.5, unless the Parties otherwise agree in writing, BMS shall have lead responsibility, and
Isis shall cooperate fully, with respect to the preparation, filing,
prosecution (including, 



 28
 









without
limitation, any interferences, reissue proceedings, oppositions and
reexaminations) and maintenance
of the Program Patent Rights, for so long as BMS retains relevant rights
hereunder.  BMS
shall be responsible for all out-of-pocket costs (including reasonable
out-of-pocket costs incurred by Isis in performing activities at the prior
written request of BMS) with respect to such preparation, filing, prosecution
and maintenance of Program Patent Rights for
which BMS assumes such lead responsibility.  Isis shall promptly disclose to BMS any
Program Inventions, and BMS shall have the right in accordance with this
Section 8.2.5 to file and prosecute any new patent application claiming such
inventions to the extent BMS has rights hereunder to the relevant
invention.  Isis shall cooperate with BMS
in the filing and prosecution of such patent applications, including consulting
with and assisting BMS and its patent counsel in drafting patent applications
and responses.  In addition, upon request
by BMS, Isis will provide such assistance and execute such documents as are
reasonably necessary to permit the filing, prosecution or maintenance of such
patent or patent application or the issuance, maintenance or extension of any
resulting patent or permit enforcement of such patent application or any such
patent.  BMS, or its outside counsel,
shall provide Isis with an update of the filing, prosecution and maintenance
status for each of the Program Patent Rights on a periodic basis for which BMS
assumes lead responsibility and shall reasonably consult with and cooperate
with Isis with respect to the preparation, filing, prosecution and maintenance
of such Program Patent Rights, including providing Isis with drafts of proposed
filings in sufficient time to allow Isis’ review and comment before such
filings are due.  BMS, or its outside
counsel, shall provide to Isis copies of any papers relating to the filing,
prosecution and maintenance of such Program Patent Rights promptly upon their
being filed or received.  In the event
that BMS elects not to pursue or continue the filing, prosecution or
maintenance of any Program Patent Rights in any country, BMS shall provide Isis
with an opportunity to assume responsibility for such filing, prosecution or
maintenance of such Patents to the same manner as applicable to the Product
Specific Patents as provided in Section 8.2.4, such that such Program Patent
Rights will be treated in the same manner as Product Specific Patents under
Section 8.2.4.  In the case where BMS
assumes responsibility for the preparation, filing, prosecution or maintenance
of any patent or patent application as set forth above, and has used all good
faith, reasonable efforts to comply with its obligations to provide notice and information
as set forth is this Section 8.2.5, BMS will not be liable to Isis in any way
with respect to its handling of, or the results obtained from, the filing,
prosecution, issuance, extension or maintenance of such application or any
resulting patent or any failure by it to so file, prosecute, extend or
maintain.


8.2.6       Cooperation.  In accordance with the foregoing, each Party will cooperate reasonably
in the preparation, filing, prosecution, and maintenance of the Product
Specific Patents and Program Patent Rights. 
Such cooperation includes (a) promptly executing all papers and
instruments and requiring employees (and other persons under obligation to
assign Patents to such Party) to execute such papers and instruments as
reasonable and appropriate so as to enable such other Party, to prepare, file,
prosecute, and maintain such Patents in any country; and (b) promptly informing
such other Party of matters that may affect the preparation, filing,
prosecution, or maintenance of any such Patents.


Section 8.3            Patent Term Extension.  Isis
and BMS shall each cooperate with one another and shall use commercially
reasonable efforts in obtaining patent term extensions (including without
limitation, any pediatric exclusivity extensions as may be available) or supplemental
protection certificates or their equivalents in any country with respect to
patent rights covering those Products licensed by BMS hereunder.  If elections with respect to obtaining such
patent term extensions or supplemental protection are to be made, BMS shall
have the right to make such election, provided
that such election will be made in accordance with applicable Law so as to
maximize the period of marketing exclusivity for the Product.



 29
 









Section 8.4            Enforcement of Patents


8.4.1       Enforcement by BMS of Product Specific Patents.  In
the event that Isis or BMS becomes aware of a suspected infringement in the
Field of any Product Specific Patent, or any such Product Specific Patent is
challenged in any action or proceeding (other than any interferences, reissue
proceedings, oppositions or reexaminations, which are addressed above), such
Party shall notify the other Party promptly, and following such notification,
the Parties shall confer.  BMS shall have
the right, but shall not be obligated, to defend any such action or proceeding
or bring an infringement action with respect to such infringement to the extent
in the Field and relevant to BMS’s exclusive rights hereunder at its own
expense, in its own name and entirely under its own direction and control, or
settle any such action, proceeding or dispute by license (to the extent such
sublicense is permitted under this Agreement), subject to the following.  Isis shall reasonably assist BMS in any
action or proceeding being defended or prosecuted if so requested, and shall
lend its name to such actions or proceedings if reasonably requested by BMS or
required by Applicable Law.  BMS shall
reimburse Isis for the documented out-of-pocket costs Isis reasonably incurs in
providing such assistance as specifically requested in writing by BMS.  In the event Isis is a required party to the
proceeding or action, Isis shall have the right to be represented by its own
counsel (such selection to be subject to BMS’s approval, such approval not to
be unreasonably withheld), and BMS shall reimburse Isis for the documented
out-of-pocket costs Isis reasonably incurs that are reasonably related to the
proceeding or action, including attorneys fees, provided
that BMS shall retain overall responsibility for the prosecution of such action
or proceeding in such event.  In the
event that Isis is not a necessary party to the proceeding or action, Isis
shall have the right to participate and be represented in any such suit by its
own counsel at its own expense, provided that
BMS shall retain overall responsibility for the prosecution of such action or
proceedings in such event.  No settlement
of any such action or proceeding which restricts the scope, or adversely
affects the enforceability, of an Isis Patent Right, or which could be reasonably
expected to have a material adverse financial impact on Isis, may be entered
into by BMS without the prior written consent of Isis, which consent shall not
be unreasonably withheld, delayed or conditioned.


8.4.2       Enforcement
by Isis.  If BMS elects not to settle, defend or bring
any action for infringement described in Section 8.4.1 and so notifies Isis,
including following any request by Isis to do so, then Isis may defend or bring
such action at its own expense, in its own name, provided
however that, Isis agrees not to so settle, defend or bring any
action for infringement of a Product Specific Patent Right upon BMS’s request
based on BMS’s good faith reasonable determination, the basis for which shall
be provided to Isis, that it is not in the best interest of the Parties to so
settle, defend or bring such action for infringement.  In the case where Isis proceeds to settle,
defend or bring an action for such infringement, the following shall apply.  BMS shall reasonably assist Isis in any
action or proceeding being defended or prosecuted if so requested, and shall
lend its name to such actions or proceedings if requested by Isis or required
by Applicable Law.  Isis shall reimburse
BMS for the documented external costs BMS reasonably incurs in providing such
assistance as specifically requested in writing by Isis.  BMS shall have the right to participate and
be represented in any such suit by its own counsel at its own expense, provided that Isis shall retain overall responsibility for
the prosecution of such suit or proceedings in such event.  No settlement of any action or proceeding
defended or brought by Isis with respect to a Product Specific Patent, which
restricts the scope, or adversely affects the enforceability, of a Product
Specific Patent Right, or which could be reasonably expected to have a material
adverse financial impact on BMS, may be entered into by Isis without the prior
written consent of BMS, which consent shall not be unreasonably withheld,
delayed or conditioned.  In addition, if
BMS elects not to settle, defend or bring any action for infringement against
an infringing Third Party described in Section 8.4.1, then any infringing
products sold by such Third Party will not be included in the calculation of
sales of Generic Products under Section 5.7.



 30
 









8.4.3       Withdrawal.  In
addition to Section 8.4.2, if either Party brings an action or proceeding under
this Section 8.4 and
subsequently ceases to pursue or withdraws from such action or proceeding, it
shall promptly notify the other Party and the other Party may substitute itself
for the withdrawing Party and pursue such action or proceeding in accordance
with the terms of this Section 8.4
(including but not limited to the proviso in the first sentence of Section
8.4.2).


8.4.4       Enforcement
and Defense of Joint Patent Rights.  With respect to infringement of
a Joint Patent that is not a Product Specific Patent, the Party responsible for
filing, prosecution and maintenance of such Joint Patent under Section 8.2.5
will have the first right to bring and control any enforcement action or
proceeding with respect to such Joint Patent, and will bear all expenses
thereof, and the other Party will have the right, at its own expense, to be
represented in any such action.


8.4.5       Cooperation.  The
Party not enforcing the applicable Patent will provide reasonable assistance to
the other Party (at such other Party’s expense), including providing access to
relevant documents and other evidence, making its employees available at
reasonable business hours, and joining the action to the extent necessary to
allow the enforcing Party to maintain the action.


8.4.6       Damages.  In
the event that either Party exercises the rights conferred in this Section 8.4 and recovers any
damages or other sums in such action, suit or proceeding or in settlement
thereof, such damages or other sums recovered shall first be applied to all
out-of-pocket costs and expenses incurred by the Parties in connection
therewith, including, without limitation, attorneys fees.  Except as otherwise provided in this Section
8.4, each Party will bear its own expenses with respect to any suit or other
proceeding against an infringer.  If such
recovery is insufficient to cover all such costs and expenses of both Parties,
it shall be shared pro rata in proportion to the total of such costs and
expenses incurred by each Party.  If
after such reimbursement any funds shall remain from such damages or other sums
recovered, such funds shall be divided as follows: (i) as to ordinary damages
based on lost sales or profit, BMS shall retain such funds and such funds will
be treated as Net Sales and royalties will be payable by BMS to Isis with
respect to such Net Sales in accordance with this Agreement and (ii) as to
special or punitive damages, the Party that brought the enforcement action at
its expense shall receive [***]% of the amount of such special or punitive
damages and the other Party shall receive [***]% of the amount of such special
or punitive damages.


8.4.7       Enforcement
of Isis Core Technology Patents and Isis Manufacturing Patents by BMS.  In
the event that Isis or BMS becomes aware of a suspected infringement of any
Isis Core Technology Patents and Isis Manufacturing Patents by a Third Party
where such infringement involves the manufacture, use or sale of an ASO
targeting PCSK9 (including but not limited to infringement which is the subject
of a notice under Section 8.5), the Parties shall confer and discuss in good
faith an enforcement strategy with respect to such Isis Core Technology Patents
and Isis Manufacturing Patents against such Third Party, and Isis shall
consider in good faith and not unreasonably deny or delay BMS’ request to
enforce such Isis Core Technology Patents and Isis Manufacturing Patents in the
same manner as a Product Specific Patent as set forth above in this Article
8.  Isis shall not bring any enforcement
action for such infringement with respect to such Isis Core Technology Patents
and Isis Manufacturing Patents without BMS having the first opportunity to
bring such action in the same manner as a Product Specific Patent as set forth
above in this Article 8.


Section 8.5            Notification of Patent Certification.  Isis
shall notify and provide BMS with copies of any allegations of alleged patent
invalidity, unenforceability or non-infringement 



 31
 









of
an Isis Patent Right Covering a Compound or Product (including methods of use
thereof) pursuant to a Paragraph IV Patent Certification by a Third Party
filing an Abbreviated New Drug Application, an application under §505(b)(2) or
other similar patent certification by a Third Party, and any foreign equivalent
thereof for a Generic Product.  Such
notification and copies shall be provided to BMS by Isis as soon as practicable
and at least within five (5) days after Isis receives such certification, and
shall be sent by facsimile and overnight courier to the address set forth
below:


Bristol-Myers
Squibb Company

P.O. Box 4000


Route
206 & Province Line Road


Princeton,
New Jersey 08543-4000

Attention:  Vice President and Chief
Intellectual Property Counsel


Telephone:  609-252-4825

Facsimile:  609-252-7884


 


Section 8.6            Data Exclusivity and Orange Book Listings.  With
respect to data exclusivity periods (such as those periods listed in the FDA’s
Orange Book (including without limitation any available pediatric extensions)
or periods under national implementations of Article 11.1(a)(iii) of Directive
2001/EC/83, or similar periods as may be applicable to a biologic, and all
international equivalents), BMS shall use commercially reasonable efforts consistent
with its obligations under applicable law (including any applicable consent
order) to seek, maintain and enforce all such data exclusivity periods
available for the Products exclusively licensed by BMS hereunder.  With respect to filings in the FDA Orange
Book or other similar filings or listings as may be applicable (and foreign
equivalents) for issued patents for a Product, upon reasonable request by BMS,
Isis shall provide reasonable cooperation to BMS in filing and maintaining any
such listing and filings.  BMS shall not
list Isis Core Technology Patents in the FDA Orange Book without Isis’ prior
written consent, such consent not to be unreasonably withheld or delayed.  In no event shall Isis shall withhold or
delay such consent where the listing of such Isis Core Technology Patent is
required under applicable law.


