Exhibit 10.1


 


LICENSE AND CO-DEVELOPMENT AGREEMENT


 


BY AND
BETWEEN


 


GENZYME
CORPORATION


 


AND


 


ISIS
PHARMACEUTICALS, INC.


 


June 24,
2008


 

















 


TABLE OF CONTENTS


 


	
  Article 1.
  DEFINITIONS

  	
  1

  
	
   

  	
   

  
	
  Article 2.
  LICENSES

  	
  18

  
	
   

  	
   

  
	
   

  	
  2.1.

  	
  Product
  License

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.2.

  	
  Limited
  Right to Sublicense

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.3.

  	
  Additional
  Rights after Prior Agreement Execution Date

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.4.

  	
  Follow-On
  Compound

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.5.

  	
  Retained
  Rights

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.6.

  	
  Isis’
  Right of First Negotiation

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.7.

  	
  Third
  Party Agreements

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.8.

  	
  No
  Implied License

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3.
  EXCLUSIVITY 

  	
  23

  
	
   

  	
   

  
	
   

  	
  3.1.

  	
  Non-Compete

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  3.2.

  	
  [**]
  Technology

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4.
  JOINT COMMITTEES

  	
  23

  
	
   

  	
   

  
	
   

  	
  4.1.

  	
  Joint
  Development Committee

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2.

  	
  Joint
  Patent Committee

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.3.

  	
  Expenses

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 5.
  DEVELOPMENT

  	
  25

  
	
   

  	
   

  
	
   

  	
  5.1.

  	
  Development
  Plan and Development Budget

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.2.

  	
  Roles
  and Responsibilities

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.3.

  	
  Clinical
  and Launch Supplies

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.4.

  	
  Know-How
  Transfer

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.5.

  	
  Subcontracting

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6.
  COMMERCIALIZATION AND REGULATORY MATTERS

  	
  28

  
	
   

  	
   

  
	
   

  	
  6.1.

  	
  Commercialization
  Responsibilities

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.2.

  	
  Regulatory
  Matters and Filings

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.3.

  	
  Commercial
  Manufacture

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.4.

  	
  Isis
  Safety Database

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  6.5.

  	
  Safety
  Reporting

  	
  32

  



 


ii

















 


	
   

  	
  6.6.

  	
  Commercial
  Forecasts & Plans

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7.
  RESEARCH RELATED TO THE PRODUCT

  	
  33

  
	
   

  	
   

  
	
   

  	
  7.1.

  	
  Research
  Programs

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2.

  	
  Research
  Funding

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3.

  	
  Research
  Efforts

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 8.
  FINANCIAL PROVISIONS

  	
  34

  
	
   

  	
   

  
	
   

  	
  8.1.

  	
  Upfront
  License Fee

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.2.

  	
  Milestones

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.3.

  	
  Financial
  Provisions Relating to Development Activities

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.4.

  	
  Sharing
  of Net Revenue

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.5.

  	
  Sharing
  of Net Profits

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.6.

  	
  Periodic
  Reporting and Reconciliation

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.7.

  	
  Accounting
  and Allocation Methods

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.8.

  	
  Audits
  and Interim Reviews

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.9.

  	
  Withholding
  Taxes

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.10.

  	
  Interest
  on Late Payments

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.11.

  	
  Currency;
  Payment

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  8.12.

  	
  Material
  Safety Warnings

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 9.
  INTELLECTUAL PROPERTY MATTERS

  	
  44

  
	
   

  	
   

  
	
   

  	
  9.1.

  	
  Product-Specific
  Patents

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2.

  	
  Program
  IP

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.3.

  	
  Manufacturing
  Improvements

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.4.

  	
  Filing,
  Prosecution and Maintenance of Patents

  	
  49

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.5.

  	
  Enforcement
  of Patents and Know-How

  	
  52

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.6.

  	
  Claimed
  Infringement of Third Party Rights

  	
  56

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.7.

  	
  Other
  Infringement Resolutions

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.8.

  	
  Patent
  Term Extensions

  	
  57

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.9.

  	
  Orange
  Book Listings

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10.

  	
  Cooperative
  Research and Technology Act Acknowledgement

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.11.

  	
  Common
  Interest

  	
  58

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.12.

  	
  Product
  Trademarks

  	
  58

  



 


iii

















 


	
  Article 10.
  REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

  	
  59

  
	
   

  	
   

  
	
   

  	
  10.1.

  	
  Representations
  and Warranties of Both Parties

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.2.

  	
  Isis’
  Representations and Warranties

  	
  59

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.3.

  	
  Indemnification

  	
  62

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  10.4.

  	
  Insurance

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 11.
  TERM AND TERMINATION

  	
  64

  
	
   

  	
   

  
	
   

  	
  11.1.

  	
  Term

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.2.

  	
  Termination

  	
  64

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.3.

  	
  Consequences
  of Termination

  	
  67

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.4.

  	
  Remedies
  for Isis’ Material Breach

  	
  68

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 12.
  CONFIDENTIALITY; PUBLIC DISCLOSURE

  	
  70

  
	
   

  	
   

  
	
   

  	
  12.1.

  	
  Non-Disclosure

  	
  70

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.2.

  	
  Authorized
  Disclosure and Use

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.3.

  	
  Terms
  of Agreement

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.4

  	
  Public
  Disclosures

  	
  71

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 13.
  DISPUTE RESOLUTION

  	
  73

  
	
   

  	
   

  
	
   

  	
  13.1.

