exv10w5



 





Exhibit 10.5




Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.




LICENSE AND COLLABORATION AGREEMENT




     This License and Collaboration Agreement (the “License Agreement” or the
“Agreement”) is entered into as of the 6th day of September 2007 (the
“Effective Date”) by and among Alnylam Pharmaceuticals, Inc., a Delaware corporation, with
its principal place of business at 300 Third Street, Cambridge, Massachusetts 02142
(“Alnylam”), Isis Pharmaceuticals, Inc., a Delaware corporation, with its principal place
of business at 1896 Rutherford Road, Carlsbad, California 92008 (“Isis”, and each of
Alnylam and Isis, a “Licensor” and together, the “Licensors”), and Regulus
Therapeutics LLC, a Delaware limited liability company, with its principal place of business at
1896 Rutherford Road, Carlsbad, California 92008 (“Regulus”).



INTRODUCTION





	1.	 	Isis and Alnylam each Controls certain intellectual property relating to miRNAs (each as
defined below).






	2.	 	Isis and Alnylam are creating a new entity, Regulus, to exploit miRNA Compounds.






	3.	 	Regulus desires to obtain a license from Isis and Alnylam to such intellectual property for
the purpose of developing and commercializing certain products, and Isis and Alnylam each
desires to grant such a license to Regulus in accordance with the terms and conditions of this
Agreement.






	4.	 	On the Effective Date, the Parties are entering into a Services Agreement pursuant to which
the Licensors will provide certain services to Regulus.




In consideration of the mutual covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, Isis, Alnylam and
Regulus each agrees as follows:




1. DEFINITIONS




     Capitalized terms used herein and not defined elsewhere herein have the meanings set forth in
Exhibit 1.



2. ASSIGNMENT; LICENSES




     2.1 Assignments to Regulus.



          (a) Isis hereby grants, sells, conveys, transfers, assigns, releases and delivers to Regulus
all right, title and interest in and to the Patent Rights and contracts listed on Schedule
2.1(a) attached hereto, to have and hold the same unto itself, its successors and assigns
forever, and Regulus hereby accepts such grant, sale, conveyance, etc.




          (b) Alnylam hereby grants, sells, conveys, transfers, assigns, releases and delivers to
Regulus all right, title and interest in and to the Patent Rights and contracts listed on




 









 




Schedule 2.1(b) attached hereto, to have and hold the same unto itself, its
successors and assigns forever, and Regulus hereby accepts such grant, sale, conveyance, etc.




          (c) Notwithstanding the foregoing, to the extent any contract for which assignment is provided
for herein is not assignable pursuant to such contract without the written consent of another party
or requires novation, if assigned, this Agreement will not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would constitute a breach thereof.
To the extent a contract is not assigned pursuant to this provision, the applicable Licensor will
cooperate with the other Parties and will use its Commercially Reasonable Efforts to provide
Regulus the economic and other benefits intended to be assigned to Regulus under the relevant
contract.




     2.2 Licenses Granted to Regulus.



          (a) Grants. Subject to the terms and conditions of this Agreement (including but not
limited to Section 2.4), each Licensor hereby grants to Regulus a worldwide, royalty-bearing,
sublicenseable (in accordance with Section 2.5) license in the Field, under such Licensor’s
Licensed IP,





	 	(i)	 	to Develop miRNA Compounds and miRNA
Therapeutics,
	 
	 	(ii)	 	to Manufacture miRNA Compounds and miRNA
Therapeutics, and
	 
	 	(iii)	 	to Commercialize miRNA Therapeutics.




Subject to Section 2.4, the rights granted under clauses (i), (ii) and (iii) will be (y) exclusive
with respect to miRNA Compounds which are miRNA Antagonists and miRNA Therapeutics containing such
miRNA Compounds, and (z) non-exclusive with respect to miRNA Compounds which are Approved Precursor
Antagonists and miRNA Therapeutics containing such miRNA Compounds.




          (b) Request to License miRNA Mimics and Additional miRNA Precursor Antagonists.
Regulus may request a worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5),
non-exclusive license in the Field, under each Licensor’s Licensed IP, to Develop, Manufacture and
Commercialize a specific miRNA Mimic or a specific miRNA Precursor Antagonist that is not then an
Approved Precursor Antagonist, and miRNA Therapeutics containing such miRNA Mimic or miRNA
Precursor Antagonist, by providing written notice to Licensors thereof on a miRNA Mimic-by-miRNA
Mimic or miRNA Precursor Antagonist-by-miRNA Precursor Antagonist basis. Such license is subject
to (i) review and affirmative approval by the Licensors, which approval may be withheld by a
Licensor in such Party’s sole discretion, and (ii) compliance with relevant Third Party Rights
([**]). For the avoidance of doubt, Regulus will have no rights to such miRNA Mimic or miRNA
Precursor Antagonist hereunder unless and until the affirmative approval of the relevant
Licensor(s) and any required consents or approvals from Third Parties have been obtained and
Regulus agrees to comply with all Third Party Rights, even to the extent inconsistent with the
terms of this Agreement, following which such miRNA Mimic or miRNA Precursor Antagonist will be
deemed to be an Approved Mimic or Approved Precursor Antagonist, respectively.




2









 








          (c) Retained Rights. The exclusive license granted to Regulus by Alnylam pursuant to
Section 2.2(a) is subject to Alnylam’s retained right to use and exploit its Licensed IP solely to
support its own internal Research in the Alnylam Field. The exclusive license granted to Regulus
by Isis pursuant to Section 2.2(a) is subject to Isis’ retained right to use and exploit its
Licensed IP solely to support its own internal Research in the Isis Field. All rights in and to
each Licensor’s Licensed IP not expressly licensed pursuant to Sections 2.2(a) and (b), and any
other Patent Rights or Know-How of such Licensor, are hereby retained by such Licensor.




     2.3 Licenses Granted to Licensors Under Regulus IP. Subject to the terms and
conditions of this Agreement and to Third Party Rights:



          (a) Regulus hereby grants to Alnylam a worldwide, exclusive, royalty-free, perpetual and
irrevocable license, with the right to grant sublicenses, under the Regulus IP solely to the extent
necessary or useful to research, discover, develop, make, have made, use, sell, offer to sell
and/or otherwise commercialize double-stranded oligonucleotides (other than Approved Mimics) and
any product containing double-stranded oligonucleotides (other than Approved Mimics) (the
“Alnylam Field”).




          (b) Regulus hereby grants to Isis a worldwide, exclusive, royalty-free, perpetual and
irrevocable license, with the right to grant sublicenses, under the Regulus IP solely to the extent
necessary or useful to research, discover, develop, make, have made, use, sell, offer to sell
and/or otherwise commercialize single-stranded oligonucleotides (other than miRNA Antagonists,
Approved Precursor Antagonists, or Approved Mimics) and any product containing single-stranded
oligonucleotides (other than miRNA Antagonists, Approved Precursor Antagonists or Approved Mimics)
(the “Isis Field”).




     2.4 Third Party Rights; Additional Rights.



          (a) Existing Out-License Agreements. The licenses granted under Section 2.2 and 2.3 are
subject to and limited by the licenses granted, and other obligations owed, by each Licensor to a
Third Party prior to the Effective Date under a Licensed Patent Right Controlled by such Licensor,
pursuant to agreements described on (i) Part 1 of Schedule 2.4(a) in the case of Licensed
Patent Rights Controlled by Isis, and (ii) Part 2 of Schedule 2.4(a) in the case of
Licensed Patent Rights Controlled by Alnylam, and (iii) in an addendum transmittal instrument
delivered by each Licensor within 30 days after the Effective Date. The schedules and instruments
provided under this Section 2.4(a) will be collectively referred to as the “Out-License
Summary”, and the agreements described therein will be collectively referred to as the
“Out-License Agreements”).