Section 8.7            Further Actions.  Each
Party shall, upon the reasonable request of the other Party, provide such
assistance and execute such documents as are reasonably necessary for such
Party to exercise its rights and/or perform its obligations pursuant to this
Article 8; provided however, that
neither Party shall be required to take any action pursuant to Article 8 that
such Party reasonably determines in its sole judgment and discretion conflicts
with or violates any applicable court or government order or decree.


Section 8.8            Infringement Claims; Oppositions.  BMS
and Isis shall promptly inform the other in writing of any written notice to it
of alleged infringement or misappropriation, based on the research,
development, making, using, importing, exporting or selling of a Compound or
Product, of a Third Party’s intellectual property rights of which it shall
become aware.  The Parties shall confer
on the handling of such matter.  Isis
shall not acknowledge to a Third Party the validity of any such allegation or
admit liability without the prior written consent of BMS, and BMS shall not
acknowledge to a Third Party the validity of any such allegation or admit
liability without the prior written consent of Isis to the extent such action
would reasonably be expected to create any liability for Isis.  BMS and Isis shall each keep the other
advised of all material developments in the conduct of any proceedings in
defending any claim of such alleged infringement or misappropriation and shall
cooperate with the other in the conduct of such defense.  In no event may either Party settle any such
infringement or misappropriation claim in a manner that would limit the rights
of the other Party or impose any obligation on the other Party, 



 32
 









without
such other Party’s prior written consent, such consent not to be unreasonably
withheld or delayed.


BMS
and Isis shall promptly inform the other in writing of any written notice to it
of actual or threatened opposition related to the Product Specific
Patents.  The Parties shall confer on the
handling of such matter and such matters will be handled in accordance with
Section 8.2.3 and 8.2.4 above.


Section 8.9            Records Regarding Isis Patent Rights.  Each
Party shall assign patent counsel representatives who shall be responsible for
coordinating activities between the Parties in accordance with this Article
8.  Such representatives will use good
faith diligent efforts to maintain a report listing the Isis Patent Rights that
are subject to the license granted to BMS under Section 2.1.  Such report shall be used to facilitate the
identification and tracking of the Isis Patent Rights licensed under this
Agreement, but shall not, unless specifically agreed to in a separate written
agreement signed by authorized representatives of both Parties, be considered
to be a then-current complete and binding list of the Isis Patent Rights
licensed under this Agreement.


ARTICLE 9 - 

TERM AND TERMINATION


Section 9.1            Term.  The term of this Agreement (the “Term”) commences
upon the Effective Date and, unless earlier terminated in accordance with the
provisions of this Article 9 or Article 10, will continue until the expiration
of all obligations to pay royalties on all Products to Isis (including any Pass
Through Royalties).


Section 9.2            BMS Right to Terminate Without Cause.  BMS may terminate this Agreement (including its license rights under
this Agreement) in full (but not in part), effective upon [***] calendar days
prior written notice in the case where Approval has not been obtained for the
applicable Product or upon [***] calendar days prior written notice in the case
where Approval has been obtained for the applicable Product.  For purposes of clarification, milestone
payments will be due on milestones achieved during the period between notice of
termination and the effective date of termination.


Section 9.3            Material Breach.


(a)           If either Party believes that the
other is in material breach of this Agreement (other than with respect to a
breach of BMS’s obligations under Section 4.1, which is governed by Section
9.4), then the non-breaching Party may deliver notice of such breach to the
other Party.  In such notice the
non-breaching Party shall identify the actions or conduct that it wishes such
Party to take for an acceptable and prompt cure of such breach; provided that such identified actions or
conduct shall not be binding upon the other Party with respect to the actions
that it may need to take to cure such breach. 
The allegedly breaching Party shall have [***] days to either cure such
breach (except to the extent such breach involves the failure to make a payment
when due, which breach must be cured within [***] days following such notice)
or, if cure cannot be reasonably effected within such [***] day period, to
deliver to the other Party a plan for curing such breach which is reasonably
sufficient to effect a cure within a reasonable period.  Following delivery of such plan, the
breaching Party shall use commercially reasonable efforts to carry out the plan
and cure the breach.  If the Party
receiving notice of breach fails to cure such breach within the [***] day
period, or the Party providing the notice reasonably determines that the
proposed corrective plan or the actions being taken to carry it out is not
commercially practicable, the Party originally delivering the notice may
declare a breach hereunder upon [***] days 



 33
 









advance written notice.  Subject to Section 8.3(b), such notice shall
effectively terminate this Agreement upon expiration of such [***] day period.


(b)           Notwithstanding the foregoing, if the allegedly breaching
Party disputes in good faith the existence or materiality of any such breach
which is not a payment breach, and provides notice to the other Party (the “Other Party”) of such dispute
within such [***] day period, the Other Party shall not have the right to
terminate this Agreement in accordance with this Section 8.3 unless and until
it has been determined in accordance with Section 13.4 that this Agreement was
materially breached by the allegedly breaching Party and that Party fails to
cure such breach within [***] days following such determination.  It is understood and acknowledged that during
the pendency of such a dispute, all of the terms and conditions of this
Agreement shall remain in effect and the Parties shall continue to perform all
of their respective obligations hereunder.


(c)           This Section 9.3 shall be subject to and shall not limit
the provisions of Section 9.4 and Section 9.5.


Section 9.4            Termination by Isis For Failure of BMS to Use
Commercially Reasonable Efforts.


(a)           Subject to Section 9.4(b) and 9.4(c),
at any time after the expiration of the Research Term, Isis shall have the
right to terminate the License granted under Section 2.1(a) Agreement on a
country-by-country basis if BMS is in breach of its obligations to use
Commercially Reasonable Efforts as set forth in Section 4.1, provided however, that the Agreement shall
not so terminate unless (i) BMS is given [***] months prior written notice by
Isis of Isis’s intent to terminate, stating the reasons and justification for
such termination and recommending steps which BMS should take, and (ii) BMS, or its
Licensee, has not used good faith Commercially Reasonable Efforts during the [***] month period following such notice to diligently
pursue the Development and/or
Commercialization of at least one Compound or Product.  Any such termination shall be limited in
force and effect to the country or countries to which such breach relates.  For clarity, it is understood and acknowledged that Commercially Reasonable Efforts in the
Development of a Product in a particular country may include sequential
implementation of clinical trials and/or intervals between clinical trials for
data interpretation and clinical program planning and approval, to the extent
such implementation is consistent with the scientific, technical and commercial
factors relevant to Development of such Product in such country.


(b)           It is understood and acknowledged
that if BMS (by itself or through its Affiliates or Licensees) uses
Commercially Reasonable Efforts to Develop a Product through an MAA Filing, BMS
shall be deemed to be in compliance with its obligation under Section 4.1 to
use Commercially Reasonable Efforts to Develop a Product with respect to all
countries in the EU.  Termination under
this Section 9.4 shall apply to all Compounds and Products, but only for the
affected country or countries, provided
however, that if the applicable termination event relates to a
country in the EU, then Isis shall not have the right to terminate this
Agreement with respect to such country if BMS is then in compliance with its
obligations under Section 4.1 with respect to three Major European Countries in
the EU.


(c)           If BMS disputes in good faith the
existence or materiality of an alleged breach specified in a notice provided by
Isis pursuant to Section 9.4(a), and BMS provides notice to Isis of such
dispute within the [***] days following such notice provided by Isis, Isis
shall not have the right to terminate this Agreement unless and until the
existence of such material breach or failure by BMS has been determined in
accordance with Section 13.4 and BMS fails to cure such breach within [***]
days following such determination.  It is
understood and acknowledged that 



 34
 









during the pendency of such
a dispute, all of the terms and conditions of this Agreement shall remain in
effect and the Parties shall continue to perform all of their respective
obligations hereunder.


Section 9.5            Consequences of Termination.


9.5.1       Licenses.  Upon early termination of this
Agreement in its entirety by either Party pursuant to this Article 9, the
licenses granted by Isis to BMS hereunder will terminate; provided
however, that BMS’ rights and Isis’ obligations under Section 2.3
shall survive termination of this Agreement other than when terminated by Isis
under Section 9.3.


9.5.2       Return of Information and Materials.  Upon
early termination of this Agreement in its entirety by either Party pursuant to
this Article 9, BMS will return to Isis (or destroy, as directed by Isis) all
data, files, records and other materials containing or comprising Isis’
Confidential Information. 
Notwithstanding the foregoing, BMS will be permitted to retain one copy
of such data, files, records, and other materials for archival purposes.


Section 9.6            Accrued Rights; Surviving Obligations.


9.6.1       Accrued
Rights.  Termination or expiration of this Agreement
for any reason will be without prejudice to any rights or financial
compensation that will have accrued to the benefit of a Party prior to such
termination or expiration.  Such
termination or expiration will not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this
Agreement.  For clarification, no
milestone payments or royalty payments under Article 5 shall be payable by BMS
following termination of this Agreement, except to the extent that the
milestone event was achieved (in the case of milestone payments) or the Product
was sold (in the case of royalty payments) prior to such termination.


9.6.2       Survival. 
Articles 6, 7, 8, 9, 10, 11 and 13, and Section 5.12 and Section 12.4 of
this Agreement will survive expiration or termination of this Agreement for any
reason.


Section 9.7            Rights in Bankruptcy.  All
rights and licenses granted under or pursuant to this Agreement by Isis or BMS
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code (i.e., Title 11 of the U.S. Code) or analogous provisions of
Applicable Law outside the United States, licenses of rights to “intellectual
property” as defined under Section 101 of the U.S. Bankruptcy Code or analogous
provisions of Applicable Law outside the United States.  The Parties agree that each Party, as licensee
of such rights under this Agreement, shall retain and may fully exercise all of
its rights and elections under the U.S. Bankruptcy Code or any other provisions
of Applicable Law outside the United States that provide similar protection for
‘intellectual property.’  The Parties
further agree that, in the event of the commencement of a bankruptcy proceeding
by or against a Party under the U.S. Bankruptcy Code or analogous provisions of
Applicable Law outside the United States, the Party that is not subject to such
proceeding will be entitled to a complete duplicate of (or complete access to,
as appropriate) such intellectual property and all embodiments of such
intellectual property, which, if not already in the non subject Party’s
possession, shall be promptly delivered to it upon the non subject Party’s
written request therefor.  Any agreements
supplemental hereto shall be deemed to be “agreements supplementary to” this
Agreement for purposes of Section 365(n) of the U.S. Bankruptcy Code.


 



 35















 


ARTICLE 10 - 

ISIS REVERSION RIGHT; TECHNOLOGY TRANSFER TO BMS


Section 10.1         Isis
Reversion Rights.