  	
  Escalation

  	
  73

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.2.

  	
  Mediation

  	
  74

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.3.

  	
  Jurisdiction;
  Venue; Service of Process

  	
  75

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 14.
  MISCELLANEOUS

  	
  76

  
	
   

  	
   

  
	
   

  	
  14.1.

  	
  Change
  of Control of Isis

  	
  76

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.2.

  	
  Specific
  Performance

  	
  77

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.3.

  	
  Governing
  Law

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.4.

  	
  Waiver;
  Remedies Cumulative

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.5.

  	
  Notices

  	
  78

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.6.

  	
  Entire
  Agreement

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.7.

  	
  Binding
  Effect; Assignment

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.8.

  	
  Severability

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.9.

  	
  Further
  Assurances

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.10.

  	
  Independent
  Contractors

  	
  79

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.11.

  	
  Interpretation

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.12.

  	
  Counterparts

  	
  80

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  14.13.

  	
  Rights
  in Bankruptcy

  	
  80

  



 


iv

















 


Schedules and Exhibits


 


	
  Schedule
  1.35

  	
   

  	
  Isis
  Methodology for Determining its Cost of Manufacture

  
	
  Schedule
  1.49

  	
   

  	
  Example
  of Calculation of Internal Development Expenses

  
	
  Schedule
  1.52

  	
   

  	
  Isis
  Core Technology Patents

  
	
  Schedule
  1.56

  	
   

  	
  Isis
  Manufacturing and Analytical Patents

  
	
  Schedule
  1.99

  	
   

  	
  Product-Specific
  Patents

  
	
  Schedule
  1.113

  	
   

  	
  Special
  Isis Core Technology Patents

  
	
  Schedule
  2.1

  	
   

  	
  Licenses
  to Third Parties

  
	
  Schedule
  10.2.2

  	
   

  	
  Third
  Party Agreements

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Development
  Plan

  
	
  Exhibit B

  	
   

  	
  Development
  Budget

  
	
  Exhibit C

  	
   

  	
  Form of
  Supply Agreement

  
	
  Exhibit D

  	
   

  	
  Form of
  Quality Agreement

  
	
  Exhibit E

  	
   

  	
  Form of
  Patent Assignment

  
	
  Exhibit F

  	
   

  	
  Disclosure
  Schedule

  



 


v

















 


LICENSE AND
CO-DEVELOPMENT AGREEMENT


 


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


 


WITNESSETH:


 


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


 


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


 


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


 


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


 


Article 1.

DEFINITIONS


 


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


 


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


 


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


 


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


 






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


 

















 


not
have control of Regulus.


 


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


 


1.5.        “apoB” means apolipoprotein B.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(v)      Regulatory filings.


 


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


 


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


 






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


 


3

















 


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


 


(iii)     Development of the use
of alternative reagents;


 


(iv)     Discovery of recycle
possibilities;


 


(v)      Discovery to enhance
yields;


 


(vi)     Discovery of the
Mipomersen oxidant;


 


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


 


(viii)   Development and validation
of PAT measures.


 


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


 


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


 


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


 


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


 


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


 






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


 


4
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1.31.                   “FH” means familial
hypercholesterolemia.


 


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


 






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


 


5

















 


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


 


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


 


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


 


1.35.                   “Fully Absorbed Cost of
Goods” means:


 


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


 


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


 


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


 


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


 


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


 






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


 


6

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


9

















 


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


 


1.71.                   [**].


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


10

















 


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


 


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


 


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


 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

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

  



 


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


 


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


 






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


 


11

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


12
















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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


13

















 


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


 


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


 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (h)

  	
   

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

  



 






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


 


14

















 


	
  (i)

  	
   

  	
  Sales and Marketing Expenses;

  
	
   

  	
   

  	
   

  
	
  (j)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (k)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (l)

  	
   

  	
  bad debt expense as calculated in accordance with GAAP;

  
	
   

  	
   

  	
   

  
	
  (m)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (n)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (o)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (p)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (q)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (r)

  	
   

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

  



 


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


 






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


 


15

















 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  



 


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


 


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


 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  



 






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


 


16

















 


	
  (c)

  	
   

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

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


17

















 


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


 


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


 


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


 


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


 


1.116.             “Territory”
means worldwide.


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


18

















 


Article 2.

LICENSES


 


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


 


2.2.                         Limited
Right to Sublicense.


 


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


 


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


 


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


 






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


 


19

















 


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


 


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


 


	
  2.4.1.

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

  
	
   

  	
   

  
	
  2.4.2.

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

  
	
   

  	
   

  
	
  2.4.3.

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

  
	
   

  	
   

  
	
  2.4.4.

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

  



 






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


 


20

















 


	
   

  	
  Compound Encumbrances associated with such
  Third Party Agreement.

   

  
	
   

  	
   

  
	
  2.4.5.

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

  



 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


21

















 


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


 


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


 


2.7.                         Third
Party Agreements.


 


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


 


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


 






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


 


22
















 


	
  2.8.

  	
   

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

  



 


Article 3.

EXCLUSIVITY


 


	
  3.1.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  3.2.

  	
   

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

  



 


Article 4.

JOINT COMMITTEES


 


	
  4.1.

  	
   

  	
  Joint
  Development Committee.

  



 


	
  4.1.1.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.1.2.

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  



 






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


 


23

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.1.3.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.1.4.

  	
   

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

  



 


	
  4.2.