          (b) Existing In-Licenses from Third Parties.



               (i) Certain of the Licensed Patent Rights as of the Effective Date that are licensed to
Regulus under Section 2.2 are in-licensed or were acquired by the applicable Licensor under
agreements with Third Party licensors or sellers that may contain restrictions on the scope of the
licenses or trigger payment or other material obligations or restrictions (such license or purchase
agreements in effect as of the Effective Date being the “In-License Agreements”). The
licenses and other rights (including sublicense and disclosure rights) granted to a Party pursuant
to this Agreement are subject to, and are limited to the extent of the terms of



3









 







any (i) In-License Agreements between Isis and any Third Party licensor, as specifically
described on Part 1 of Schedule 2.4(b) and (ii) any In-License Agreement between Alnylam
and any Third Party, as specifically described on Part 2 of Schedule 2.4(b). The
schedules provided under this Section 2.4(b) will be collectively referred to as “In-License
Summary.” Each Part of the In-License Summary summarizes all material restrictions on the
scope of the licenses, and all material payment obligations owed, under the In-License Agreements
(other than the Previous Agreements) which the applicable Licensor reasonably believes apply to the
licenses granted to Regulus hereunder as of the Effective Date. Except as provided in Section
5.6(d), Regulus will assume all financial and other obligations to the relevant Third Party, and be
subject to all restrictions, set forth on the In-License Summary and arising from the grant to
Regulus of the licenses pursuant to Section 2.2(a) as of the Effective Date.



               (ii) In addition to the financial obligations and scope limitations set forth on the
In-License Summary and the Out-License Summary, and to the extent access to such terms have been
made available to such licensed Party in unredacted form (provided, however, that
such licensed Party has not failed to request such access in accordance with Section 2.4(e)), a
Party receiving a license or sublicense under Licensed IP hereunder will comply, and will cause its
Affiliates and Sublicensees to comply, with all other terms of the In-License Agreements and
Out-License Agreements, including without limitation diligence requirements, applicable to the
licenses granted to such Party hereunder.



          (c) Optional In-Licenses. Notwithstanding anything to the contrary herein, the licenses to
Isis’ Licensed IP hereunder initially shall not include licenses to Patent Rights or Know-How
licensed by Isis under the agreements listed and described on Part 1 of Schedule 2.4(c)
and the licenses to Alnylam’s Licensed IP hereunder initially shall not include licenses to Patent
Rights or Know-How licensed by Alnylam under the agreements listed and described on Part 2 of
Schedule 2.4(c) (such agreements on Schedule 2.4(C) referred to as the “Optional
In-Licenses”). Regulus is hereby granted the option of expanding its licenses under Section
2.2 to include Patent Rights and Know-How licensed to the relevant Licensor pursuant to [**]
Optional In-Licenses, with respect to [**] miRNA Compounds and related miRNA Therapeutics, by
notifying the Parties in writing of the relevant Optional In-License, and each miRNA Compound with
respect thereto, for which such option is exercised. Upon such exercise and Regulus’ written
agreement to assume all financial and other obligations and restrictions imposed by the desired
Optional In-License (including, to the extent access to such terms have been made available to
Regulus in unredacted form (provided, however, that Regulus has not failed to
request such access in accordance with Section 2.4(e)), all other terms of such Optional In-License
applicable to the licenses granted to Regulus hereunder), the Patent Rights and Know-How licensed
to the relevant Licensor pursuant to the specified Optional In-License shall be deemed included in
such Licensor’s Licensed IP solely with respect to the relevant miRNA Compounds and related miRNA
Therapeutics.




          (d) Additional Rights after Effective Date. If after the Effective Date, a Party (the
“Controlling Party”) invents or acquires rights or title to an invention claimed by a
Patent Right that would be included in the Licensed Patent Rights or Regulus Patent Rights (the
“Additional Rights”), then, on the anniversary of the Effective Date following such
invention or acquisition of such Additional Right, or as otherwise reasonably requested by a Party,
the Controlling Party must notify each other Party (each, a “Non-Controlling Party”) of
such acquisition or invention. If a Non-Controlling Party wishes to include such Additional Rights




4









 







under the licenses granted pursuant to Sections 2.2, 2.3 or 5.6 (as the case may be), such
Non-Controlling Party will notify the Controlling Party of its desire to do so, the Controlling
Party will provide the Non-Controlling Party a summary of all material restrictions on the scope of
the licenses granted, and all material payment obligations owed, under any Third Party Agreement
applicable to such Additional Rights and the Non-Controlling Party may, upon written notice to the
Controlling Party, obtain a license under such Additional Rights and will assume all financial and
other obligations to, and be subject to all restrictions imposed by, the Controlling Party’s
licensors or collaborators, if any, arising from the grant to such Non-Controlling Party of such
license (including, to the extent access to such terms have been made available to such
Non-Controlling Party in unredacted form (provided, however, that such
Non-Controlling Party has not failed to request such access in accordance with Section 2.4(e)), all
other terms of such Third Party Agreements applicable to the licenses granted to such
Non-Controlling Party hereunder). Notwithstanding the foregoing, any Additional Rights that do not
carry financial or other obligations or restrictions will be automatically included under the
licenses granted pursuant to Section 2.2, 2.3 or 5.6. If the Controlling Party pays any upfront
payments or similar acquisition costs to access Additional Rights, the Controlling Party and
relevant Non-Controlling Party(ies) will negotiate in good faith regarding sharing such acquisition
costs and payments. When acquiring or creating such Additional Rights pursuant to any agreement
entered into after the Effective Date, each Party will endeavor in good faith to secure the right
to sublicense such Additional Rights to the other Parties.




          (e) Applicable Agreements. Each Party agrees to provide, upon the request of a Party, access
to each Third Party Agreement that is the subject of any provision of this Section 2.4;
provided, however, that the Parties agree and acknowledge that (i) the Third Party
Agreements so provided may, to the extent necessary to protect confidential information of the
relevant Third Party or financial information of the relevant Party, be redacted, and (ii) if so
redacted, the Party assuming any obligations or accepting any limitations under a Third Party
Agreement pursuant to this Section 2.4, will only be liable to the extent access to such terms have
been made available to such licensed Party in unredacted form.




     2.5 Sublicenses.



          (a) Subject to Third Party Rights, Regulus will have the right to grant to its Affiliates and
Third Parties sublicenses under the licenses granted in Sections 2.2(a) and (b).




          (b) Subject to Third Party Rights, the Opt-In Party will have the right to grant to its
Affiliates and Third Parties sublicenses under the rights granted to such Licensor in Section
5.6(a).




          (c) Each such sublicense will be subject and subordinate to, and consistent with, the terms
and conditions of this Agreement, and will provide that any such Affiliate and Sublicensee will
not further sublicense except on terms consistent with this Section 2.5. Regulus or the Opt-In
Party, as applicable, will provide the other Parties with a copy of any sublicense granted
pursuant to this Section 2.5 within 30 days after the execution thereof. Such copy may be
redacted to exclude confidential scientific information and other information required by a
Sublicensee to be kept confidential; provided that all relevant financial terms and
information will be retained. Regulus or the Opt-In Party, as applicable, will remain responsible
for the performance of its Affiliates and Sublicensees, and will ensure that all such



5









 






Affiliates and Sublicensees comply with the relevant provisions of this Agreement. In the
event of a material default by any of its Affiliates or Sublicensees under a sublicense agreement,
Regulus or the Opt-In Party, as applicable, will inform the other Parties and will take such
action, after consultation with such other Parties, which, in Regulus’ or the Opt-in Party’s (as
applicable) reasonable business judgment, will address such default.