(a)           If BMS terminates the Agreement under
Section 9.2 or Isis terminates the Agreement under Section 9.3 or 9.4, Isis may
elect to continue to Develop and Commercialize any Compound or Product by
notice in writing to BMS within [***] of such termination (an “Election Notice”)
that Isis is exercising its rights under this Section 10.1, in which case BMS
will (i) grant to Isis a fully-paid (except for the royalty payments specified
in Section 10.1(b) below), sublicensable, worldwide license or sublicense, as
the case may be, to [***] as of the date of the Election Notice solely as they
are necessary to make, have made, use, sell, offer for sale, have sold and import
Compounds identified as of the date of the Election Notice and Products
containing such Compounds identified as of the date of the Election Notice and
(ii) transfer to Isis, for Isis’ use with respect to the Development and
Commercialization of the Compounds or Products, [***] as of the date of the
Election Notice that relate to such Compounds and Products.


(b)           In consideration for the rights
granted by BMS to Isis under this Article 10, Isis shall pay a royalty on net
sales of Products by Isis, its Affiliates and licensees as follows: (i) [***]%
of net sales of a Product if the Election Notice occurs after [***] but prior
to establishing [***] for the applicable Compound or Product, (ii) [***]% of
net sales of a Product if the Election Notice occurs after establishing [***]
for the applicable Compound or Product but prior to [***] and (iii) [***]% of
net sales of a Product if the Election Notice occurs after the Compound or
Product [***].  Such royalty payment obligation
shall be governed by Sections 5.8 through 5.16 which shall apply to Isis in the
same way as they applied to BMS prior to such termination of the Agreement.


(c)           Notwithstanding the foregoing, the
licenses granted by BMS to Isis under this Section 10.1 shall be of no force or
effect with respect to any given Compound(s) or Product(s) where BMS terminated
the pre-clinical development, clinical development and/or commercialization of
such Compound(s) or Product(s) due to Safety Reasons.  For purposes of this Section 10.1(c), “Safety
Reasons” means
it is BMS’ or any of its Affiliates’ or Licensee’s reasonable belief that there
is an unacceptable risk for harm in humans based upon: (i) pre-clinical
safety data, including data from animal toxicology studies or (ii) the
observation of serious adverse effects in humans after a Compound or Product
has been administered to or taken by humans, such as during a clinical trial or
after the launch of a Product.  BMS shall
provide Isis with all relevant data for such Compound or Product terminated for
Safety Reasons but shall not be obligated to provide Isis with any rights of
reference to any regulatory documents or filings relating to such terminated
Compound or Product.  In cases where this
Section 10.1(c) applies, Isis will [***].


Section 10.2         [***] to BMS in the Event of Material Breach.


(a)           In the event that, subsequent to a
Change of Control of Isis, Isis (or its successor) materially breaches its
obligations to BMS with respect to Isis’ performance of activities under this
Agreement, then BMS shall have the right to receive a [***] with respect to any
Isis Know-How and materials (including samples of Compounds and materials used
in the preparation of Compounds) Controlled by Isis that are [***] for BMS to
perform the activities otherwise assigned to Isis with respect to this
Agreement, provided however, that BMS may not
exercise this right unless (i) Isis is given [***] months prior written notice
by BMS of BMS’ intent to exercise its rights hereunder, stating the reasons and
justification for such breach and recommending steps which Isis should take,
and (ii) Isis has not used good faith commercially reasonable efforts during the
[***] month period following
such notice to diligently remedy such breach and perform its obligations to BMS with respect to Isis’
performance of activities under the Research Plan.  BMS’ rights under this Section 10.2 shall be
limited to the performance of 



 36
 









such activities that are
necessary or reasonably useful for, and solely for the purposes originally
licensed hereunder to, BMS to enjoy the benefit of the licenses granted
hereunder with respect to the Compounds and Products, and any materials and
Isis Know-How [***] pursuant to this Section 10.2 shall be used solely for such
purpose.  BMS shall be entitled to seek
specific performance with respect to the remedy described in this Section 10.2
as set forth in Section 13.4, and Isis hereby stipulates to the fairness and
reasonableness of such a remedy and covenants not to allege or assert, nor to
allow any of its Affiliates to assert, nor further to cause or support any
other Third Parties to assert, that such remedy is inappropriate or
unenforceable or illegal in any way.  For
purposes of clarification, if BMS exercises its rights under this Section
10.2(a), except as specifically set forth in this Section, or as otherwise
determined by an arbitrator under Section 13.4, all other provisions of this
Agreement (including but not limited to Article 5) will remain in full force
and effect.


(b)           For the purposes of this Agreement,
(1)  “Change of
Control” of Isis means that during the Term (i) Isis shall
have become an Affiliate controlled by an entity that is a Drug Company,
(ii) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of
Isis shall have occurred to a Drug Company, or (iii) any Drug Company
(whether individually or as part of a group) shall have become the owner,
directly or indirectly, of voting securities entitled to cast more than fifty
percent (50%) of the votes in the election of directors of Isis, and (2) “Drug Company” means
any entity that conducts any research and/or development activities, or that
manufactures, promotes, markets, distributes and/or sells any products, in the
biotechnology or pharmaceutical industry.


ARTICLE 11 - 

INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY


Section 11.1         Indemnification of Isis.  BMS
agrees to defend Isis, its Affiliates and
their respective directors, officers, employees and agents, and their
respective successors, heirs and assigns (collectively, the “Isis  Indemnitees”), and shall indemnify and hold harmless the Isis Indemnitees, from and against any
liabilities, losses, costs, damages, fees or expenses payable to a Third Party,
and reasonable attorney’s fees and other legal expenses with respect thereto
(collectively, “Losses”)
arising out of any claim, action, lawsuit or other proceeding by a Third Party
(collectively, “Third
Party Claims”) brought against any Isis Indemnitee and resulting from or occurring as
a result of: (a) whether or not negligence is found, the Development,
manufacture, use, handling, storage, sale or other Commercialization or
disposition of any Product in the Territory by BMS or its Affiliates or
Licensees, (b) any breach by BMS of
any of its representations or warranties pursuant to this Agreement or (c) the
gross negligence or willful misconduct of BMS or any BMS Affiliate or Licensee
in connection with this Agreement; except
in any such case to the extent such Losses result from: (i) the gross
negligence or willful misconduct of any Isis Indemnitee or (sub)contractor of Isis, (ii) any breach by Isis of any of its representations, warranties,
covenants or obligations pursuant to this Agreement or under any agreement with
a Third Party, or (iii) any breach of Applicable Law by any Isis Indemnitee or (sub)contractor of Isis.


Section 11.2         Indemnification of BMS.  Isis agrees to defend BMS, its Affiliates,
Licensees and their respective directors, officers, employees and agents, and
their respective successors, heirs and assigns (collectively, the “BMS Indemnitees”), and shall indemnify and hold harmless the
BMS Indemnitees, from and against any Losses and Third Party Claims brought
against any BMS Indemnitee and resulting from or occurring as a result of: (a)
any breach by Isis of its
representations or warranties pursuant to this Agreement or (b) the gross
negligence or willful misconduct of any Isis Indemnitee or any (sub)contractor of Isis in 



 37
 









connection
with this Agreement; except in
any such case to the extent such Losses result from: (i) the gross negligence
or willful misconduct of any BMS Indemnitee or (sub)contractor of BMS, (ii) any breach by BMS of any of its representations, warranties,
covenants or obligations pursuant to this Agreement or under any agreement with
a Third Party, or (iii) any breach of Applicable Law by any BMS Indemnitee or (sub)contractor of BMS.


Section 11.3         Notice
of Claim. All
indemnification claims provided for in Sections 11.1 and 11.2 shall be made
solely by such Party to this Agreement (the “Indemnified Party”).  The Indemnified Party shall give the
indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any
Losses or the discovery of any fact upon which the Indemnified Party intends to
base a request for indemnification under Section 11.1 or 11.2, but in no event
shall the indemnifying Party be liable for any Losses to the extent such Losses
result from any delay in providing such notice. 
Each Indemnification Claim Notice must contain a description of the
claim and the nature and amount of such Loss (to the extent that the nature and
amount of such Loss is known at such time). 
The Indemnified Party shall furnish promptly to the indemnifying Party
copies of all papers and official documents received in respect of any Losses
and Third Party Claims.


Section 11.4         Defense, Settlement, Cooperation and Expenses.


(a)           Control
of Defense.  At its option,
the indemnifying Party may assume the defense of any Third Party Claim by
giving written notice to the Indemnified Party within thirty (30) calendar
days after the indemnifying Party’s receipt of an Indemnification Claim
Notice.  The assumption of the defense of
a Third Party Claim by the indemnifying Party shall not be construed as an
acknowledgment that the indemnifying Party is liable to indemnify the
Indemnified Party in respect of the Third Party Claim, nor shall it constitute
a waiver by the indemnifying Party of any defenses it may assert against the
Indemnified Party’s claim for indemnification. 
Upon assuming the defense of a Third Party Claim, the indemnifying Party
may appoint as lead counsel in the defense of the Third Party Claim any legal
counsel selected by the indemnifying Party. 
In the event the indemnifying Party assumes the defense of a Third Party
Claim, the Indemnified Party shall as soon as is reasonably possible deliver to
the indemnifying Party all original notices and documents (including court
papers) received by the Indemnified Party in connection with the Third Party
Claim.  Should the indemnifying Party
assume the defense of a Third Party Claim, except as provided in Section
11.4(b), the Indemnified Party shall be responsible for the legal costs or expenses
subsequently incurred by such Indemnified Party in connection with the
analysis, defense or settlement of the Third Party Claim.  In the event that it is ultimately determined
that the indemnifying Party is not obligated to indemnify, defend or hold harmless
the Indemnified Party from and against the Third Party Claim, the Indemnified
Party shall reimburse the indemnifying Party for any and all costs and expenses
(including attorneys’ fees and costs of suit) and any Third Party Claims
incurred by the Indemnifying Party solely attributed to the defense of the
Third Party Claim on behalf of the Indemnified Party (but not those costs and
expenses otherwise attributable to the defense of the Indemnifying Party).


(b)           Right to Participate in Defense.  Without limiting Section 11.4(a), any
Indemnified Party shall be entitled to participate in, but not control, the
defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that
such employment shall be at the Indemnified Party’s own cost and expense unless
(i) the employment thereof has been specifically authorized by the
indemnifying Party in writing, (ii) the indemnifying Party has failed to
assume the defense and employ counsel in accordance with Section 11.4(a) (in
which case the Indemnified Party shall control the defense) or (iii) the
interests of the Indemnified Party and the indemnifying Party with respect to
such Third Party Claim are sufficiently adverse to prohibit the representation
by the same counsel of both Parties 



 38
 









under Applicable Law, ethical
rules or equitable principles in which case the indemnifying Party shall be
responsible for any such costs and expenses of counsel for the Indemnified
Party.


(c)           Settlement.  With respect to any Third Party Claims
relating solely to the payment of money damages in connection with a Third
Party Claim and that shall not admit liability or violation of Law on the part
of the Indemnified Party or result in the Indemnified Party’s becoming subject
to injunctive or other relief or otherwise adversely affecting the business of
the Indemnified Party in any manner (such as granting a license or admitting
the invalidity of a Patent Controlled by an Indemnified Party), and as to which
the indemnifying Party shall have acknowledged in writing the obligation to indemnify
the Indemnified Party hereunder, the indemnifying Party shall have the sole
right to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss, on such terms as the indemnifying Party, in its
sole discretion, shall deem appropriate. 
With respect to all other Losses in connection with Third Party Claims,
where the indemnifying Party has assumed the defense of the Third Party Claim
in accordance with Section 11.4(a), the indemnifying Party shall have authority
to consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss provided it obtains the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld).  The indemnifying Party shall not be liable
for any settlement or other disposition of a Loss by an Indemnified Party that
is reached without the written consent of the indemnifying Party.  Regardless of whether the indemnifying Party
chooses to defend or prosecute any Third Party Claim, no Indemnified Party
shall admit any liability with respect to or settle, compromise or discharge,
any Third Party Claim without the prior written consent of the indemnifying
Party, such consent not to be unreasonably withheld.