  	
   

  	
  Joint Patent Committee.

  



 


	
  4.2.1.

  	
   

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

  



 






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


 


24

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.2.2.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  4.2.3.

  	
   

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

  



 


	
  4.3.

  	
   

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

  



 


Article 5.

DEVELOPMENT


 


	
  5.1.

  	
   

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

  



 






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


 


25

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  5.2.

  	
   

  	
  Roles
  and Responsibilities.

  



 


	
  5.2.1.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  5.2.2.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  5.2.3.

  	
   

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

  



 


	
  5.3.

  	
   

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

  



 






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


 


26

















 


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


 


	
  5.4.

  	
   

  	
  Know-How Transfer.

  



 


	
  5.4.1.

  	
   

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

  



 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

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

  



 






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


 


27

















 


	
  (d)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

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

  



 


	
  5.4.2.

  	
   

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

  



 


	
  5.5.

  	
   

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

  



 


Article 6.

COMMERCIALIZATION AND REGULATORY MATTERS


 


	
  6.1.

  	
   

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

  



 


	
  6.2.

  	
   

  	
  Regulatory
  Matters and Filings.

  



 


	
  6.2.1.

  	
   

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

  



 






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


 


28

















 


	
   

  	
   

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

  



 






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


 


29

















 


	
  6.2.2.

  	
   

  	
  Third Party Services Agreements.

  



 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

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

  



 


	
  6.2.3.

  	
   

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

  



 






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


 


30

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  6.2.4.

  	
   

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

  



 


	
  6.3.

  	
   

  	
  Commercial
  Manufacture.

  



 


	
  6.3.1.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  6.3.2.

  	
   

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

  



 


	
  6.4.

  	
   

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

  



 






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


 


31

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  6.5.

  	
   

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

  
	
   

  	
   

  	
   

  
	
  6.6.

  	
   

  	
  Commercial
  Forecasts & Plans.

  



 


	
  6.6.1.

  	
   

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

  



 






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


 


32
















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.6.2.

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

  



 


Article 7.

RESEARCH RELATED TO THE PRODUCT


 


	
  7.1.

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2.

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.3.

  	
   

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

  



 






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


 


33

















 


	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 8.

  FINANCIAL PROVISIONS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1.

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2.

  	
   

  	
  Milestones.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.2.1.

  	
  Development
  Milestones.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  



 


	
  Milestone Event

  	
   

  	
  Milestone

  Payment

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

  



 


	
   

  	
   

  	
   

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

  



 


	
  Milestone Event*

  	
   

  	
  Milestone

  Payment

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

  
					



 






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


 


34

















 


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

  	
   

  	
   

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

  



 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (1)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (2)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (3)

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  



 






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


 


35

















 


	
  Milestone Event

  	
   

  	
  Milestone

  Payment

  	
   

  
	
  NDA Approval for the Follow-On Compound

  	
   

  	
  $

  	
  [**]

  	
   

  
	
  MAA Approval for the Follow-On Compound

  	
   

  	
  $

  	
  [**]

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

  



 


	
   

  	
   

  	
  8.2.2.

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

  



 


	
  Milestone Event

  	
   

  	
  Milestone

  Payment

  	
   

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

  	
   

  	
  $

  	
  250,000,000

  	
   

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

  	
   

  	
  $

  	
  250,000,000

  	
   

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

  	
   

  	
  $

  	
  250,000,000

  	
   

  



 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.2.3.

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

  



 






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


36

















 


	
  Milestone Event*

  	
   

  	
  Milestone

  Payment

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

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

  	
   

  	
  $

  	
  [**]

  	
   

  



 






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


	
   

  	
   

  
	
   

  	
   

  	
  8.2.4.

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.2.5.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3.

  	
   

  	
  Financial
  Provisions Relating to Development Activities.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.3.1.

  	
  Isis
  Funding of External Development Expenses.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  



 






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


 


37

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.3.2.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.3.3.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.4.

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.1.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.2.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.3.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.4.

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

  



 






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


 


38

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.5.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.4.6.

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

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5.

  	
   

  	
  Sharing
  of Net Profits.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.5.1.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.5.2.

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

  
	
   

  
	
   

  	
  Annual Net Revenue

  	
   

  	
  Genzyme Percentage

  	
   

  	
  Isis Percentage

  	
   

  	
   

  
	
   

  	
  $1 to < $200 M

  	
   

  	
  70%

  	
   

  	
  30%

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  	
   

  
	
   

  	
  >$2 B

  	
   

  	
  50%

  	
   

  	
  50%

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

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

  
											



 






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


 


39

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6.

  	
   

  	
  Periodic
  Reporting and Reconciliation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.6.1.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.6.2.

  	
  Reconciliation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  



 






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


 


40

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.6.3.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.6.4.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.7.

  	
   

  	
  Accounting
  and Allocation Methods.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.7.1.

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

  



 






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


 


41

















 


	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  8.7.2.

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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.8.

  	
   

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

  



 






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


 


42
















 


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


 


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


 


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


 


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


 






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


 


43

















 


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


 


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


 


Article 9.


INTELLECTUAL
PROPERTY MATTERS


 


9.1.                             Product-Specific
Patents.


 


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


 


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


 


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


 






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


 


44

















 


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


 


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


 


9.2.                             Program
IP.


 


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


 






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


 


45

















 


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


 


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


 


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


 


9.3.                             Manufacturing
Improvements.


 


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


 


9.3.2.                    Terms of
Sharing Arrangement.


 






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


 


46

















 


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


 


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


 


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


 






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


 


47

















 


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


 


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


 


9.3.3.                    [**].