3. TECHNOLOGY TRANSFER




     3.1 Technology Transfer to Regulus. At each meeting of the Collaboration Working
Group the representatives will discuss new Know-How and Patent Rights of Isis and Alnylam that are
included in such Licensor’s Licensed Patents and Licensed Know-How hereunder at the level of detail
necessary to enable Regulus to effectively practice such Patent Rights and Know-How.



     3.2 Technology Transfer from Regulus; Identification and Improvements. At each
Collaboration Working Group meeting Regulus will present a description of all Regulus IP developed
by it or on its behalf, or over which Regulus otherwise acquired Control, since the last meeting.
The description will be at a level of detail necessary to enable Isis, Alnylam or both, as
appropriate, to effectively practice such Regulus IP in accordance with their respective licenses
under Section 2.3.



4. DILIGENCE 




     4.1 General Diligence. Except to the extent a Licensor receives a license from
Regulus pursuant to this Agreement to Develop, Manufacture and Commercialize miRNA Therapeutics,
Regulus will use Commercially Reasonable Efforts to Develop, and Commercialize miRNA Compounds and
miRNA Therapeutics in the Field.



     4.2 Compliance with Laws. Each Party will, and will ensure that its Affiliates and
Sublicensees will, comply with all relevant Laws in exercising their rights and fulfilling their
obligations under this Agreement.



     4.3 Reporting. By January 31st of each year, Regulus will prepare and
furnish each Licensor with a written report summarizing Regulus’ activities conducted during the
prior calendar year to Develop, Manufacture and Commercialize miRNA Therapeutics in the Field and
identifying the results obtained or benchmarks achieved since the last report to the Licensors.



     4.4 Designation of Research Programs and Development Projects. Regulus’ officers will
be responsible for reviewing the results of Research and Development activities under the Operating
Plan and designating (subject to the approval of the Managing Board) from time to time Research
Programs and Development Projects. A “Research Program” will begin upon the commencement
of discovery or characterization activities focused on one or more specific miRNA(s) after
preliminary validation of the biological function of such miRNA(s) has been identified (i.e.,
compound discovery, not target validation) and will include all activities with respect to the
Development, Manufacturing and Commercialization of miRNA Compounds and miRNA Therapeutics directed
to such miRNA(s). A Research Program will become a “Development Project” (and thereafter
will no longer be a Research Program) when Regulus’ officers recommend, and the Managing Board
agrees, that a sufficient portfolio of data exists to



6









 







support the initiation of a [**] on a miRNA Compound drug candidate targeting such miRNA(s).
Regulus will maintain a written list of the then-current Research Programs and Development Projects
(each, a “Program/Project List”).



5. RIGHT TO OPT-IN 




     5.1 Notice of Development Project Status. Concurrently with the conversion of a
Research Program into a Development Project, Regulus will notify each Licensor of such conversion
and whether or not Regulus will continue to pursue the Development and Commercialization of such
newly designated Development Project.



     5.2 Continued Development by Regulus of Development Projects. If Regulus notifies
Licensors pursuant to Section 5.1 that Regulus will continue to pursue the Development and
Commercialization of such Development Project, then, without limiting the generality of Section
4.1, Regulus will use Commercially Reasonable Efforts to Develop and Commercialize the relevant
Development Compounds and Development Therapeutics in the Field. Regulus will also (a) pay to each
Licensor a royalty of [**]% of Net Sales of such Development Therapeutics which are Royalty-Bearing
Products, during the relevant Royalty Term (provided, however, that, for the
remainder of the relevant Royalty Term following the end of the relevant Exclusivity Period, the
royalty rate will be [**]%) and (b) be responsible for all milestones, royalties and other payments
payable to Third Parties in respect of the Development, Manufacture and Commercialization of such
Development Therapeutics in the Field, by Regulus, its Affiliates and Sublicensees, including any
amounts payable by either Licensor to Third Parties under the Third Party Rights. The Parties will
use reasonable efforts to [**]. Regulus agrees that the royalty described in clause (a) of this
Section 5.2 is payable to each Licensor, regardless of whether a particular Royalty-Bearing Product
is covered by such Licensor’s Licensed IP. Each Party agrees and acknowledges that such royalty
structure (i) is freely entered into by such Party, (ii) is a fair reflection of the value received
by Regulus from the licenses granted by the Licensors, and (iii) is a reasonable allocation of the
value received by Regulus from each Licensor, due to the difficulty of determining the extent to
which Licensor’s Licensed IP covers or has enabled each Royalty-Bearing Product.



     5.3 Opt-In Election. If Regulus notifies Licensors pursuant to Section 5.1 that it
will not continue to pursue the Development and Commercialization of such Development Project, each
Licensor will have the right, exercisable by providing written notice to Regulus and the other
Licensor within [**] days following receipt of such notice (“Initial Opt-In Election
Period”), to elect to continue to pursue the Development and Commercialization of such
Development Project (“Opt-In Election”).



          (a) Opt-In by One Licensor. If only one, but not both, of the Licensors (the
“Opt-In Party”) makes an Opt-In Election with respect to such Development Project within
the Initial Opt-In Election Period, the High Terms set forth in Section 5.4 and the terms of
Section 5.6 will apply following the end of such Initial Opt-In Election Period and the Licensor
who did not elect to opt-in will waive its right to opt-in with respect to such Development
Project.




          (b) No Opt-In; Second Opt-In Election. If, within the Initial Opt-In Election Period,
neither Licensor makes an Opt-In Election (or both Licensors fail to submit any response), then
Regulus will use diligent efforts to negotiate and finalize, within [**] months



7









 






following the end of the Initial Opt-In Election Period, a term sheet with a Third Party
pursuant to which such Third Party will Develop and Commercialize, either by itself or with or on
behalf of Regulus, such Development Project in the Field.





	 	(i)	 	If, despite diligent efforts, Regulus is unable
to finalize such term sheet with a Third Party with respect to the
Development Project within such [**] month period, or Regulus is able
to finalize such term sheet with a Third Party with respect to the
Development Project within such [**] month period, but Regulus is
unable to execute a definitive agreement substantially in conformance
with such term sheet within [**] months after finalizing such term
sheet, Regulus will notify Licensors thereof and each Licensor will
again have the right, exercisable by providing written notice to
Regulus and the other Licensor, within [**] days following Regulus’
notice (“Second Opt-In Election Period”), to elect to continue
to pursue the Development and Commercialization of such Development
Project on the Low Terms set forth in Section 5.5.
	 
	 	(ii)	 	If only one, but not both, of the Licensors,
makes an Opt-In Election within the Second Opt-In Election Period (the
“Opt-In Party”), the Low Terms set forth in Section 5.5 and the
terms of Section 5.6 will apply following the end of such Second Opt-In
Election Period and the Licensor who did not make an Opt-In Election,
within such Second Opt-In Election Period, will have waived its right
to opt-in with respect to such Development Project.
	 
	 	(iii)	 	If, within the Second Opt-In Election Period,
neither Licensor makes an Opt-In Election (or both Licensors fail to
submit any response), then Regulus will retain all rights to such
Development Project.





          (c) Opt-In by Both Licensors. If, within the Initial Opt-In Election Period or Second
Opt-In Election Period, both Licensors submit an Opt-In Election with respect to such Development
Project, then the Parties will, to the extent mutually agreed, work together to amend the Operating
Plan to support Regulus in Developing and Commercializing the Development Project, including, as
applicable, creating a funding and early development plan, and the designation of roles and
responsibilities of each Party in the execution of such Operating Plan.