(d)           Cooperation.  Regardless of whether the indemnifying Party
chooses to defend or prosecute any Third Party Claim, the Indemnified Party
shall, and shall cause each other Indemnified Party to, cooperate in the
defense or prosecution thereof and shall furnish such records, information and
testimony, provide such witnesses and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested in
connection therewith.  Such cooperation
shall include access during normal business hours afforded to indemnifying
Party to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
Indemnified Parties and other employees and agents available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder, and the indemnifying Party shall reimburse the
Indemnified Party for all its reasonable out-of-pocket costs and expenses in
connection therewith.


(e)           Costs
and Expenses.  Except as
provided above in this Section 11.4, the costs and expenses, including
attorneys’ fees and expenses, incurred by the Indemnified Party in connection
with any claim shall be reimbursed on a Calendar Quarter basis by the
indemnifying Party, without prejudice to the indemnifying Party’s right to
contest the Indemnified Party’s right to indemnification and subject to refund
in the event the indemnifying Party is ultimately held not to be obligated to
indemnify the Indemnified Party.


Section 11.5         Insurance.  Each Party shall maintain at its sole cost
and expense, an adequate liability insurance or self-insurance program
(including clinical trials and product liability insurance) to protect against
potential liabilities and risk arising out of activities to be performed under
this Agreement and any agreement related hereto and upon such terms (including
coverages, deductible limits and self-insured retentions) as are
customary in the U.S. pharmaceutical industry for the activities to be
conducted by such Party under this Agreement. 
As applicable, BMS will name Isis as an additional insured and will upon
request provide Isis 



 39
 









with
a certificate of insurance.  BMS will
promptly notify Isis of any material change in insurance or self-insurance
coverage or lapse in coverage in that regard.


Section 11.6         Limitation of Liability.  Neither Party hereto will be liable for indirect, incidental,
consequential, special, exemplary, punitive or multiple damages arising in
connection with this Agreement or the exercise of its rights hereunder, or for
lost profits arising from or relating to any breach of this Agreement,
regardless of any notice of such damages, provided
however, that this Section 11.6 shall not limit or restrict (i)
damages available for breaches of confidentiality obligations Article 7 and
(ii) damages available for willful breaches of Article 12.  In addition, the rights of termination by
Isis under Section 9.4 and the effect of such termination as set forth in
Sections 9.5 and 10.1 shall be Isis’s only remedy and BMS’s only liability with
respect to or resulting from BMS’s breach of its obligations as set forth in
Section 4.1.


ARTICLE 12 - 

REPRESENTATIONS AND WARRANTIES


Section 12.1         Representations, Warranties and Covenants.  Each Party hereby represents and warrants as of the Effective Date and
covenants to the other Party that:


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


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


(c)  all necessary consents,
approvals and authorizations of all Regulatory Authorities and other parties
required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder
have been obtained;


(d)  the execution and delivery
of this Agreement and the performance of such Party’s obligations hereunder (i)
do not conflict with or violate any requirement of Applicable Law or any
provision of the articles of incorporation, bylaws or any similar instrument of
such Party, as applicable, in any material way, and (ii) do not conflict with,
violate, or breach or constitute a default or require any consent not already
obtained under, any contractual obligation or court or administrative order by
which such Party is bound; and


(e)  it has and will have
enforceable written agreements with all of its employees who receive
Confidential Information under this Agreement assigning to such Party ownership
of all intellectual property rights created in the course of their employment.


Section 12.2         Isis Representations, Warranties, and Covenants.  Isis  hereby represents and warrants as of the
Effective Date and covenants to BMS that:


(a)  subject to the limitations
set forth in Appendix 6, Isis has the sufficient legal and/or beneficial title
and ownership or right to license (or sublicense as the case may be) with respect
to the Isis Patent Rights as is necessary to fulfill its obligations under this
Agreement and to grant the licenses (or sublicenses as the case may be) to BMS
pursuant to this Agreement;



 40
 









(b)  with respect to agreements
between Isis and any Third Party existing on the Effective Date, the only
financial Pass Through Obligations for Products utilizing MOE Gapmers are the
[***] Royalties, which total [***]% of net sales for such Products;


(c)  to the best of Isis’
knowledge, no actions, suits, claims, disputes, or proceedings concerning the
Isis Patent Rights licensed hereunder are currently pending or are threatened
in writing, that if determined adversely to Isis would have a material adverse
effect on the Research Program or Isis’ ability to perform its obligations or
to grant the licenses to BMS under this Agreement, or that would have a
material adverse effect on or would impair BMS’ right to practice under the
licenses granted under this Agreement by Isis to BMS;


(d)  subject to the limitations
set forth in Appendix 6, it has the ability to grant to BMS the licenses
granted by Isis under this Agreement on the terms set forth herein;


(e)  subject to the limitations
set forth in Appendix 6, it is not currently subject to any agreement with any
Third Party or to any outstanding order, judgment or decree of any court or
administrative agency that restricts it in any way from granting to BMS the
licenses granted by Isis under this Agreement on the terms set forth herein or
the right of BMS to exercise such license rights;


(f)  to its knowledge as of the
Effective Date, all fees required to maintain the issued Isis Patent Rights set
forth in the Appendices to this Agreement have been paid to date;


(g)  subject to the limitations set forth in
Appendix 6, it has not granted, or permitted to be attached, and it will not
grant or permit to be attached during the term of the Agreement, any lien,
security interest or other encumbrance with respect to the Isis Technology,
Research Results or Program Inventions which would adversely effect the rights
granted to BMS hereunder;


(h)  to Isis’s knowledge, as of the Effective
Date, the Isis Technology does not include any trade secrets that have been
misappropriated from any Third Party or obtained in breach of any contractual
obligation of Isis or its employees to a Third Party;


(i)  subject to the limitations set forth in
Appendix 6, Isis has not entered into any agreement pursuant to which it has
agreed to transfer, whether by asset sale, operation of law or otherwise, title
to any of the Isis Technology licensed to BMS hereunder;


(j)  all inventors of any inventions of Patents
which Isis has represented as being owned by Isis and included in the Isis
Technology licensed to BMS hereunder have assigned or have a contractual obligation
to assign their entire right, title and interest in and to such inventions and
the corresponding Patents to Isis;


(k)  it has no knowledge as of
the Effective Date of claims to inventorship by persons not already listed as
inventors with respect to the Product Specific Patent Rights;


(l)  during the Term, Isis shall
use commercially reasonable efforts to maintain and not to breach any
agreements with Third Parties that provide a grant of rights from such Third
Party to Isis that are Controlled by Isis and are licensed or become subject to
a license from Isis to BMS under this Agreement; as of the Effective Date, Isis
is in compliance in all material respects with any aforementioned agreements
with Third Parties;


(m)  it has not granted, and that
during the Term that it will not grant, any license, option or other rights to
Alnylam or any other Third Party with respect to any Product Specific Patents
(with the exception of the material transfer agreements listed as number 35-37
in Appendix 6);



 41
 









(n)  subject to the limitations
set forth in Appendix 6, it has not granted any right, license or interest in
or to, or an option to acquire any of the foregoing with respect to, the
intellectual property rights licensed to BMS hereunder that is in conflict with
the rights or licenses granted or to be granted to BMS under this Agreement;
and


(o)  it has disclosed to BMS all Third Party
patents and patent applications of which Isis has knowledge as of the Effective
Date that are believed by Isis to be potentially required for
freedom-to-operate with respect to the manufacture, use or sale of MOE Gapmers
targeting PCSK9.


Section 12.3         BMS Representation and Covenant.  BMS  hereby represents and covenants to Isis
that:


(a)  BMS has the requisite
personnel, facilities, equipment, expertise, experience and skill to perform
its obligations under this Agreement;


(b)  BMS’ sales representatives
will perform in a professional, timely, competent and efficient manner in the
performance of its rights and obligations under this Agreement; and


(c)  BMS, its Affiliates, and its
Licensees will at all times comply with all Applicable Laws in the performance
of its rights and obligations under this Agreement.


Section 12.4         DISCLAIMER OF WARRANTY. 
EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 12 AND IN
SECTIONS 2.2, 5.5.1 AND 5.5.2, BMS AND ISIS MAKE NO REPRESENTATIONS AND GRANT
NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY
STATUTE OR OTHERWISE, AND BMS AND ISIS EACH SPECIFICALLY DISCLAIM ANY OTHER
WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE
OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF
ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.


ARTICLE 13 - 

MISCELLANEOUS


Section 13.1         Assignment.  Except as expressly set forth in this
Agreement, without the prior written consent of the other Party hereto, neither
Party will sell, transfer, assign, delegate, pledge or otherwise dispose of,
whether voluntarily, involuntarily, by operation of law or otherwise, this
Agreement or any of its rights or duties hereunder; provided, however, that (i) either Party hereto may assign
or transfer this Agreement or any of its rights or obligations hereunder
without the consent of the other Party to any Third Party with which it has
merged or consolidated, or to which it has transferred all or substantially all
of its assets or stock to which this Agreement relates if in any such event the
Third Party assignee or surviving entity assumes in writing all of the
assigning Party’s obligations under this Agreement or (ii) Isis may assign or
transfer its rights under Article 5 (but no liabilities) to a Third Party in
connection with a royalty factoring transaction.  Any purported assignment or transfer in
violation of this Section 13.1 will be void ab
initio and of no force or effect.


Section 13.2         Severability.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, such adjudication will not affect or 



 42
 









impair,
in whole or in part, the validity, enforceability, or legality of any remaining
portions of this Agreement.  All
remaining portions will remain in full force and effect as if the original
Agreement had been executed without the invalidated, unenforceable or illegal
part.


Section 13.3         Governing Law; Jurisdiction.  This
Agreement will be governed by and construed and enforced in accordance with the
laws of the State of New York, USA without reference to any rules of conflicts
of laws.  Each of the Parties hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any federal court of the United States of America
sitting in the City of Chicago, Illinois and any appellate court from any
jurisdiction thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the Parties hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in any
such federal court in Chicago.  For
clarification, any dispute relating to the scope, validity, enforceability or
infringement of any Patents shall be governed by and construed and enforced in
accordance with the patent laws of the applicable jurisdiction.


Section 13.4         Dispute Resolution.


13.4.1     Resolution
by Senior Representatives.  The Parties shall seek to
settle amicably any and all disputes, controversies or claims arising out of or
in connection with this Agreement.  Any
dispute within the JRC’s decision-making authority shall be finally decided as
set forth in Appendix 5.  Any dispute
between the Parties which is outside the JRC’s decision-making authority
shall be promptly presented to the Alliance Managers and the JRC for
resolution, and if the Alliance Managers and the JRC are unable to resolve such
dispute, such dispute shall then be presented to the [***] of Isis (the “Senior Representatives”), or
their respective designees, for resolution. 
Such Senior Representatives, or their respective designees, will meet
in-person or by teleconference as soon as reasonably possible thereafter, and
use their good faith efforts to mutually agree upon the resolution of the
dispute, controversy or claim.  If a
dispute between the Parties arising out of or relating to the validity or
interpretation of, compliance with, breach or alleged breach of or termination
of this Agreement cannot be resolved within [***] days of presentation to the
Senior Representatives, or their respective designees, for resolution, either
Party may refer such dispute to binding arbitration to be conducted as set
forth below in this Section 13.4.  For
clarification, any dispute relating to any Patent will not be subject to
arbitration, and any dispute within the JRC’s decision-making authority will
not be subject to arbitration.


13.4.2     Arbitration.  If a
dispute between the Parties arising out of or relating to the validity or
interpretation of, compliance with, breach or alleged breach of or termination
of this Agreement cannot, in accordance with Section 13.4.1, be resolved within
ninety (90) days of presentation to the Senior Representatives, or their
respective designees, for resolution, either Party may refer such dispute to
binding arbitration to be conducted as set forth below in this Section 13.4.2.