 


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


 


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


 


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


 


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


 






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


 


48

















 


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


 


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


 


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


 


9.4.                              Filing,
Prosecution and Maintenance of Patents.


 


9.4.1.                    Responsibility.


 


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


 


(b)           Licensed Product Patents.


 


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


 






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


 


49

















 


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


 


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


 


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


 






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


 


50

















 


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


 


9.4.2.                    Election
Not to Continue Prosecution; Abandonment.


 


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


 


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


 






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


 


51

















 


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


 


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


 


9.5.                             Enforcement
of Patents and Know-How.


 


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


 


9.5.2.                    Rights to
Enforce.


 


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


 






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


 


52

















 


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


 


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


 


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


 






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


 


53
















 


9.5.3.       Election Not to Enforce.


 


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


 


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


 


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


 


9.5.4.       Procedures and Expenses.


 


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


 






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


 


54

















 


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


 


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


 


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


 


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


 


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


 






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


 


55

















 


9.6.          Claimed Infringement
of Third Party Rights.


 


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


 


9.6.2.       Defense of Infringement
Claim; Declaratory Judgment Actions.


 


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


 


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


 






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


 


56

















 


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


 


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


 


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


 


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


 






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


 


57

















 


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


 


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


 


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


 


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


 


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


 






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


 


58

















 


Article 10.


REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


59

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


10.3.        Indemnification.


 


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


 


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


 






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


 


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agreement of Genzyme in or pursuant to this
Agreement, or the negligence or willful misconduct by or of any of the Genzyme
Indemnitees.


 


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


 


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


 


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


 






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


 


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


 


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


 


Article 11.


TERM
AND TERMINATION


 


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


 


11.2.        Termination.


 


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


 






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


 


64

















 


termination.


 


11.2.2.     Termination for Material
Breach.


 


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


 


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


 


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


 






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


 


65
















 


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


 


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


 


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


 


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


 






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


 


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


 


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


 


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


 


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


 


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


 


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


 


11.3.5.     Reversion.


 


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


 


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


 






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


 


67

















 


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


 


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


 


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


 


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


 


(c)           Consideration for
Reversion Rights.


 


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


 


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


 


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


 






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


 


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11.4.        Remedies for Isis’
Material Breach.


 


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


 


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


 






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


 


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


 


Article 12.


CONFIDENTIALITY;
PUBLIC DISCLOSURE


 


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


 


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


 


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


 


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


 


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


 






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


 


70

















 


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


 


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


 


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


 


(a)           prosecute or defend
litigation,


 


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


 


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


 


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


 


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


 


12.4         Public Disclosures.


 


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


 






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


 


71

















 


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


 


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


 


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


 






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


 


72

















 


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


 


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


 


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


 


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


 


Article 13.


DISPUTE
RESOLUTION


 


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


 






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


 


73

















 


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


 


13.2.        Mediation.


 


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


 


13.2.2.     Mediation of Setoff Dispute.


 


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


 


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


 


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


 


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


 






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


 


74

















 


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


 


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


 


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


 


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


 


13.3.        Jurisdiction; Venue;
Service of Process.


 


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


 


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


 






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


 


75

















 


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


 


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


 


Article 14.


MISCELLANEOUS


 


14.1.        Change of Control of
Isis.


 


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


 






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


 


76

















 


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


 


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


 


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


 






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


 


77
















 


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


 


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


 


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


 


	
  If to
  Genzyme:

  	
  Genzyme
  Corporation

  
	
   

  	
  500 Kendall
  Street

  
	
   

  	
  Cambridge,
  Massachusetts 02142

  
	
   

  	
  Attn:                    General
  Manager,

  
	
   

  	
                                                Cardiovascular
  Business Unit

  
	
   

  	
  Fax: (617)
  252-7553

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Genzyme
  Corporation

  
	
   

  	
  500 Kendall
  Street

  
	
   

  	
  Cambridge,
  Massachusetts 02142

  
	
   

  	
  Attn:
  General Counsel

  
	
   

  	
  Fax: (617)
  252-7553

  
	
   

  	
   

  
	
  If to Isis:

  	
  Isis
  Pharmaceuticals, Inc.

  
	
   

  	
  1896
  Rutherford Road

  
	
   

  	
  Carlsbad, CA
  92008

  
	
   

  	
  Attn: COO
  and CFO

  
	
   

  	
  Fax: (760)
  603-4650

  
	
   

  	
   

  
	
  with a copy
  to:

  	
  Isis
  Pharmaceuticals, Inc.