     5.4 Opt-In on High Terms. In the event that an Opt-In Election is made by only one of
the Licensors during the Initial Opt-In Election Period pursuant to Section 5.3(a), the following
terms will apply (“High Terms”):



          (a) Upfront Payment. The Opt-In Party will pay to Regulus, within 15 days following
the end of the Initial Opt-In Election Period, a one-time payment of [**] Dollars ($[**]).




8









 








          (b) Royalties. During the relevant Royalty Term, the Opt-In Party will pay to Regulus
the following royalties on Net Sales (aggregated from all relevant countries) of each
Royalty-Bearing Product in a calendar year:




	 	 	 	 	 
	 	 	Royalty Rate	 	Royalty Rate
	On the portion of Net Sales	 	on Net Sales During	 	on Net Sales After
	during the calendar year:	 	Exclusivity Period	 	Exclusivity Period
	Less than or equal to $[**]:

	 	[**]%
	 	[**]%
	 
	 	 	 	 
	Greater than $[**]:

	 	[**]%
	 	[**]%





The Opt-In Party’s obligation to pay royalties under this Section 5.4(b) is imposed only once with
respect to the same unit of Royalty-Bearing Product.




          (c) Milestone Payments. Subject to Section 5.6(f), the Opt-In Party will pay to
Regulus the following payments upon the achievement of the events set forth below by a
Royalty-Bearing Product for the relevant Development Project:




	 	 	 
	Milestone Event:	 	Payment
	 	 	[**]:
	(i) Filing of IND for first Royalty-Bearing Product

	 	$[**]
	 
	 	 
	(ii) Upon Completion of the first Phase IIa Clinical Trial

	 	$[**]
	 
	 	 
	(iii) Initiation (i.e., dosing of first patient) of the first
Phase III Clinical Trial

	 	$[**]
	 
	 	 
	(iv) Filing of NDA in U.S. for first Royalty-Bearing Product

	 	$[**]
	 
	 	 
	(v) Filing of NDA in the European Union for first Royalty-Bearing
Product

	 	$[**]
	 
	 	 
	(vi) Regulatory Approval in U.S. for the first Royalty-Bearing
Product

	 	$[**]
	 
	 	 
	(vii) Regulatory Approval in any Major Country in the European 

Union for the first Royalty-Bearing Product

	 	$[**]





The Opt-In Party will notify the other Parties within 15 days following achievement or occurrence
of a milestone event. Each milestone payment under this Section 5.4(c) will be payable only once
with respect to the first Royalty-Bearing Product under the relevant Development Project to achieve
the milestone event. If an event in clause (ii), (iii), (iv) or (v) occurs before an event in a
preceding clause (i), (ii) or (iii), the milestone payment described in such clause (i), (ii) or
(iii) will be paid when the milestone payment described in such clause (ii), (iii), (iv) or (v) is
paid.




9









 







Milestone payments will continue to be due for milestone events occurring after any grant by the
Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus IP or Licensed IP
licensed to the Opt-In Party under Section 5.6(a) with respect to the relevant Development Project.




          (d) Sublicense Income. Subject to Section 5.6(f), the Opt-In Party will pay to
Regulus a portion of the Sublicense Income received by the Opt-In Party or its Affiliates, in
accordance with the following table:




	 	 	 
	Sublicense agreement initially entered into	 	Percentage of
	during this timeframe:	 	Sublicense Income
	Prior to Completion of first Phase IIa Clinical Trial

	 	[**]%
	 
	 	 
	After Completion of first Phase IIa Clinical Trial,
but prior to completion of first Phase III Clinical
Trial

	 	[**]%
	 
	 	 
	After Completion of first Phase III Clinical Trial

	 	[**]%






     5.5 Opt-In on Low Terms. In the event that an Opt-In Election is made by only one,
but not both, of the Licensors during the Second Opt-In Election Period pursuant to Section
5.3(b)(ii), the following terms will apply (“Low Terms”):



          (a) Upfront Payment. The Opt-In Party will pay to Regulus, within 15 days following
the end of the Second Opt-In Election Period, a one-time payment of [**] Dollars ($[**]).




          (b) Royalties. During the relevant Royalty Term, the Opt-In Party will pay to Regulus
the following royalties on Net Sales (aggregated from all relevant countries) of each
Royalty-Bearing Product in a calendar year:




	 	 	 	 	 
	 	 	Royalty Rate	 	Royalty Rate
	On the portion of Net Sales	 	on Net Sales During	 	on Net Sales After
	during the calendar year:	 	Exclusivity Period	 	Exclusivity Period
	Less than or equal to $[**]:
	 	[**]%	 	[**]%
	 
	 	 	 	 
	Greater than $[**]:
	 	[**]%	 	[**]%





The Opt-In Party’s obligation to pay royalties under this Section 5.5(b) is imposed only once with
respect to the same unit of Royalty-Bearing Product.




          (c) Milestone Payments. Subject to Section 5.6(f), the Opt-In Party will pay to
Regulus the following payments upon the achievement of the events set forth below by a
Royalty-Bearing Product for the relevant Development Project:




10









 








	 	 	 
	 	 	Payment for
	 	 	Royalty-Bearing
	Milestone Event:	 	Product
	 	 	[**]:
	(i) Filing of IND for first Royalty-Bearing Product

	 	$[**]
	 
	 	 
	(ii) Upon Completion of the first Phase IIa Clinical Trial

	 	$[**]
	 
	 	 
	(iii) Initiation (i.e., dosing of first patient) of the
first Phase III Clinical Trial

	 	$[**]
	 
	 	 
	(iv) Filing of NDA in U.S. for first Royalty-Bearing
Product

	 	$[**]
	 
	 	 
	(v) Regulatory Approval in U.S. for the first
Royalty-Bearing Product

	 	$[**]





The Opt-In Party will notify the other Parties within 15 days following achievement or occurrence
of a milestone event. Each milestone payment under this Section 5.4(c) will be payable only once
with respect to the first Royalty-Bearing Product under the relevant Development Project to achieve
the milestone event. If an event in clause (ii), (iii), (iv) or (v) occurs before an event in a
preceding clause (i), (ii) or (iii), the milestone payment described in such clause (i), (ii) or
(iii) will be paid when the milestone payment described in such clause (ii), (iii), (iv) or (v) is
paid.



Milestone payments will continue to be due for milestone events occurring after any grant by the
Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus IP or Licensed IP
licensed to the Opt-In Party under Section 5.6(a) with respect to the relevant Development Project.




          (d) Sublicense Income. Subject to Section 5.6(f), the Opt-In Party will pay to
Regulus a portion of the Sublicense Income received by the Opt-In Party or its Affiliates, in
accordance with the following table:




	 	 	 
	Sublicense agreement initially entered into	 	Percentage of
	during this timeframe:	 	Sublicense Income
	Prior to Completion of first Phase IIa Clinical Trial

	 	[**]%
	 
	 	 
	After Completion of first Phase IIa Clinical Trial,
but prior to completion of first Phase III Clinical
Trial

	 	[**]%
	 
	 	 
	After Completion of first Phase III Clinical Trial

	 	[**]%






11









 






     5.6 Other Terms Applicable to Opt-In Party.



          (a) License Grant.





	 	(i)	 	Regulus will, and hereby does, grant to the
Opt-In Party, subject to and limited by the Third Party Rights, a
worldwide, royalty-bearing, sublicenseable (in accordance with Section
2.5), (x) license under all Regulus IP, and (y) sublicense under all
Licensed IP (within the scope of the license granted to Regulus under
such Licensed IP pursuant to Sections 2.2(a) and 2.2(b)), solely for
purposes of Developing, Manufacturing and Commercializing the relevant
Development Project’s Development Compounds and Development
Therapeutics in the Field on the terms set forth in this Section 5.6.
Regulus shall comply with the provisions of Section 2.4 with respect to
the disclosure of information with respect to the relevant Third Party
Rights.
	 