(a)           A Party may submit such dispute to
arbitration by notifying the other Party, in writing, of such dispute.  Within thirty (30) days after receipt of such
notice, the Parties shall designate in writing a single arbitrator to resolve
the dispute; provided, however, that if the Parties cannot agree on an
arbitrator within such thirty (30) day period, the arbitrator shall be selected
by the Chicago, Illinois office of the American Arbitration Association (the “AAA”)
or, if such office does not exist or is unable to make a selection, by the
office of the AAA nearest to Chicago, Illinois. 
For any disputed breach under Section 4.1 related to an alleged failure
to use Commercially Reasonable Efforts as described in Section 4.1, the
arbitrator shall be an individual with experience and expertise in the
worldwide Development and Commercialization of 



 43
 









pharmaceuticals and the business,
legal and scientific considerations related thereto.  Otherwise, the arbitrator shall be a lawyer
knowledgeable and experienced in the Applicable Laws concerning the subject
matter of the dispute.  In any case the
arbitrator shall not be an Affiliate, employee, consultant, officer, director
or stockholder of either Party, or otherwise have any current or previous
relationship with either Party or their respective Affiliates.  The governing law in Section 13.3 shall
govern any such proceedings.  The language
of the arbitration shall be English.  No
individual will be appointed to arbitrate a dispute pursuant to this Agreement
unless he or she agrees in writing to be bound by the provisions of this
13.4.2.  The place of arbitration will be
Chicago, Illinois.  Either Party may
apply to the arbitrator for interim injunctive relief until the arbitration
award is rendered or the controversy is otherwise resolved.


(b)           Within sixty (60) days after the
designation of the arbitrator, the arbitrator and the Parties shall meet, and
each Party shall provide to the arbitrator a written summary of all disputed
issues, such Party’s position on such disputed issues and such Party’s proposed
ruling on the merits of each such issue.


(c)           The arbitrator shall set a date for a
hearing, which shall be no later than thirty (30) days after the submission of
written proposals pursuant to Section 13.4.2(b), for the presentation of evidence and
legal argument concerning each of the issues identified by the Parties.  The Parties shall have the right to be
represented by counsel.  Except as
provided herein, the arbitration shall be governed by the Commercial
Arbitration Rules of the AAA applicable at the time of the notice of
arbitration pursuant to Section 13.4.2(a); provided, however, that the Federal Rules
of Evidence shall apply with regard to the admissibility of evidence in such
hearing.  In any such arbitration proceeding, the Parties shall be entitled to
all remedies to which they would be entitled in a United States District Court
and to full discovery to the same degree permitted under the Federal Rules of
Civil Procedure, including monetary damages and injunctive relief, provided that the arbitrator may not order the granting or
termination of licenses or assign rights to a Product to either of the Parties.


(d)           The arbitrator shall use his or her
best efforts to rule on each disputed issue within thirty (30) days after
completion of the hearing described in Section 13.4.2(c). 
The determination of the arbitrator as to the resolution of any dispute
shall be binding and conclusive upon all Parties.  All rulings of the arbitrator shall be in
writing and shall be delivered to the Parties as soon as is reasonably
possible.  Nothing contained herein shall
be construed to permit the arbitrator to award punitive, exemplary or any
similar damages.  The arbitrator shall render a “reasoned
decision” within the meaning of the Commercial Arbitration Rules which shall
include findings of fact and conclusions of law.  The Parties undertake to satisfy any award
without delay.


(e)           The (i) attorneys’ fees of the
Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs and
expenses of the arbitration shall be borne by the Parties in a proportion
determined by the arbitrator.


(f)            Any arbitration pursuant to this
Section 13.4 shall be conducted in Chicago, Illinois, unless the Parties
otherwise agree to a different location. 
Any arbitration award may be entered in and enforced by a court in accordance
with Section 13.3.


(g)           Notwithstanding anything in this Section 13.4, each Party
shall have the right to seek injunctive or other equitable relief from a court
of competent jurisdiction pursuant to Section 13.3 that may be necessary to
avoid irreparable harm, maintain the status quo or preserve the subject matter
of the arbitration.



 44
 









(h)           The Parties agree that any payments that are made by one
Party to the other Party pursuant to this Agreement pending resolution of any
dispute shall be promptly refunded if an arbitrator or court determines pursuant
to this Section 13.4.2 that such payments are to be refunded by one Party to
the other Party.


(i)            The Parties intend, and will take
all reasonable action as is necessary or desirable to ensure, that there be a
speedy resolution to any dispute which becomes the subject of arbitration, and
the arbitrator will conduct the arbitration so as to resolve the dispute as
expeditiously as possible.


(j)            Except to the extent necessary to
confirm an award or as may be required by Applicable Law, neither a Party nor
an arbitrator may disclose the existence, content, or results of an arbitration
without the prior written consent of both Parties.  In no event will an arbitration be initiated
after the date when commencement of a legal or equitable proceeding based on
the dispute, controversy or claim would be barred by the applicable Delaware
statute of limitations.


(k)           Disputes
Regarding Material Breach.  If
the Parties are in dispute as to whether one Party is in material breach of
this Agreement, then the arbitrator will first determine if material breach has
in fact occurred, and if so, will grant the defaulting Party the cure period
provided pursuant to Section 9.3 (or 10.2, as applicable).  If the material breach is not cured within
the time period provided pursuant to Section 9.3 (or 10.2, as applicable), the
arbitration will continue and the arbitrator will, as part of the same
arbitration, award actual direct damages to the non-defaulting Party.


Section 13.5         Notices.  Except as otherwise provided for in this Agreement,
all notices or other communications that are required or permitted hereunder
will be in writing and delivered personally with acknowledgement of receipt,
sent by facsimile (and promptly confirmed by personal delivery, registered or
certified mail or overnight courier as provided herein), sent by
nationally-recognized overnight courier or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:


If
to BMS, to:


	
  

  	
   

  	
  Bristol-Myers Squibb Company

  
	
   

  	
   

  	
  P.O. Box 4000

  
	
   

  	
   

  	
  Route 206 &
  Province Line Road

  
	
   

  	
   

  	
  Princeton, NJ
  08543-4000

  
	
   

  	
   

  	
  Attention: Vice
  President, Business Development

  
	
   

  	
   

  	
  Telephone:
  609-252-4418

  
	
   

  	
   

  	
  Facsimile:
  609-252-7128

  



 


 



 45
 









 


	
  

  	
  With copy to:

  
	
  

  	
   

  	
  Bristol-Myers Squibb Company

  
	
   

  	
   

  	
  P.O. Box 4000

  
	
   

  	
   

  	
  Route 206 and Province Line Road

  
	
   

  	
   

  	
  Princeton, NJ
  08543-4000

  
	
   

  	
   

  	
  Attention: Vice
  President and Senior Counsel, Corporate & 

               Business
  Development

  
	
   

  	
   

  	
  Phone: 609-252-5328

  
	
   

  	
   

  	
  Facsimile: 609-252-4232

  



 


If to Isis, to:


	
  

  	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  1896 Rutherford Road

  
	
   

  	
   

  	
  Carlsbad,
  California 92008

  
	
   

  	
   

  	
  Attention:
  Executive Vice President and CFO

  
	
   

  	
   

  	
  Facsimile: (760)
  603-4650

  



 


 


	
  

  	
  With a copy to:

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
  Facsimile: (760)
  268-4922

  



 


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 communication will be deemed to have
been given (i) when delivered, if personally delivered or sent by facsimile on
a Business Day, (ii) on the Business Day after dispatch, if sent by
nationally-recognized overnight courier, and (iii) on the third Business Day
following the date of mailing, if sent by mail. 
It is understood and agreed that this Section 13.5 is not intended to
govern the day-to-day business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Agreement.


Section 13.6         Entire Agreement; Modifications.  This
Agreement (including the attached Appendices and the Research Plan) sets forth
and constitutes the entire agreement and understanding between the Parties with
respect to the subject matter hereof and all prior agreements, understanding,
promises and representations, whether written or oral, with respect thereto are
superseded hereby.  Each Party confirms
that it is not relying on any representations or warranties of the other Party
except as specifically set forth herein. 
No amendment, modification, release or discharge will be binding upon
the Parties unless in writing and duly executed by authorized representatives
of both Parties.


Section 13.7         Headings.  The headings of Articles and
Sections of this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement in any way.


Section 13.8         Relationship of the Parties.  It is
expressly agreed that the Parties will be independent contractors of one
another and that the relationship between the Parties will not constitute a
partnership, joint venture or agency.


Section 13.9         Waiver.  Any term or condition of this
Agreement may be waived at any time by the Party that is entitled to the
benefit thereof, but no such waiver will be effective unless 



 46
 









set
forth in a written instrument duly executed by or on behalf of the Party
waiving such term or condition.  Any such
waiver will not be deemed a waiver of any other right or breach hereunder.


Section 13.10       Counterparts.  This 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.


Section 13.11       No Benefit to Third Parties. 
The representations,
warranties, covenants and agreements set forth in this Agreement are for the
sole benefit of the Parties hereto and their successors and permitted assigns,
and they will not be construed as conferring any rights on any other parties.


Section 13.12       Further Assurances.  Each Party will duly execute
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including
the filing of such assignments, agreements, documents and instruments, as may
be necessary to carry out the provisions and purposes of this Agreement.


Section 13.13       Force Majeure.  Neither Party will be charged
with any liability for delay in performance of an obligation under this
Agreement to the extent such delay is due to a cause beyond the reasonable
control of the affected Party, such as war, riots, labor disturbances, fire,
explosion, and compliance in good faith with any governmental Law, regulation
or order.  The Party affected will give
prompt written notice to the other Party of any material delay due to such
causes.


Section 13.14       Interpretation.


(a)           Each of the Parties acknowledges and
agrees that this Agreement has been diligently reviewed by and negotiated by
and between them, that in such negotiations each of them has been represented
by competent counsel and that the final agreement contained herein, including
the language whereby it has been expressed, represents the joint efforts of the
Parties hereto and their counsel. 
Accordingly, in the event an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any provisions of this
Agreement.


(b)           The definitions of the terms herein
shall apply equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  The word “any” shall mean “any and all”
unless otherwise clearly indicated by context.


(c)           Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein or therein), (ii) any reference to any
Applicable Laws herein shall be construed as referring to such Applicable Laws
as from time to time enacted, repealed or amended, (iii) any reference herein
to any person shall be construed to include the person’s successors and
assigns, (iv) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, and (v) all references herein to
Articles, Sections or Appendices, unless 



 47
 









otherwise specifically
provided, shall be construed to refer to Articles, Sections and Appendices of
this Agreement.


(d)           References to sections of the Code of
Federal Regulations and to the United States Code shall mean the cited
sections, as these may be amended from time to time.


[SIGNATURE PAGE FOLLOWS]



 48
 









IN WITNESS WHEREOF, the Parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the
date first above written.


	
  Isis Pharmaceuticals, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ B. Lynne
  Parshall

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  B. Lynne
  Parshall

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice
  President & CFO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Bristol-Myers Squibb
  Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Andrew
  Bonfield

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Andrew Bonfield

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  EVP & CFO

  	
   

  	
   

  
						



 



 49














 


APPENDIX 1




DEFINITIONS


“Additional Third Party Agreement” has the meaning set forth in Section 5.5.


“Affiliate” of
an entity means any other entity that, directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control
with such first entity.  For purposes of
this definition only, “control” (and, with correlative meanings, the terms “controlled
by” and “under common control with”) means the possession, directly or
indirectly, of the power to direct the management or policies of an entity,
whether through the ownership of voting securities or by contract relating to
voting rights or corporate governance.


“Agreement”
means this Collaboration and License Agreement, together with all Appendices
attached hereto and the Research Plan, as the same may be amended or
supplemented from time to time in accordance with the terms of this Agreement.


“Alliance Manager” has the meaning set forth in Section 3.12.