  
	
   

  	
  1896
  Rutherford Road

  
	
   

  	
  Carlsbad, CA
  92008

  
	
   

  	
  Attn:
  General Counsel

  
	
   

  	
  Fax: (760)
  268-4922

  



 






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


 


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


 


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


 


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


 


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


 


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


 






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


 


79

















 


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


 


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


 


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


 


[remainder of page intentionally
left blank]


 






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


 


80

















 


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


 


 


	
   

  	
  Genzyme Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Henri A. Termeer

  
	
   

  	
  Name:

  	
  Henri A. Termeer

  
	
   

  	
  Title:

  	
  Chairman, President

  
	
   

  	
   

  	
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Isis Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ B. Lynne Parshall

  
	
   

  	
  Name:

  	
  B. Lynne Parshall

  
	
   

  	
  Title:

  	
  Chief Operating Officer and

  
	
   

  	
   

  	
  Chief Financial Officer

  
						



 






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


 


81

















 


SCHEDULE 1.35


 


ISIS METHODOLOGY FOR DETERMINING ITS COST OF
MANUFACTURE


 


[**]


 


SCHEDULE 1.49


 


EXAMPLE CALCULATION OF INTERNAL DEVELOPMENT EXPENSES


 


[**]


 


SCHEDULE 1.52


 


ISIS CORE TECHNOLOGY PATENTS


 


[**]


 


SCHEDULE 1.56


 


ISIS MANUFACTURING & ANALYTICAL PATENTS


 


[**]


 


SCHEDULE 1.99


 


PRODUCT-SPECIFIC PATENTS


 


[**]


 


SCHEDULE 1.113


 


SPECIAL ISIS CORE TECHNOLOGY PATENTS


 


[**]


 


SCHEDULE 2.1


 


LICENSES TO THIRD PARTIES


 


[**]


 


SCHEDULE 10.2.2


 


THIRD PARTY AGREEMENTS


 


[**]


 






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


 

















 


EXHIBIT
A


 


DEVELOPMENT
PLAN


 


[**]


 


EXHIBIT
B


 


DEVELOPMENT
BUDGET


 


[**]


 


EXHIBIT
C


 


FORM OF
SUPPLY AGREEMENT


 


MANUFACTURING AND SUPPLY AGREEMENT


 


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


 


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


 


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


 


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


 


NOW, THEREFORE in consideration of the premises and mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree to this Supply Agreement as follows:


 


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


 


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


 


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


 






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


 

















 


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


 


4.              Supply after 2008;
Forecasting Before NDA Filing.


 


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


 


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


 


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


 


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


 


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


 


5.              Supply; Forecasting After
NDA Filing.


 


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


 


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


 


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


 






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


 


C-2

















 


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


 


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


 


6.              Delivery


 


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


 


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


 


7.              Shortfall


 


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


 


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


 


8.              Specifications; CofA


 


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


 


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


 






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


 


C-3

















 


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


 


10.       Terms of Payment –


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


C-4

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


16.       Hazards; Risk Sharing


 


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


 


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


 






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


 


C-5

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


C-6
















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


In the case of Isis,


 


Isis
Pharmaceuticals, Inc.


1896
Rutherford Road


Carlsbad,
CA 92008


Attention:  VP, Manufacturing/Operations


Facsimile:  760-603-4655


 


With a copy to:


1. General Counsel
(fax:  760.268.4922); and


 






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


 


C-7

















 


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


 


In the Case of Genzyme:


 


Genzyme
Corporation


200
Crossing Blvd.


Framingham,
MA  01792


Attention:  Senior VP, Materials Management


Facsimile:  (508) 661-8538


 


With
copy to:


 


Genzyme
Corporation


500
Kendall Street


Cambridge,
MA  02142


Attn:  General Counsel


Facsimile:
(617) 252-7553


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


C-8

















 


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


 


[remainder of this page intentionally left
blank]


 


The
Parties executing this Supply Agreement:


 


 


	
  ISIS PHARMACEUTICALS, INC.

  	
   

  	
  GENZYME CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME:
  B. Lynne Parshall

  	
   

  	
  NAME:
  Henri A. Termeer

  
	
   

  	
   

  	
   

  
	
  TITLE:

  	
  Chief
  Operating Officer and

  	
   

  	
  TITLE:
  Chairman, President and CEO

  
	
   

  	
  Chief
  Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNATURE:

  	
  /s/
  B. Lynne Parshall

  	
   

  	
  SIGNATURE:

  	
  /s/
  Henri A. Termeer

  
						



 


[**]


 






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


 


C-9

















 


EXHIBIT
D


 


FORM OF
QUALITY AGREEMENT


 


QUALITY AGREEMENT


Isis Pharmaceuticals and Genzyme Corporation.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


D-1

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


D-2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 






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


 


D-3

















 


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


 


The Parties Quality Assurance representatives executing this Agreement:


 


 


	
  ISIS PHARMACEUTICALS, INC.

  	
   

  	
  GENZYME CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NAME: Jeff Jones

  	
   

  	
  NAME: Charles Thyne

  
	
   

  	
   

  	
   

  
	
  TITLE: Executive Vice President

  	
   

  	
  TITLE: Vice President, Quality Operations

  
	
   

  	
   

  	
   

  
	
  SIGNATURE:

  	
  /s/ Jeff Jones

  	
   

  	
  SIGNATURE:

  	
  /s/ Charles Thyne

  
	
   

  	
   

  	
   

  
	
  DATE: [illegible]

  	
   

  	
  DATE: June 20, 2008

  
					



 






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


 


D-4

















 


Appendix A


 


Key Contacts


 


Isis


 


	
  Department

  	
   

  	
  Primary Contact

  	
   

  	
  Secondary Contact

  
	
  Project Manager

  	
   

  	
  [**], Development

  Chemistry & Manufacturing

  Telephone: [**]

  	
   

  	
  [**], Development

  Operations

  Telephone: [**]

  
	
  Analytical

  Development/Quality

  Control

  	
   

  	
  [**], ADQC

  Telephone: [**]

  	
   

  	
  [**], ADQC

  Telephone: [**]

  
	
  Quality

  Assurance/Compliance

  	
   