	 	(ii)	 	Subject to Third Party Rights, the rights
granted under Section 5.6(a)(i) to the Opt-In Party will be exclusive,
to the fullest extent possible, under Regulus IP and under Licensed IP.
For the sake of clarity, this means that Regulus IP will be
exclusively licensed by Regulus to the Opt-In Party with respect to the
relevant Development Project, and Regulus’ rights under the Licensed IP
will be exclusively sublicensed by Regulus to the Opt-In Party with
respect to the relevant Development Project, but any non-exclusive
licenses grant by the relevant Licensor to Regulus with respect to
Licensed IP shall not be deemed to have been expanded to exclusive
licenses to Regulus.





          (b) Diligence. The Opt-In Party will use Commercially Reasonable Efforts to Develop,
Manufacture and Commercialize the relevant Development Compounds and Development Therapeutics, at
such Opt-In Party’s own expense, in the Field, either by itself or with or through its Affiliates
or Sublicensees.




          (c) Non-Compete. The non-Opt-In Party with respect to a Development Project will not,
itself or through its Affiliates or with Third Parties, Develop, Manufacture or Commercialize
Development Compounds or Development Therapeutics with respect to such Development Project during
the period (i) [**] of a Royalty-Bearing Product with respect to such Development Project anywhere
in the world as long as such Opt-In Party reasonably believes that a Development Therapeutic would
be a Royalty-Bearing Product upon first commercial sale, and (ii) [**] of a Royalty-Bearing Product
with respect to such Development Project anywhere in the world, until the expiration of [**] for
such Development Project; provided, however that each Party will be entitled to
grant Permitted Licenses.




          (d) Third Party and Inter-Licensor Payments. In addition to the royalties and
milestones payable under Section 5.4 or 5.5 above, the Opt-In Party will be responsible for all
milestones, royalties and other payments payable to Third Party Licensors and assumed under Section
2.4. The Parties will use reasonable efforts to [**]. In addition, the Opt-In Party will be



12









 






responsible for any other payments to the Third Parties in respect of the Development,
Manufacture and Commercialization of such Development Compounds and Development Therapeutics in the
Field. In addition, the Licensors agree that any amounts otherwise owed by one Licensor to another
pursuant to a Previous Agreement is hereby waived with respect to such Development Project.




          (e) No Longer a Development Project. If one, but not both, Licensors make an Opt-In
Election with respect to a Development Project, such Development Project will be permanently
removed from the Program/Project List.




          (f) Credit for Prepaid Amounts. The Parties agree that, with respect to any
Development Project, the relevant Opt-In Party should pay the greater of the cumulative Guaranteed
Payments and the cumulative Sublicense Income Payments as of the end of each calendar quarter, and,
because the timing of the Guaranteed Payments and the Sublicense Income Payments with respect to
any given Development Project may not align, the Parties agree that the relevant Opt-In Party will
not, with respect to any calendar quarter, be required to pay more than the amount necessary to
bring the cumulative payments made by such Opt-In Party with respect to such Development Project up
to the greater of the cumulative Guaranteed Payments and the cumulative Sublicense Income Payments
with respect to such calendar quarter. Therefore, with respect to any calendar quarter, the
relevant Opt-In Party shall pay the difference (if positive) between (i) the Cumulative Amount Owed
as of the end of such calendar quarter, minus (ii) the Cumulative Amount Owed (if any) as of the
end of the immediately prior calendar quarter. Several examples are provided in Schedule
5.6(f).





	 	(A)	 	“Cumulative Amount Owed” means, with
respect to a Development Project and a calendar quarter, the greater of
(1) the cumulative Guaranteed Payments as of the end of such calendar
quarter, and (2) the cumulative Sublicense Income Payments as of the
end of such calendar quarter.
	 
	 	(B)	 	“Guaranteed Payments” means, with
respect to a Development Project and a calendar quarter, (1) if High
Terms apply, the payments paid or payable pursuant to Sections 5.4(a)
and 5.4(c) with respect to such calendar quarter, and (2) if Low Terms
apply, the payments paid or payable pursuant to Section 5.5(a) and
5.5(c) with respect to such calendar quarter.





6. [Intentionally Deleted]




7. [Intentionally Deleted]




8. PAYMENT TERMS; REPORTS; RECORD-KEEPING AND AUDIT RIGHTS




     8.1 Reports and Payments. The Party paying any royalties, milestones or Sublicense
Income Payments hereunder (the “Paying Party”) to another Party (each, a “Payee
Party”) will deliver to such Payee Party(ies), within 15 days after the end of each calendar
quarter, a report with a reasonably detailed written accounting of Net Sales of Royalty-Bearing
Products that are subject to royalty payments due to the Payee Party(ies) for such calendar
quarter, milestones payable and Sublicense Income received or accrued during such period. Such
quarterly reports



13









 




will indicate gross sales on a country-by-country and Royalty-Bearing
Product-by-Royalty-Bearing Product basis, the deductions from gross sales used in calculating Net
Sales and the resulting calculation of the royalties due to the Payee Party(ies). Royalties or
other payments accrued for the period covered by each such quarterly report will be due and payable
45 days after the end of each relevant calendar quarter. All amounts in this Agreement are
expressed in U.S. Dollars and all payments due to the Payee Party(ies) hereunder will be paid in
U.S. Dollars. If any conversion of foreign currency to U.S. Dollars is required in connection with
any such payments, such conversion will be made by using the conversion rate existing in the United
States (as reported in The Wall Street Journal) on the last Business Day of the reporting period to
which such payments relate, or such other publication as the Parties agree.




     8.2 Tax Withholding. The Paying Party will use all reasonable and legal efforts to
reduce tax withholding with respect to payments to be made to the Payee Party(ies).
Notwithstanding such efforts, if the Paying Party concludes that tax withholdings are required with
respect to payments to the Payee Party(ies), the Paying Party will withhold the required amount and
pay it to the appropriate governmental authority. In any such case, the Paying Party will promptly
provide the Payee Party(ies) with original receipts or other evidence reasonably sufficient to
allow the Payee Party(ies) to document such tax withholdings for purposes of claiming foreign tax
credits and similar benefits.



     8.3 Late Payments. Any payments that are not made on or before the due date will bear
interest at the lesser of (a) 1.5% per month or (b) the maximum permissible rate under applicable
law, for the period from the date on which such payment was due through the date on which payment
is actually made.



     8.4 Financial Records. Unless otherwise required by the LLC Agreement, the Paying
Party will maintain, and will require its Affiliates and Sublicensees to maintain, for 3 years
after the relevant reporting period all financial records relating to the transactions and
activities contemplated by this Agreement in sufficient detail to verify compliance with the terms
of this Agreement.



     8.5 Audit Right. Once during each calendar year, each Payee Party may retain an
independent certified public accountant reasonably acceptable to the Paying Party to audit the
financial records described in Section 8.4, upon reasonable notice to the Paying Party, during
regular business hours and under an obligation of confidentiality to the Paying Party. Such Payee
Party will bear all of the costs of such audit, except as provided below. The results of such
audit will be made available to all Parties; provided, that, such results will be
deemed the Confidential Information of the Paying Party hereunder. If the audit demonstrates that
the payments owed under this Agreement have been understated, the Paying Party will pay the balance
to the Payee Party, together with interest in accordance with Section 8.3. Further, if the amount
of the understatement is greater than 5% of the amount owed to such Payee Party with respect to the
audited period, then the Paying Party will reimburse the Payee Party for the reasonable cost of the
audit. If the audit demonstrates that the payments owed under this Agreement have been overstated,
the Payee Party will refund to the Paying Party the amount of such overpayment. All payments owed
by the Paying Party or Payee Party under this Section 8.5 will be made within 30 days after the
results of the audit are delivered to the Parties unless the Paying Party is disputing in good
faith the results of the audit in which case the payment will be made within 30 days after
resolution of such dispute.