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


“Approval”
means, with respect to any Product in any regulatory jurisdiction, approval
from the applicable Regulatory Authority sufficient for the manufacture,
distribution, use and sale of the Product in such jurisdiction in accordance
with Applicable Laws.  In jurisdictions
where the applicable Regulatory Authority sets the pricing authorizations necessary
for a Product, Approval will be deemed to have occurred even if the final
approval to market and sell the Product is being withheld because BMS (or its
Affiliates or Licensee) and the Regulatory Authority have not yet determined
pricing so long as all other approvals, licenses, registrations or
authorizations necessary for marketing, sale, and/or use of such Product in
such jurisdiction have been obtained.


“API” means the bulk active
pharmaceutical ingredient Compound manufactured in accordance with cGMP for a
Product.  References to the weight of a
quantity of API refer to the gross mass of the API after lyophilization.


“ASO” means an [***] of such gene
target.


“BMS” means
Bristol-Myers Squibb Company.


“BMS Materials”
has the meaning set forth in Section 3.10.


“BMS Third Party Payment” has the meaning set forth in
5.5.3.


“Business Day”
means any day, other than Saturday, Sunday or any statutory holiday in the
United States.


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



 50
 








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


“Clinical Supply Agreement” has the meaning set forth in Section 4.3.


“Combination Product” means a Product that includes at least one additional active
ingredient (whether coformulated or copackaged) which is not a Compound.


“Commercialize”,
“Commercializing” and “Commercialization” means activities directed to
manufacturing, obtaining pricing and reimbursement approvals, carrying out
Phase IV Trials for, marketing, promoting, distributing, importing or selling a
Product.


“cGMP” or “GMP”
means current Good Manufacturing Practices as specified in the United States
Code of Federal Regulations, ICH Guideline Q7A, or equivalent laws, rules, or
regulations of an applicable Regulatory Authority at the time of manufacture.


“Commercially Reasonable Efforts” means, with respect to a Compound and
Product, the carrying out of Development or Commercialization activities using
good faith commercially reasonable and diligent efforts, using the efforts that
the applicable Party would reasonably devote to a compound or product of
similar market potential or profit potential at a similar stage in development
or product life resulting from its own research efforts, based on conditions
then prevailing and taking into account, without limitation, issues of safety
and efficacy, regulatory authority-approved labeling, product profile, the
competitiveness of alternative products in the marketplace, the likely timing
of the product’s entry into the market, the patent and other proprietary
position, the likelihood of regulatory approval and other relevant scientific,
technical and commercial factors.


“Compound” means
any ASO, or a conjugate or prodrug thereof, that modulates the expression of
PCSK9 and [***] mRNA or pre-mRNA and that:


(a) is specifically identified by Isis in the
performance of the Research Program; or


(b) is within the scope of a Valid Claim of a
Patent Controlled by Isis or its Affiliates; or


(c) is identified by BMS during the period
ending on the [***] year anniversary of the end of the Research Term through
use of technology Covered by a Valid Claim of the Isis Patent Rights and/or use
of the Isis Confidential Information.


“Confidential Information” means all information and Know-How and any tangible embodiments thereof
provided by or on behalf of the Disclosing Party to the Receiving Party either
in connection with the discussions and negotiations pertaining to this
Agreement or in the course of performing this Agreement, including without
limitation data; knowledge; practices; processes; ideas; research plans;
engineering designs and drawings; research data; manufacturing processes and
techniques; scientific, manufacturing, marketing and business plans; and
financial and personnel matters relating to the Disclosing Party or to its
present or future products, sales, suppliers, customers, employees, investors
or business; regardless of whether any of the foregoing are marked “confidential”
or “proprietary” or communicated to the other by the Disclosing Party in oral,
written, graphic or electronic form.  For
all purposes of this Agreement, the Research Results (for so long as and to the
extent BMS has rights hereunder) shall be treated as being Confidential
Information of both Parties. 
Accordingly, each Party shall be considered the Receiving Party with
respect to the Research Results and shall be subject to all of the 



 51
 








restrictions and obligations
of this Agreement with respect to the disclosure and use of such Research
Results to the same extent as applicable to Confidential Information disclosed
to such Party by the other Party.


Notwithstanding
the foregoing, information or Know-How of a Party will not be deemed
Confidential Information for purposes of this Agreement to the extent that the
Receiving Party can show by competent proof that such information or Know-How:


(a)           was already known to
the Receiving Party or any of its Affiliates, without any obligation to the
Disclosing Party to keep it confidential or restricting its use, prior to the
time of disclosure to such Receiving Party;


(b)           was generally
available or known to parties reasonably skilled in the field to which such
information or Know-How pertains, or was otherwise part of the public domain,
at the time of its disclosure to the Receiving Party;


(c)           became generally
available or known to parties reasonably skilled in the field to which such
information or Know-How pertains, or otherwise became part of the public
domain, after its disclosure to such Receiving Party through no fault of the
Receiving Party;


(d)           was disclosed to
such Receiving Party or any of its Affiliates by a Third Party lawfully in
possession thereof, and was not obtained indirectly or directly from the
Disclosing Party or in connection with the Research Program; or


(e)           was independently
discovered or developed outside of the Research Program by employees or
(sub)contractors of the Receiving Party or any of its Affiliates, without the
aid, application or use of Confidential Information of the Disclosing Party.


“Control”
means, with respect to any Know-How, Patent or other intellectual property
right, possession by a Party (including its Affiliates) of the right (whether by
ownership, license or otherwise) to grant to the other Party access, ownership,
a license, sublicense and/or other right to or under such Know-How,
Patent or other intellectual property right as provided for herein without
violating the terms of any agreement or other arrangement with any Third
Party.  Notwithstanding anything to the
contrary under this Agreement, with respect to any Third Party that later
becomes an Affiliate of Isis after the Effective Date (including a Third Party
acquirer), no intellectual property of such Third Party will be included in the
licenses granted hereunder by virtue of such Third Party becoming an Affiliate
of Isis, in each case where such intellectual property (1) exists at the time
such Third Party became an Affiliate of Isis or (2) (i) is created by such
Third Party after it becomes an Affiliate and (ii) does not otherwise qualify
as a Product Specific Patent or Isis Core Technology Patent.


“Cover”, “Covered” or “Covering”
means, with respect to a Patent, that, but for rights granted to a Person under
such Patent, the practice by such Person of an invention claimed in such Patent
would infringe a Valid Claim included in such Patent, or in the case of a
Patent that is a patent application, would infringe a Valid Claim in such
patent application if it were to issue as a patent.


“Development” means
non-clinical and clinical drug discovery, research and/or development
activities reasonably related to or leading to the development and submission
of information to a Regulatory Authority, including, without limitation,
compound screening, medicinal chemistry, chemical synthesis, toxicology,
pharmacology and other discovery and pre-clinical efforts, test method
development and stability testing, manufacturing process 



 52
 








development,
formulation development, delivery system development, quality assurance and
quality control development, manufacturing, statistical analysis, and clinical
studies.  When used as a verb, “Develop” means to engage in Development.


“Disclosing Party” has the meaning set forth in Section 7.1.


“Dollars” or “$” means the lawful currency of the United States.


“ECN” means a
Compound that has been designated as an Early Candidate Nomination by BMS, such
that such Compound has been shown to meet the internal standards and criteria
established by BMS to qualify such Compound for full pre-clinical development,
which standards and criteria are consistent with those customarily used by BMS
for its other drug development projects. 
Such designation corresponds to what is referred to internally by BMS as
BMS’s [***].


“Effective Date”
means the date specified in the initial paragraph of this Agreement.


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


“EU” means
the European Union, as its membership may be altered from time to time, and any
successor thereto, and which, as of the Effective Date, consists of Austria,
Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands,
Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and the United Kingdom, and
that certain portion of Cyprus included in such organization.


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


“Field” means
all indications and uses, including but not limited to the prevention,
treatment, diagnosis and/or control of any disease, disorder or condition in
humans.


“First Commercial Sale” means the first sale of a Product by BMS, its Affiliates or a Licensee
to a Third Party in a particular country after Approval of such Product has
been obtained in such country.


“FTE” means
the equivalent of the work of one (1) employee working on a dedicated full time
basis for one (1) year (consisting of at least a total of [***] hours per year
of dedicated effort, excluding vacations and holidays) of work on or directly
related to the Research Plan, carried out by an Isis employee, or Third Party
mutually agreed upon by the JRC. 
Overtime will not be counted toward the number of hours that are used to
calculate the FTE contribution.  No one
person will be permitted to account for more than [***] hours of FTE
contribution per year.  Any person who
devotes less than [***] hours per year shall be treated as an FTE on a pro-rata
basis, based upon the actual number of hours worked divided by [***].  Scientific work performed in the performance
of the Research Program by an Isis FTE (or a Third Party FTE mutually agreed
upon by the JRC) may include, but is not limited to, experimental laboratory
work, recording and writing up results, reviewing literature and references,
and holding scientific discussions.


“FTE Rate”
means the rate that BMS will fund Isis FTEs which is $[***] per FTE per year
for the initial Calendar Year of the Research Term, and such FTE rate will
[***] by a factor [***] per annum starting as of the beginning of the 2nd
Calendar Year of the Research Term (i.e., 



 53
 








beginning in 2008) and each
Calendar Year thereafter during the Research Term, provided
that any such [***] shall not [***] [***]% per annum.


“GAAP” means
generally accepted accounting principles of the United States consistently
applied.


“Generic Product(s)” means a product or products containing an active ingredient having the
same or substantially the same chemical structure as the Compound contained in
a Product, whether approved under an NDA, ANDA, an application under 505(b)(2),
or any equivalent thereof, or otherwise by a Regulatory Authority.


“[***] Royalties” means the royalty obligations of Isis, if any, applicable with respect
to a Product under Isis’ agreement with [***], Inc. dated [***] and Isis’
agreement with [***].


“IMS” means
IMS America Ltd. of Plymouth Meeting, Pennsylvania or any successor to thereof,
or any other independent pharmaceutical sales auditing firm reasonably agreed
upon by the Parties.


“IND” means
an Investigational New Drug Application (as defined in the Food, Drug and
Cosmetic Act, as amended) filed with the FDA or its foreign counterparts.


“IND Acceptance”
means the acceptance (or deemed acceptance) of the filing of an IND by the
applicable Regulatory Authority.


“IND-Enabling Studies” means the pharmacokinetic and toxicology studies required to meet the
regulations for filing an IND.


“Initiation of Phase II Trial” means the first dosing of
Product in a human patient in a Phase II Trial.


“Initiation of Phase III Trial” means the first dosing of Product in a human
patient in a Phase III Trial.  In the case where a Phase IIb/III
Trial precedes any Phase III Trial for a given Product, the first dosing of
such Product in a human patient following the review of interim data and
decision to extend the period of such Phase IIb/III Trial in order to
provide sufficient evidence of safety and efficacy to be included as a
Phase III Trial in filings with Regulatory Authorities shall be deemed to
be the “start of Phase III Trial” for such Product.


“Isis Core Technology Patents” means
Patents Controlled by Isis or its Affiliates on the Effective Date and/or at
any time through the period ending on the [***] year anniversary of the
expiration of the Research Term, in each case that are [***] for the
Development and Commercialization of Compound and Products; provided however, that for any such Patents that include
Pass Through Obligations, the provisions of Section 5.5 will govern whether
such Patent will be included as an Isis Core Technology Patent.  In addition, Isis Core Technology Patents
shall exclude the Product Specific Patents and the Isis Manufacturing
Patents.  A representative list of the
Isis Core Technology Patents as of the Effective Date are listed in Appendix 3
hereto.  For clarification, any Isis Program Patent Rights or any Joint Patent
satisfying the definition above, will be considered an Isis Core Technology
Patent.  For clarification, any such Isis
Core Technology Patent that qualifies as an Isis Core Technology Patent
on the [***] year anniversary of the expiration of the Research Term will
remain an Isis Core Technology Patent throughout the Term of the Agreement.


“Isis In-License Agreements” has the meaning set forth in Section 5.5.1.



 54
 








“Isis Inventions” has the meaning set
forth in Section 8.1.