  	
  [**], QA/C

  Telephone: [**]

  	
   

  	
  [**], QA/C

  Telephone: [**]

  
	
  Regulatory Affairs

  	
   

  	
  [**], RA

  Telephone: [**]

  	
   

  	
  [**]. RA

  Telephone: [**]

  



 


Genzyme


 


	
  Department

  	
   

  	
  Primary Contact

  	
   

  	
  Contact Information

  
	
  Quality Assurance

  	
   

  	
  [**]

  QA Director

  	
   

  	
   

  
	
  Quality Assurance

  	
   

  	
  [**]

  Sr. Director CQC

  	
   

  	
  [**]

  
	
  Regulatory Affairs

  	
   

  	
  [**]

  Associate Director

  Regulatory Affairs

  	
   

  	
  [**]

  
	
  Stability & Statistics

  	
   

  	
  [**]

  Sr. Director Stability

  & Statistics

  	
   

  	
  [**]

  
	
  Project Management

  	
   

  	
  [**]

  Sr. Project Manager

  	
   

  	
  [**]

  



 






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


 


D-5

















 


Appendix B


 


Pre-Approved Subcontractors


 


API Release


 


	
  Test

  	
   

  	
  Subcontractor

  
	
  Bioburden

  	
   

  	
  [**]

  
	
  Endotoxin

  	
   

  	
  [**]

  
	
  Metals/Non-metals

  	
   

  	
  [**]

  



 






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


 


D-6
















 


Schedule 1.  Responsibility
Checklist


 


	
   

  	
   

  	
  Responsibility

  	
   

  	
  Genzyme

  	
   

  	
  Isis

  
	
  1.0

  	
   

  	
  Regulatory Authorizations & cGMP
  Requirements

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.3

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.4

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.5

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.6

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.7

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.8

  	
   

  	
  Performs
  annual Product Quality Review per applicable regulations

  	
   

  	
  x

  	
   

  	
   

  
	
  1.9

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  1.10

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  



 






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


 


D-7

















 


	
  1.11

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  2.0

  	
   

  	
  Regulatory Actions & Inspections

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  2.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  2.3

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  
	
  2.4

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  
	
  2.5

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  2.6

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  
	
  2.7

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  
	
  2.8

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  



 






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


 


D-8

















 


	
  3.0

  	
   

  	
  Audits

  	
   

  	
   

  	
   

  	
   

  
	
  3.1 

  	
   

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

  	
   

  	
  x

   

  x

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

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

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  4.0

  	
   

  	
  Compliance of Specifications & Other
  Pertinent Controlled Documents & Change Control

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  4.2

  	
   

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

  	
   

  	
  x

  	
   

  	
  x

  
	
  4.3

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  



 






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


 


D-9

















 


	
  4.4

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  5.0

  	
   

  	
  Safety

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  5.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  6.0

  	
   

  	
  Complaints

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  6.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  6.3

  	
   

  	
  Collects
  and logs all information relating to product complaints.

  	
   

  	
  x

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Investigates
  all product complaints.

  	
   

  	
  x

  	
   

  	
  x

  
	
  6.5

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  6.6

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  7.0

  	
   

  	
  Recall & Product Withdrawal

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  7.2

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Initiates
  and manages Recall or Product Withdrawal.

  	
   

  	
  x

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Notifies
  appropriate Regulatory Authorities of Recall or Product Withdrawal.

  	
   

  	
  x

  	
   

  	
   

  
	
  8.0

  	
   

  	
  Materials

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  8.2

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  



 






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


 


D-10

















 


	
  8.3

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  8.4

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  8.5

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  8.6

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.0

  	
   

  	
  Production & Validation

  	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.2

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  9.3

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.4

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.5

  	
   

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

  	
   

  	
  x

  	
   

  	
   

  
	
  9.6

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.7

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.8

  	
   

  	
  Generates
  Master Batch Record.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.9

  	
   

  	
  Approves
  Master Batch Record.

  	
   

  	
  x

  	
   

  	
  x

  
	
  9.10

  	
   

  	
  Generates
  Product Specifications.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.11

  	
   

  	
  Approves
  Product Specifications.

  	
   

  	
  x

  	
   

  	
  x

  
	
  9.12

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  
	
  9.13

  	
   

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

  	
   

  	
   

  	
   

  	
  x

  



 






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


 


D-11

















 


	
   

  	
   

  	
  Responsibility

  	
   

  	
  Genzyme

  	
   

  	
  Isis

  
	
  9.14

  	
   

  	
  Informs
  the other party in writing within 2 business days of occurrence of any
  Significant Deviation that may affect quality, safety, efficacy, or
  compliance with any license or Clinical Trial use of the API.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.15

  	
   

  	
  Notifies
  other party’s QA, in writing of any API investigation and involves other
  party’s QA in any corrective and preventive actions for Significant
  Deviations.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.16

  	
   

  	
  Provides
  copies of investigation reports to other party relating to all Significant
  Deviations related to the API.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.17

  	
   

  	
  Notifies
  other party’s QA in writing before implementation of any planned Deviation:
  major, experimental, temporary or permanent, directly affecting any
  production of the API that may impact the IND, CTA, NDA or MAA.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.18

  	
   

  	
  Approves
  in writing any Planned Deviation: major, experimental, temporary or
  permanent, affecting any production of the API that may impact the IND, CTA,
  NDA or MAA.