14












 





9. INTELLECTUAL PROPERTY




     9.1 Ownership.



          (a) As among the Parties, (i) all of Alnylam’s Licensed IP will be owned solely by Alnylam,
(ii) all of Isis’ Licensed IP will be owned solely by Isis, and (iii) subject to the Buy-Out
process, all Work Product, and the Intellectual Property therein, will be owned by Regulus, and
each Licensor hereby assigns, and will cause its Affiliates to assign, to Regulus all Work Product
and the Intellectual Property therein.



          (b) If Regulus enters into an agreement (other than the Services Agreement) with one of its
Affiliates, a Licensor, an Affiliate of a Licensor or a Third Party pursuant to which Regulus IP
could be developed, Regulus will use Commercially Reasonable Efforts to require such Person to
assign to Regulus all right, title and interest to Regulus IP developed by such Person, or
otherwise ensure that Regulus Controls all such Regulus IP.



     9.2 Prosecution and Maintenance of Patent Rights.



          (a) Regulus IP. As among the Parties, Regulus will have the sole right to file,
prosecute and maintain Patent Rights covering any Regulus IP, at Regulus’ own expense.



          (b) Licensor IP.




	 	(i)	 	As among the Parties, each Licensor will have
the initial right to file, prosecute and maintain such Licensor’s
Licensed Patent Rights. Such activities will be at such Licensor’s
expense.
	 
	 	(ii)	 	Subject to any Third Party Rights, in the event
that a Licensor declines to file, prosecute or maintain such Licensor’s
Licensed Patent Rights, elects to allow any such Patent Rights to
lapse, or elects to abandon any such Patent Rights before all appeals
within the respective patent office have been exhausted, then:






	 	(A)	 	Such Licensor will provide
Regulus with reasonable notice of its decision to decline to
file, prosecute or maintain any such Patent Rights or its
election to allow any such Patent Rights to lapse, or its
election to abandon any such Patent Rights, so as to permit
Regulus to decide whether to file, prosecute or maintain the
same, and to take any necessary action.
	 
	 	(B)	 	Regulus may assume control of the
filing, prosecution and/or maintenance of such Patent Rights in
the name of such Licensor, at Regulus’ expense.
	 
	 	(C)	 	Such Licensor will, at Regulus’
expense and reasonable request, assist and cooperate in the
filing, prosecution and maintenance of such Patent Rights.




15









 






	 	(D)	 	Regulus will provide such
Licensor, sufficiently in advance for such Licensor to comment,
with copies of all patent applications and other material
submissions and correspondence with any patent counsel or patent
authorities pertaining to such Patent Rights.
	 
	 	(E)	 	Regulus will give due
consideration to the comments of such Licensor, but will have
the final say in determining whether or not to incorporate such
comments.
	 
	 	(F)	 	Regulus and such Licensor will
promptly provide the other with copies of all material
correspondence received from any patent counsel or patent
authorities pertaining to such Patent Rights.





     9.3 Enforcement.




          (a) Competitive Infringement. Subject to any Third Party Rights, the terms of this
Section 9.3(a) will apply with respect to any actual or suspected infringement of a Licensor’s
Licensed Patent Rights or Regulus Patent Rights by a Third Party making, using or selling a
therapeutic product that contains or consists of (y) a miRNA Compound as an active ingredient [**]
or (z) if clause (y) does not apply, an oligonucleotide(s) that falls within the field of a
Party’s exclusive license under Section 2.3 of this Agreement. In the case of (z) above, the Party
with the exclusive license in the field where the infringing product most reasonably falls will be
considered the relevant Commercializing Party for purposes of this Section 9.3(a).




	 	(i)	 	Each Party will promptly report in writing to
the other Parties any such infringement of which it becomes aware,
including, without limitation, receipt of any certification received
under the United States Drug Price Competition and Patent Term
Restoration Act of 1984 (Pub. Law 98-471), as amended (the
“Hatch-Waxman Act”), claiming that any of the Licensed Patent
Rights or Regulus Patent Rights is invalid, unenforceable or that no
infringement will arise from the manufacture, use or sale of such
product (a “Paragraph IV Certification”).
	 
	 	(ii)	 	The relevant Commercializing Party will have
the initial right, at such Commercializing Party’s expense, to initiate
a legal action against such Third Party with respect to such
infringement of the Regulus Patent Rights and, if such Commercializing
Party is a Licensor, such Commercializing Party’s Licensed Patent
Rights. At the Commercializing Party’s reasonable request and expense,
the relevant Licensor(s) (if Regulus is the Commercializing Party) or
the other Licensor (if a Licensor is the Commercializing Party) will
use Commercially Reasonable Efforts to initiate a legal action against
such Third Party with respect to an infringement described in clause
(y) of this Section 9.3(a) of such other Licensor(s)’ Licensed Patent
Rights. Each other Party will join in any such




16









 






	 	 	 	action(s) as a party at the Commercializing Party’s request and at
the Commercializing Party’s expense in the event that an adverse
party asserts, the court rules or other Laws then applicable provide,
or the Commercializing Party determines in good faith, that a court
would lack jurisdiction based on such other Party’s absence as a
party in such suit. Each other Party may also at any time join in
the Commercializing Party’s action and may be represented by counsel
of its choice, at such Party’s expense; but in any event control of
such action will remain with the Commercializing Party. At the
Commercializing Party’s or enforcing Licensor’s reasonable request
and expense, the other Parties will provide reasonable assistance to
the Commercializing Party or enforcing Licensor, as the case may be,
in connection with any such action. Without the prior written
consent of the relevant other Party(ies), the Commercializing Party
or enforcing Licensor, as the case may be, will not enter into any
settlement admitting the invalidity of, impacting the scope or
interpretation of or otherwise impairing such other Party(ies)’
rights, as the case may be, in any such Patent Rights.
	 
	 	(iii)	 	Any recoveries resulting from an action
brought under Section 9.3(a)(ii) in connection with an infringement
described in clause (y) of Section 9.3(a) (whether undertaken by the
Commercializing Party or the enforcing Licensor) will be applied as
follows:






	 	(A)	 	First, to reimburse each Party
for all litigation costs in connection with such proceeding paid
by such Party (on a pro rata basis, based on each Party’s
respective litigation costs, to the extent the recovery was less
than all such litigation costs); and
	 
	 	(B)	 	The remainder of the recovery
will be retained by the Commercializing Party and [**].






Any recoveries resulting from an action brought under Section
9.3(a)(ii) in connection with an infringement described in clause (z)
of Section 9.3(a) will be retained by the Commercializing Party.




	 	(iv)	 	If the Commercializing Party does not, within 6
months of written notice from another Party or otherwise becoming aware
of such infringement (or within 30 days of the Commercializing Party’s
receipt of a Paragraph IV Certification), commence and reasonably
pursue a legal action to prevent such infringement with respect to the
Regulus Patent Rights, Regulus will be entitled, at its expense, to
commence the action in its name. Each Licensor will join in such
action as a party at Regulus’ request and expense in the event that an
adverse party asserts, the court rules or other Laws then




17









 






	 	 	 	applicable provide, or Regulus determines in good faith, that a court
would lack jurisdiction based on such Licensor’s absence as a party
in such suit, but control of such action will remain with Regulus.
Any recoveries resulting from such an action will be retained by
Regulus.