“Isis Know-How” means all Know-How that
encompass or relate to any Compounds or Products or that are otherwise useful
for the research, discovery, Development, manufacturing and commercialization
of Compounds and/or Products in the Field that are Controlled by Isis or its
Affiliates as of the Effective Date and/or at any time through the period
ending on the [***] year anniversary of the expiration of the Research Term
(including but not limited to all chemical, biological and structure activity
relationship information relating to Compounds).  The Isis Know-How shall include the Research
Results.  For clarification, any such Isis Know-How shall remain Isis
Know-How after the [***] year anniversary of the expiration of the Research
Term throughout the Term of the Agreement


“Isis Manufacturing Patents” means
Patents Controlled by Isis or its Affiliates on the Effective Date and/or
[***], in each case that claim methods and materials used in the synthesis of
ASOs; provided however, that for any such
Patents that include Pass Through Obligations, the provisions of Section 5.5
will govern whether such Patent will be included as an Isis Manufacturing
Patent.  A representative list of Isis
Manufacturing Patents is attached hereto as Appendix 4.  Isis Manufacturing Patents shall exclude the
Product Specific Patents and the Isis Core Technology Patents.  For
clarification, any Isis Program Patent Rights or any Joint Patent satisfying
the definition above, will be considered an Isis Manufacturing Patent.


“Isis Manufacturing Technology” means
the Isis Know-How and Isis Manufacturing Patents claiming inventions made on or
after the Effective Date solely to the extent necessary or useful to
manufacture a Compound and/or Product by or for BMS (or its Affiliate or
Licensee).


“Isis Patent Rights” means the Isis Core
Technology Patents, the Product Specific Patents and the Isis Manufacturing
Patents.


“Isis Permitted Manufacturing Technology”
means (i) the Isis Know-How and Isis Manufacturing Patents claiming inventions
made [***] the Effective Date solely to the extent necessary or useful to
manufacture a Compound and/or Product for and on behalf of BMS (or its
Affiliate or Licensee) and (ii) the Isis Know-How [***] the Effective Date and
Isis Manufacturing Patents [***] the Effective Date solely to the extent
necessary to manufacture a Compound and/or Product for and on behalf of BMS (or
its Affiliate or Licensee).


“Isis Program Patent Rights” has the
meaning set forth in Section 8.1.


“Isis Technology” means collectively the
Isis Know-How and the Isis Patent Rights.


“Joint Invention” has the meaning set forth in Section 8.1


“Joint Patent”
means any Patent that claims, and only to the extent that it claims, a Joint
Invention(s).


“Joint Research Committee” or “JRC” has the meaning set forth in
Section 3.3.


“JRC Charter”
has the meaning set forth in Section 3.3.


“JNDA” means
a New Drug Application filed with the Koseisho required for marketing approval
for the applicable Product in Japan.



 55
 








“JNDA Approval”
means the Approval of a JNDA by the Koseisho for the applicable Product in
Japan.


“Know-How”
means technical information and materials, including without limitation,
technology, software, instrumentation, devices, data, biological materials,
assays, constructs, compounds, inventions, practices, methods, knowledge, know-how,
trade secrets, skill and experience.


“Koseisho”
means the Japanese Ministry of Health and Welfare, or any successor agency
thereto.


“Licensee”
means any Third Party which is sublicensed by BMS or any of its Affiliates to
market and sell Product, but shall not include any wholesaler or distributor.


“Losses” has
the meaning set forth in Section 11.1.


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


“MAA Approval”
shall be achieved upon receiving the first Approval for the applicable Product
in any of the Major European Countries.


“MAA Filing”
means filing with the EMEA of a marketing authorization application (“MAA”) for the applicable Product
under the centralized European procedure. 
If the centralized EMEA filing procedure is not used, MAA Filing will be
achieved upon the first filing of an MAA for the applicable Product in any
Major European Country.


“MOE Gapmer” means
a single stranded ASO of less than [***] nucleotides (i) wherein [***] backbone
linkages are modified by substituting a sulfur at the non-bridging oxygen
(phosphorothioate) and (ii) comprising a region of at least [***] unsubstituted
2’ deoxy nucleotides with the remaining nucleotides having a 2’-O-(methoxyethyl)
substitution at the 2’ position.


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


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


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


“Net Sales”  means,
with respect to any Product, the amount billed by BMS, an Affiliate of BMS, or
any permitted Licensee for sales of such Product in arm’s length transactions
to Third Parties, after deduction (if not already deducted in the amount
invoiced) of the following items with respect to sales of such Product:


(a)           trade, cash, and/or
quantity discounts, retroactive price reductions, charge-back payments
and rebates actually taken and allowed, including discounts or rebates to
governmental or managed care organizations;



 56
 








(b)           credits or
allowances given or recorded for rejection or return of previously sold Product
(including, without limitation, returns of Product in connection with recalls
or withdrawals);


(c)           freight out,
postage, shipping and insurance charges actually incurred for delivery of such
Product;


(d)           any tax, tariff,
duty or government charge (including any tax such as a value added or similar
tax or government charge other than an income tax) levied on the sale,
transportation or delivery of a Product and borne by the seller thereof without
reimbursement from any Third Party; and


(e)           amounts
written off by reason of uncollectible debt.


Net
Sales and all of the foregoing deductions from the gross invoiced sales prices
of Product shall be determined in accordance with BMS’s standard accounting
procedures and in accordance with GAAP. 
In the event that BMS, its Affiliates or Licensees make any adjustments
to such deductions after the associated Net Sales have been reported pursuant
to this Agreement, the adjustments shall be reported and reconciled with the
next report and payment of any royalties due. 
In the case of any Combination Product sold in the Territory, Net Sales
for such Combination Product shall be calculated by multiplying actual Net
Sales of such Combination Product by the fraction A/(A+B) where A is the
invoice price of the Product if sold separately without the other active
ingredient(s), and B is the total invoice price of the other active
ingredient(s) in the Combination Product, if sold separately.  If, on a country-by-country basis, such other
active ingredient(s) in the Combination Product are not sold separately in said
country, Net Sales for the purpose of determining royalties of the Combination
Product shall be calculated by multiplying actual Net Sales of such Combination
Product by the fraction A/D, where A is the invoice price of the Product if
sold separately, and D is the invoice price of the Combination Product.  If neither the Product nor such other active
ingredient(s) are sold separately in a given country, the Parties shall in good
faith, determine Net Sales for such Combination Product by mutual agreement.


In
the event, in a particular country, BMS or any of its Affiliates sells a
Product to an unaffiliated distributor or wholesaler at a price that is less
than an arm’s length price and such distributor or wholesaler pays BMS or its
Affiliates any additional amount related to such sale, then BMS will adjust such
selling price for purposes of calculating Net Sales so as to bring it to an arm’s
length basis.


Net Sales shall not include (x) any payments
among BMS, its Affiliates and Licensees, unless such paying party is the end
user of the relevant Product or (y) any payments in consideration of supplies
of the applicable Product for use in clinical trials.


“Objective”
has the meaning set forth in Section 3.1.


“Pass Through Royalties” means any royalty on net sales of Product that becomes payable by Isis
to a Third Party under an Isis In-License Agreement with respect to a Product
Developed and Commercialized by BMS under this Agreement, where such royalty
obligation is based on the manufacture, use or sale of the Product being
Covered by an Isis Patent Right licensed to BMS under Section 2.1 which Isis
Patent Right is licensed to Isis under such Isis In-License Agreement.


“Pass Through Obligations” means any development milestone payment or royalty on net sales of
Product that becomes payable by Isis to a Third Party under an Isis In-License 



 57
 








Agreement with respect to a
Product Developed and Commercialized by BMS under this Agreement or any or
other non-financial obligation, where such milestone payment, royalty payment
or other obligation is based on the manufacture, use or sale of the Product
being Covered by an Isis Patent Right licensed to BMS under Section 2.1 which
Isis Patent Right is licensed to or acquired by Isis under such Isis In-License
Agreement.  Pass Through Obligations
includes any Pass Through Royalties.


“Patents”
means (a) patents and patent applications in any country or jurisdiction, (b)
all priority applications, divisionals, continuations, and
continuations-in-part of any of the foregoing, and (c) all patents issuing on
any of the foregoing patent applications, together with all registrations,
reissues, renewals, re-examinations, confirmations, supplementary
protection certificates, and extensions of any of (a), (b) or (c).


“PCSK9” means
proprotein convertase subtilisin/kexin type 9 (GenBank accession #
NM_174936.2), or any [***], mutants, polymorphisms and fragments thereof.


“Permitted License” means a license granted by Isis to a Third Party (i) under the Isis
Core Technology Patents or the Isis Manufacturing Patents (but not under the
Product Specific Patents) to use ASOs (or supply ASOs to end users) [***]
solely to conduct Research, or (ii) under the Isis Manufacturing Patents (but
not under [***] Product Specific Patents) to enable such Third Party to [***]
ASOs, where such Third Party is primarily engaged in providing contract
manufacturing or services and is not engaged in drug discovery, development or
commercialization; provided further,
that any such license under clause (i) and (ii) shall be limited to patent
claims that are generally [***] in general, and do not relate to any [***]
sequence.  For avoidance of doubt,
Permitted License shall not include any license specific to any Compound or
Product or under any Patent claim directed to or specific to any Compound or
Product (including the use or manufacture thereof).


“Person”
means any individual, firm, corporation, partnership, limited liability
company, trust, business trust, joint venture company, governmental authority,
association or other entity.


“Phase II Trial”
means a human clinical trial of a Product, the principal purpose of which is a
determination of preliminary short-term safety and efficacy in the target
patient population, as described in 21 C.F.R. 312.21(b) for the United States,
or a similar clinical study prescribed by the Regulatory Authorities in a
foreign country.


“Phase IIb Trial” means a Phase II Trial, designed to support and immediately
precede the initiation of a Phase III Trial program without any further Phase
II Trials, to evaluate the dose-dependent
effectiveness of a pharmaceutical product for a particular indication or
indications in patients with the disease or condition under study and to
determine the common side effects and risks associated with the pharmaceutical
product.


“Phase IIb/III Trial” means a human clinical trial of a Product, the principal purpose of
which is a further determination of efficacy and safety, in the target
population, at the intended clinical dose or doses or range of doses, on a
sufficient number of subjects and for a sufficient period of time to confirm
the optimal manner of use of the Product (dose and dose regimen) prior to
initiation of the pivotal Phase III Trials, and which itself provides
sufficient evidence of safety and efficacy to be included as a Phase III
Trial in filings with Regulatory Authorities.


“Phase III Trial” means a human clinical trial of a Product on a
sufficient number of subjects that is designed to establish that a pharmaceutical product is safe and
efficacious for its intended use, and to determine warnings, precautions and adverse reactions that are associated 



 58
 








with such pharmaceutical product in the dosage range to be prescribed, which trial is intended to support
Approval of a Product, as described in 21 C.F.R. 312.21(c) for the
United States, or a similar clinical
study prescribed by the Regulatory Authorities in a foreign country.


“Phase IV Trial”
means a human clinical trial for a Product commenced after receipt of Approval
in the country for which such trial is being conducted and that is conducted
within the parameters of the Approval for the Product.  Phase IV Trials
may include, without limitation, epidemiological studies, modeling and
pharmacoeconomic studies, investigator sponsored clinical trials of Product and
post-marketing surveillance studies.


“Prior Third Party Agreements” means certain licenses granted prior to the
Effective Date by Isis to Third Parties under a Patent Controlled by Isis under
an agreement included in the agreements listed in Appendix 6.


“Product”
means any pharmaceutical product containing a Compound (alone or with other
active ingredients), in all forms, presentations, formulations and dosage forms.