  	
   

  	
  x

  	
   

  	
  x

  
	
  9.19

  	
   

  	
  Maintains
  all batch records for at least one (1) year after the expiry date. For
  APIs with retest dates, records should be retained for at least three
  (3) years after the batch is completely distributed.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.20

  	
   

  	
  Provides
  all documentation needed to maintain the Product Specification File in
  accordance with the applicable Regulatory Authorities for maintenance of the
  CTA, MAA.

  	
   

  	
   

  	
   

  	
  x

  
	
  9.21

  	
   

  	
  Maintains
  the Product Specification File in accordance with applicable Regulatory
  Authorities.

  	
   

  	
  x

  	
   

  	
   

  
	
  9.22

  	
   

  	
  Labels
  API in accordance with internal procedures and regulatory requirements.

  	
   

  	
   

  	
   

  	
  x

  
	
  10.0

  	
   

  	
  Lot Number Assignment

  	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Assigns
  lot numbers using internal procedures and communicates such lot numbers as
  soon as reasonable to facilitate tracking by the other party, as necessary.

  	
   

  	
   

  	
   

  	
  x

  
	
  11.0

  	
   

  	
  Samples

  	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Samples
  API according to cGMPs and internal procedures.

  	
   

  	
   

  	
   

  	
  x

  
	
  11.2

  	
   

  	
  Provides
  all non-USP reference standards required for testing API and drug product.

  	
   

  	
   

  	
   

  	
  x

  
	
  11.3

  	
   

  	
  Samples
  for required applicable retain samples per Regulations and approved
  procedures.

  	
   

  	
   

  	
   

  	
  x

  



 






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


 


D-12

















 


	
  11.4

  	
   

  	
  Samples
  for required stability samples per approved procedures.

  	
   

  	
   

  	
   

  	
  x

  
	
  11.5

  	
   

  	
  Stores
  all required retain samples per approved procedures while at Isis facilities.

  	
   

  	
   

  	
   

  	
  x

  
	
  11.6

  	
   

  	
  As
  applicable, coordinates transfer of retain and/or stability samples for
  storage at other party’s facilities.

  	
   

  	
  x

  	
   

  	
   

  
	
  12.0

  	
   

  	
  Testing & Analysis

  	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Performs
  API release and stability testing according to all approved agreements,
  specifications and party’s applicable procedures.

  	
   

  	
   

  	
   

  	
  x

  
	
  12.2

  	
   

  	
  Within
  two (2) business days, notifies the other party of any apparent OOS
  result, which cannot be invalidated by an assignable laboratory cause,
  generated during release or stability testing.

  	
   

  	
   

  	
   

  	
  x

  
	
  12.3

  	
   

  	
  Provides
  a plan describing any proposed confirmatory or expanded testing of an
  apparent OOS result

  	
   

  	
   

  	
   

  	
  x

  
	
  12.4

  	
   

  	
  Within
  two (2) business days of receiving a confirmatory or expanded testing
  plan, provides QA authorization to perform such testing.

  	
   

  	
  x

  	
   

  	
  x

  
	
  12.5

  	
   

  	
  Ensures
  that any confirmatory or expanded testing is performed according to an
  approved plan

  	
   

  	
   

  	
   

  	
  x

  
	
  12.6

  	
   

  	
  Investigates
  all confirmed OOS results according to party’s applicable procedures

  	
   

  	
   

  	
   

  	
  x

  
	
  12.7

  	
   

  	
  Provides
  complete documentation of OOS investigation to other party, including final
  reported result(s), within two (2) business days of report completion.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.0

  	
   

  	
  Stability Testing

  	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Adheres
  to approved Stability Protocols.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.2

  	
   

  	
  Maintains
  Stability Program and provides documentation to support storage temperature
  and shelf-life for the duration of the Product life cycle.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.3

  	
   

  	
  Provides
  sample storage in temperature controlled stability chambers.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.4

  	
   

  	
  Provides
  stability data updates for time points as specified in the stability
  protocol.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.5

  	
   

  	
  Notifies
  the other party within 2 working days of confirmation of any initial
  stability failure of the API that has no assignable laboratory cause for the
  result.

  	
   

  	
   

  	
   

  	
  x

  
	
  13.6

  	
   

  	
  Trends
  and analyzes all stability data.

  	
   

  	
  x

  	
   

  	
  x

  
	
  13.7

  	
   

  	
  Reviews
  stability reports related to the API.

  	
   

  	
  x

  	
   

  	
  x

  
	
  14.0

  	
   

  	
  Release

  	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Provides
  copies of documentation per section 15.0 pertaining to the manufacture of the
  API.

  	
   

  	
   

  	
   

  	
  x

  
	
  14.2

  	
   

  	
  Authorizes
  shipment of API upon review and acceptance 

  	
   

  	
  x

  	
   

  	
   

  



 






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


 


D-13

















 


	
   

  	
   

  	
  of
  all required documentation and provides other party with written
  Authorization to Ship.

  	
   

  	
   

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Provides
  all necessary API release documentation to approved designated Third Party.

  	
   

  	
   

  	
   

  	
  x

  
	
  15.0

  	
   

  	
  Records Required for Release

  	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Provides
  quality documentation for each batch of API. The list of required documents
  includes, but is not limited to: 

  ·  Certificate of Analysis
  for API 

  ·  Certificate of Conformance
  for API 

  ·  Manufacturing Batch
  Record(s) for API 

  ·  Analytical Forms / Records
  

  ·  Deviation/Investigation forms as part of
  the batch record

  · Signature of the QA
  representative who reviewed and approved the documentation and who is aware
  of any outstanding investigational issues with respect to the batch.