          (b) Non-Competitive Infringement.




	 	(i)	 	As among the Parties, except as provided in
Sections 9.3(a), Regulus will have the sole right to protect Regulus
Patent Rights from any actual or suspected infringement or
misappropriation, at Regulus’ own expense. Any recoveries resulting
from such an action will be retained by Regulus [**].
	 
	 	(ii)	 	As among the Parties, except as provided in
Section 9.3(a), each Licensor will have the sole right to protect such
Licensor’s Licensed Patent Rights from any actual or suspected
infringement or misappropriation. Such activities will be at such
Licensor’s expense. Any recoveries resulting from such an action will
be retained by such Licensor.





     9.4 Invalidity Claims. Subject to any Third Party Rights, if a Third Party at any
time asserts a claim that a Licensor’s Licensed IP or the Regulus IP is invalid or otherwise
unenforceable (an “Invalidity Claim”), whether as a defense in an infringement action
brought by a Party pursuant to Section 9.3 or in an action brought against a Party under Section
9.5, the general concepts of Section 9.3 will apply to such Invalidity Claim (i.e., each Party has
the right to defend its own intellectual property, except that the Commercializing Party will have
the initial right, to the extent provided in Section 9.3(a), to defend such Invalidity Claim, and
Regulus will have a step-in right, to the extent provided in Section 9.3(a), to defend such
Invalidity Claim).



     9.5 Claimed Infringement.



          (a) Regulus will promptly notify the Licensors of the receipt of any claim that the
Development or Manufacture of miRNA Compounds or miRNA Therapeutics or Commercialization of miRNA
Therapeutics infringes the Patent Rights or misappropriates Know-How of any Third Party or the
commencement of any action, suit or proceeding with respect thereto, enclosing a copy of the claim
and all papers served.



          (b) If a Party becomes aware that the Development or Manufacture of miRNA Compounds or miRNA
Therapeutics or the Commercialization of miRNA Therapeutics in the Field, by a Commercializing
Party, its Affiliates or Sublicensees, infringes or misappropriates, or is likely to or is alleged
to infringe or misappropriate, the Patent Rights or Know-How of any Third Party, such Party will
promptly notify intellectual property counsel to the other Parties, and such Commercializing Party
will have the sole right and responsibility to take any action it deems appropriate with respect
thereto; provided, however, that, to the extent that any action would
involve the enforcement of another Party’s Licensed IP or the Regulus IP (if the Commercializing
Party is a Licensor), or the defense of an Invalidity Claim with respect to such



18









 




other Party’s Licensed IP or the Regulus IP, the general concepts of Section 9.3 will apply to
the enforcement of such other Party’s Licensed IP or the Regulus IP or the defense of such
Invalidity Claim (i.e., each Party has the right to enforce its own intellectual property, except
that the relevant Commercializing Party will have the initial right, to the extent provided in
Section 9.3(a), to enforce such Licensed IP or Regulus IP or defend such Invalidity Claim, and
Regulus will have a step-in right, to the extent provided in Section 9.3(a), to enforce such Patent
Right or defend such Invalidity Claim).




     9.6 Additional Right. Notwithstanding any provision of Section 9, Isis will actively
participate in the planning and conduct of any enforcement of Regulus IP or Isis IP and will take
the lead of such enforcement to the extent that the scope or validity of any Licensed Patent Right
Controlled by Isis [**].


10. CONFIDENTIAL INFORMATION




     10.1 Permitted Disclosures. Each Party may make Permitted Disclosures of another
Party’s Confidential Information.



     10.2 Scientific Publications. No Party will publish, present or otherwise disclose to
the public the results of any Research Program or Development Project (“Research Results”),
except as specifically approved by the Collaboration Working Group or as provided in this Section
10.2 below or in Section 10.3. The Collaboration Working Group will agree upon the form and timing
of any publication or presentation or other disclosure (such as an abstract, manuscript or
presentation) to the public of the Research Results subject to the Collaboration Working Group’s
approval. For clarification, this Section 10.2 and Section 10.3 will not apply with respect to the
use and disclosure of another Party’s Confidential Information as specifically provided for in the
LLC Agreement or Section 10.1 of this Agreement or for disclosure of any Party’s own information to
comply with Law.



     10.3 Disclosures Regarding Royalty-Bearing Products. In addition, each
Commercializing Party may, without the Collaboration Working Group’s approval, make disclosures
pertaining solely to its Royalty-Bearing Products; provided, however, that, (i)
Regulus will immediately notify (and provide as much advance notice as possible to) the other
Parties of any event materially related to its Royalty-Bearing Products (including any regulatory
approval) so that the Parties may analyze the need to or desirability of publicly disclosing or
reporting such event and (ii) any press release or other similar public communication by any Party
related to efficacy or safety data and/or results of a Royalty-Bearing Product will be submitted to
the other Parties for review at least [**] Business Days (to the extent permitted by Law) in
advance of such proposed public disclosure, the other Parties shall have the right to expeditiously
review and recommend changes to such communication and the Party whose communication has been
reviewed shall in good faith consider any changes that are timely recommended by the reviewing
Parties. Notwithstanding the foregoing, in each case such right of review and recommendation shall
only apply for the first time that specific information is to be disclosed, and shall not apply to
the subsequent disclosure of information that (A) is substantially similar to a previously reviewed
disclosure and (B) in the context of the subsequent disclosure, does not carry a substantially
different qualitative message than that carried by the previously reviewed disclosure.



19









 





11. INDEMNIFICATION




     11.1 Indemnification by Regulus. Regulus agrees to defend each Licensor, the
Affiliates of each Licensor, and their respective agents, directors, officers and employees (the
“Licensor Indemnitees”), at Regulus’ cost and expense, and will indemnify and hold harmless
the Licensor Indemnitees from and against any and all losses, costs, damages, fees or expenses
(“Losses”) relating to or in connection with a Third Party claim arising out of (a) any
actual or alleged death, personal bodily injury or damage to real or tangible personal property
claimed to result, directly or indirectly, from the manufacture, storage, possession, use or
consumption of, treatment with or sale, any miRNA Compound or miRNA Therapeutic (other than as set
forth in Section 11.2(a) or in the LLC Agreement), regardless of the form in which any such claim
is made or whether actual negligence is found, (b) any actual or alleged infringement or
unauthorized use or misappropriation of any Patent Right or other intellectual property right of a
Third Party with respect to the activities of Regulus, its Affiliates or Sublicensees under this
Agreement or the Services Agreement, (c) breach by Regulus of its representations, warranties or
covenants made under this Agreement or the Services Agreement, or (d) any negligent act or omission
or willful misconduct of Regulus, its Affiliates or Sublicensees or any of their employees,
contractors or agents, in performing its obligations or exercising its rights under this Agreement
or the Services Agreement; provided, however, that, with respect to each Licensor
and its related Licensor Indemnitees, the foregoing indemnity will not apply to the extent that any
such Losses (i) are attributable to the gross negligence or willful misconduct of such Licensor or
its related Licensor Indemnitees, or (ii) are otherwise subject to an obligation by such Licensor
to indemnify the Superset Indemnitees under Section 11.2(a)-(d).