“Product Specific Patents” means all Patents (including all claims and
the entire scope of claims therein) Controlled by Isis or its Affiliates on the
Effective Date and/or at any time through the period ending on the [***] year
anniversary of the expiration of the Research Term, in each case claiming
inventions specifically directed to any Compounds or Products, including but
not limited to patents and patent applications specifically claiming such
Compounds or Products, methods of using such Compounds or Products, methods and
materials specific to the synthesis of such Compounds or Products, and methods
and materials specific to formulating and administering such Compounds or
Products (including by way of example and without limitation, such Patents claiming (a) the sequence or a portion thereof
corresponding to the PCSK9 gene sequence or a portion thereof, (b) the specific
composition of matter of a Product, (c) methods of using a Product as a
therapeutic or (d) methods of using a Compound as a therapeutic); provided however, that (x) for any such Patents that include
Pass Through Obligations, the provisions of Section 5.5 will govern whether
such Patent will be included as an Product Specific Patent Right and (y) unless
the Parties otherwise agree in writing, Patents
that include claims that are directed to subject matter and have a scope that
is applicable to ASOs in general, and not specifically directed to a Compound
or Product, shall be considered to be Isis Core Technology Patents (or Isis
Manufacturing Patents, as applicable). 
For clarification, any Isis Program Patent Rights or any Joint Patent
satisfying the definition above, will be considered a Product Specific Patent.  The Product Specific Patents as of the
Effective Date are listed in Appendix 2 attached hereto.  For
clarification, any such Product Specific Patent qualifying as a Product
Specific Patent on the [***] year anniversary of the expiration of the Research
Term shall remain a Product Specific Patent throughout the Term of the
Agreement.


“Program Inventions” has the meaning set
forth in Section 8.1.


“Program Leader” has the meaning set
forth in Section 3.3.


“Program Patent Rights” has the meaning set
forth in Section 8.1.


“Proof of Concept” means that a Compound
or Product has demonstrated sufficient short-term safety and efficacy in a
Phase II Trial  to warrant the initiation of Phase IIb Trials (or, as applicable, the extension of a Phase
II Trial into the Phase IIb Trial portion of the trial).  For
purposes of clarification, the dosing of the first human in a Phase IIb Trial (or, as applicable, in the Phase IIb Trial
portion of a Phase II Trial)  for a
Product or Compound will conclusively demonstrate the achievement of Proof of
Concept for such Compound or Product.



 59
 








“Ready for Pivotal Quality Trials”
means
that a Compound or Product has demonstrated sufficient safety profile and
dose-dependent effectiveness for a particular indication(s) in Phase IIb Trials
(or,
as applicable, a Phase IIb/III Trial) to warrant the initiation of
Phase III Trials (or, as
applicable, the extension of the Phase IIb/III Trial into the the Phase III
Trial portion of the Phase IIb/III Trial).  For purposes of clarification,
the dosing of the first human in a Phase III Trial (or, as applicable, in the Phase III Trial
portion of a Phase IIb/III Trial)  for
a Product or Compound will conclusively demonstrate that such Compound or
Product is Ready for Pivotal Quality Trials.


“Receiving Party” has the meaning set forth in Section 7.1.


“Regulatory Authority” means any governmental authority, including without limitation FDA,
EMEA or Koseisho (i.e., the Japanese Ministry of Health and Welfare, or any
successor agency thereto), that has responsibility for granting any licenses or
approvals or granting pricing and/or reimbursement approvals necessary for the
marketing and sale of a Product in any country.


“Regulatory Documentation” means all applications, registrations, licenses, authorizations and
approvals (including all Approvals), all correspondence submitted to or
received from Regulatory Authorities (including minutes and official contact
reports relating to any communications with any Regulatory Authority), all
supporting documents and all clinical studies and tests, including the
manufacturing batch records, relating to the Product, and all data contained in
any of the foregoing, including all regulatory drug lists, advertising and
promotion documents, adverse event files and complaint files.


“Research”
means pre-clinical research including gene function, gene expression and target
validation research, which may include small pilot toxicology studies but
excludes IND-Enabling Studies, clinical development and
commercialization.


“Research Plan” has the meaning set forth in Section 3.4.


“Research Program” has the meaning set forth in Section 3.1.


“Research Program Costs” has the meaning set forth in Section 3.5.


“Research Results” means all data, information, trade secrets,
inventions and Know-How which are discovered, made, reduced to practice,
identified or developed in whole or in part by Isis in the course of the
performance of the Research Program.


“Research Term” will have the meaning set forth in Section 3.2.


“Research Year” means each 12 month period during the Research Term,
with the first Research Year beginning on the Effective Date.


“Royalty Term” has the meaning set
forth in Section 5.9.


“Senior Representatives” has the meaning set forth in Section 13.4.


“Term” has the meaning set
forth in Section 9.1.


“Territory” means all countries and
jurisdictions throughout the world.


“Third Party”
means any Person other than Isis or BMS or their respective Affiliates.



 60
 








“Valid Claim”
means either (a) a claim of an issued and unexpired patent which has not been
held permanently revoked, unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal and that is not admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise (i.e., only to the
extent the subject matter is disclaimed or is sought to be deleted or amended
through reissue), or (b) a claim of a pending patent application that has not
been abandoned, finally rejected or expired without the possibility of appeal
or refiling, provided however,
that (x) Valid Claim will exclude any such pending claim in an application that
has not been granted within [***] following the [***] filing date for such
application (unless and until such claim is granted) and (y) Valid Claim will
exclude any such pending claim that does not have a reasonable bona fide basis
for patentability (such reasonable bona fide basis to be determined by outside
counsel selected by the parties the event that the parties disagree as to
whether there is a reasonable bona fide basis for patentability for such a
claim).


 



 61















APPENDIX 2


PRODUCT-SPECIFIC PATENTS

(as of the
Effective Date)


[***]



 62















APPENDIX 3


ISIS CORE TECHNOLOGY PATENTS


[***]



 63















APPENDIX 4


ISIS MANUFACTURING PATENTS


[***]



 64















APPENDIX 5


CHARTER OF THE JOINT RESEARCH COMMITTEE


Purpose


The Joint Research Committee is established
by Isis and BMS to oversee the Research Program under the Agreement.


Responsibilities


1.                                       The JRC will, using the Research Plan
initially attached to the Agreement, as a basis, continue to develop and refine
the Research Plan, as needed, and will conduct a comprehensive review of the
Research Plan on at least an annual basis.


2.                                       The JRC will be responsible for the overall
planning and execution of the Research Program and the approval and oversight
of the Research Plan. The JRC will (i) evaluate the data generated by the
Parties in the course of carrying out the Research Plan, (ii) discuss and
resolve any overarching issues or significant changes in the Research Plan,
(iii) recommend project prioritization within the Research Plan, (iv) make
project progression decisions and resource allocation decisions in accordance
with the Research Plan, (v) review and approve
all patent filings covering the Research Results, and (vi) make
revisions to the Research Plan as necessary. 
Except for amendments to the Research Plan (as adopted in accordance
with this charter and the Agreement), in no event will the JRC have the power
or authority to amend any provision of the Agreement.


3.                                       The JRC will have the power to delegate its
authority and duties to sub-committees as it deems appropriate.


Composition


4.                                       The JRC will initially have six members, and
will at all times have an equal number of members designated by each Party.  Each Party may replace its appointed JRC
representatives at any time upon written notice to the other Party.  The size and composition of the JRC provided
herein may not be changed without the consent of both Isis and BMS.


5.                                       Each JRC member will have the requisite
background, experience and training to carry out the duties and obligations of
the JRC.


6.                                       Each Party will designate one of its
representatives as co-chairperson of the JRC. 
Each of the co-chairpersons will be responsible, on an alternating basis
with the BMS co-chairperson having responsibility with respect to the initial
meeting, for scheduling meetings, preparing and circulating an agenda in
advance of each meeting, and preparing the minutes of each meeting.



 65
 









Decisions


7.                                       Each Party’s JRC members will collectively
have three votes, regardless of the number of its JRC members participating in
any meeting.  No votes will be taken
unless there is at least one JRC member representing each of Isis and BMS participating
in such meeting.  Each Party may allocate
its three votes among its attending JRC members in any manner, at such Party’s
discretion.  If only one JRC member is
attending on behalf of a given Party, such JRC member may cast all the votes
allocated to such Party.  Unless
otherwise specified herein, all actions taken by the JRC as a committee will be
by majority vote.  If the JRC members
reach a deadlock on any vote, then the deadlock will be resolved in accordance
with Paragraph 8 below.  Notwithstanding
anything to the contrary, no decision by the JRC will require the other Party
to: (i) breach any written agreement that such other Party may have with a
Third Party (except where such agreement is entered into in breach of any
representation, warranty, covenant or obligation of such Party under to this
Agreement; (ii) perform any activities that are outside the scope of the
Objective; or (iii) violate any Applicable Law or principles of scientific
integrity.


8.                                       If the JRC is unable to decide by a majority
vote on any issue within the scope of its authority and duties, then the JRC
will promptly raise such issue to each Parties co-chairperson on the JRC, and
such co-chairs will have 10 days to mutually agree on how to resolve such
issue.  If the co-chairs are unable
to resolve such issue within the 10 day period, then such issue will be brought
to each Party’s Senior Representatives, or their designees.  The Senior Representatives will have ten days
to mutually agree on how to resolve such issue. 
If the Senior Representatives are unable to resolve such issue within
the ten day period, then, subject to the express limitations set forth in the
Agreement and in Paragraph 9 below, such issue will be finally resolved by the
Senior Representative of BMS, and such resolution will be binding on BMS and
Isis.


9.                                       Notwithstanding anything to the contrary, BMS
will not have the final decision with respect to any dispute involving any of
the following: (i) moving the performance of the Research Program away from the
Objective; (ii) reducing the number of FTEs required by the Research Plan below
[***] FTEs during the first [***] years of the Research Term; (iii)
unilaterally changing the Research Plan in a manner that is likely to produce
data or results that are not reasonably consistent with the Objective; or (iv)
changing the performance of the Research Plan to include new technology (e.g.
assays, targets, capital equipment or animal models) for which Isis would bear
the cost of obtaining.



 66
 









Operations; Meetings


10.                                 During the Research Term the JRC will initially
meet once per month, unless and until the JRC determines that such meetings
should occur once per Calendar Quarter (in either case, each a “Scheduled Meeting”).  Scheduled Meetings may be held in person or
by audio or video teleconference when appropriate, but at a minimum, once each
year in person (which in-person meeting will be held on an alternating basis in
New Jersey and in San Diego). In addition, any two members of the JRC may
jointly call for an ad hoc meeting
of the JRC by teleconference at any time, by giving the other members of the
JRC advance written notice of at least two Business Days (each, an “Ad Hoc Meeting”).  An Ad Hoc Meeting may be called to address
any time-sensitive matter.


11.                                 Meetings of the JRC will be effective only if
at least one JRC representative of each Party is present or participating.  Each Party will be responsible for all of its
own expenses of participating in the JRC meetings.  The Parties will endeavor to schedule
meetings of the JRC with at least 30 days advance notice.


12.                                 Each Party may bring additional employees to
each meeting as non-voting observers.


13.                                 The co-chair responsible for each meeting
(the “Responsible Chair”) will, in
consultation with other members of the JRC, develop and set the JRC’s agenda
for each Scheduled Meeting.  The
Responsible Chair will include on such agenda each item requested within a
reasonable time in advance of such Scheduled Meeting by a JRC member.  The agenda and information concerning the
business to be conducted at each Scheduled Meeting will be communicated in
writing to the members of the JRC within a reasonable time in advance of such
Scheduled Meeting to permit meaningful review. 
No agenda is required for an Ad Hoc Meeting.


14.                                 The
Responsible Chair, or such person as the Responsible Chair may designate, will
prepare, and distribute to all JRC members, draft committee minutes within 2
weeks following each Scheduled Meeting or Ad Hoc Meeting and such minutes shall
be finalized by the JRC promptly thereafter. 
As part of the agenda of the first Scheduled Meeting, the JRC members
will agree upon a standard procedure for review and approval of such draft
committee minutes by the JRC.



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APPENDIX
6


ISIS IN-LICENSE AGREEMENTS 

AND

PRIOR THIRD PARTY AGREEMENTS


[***]


 



 68