  	
   

  	
   

  	
   

  	
  x

  
	
  15.2

  	
   

  	
  Provides
  copies of all documentation necessary for the other party to respond to
  inquiries by Regulatory Authorities.

  	
   

  	
   

  	
   

  	
  x

  
	
  16.0

  	
   

  	
  Storage & Transportation

  	
   

  	
   

  	
   

  	
   

  
	
  16.1

  	
   

  	
  Stores
  the API at the Facilities according to the Specifications pending API
  release.

  	
   

  	
   

  	
   

  	
  x

  
	
  16.2

  	
   

  	
  Will
  not ship the API to any other location without an Authorization to Ship from
  other party that may include specific conditions of insurance, packaging or
  courier service.

  	
   

  	
   

  	
   

  	
  x

  
	
  16.3

  	
   

  	
  Transports
  under correct transport conditions to other or designated Third Party site.

  	
   

  	
   

  	
   

  	
  x

  
	
  17.0

  	
   

  	
  Training

  	
   

  	
   

  	
   

  	
   

  
	
  17.1

  	
   

  	
  Employees
  engaged in the manufacture, filling, storage and testing of Product shall
  have education, training and experience or any combination thereof, to enable
  that person to perform the assigned functions.

  · Training on the
  applicable procedures shall be conducted by qualified individuals on a
  continuing basis and with sufficient frequency to assure that employees
  remain familiar with requirements applicable to them. 

  · All training will be
  documented in a training record for each employee. Employees will be trained
  with respect to data integrity and fraud.

  	
   

  	
   

  	
   

  	
  x

  
	
  18.0

  	
   

  	
  Quality Agreements

  	
   

  	
   

  	
   

  	
   

  
	
  18.1

  	
   

  	
  Review
  Quality Agreements every two (2) years and update as necessary.

  	
   

  	
  x

  	
   

  	
  x

  



 






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


 


D-14

















 


EXHIBIT E


 


FORM OF
PATENT ASSIGNMENT


 


PATENT ASSIGNMENT


 


WHEREAS, Isis
Pharmaceuticals, Inc. (“Assignor”), a Delaware corporation with an address
of 1896 Rutherford Road, Carlsbad, California 92008, is the owner of all rights,
title, and interests in and to the patents and patent applications shown on the
attached Exhibit 1 (the “Patents”);
and


 


WHEREAS, Genzyme Corporation
(“Assignee”), a Massachusetts corporation with an address of 500 Kendall
Street, Cambridge, Massachusetts 02142, desires to acquire the entire right,
title, and interest in and to the Patents and all the inventions and
discoveries disclosed in the Patents (the “Inventions”);


 


NOW THEREFORE, be it known
that effective as of [    ], 2008, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Assignor hereby sells, assigns, transfers, and sets over unto Assignee (1) the
entire right, title, and interest in all countries throughout the world in and
to said Patents and Inventions, including any renewals, revivals, reissues,
reexaminations, extensions, continuations, continuations-in-part, and divisions
of said Patents and any substitute applications therefor; (2) the entire
right to file patent applications (“New Applications”) in the name of Assignee
or its designee, or in the name of Assignor at Assignee’s or its designee’s
election, on the aforesaid Inventions in all countries of the world; (3) the
entire right, title, and interest in and to any patent which issued and may
issue on the Inventions in any country, and any renewals, revivals, reissues,
reexaminations, and extensions thereof, and any patents of confirmation,
registration, and importation of the same; (4) the right to sue and recover for, and the right to profits or damages
due or accrued in connection with, any and all past, present, or future
infringements of the Patents and Inventions; and (5) the entire
right, title, and interest in all convention and treaty rights of all kinds,
including without limitation all rights of priority in any country of the
world, in and to the above Patents and Inventions;


 


AND, Assignor hereby
authorizes and requests the competent authorities to grant and to issue any and
all patents on the Inventions throughout the world to Assignee, its successors,
or assigns, whose rights, title, and interests in such patents are the same as
would have been held and enjoyed by Assignor had this assignment, sale, and
transfer not been made.


 


[Remainder of Page Left Blank]


 






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


 

















 


IN WITNESS WHEREOF, the Assignor has caused this
Patent Assignment to be duly executed by its officer thereunto duly authorized
as of the [      ] day of [      ], 2008.


 


 


	
   

  	
  ISIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
  STATE
  OF

  	
   

  	
  )

  
	
   

  	
   

  	
  :
  ss.:

  
	
  COUNTY
  OF

  	
   

  	
  )

  



 


On
the        day of
        , 200  , before me
the undersigned, personally appeared
                                                        ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary
  Public

  	
   

  



 






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


 

















 


	
   

  	
  Acknowledgement of Assignee:

  
	
   

  	
   

  
	
   

  	
  GENZYME CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
  STATE
  OF

  	
   

  	
  )

  
	
   

  	
   

  	
  :
  ss.:

  
	
  COUNTY
  OF

  	
   

  	
  )

  



 


On
the        day of
        , 200  , before me
the undersigned, personally appeared
                                                        ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.


 


	
   

  	
   

  
	
   

  	
  Notary
  Public

  	
   

  



 


 


[**]


 






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


 

















 


EXHIBIT F


 


DISCLOSURE
SCHEDULE


 


[**]


 






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