     11.2 Indemnification by Licensor(s). Each Licensor agrees to defend Regulus and its
Affiliates, and their respective agents, directors, officers and employees (the “Regulus
Indemnitees”) and the other Licensor, and its related Licensor Indemnitees (the Regulus
Indemnitees, such other Licensor and its related Licensor Indemnitees, collectively, the
“Superset Indemnitees”), at such Licensor’s cost and expense, and will indemnify and hold
harmless the Superset Indemnitees from and against any and all Losses, relating to or in connection
with a Third Party claim arising out of (a) any actual or alleged death, personal bodily injury or
damage to real or tangible personal property claimed to result, directly or indirectly, from the
manufacture, storage, possession, use or consumption of, treatment with or sale, any miRNA Compound
or miRNA Therapeutic Developed, Manufactured and/or Commercialized by such Licensor, its Affiliates
or Sublicensees pursuant to Section 5, regardless of the form in which any such claim is made or
whether actual negligence is found, (b) any actual or alleged infringement or unauthorized use or
misappropriation of any Patent Right or other intellectual property right of a Third Party with
respect to the activities of such Licensor, its Affiliates or Sublicensees under this Agreement or
the Services Agreement, (c) any breach by such Licensor of its representations, warranties or
covenants under this Agreement or the Services Agreement given to the other Party seeking
indemnification hereunder, or (d) any negligent act or omission or willful misconduct of such
Licensor or its Affiliates, or any of their employees, contractors or agents, in performing its
obligations or exercising its rights under this Agreement or the Services Agreement;
provided, however, that with respect to Regulus or the indemnified Licensor, and
the relevant Superset Indemnitees, the foregoing indemnity will not apply to the extent that any
such Losses (i) are attributable to the gross negligence or willful misconduct of such Party or its
Superset Indemnitees, or (ii) are otherwise subject to an obligation by such Party to indemnify the
Licensor Indemnitees under Section 11.1(a)-(d).



20









 





     11.3 Notification of Claims; Conditions to Indemnification Obligations. A Party
entitled to indemnification under this Section 11 will (a) promptly notify the indemnifying Party
as soon as it becomes aware of a claim or action for which indemnification may be sought pursuant
hereto, (b) cooperate with the indemnifying Party in the defense of such claim or suit, and (c)
permit the indemnifying Party to control the defense of such claim or suit, including without
limitation the right to select defense counsel; provided that if the Party entitled
to indemnification fails to promptly notify the indemnifying Party pursuant to the foregoing clause
(a), the indemnifying Party will only be relieved of its indemnification obligation to the extent
prejudiced by such failure. In no event, however, may the indemnifying Party compromise or settle
any claim or suit in a manner which admits fault or negligence on the part of the indemnified
Party, or which imposes obligations on the indemnified Party, other than financial obligations that
are covered by the indemnifying Party’s indemnification obligation, without the prior written
consent of the indemnified Party. The indemnifying Party will have no liability under this Section
11 with respect to claims or suits settled or compromised without its prior written consent and the
indemnified Party may not, without the prior written consent of the indemnifying Party, compromise
or settle any claim or suit in a manner which admits fault or negligence on the part of the
indemnifying Party, or which imposes obligations on the indemnified Party.



     11.4 Allocation. In the event a claim is based partially on an indemnified claim
under this Agreement or the LLC Agreement and partially on a non-indemnified claim or based
partially on a claim indemnified by one Party under this Agreement or the LLC Agreement and
partially on a claim indemnified by another Party(ies) under this Agreement or the LLC Agreement,
any payments in connection with such claims are to be apportioned between the Parties in accordance
with the degree of cause attributable to each Party.



12. INSURANCE




     12.1 Without limiting a Party’s undertaking to defend, indemnify, and hold the other Parties
harmless as set forth in Section 11, to the extent available on commercially reasonable terms each
Party will obtain and maintain a commercial general liability policy, including coverage for
commercial general liability claims and coverage for products liability claims, taking into account
the stage of development of the miRNA Compound or miRNA Therapeutic to which such Party has rights
under this Agreement, in amounts reasonably sufficient to protect against liability under Section
11. The foregoing coverage will continue during the term of this Agreement and for a period of 3
years thereafter. The Parties have the right to ascertain from time to time that such coverage
exists, such right to be exercised in a reasonable manner.



13. WARRANTIES




     13.1 Mutual Warranties. Each Party warrants that as of the Effective Date: (a) it is
a corporation (with respect to each Licensor) or a limited liability company (with respect to
Regulus) duly organized and in good standing under the laws of the jurisdiction of its
incorporation or organization, and it has full power and authority and the legal right to own and
operate its property and assets and to carry on its business as it is now being conducted and as it
is contemplated to be conducted under this Agreement and the Services Agreement; (b) it has the
full right, power and authority to enter into this Agreement and the Services Agreement and to
grant the rights and licenses granted by it under this Agreement and the Services Agreement; (c)



21









 




there are no existing or, to its knowledge, threatened actions, suits or claims pending with
respect to the subject matter hereof or its right to enter into and perform its obligations under
this Agreement and the Services Agreement; (d) it has taken all necessary action on its part to
authorize the execution and delivery of this Agreement and the Services Agreement and the
performance of its obligations under this Agreement and the Services Agreement; (e) this Agreement
and the Services Agreement have been duly executed and delivered on behalf of it, and each
constitutes a legal, valid, binding obligation, enforceable against it in accordance with the terms
hereof, subject to the general principles of equity and to bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors’ rights generally; (f) all necessary
consents, approvals and authorizations of all regulatory and governmental authorities and other
persons required to be obtained by it in connection with the execution and delivery of this
Agreement and the Services Agreement and the performance of its obligations under this Agreement
and the Services Agreement have been obtained; and (g) the execution and delivery of this Agreement
and the Services Agreement and the performance of its obligations under this Agreement and the
Services Agreement do not conflict with, or constitute a default under, any of its existing
contractual obligations.




     13.2 Additional Licensor Warranties.



          (a) Each Licensor warrants to Regulus that, as of the Effective Date, except as set forth on
Schedule 2.4(A) or in accordance with Section 2.4: (i) such Licensor has the right to
grant to Regulus the rights granted to Regulus under such Licensor’s Licensed IP hereunder; and
(ii) no written claim has been made against such Licensor alleging that such Licensor’s Licensed
Patent Rights are invalid or unenforceable.



          (b) Each Licensor further warrants to each other Party that such Licensor has prepared, or
will prepare, as applicable, its respective In-License Summary, Out-License Summary and
descriptions of Optional In-Licenses, in good faith and having used reasonable and diligent efforts
to disclose, in summary form, all material issues relating to the scope of the license granted to
Regulus and all material pass-through payment obligations. The Parties agree and acknowledge that
a Licensor shall be deemed to be in breach of the warranty in this Section 13.2(b) if such Licensor
knowingly omitted from, or knowingly misrepresented in, its In-License Summary, Out-License Summary
or Optional In-License description any material issues relating to the scope of the license granted
to Regulus or any material pass-through payment obligations. For the sake of clarity, the Parties
agree and acknowledge, by way of example and not limitation, that a Licensor shall not be deemed to
be in breach of the warranty in this Section 13.2(b) if its In-License Summary, Out-License Summary
or Optional In-License description is incorrect or misleading in light of facts, issues or
technology changes which occur or become known after the date such In-License Summary, Out-License
Summary or Optional In-License description is provided to the other Licensor.



          (c) Each Licensor further warrants to each other Party that such Licensor has set forth on
Schedule 2.2(A), in good faith and having used reasonable and diligent efforts to identify,
all Patent Rights Controlled by such Licensor on the Effective Date that (1) are reasonably
necessary or useful to the research, development and commercialization of miRNA Compounds or miRNA
Therapeutics as contemplated by the current Operating Plan and (2) claim (a) miRNA Compounds or
miRNA Therapeutics in general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or
delivery of miRNA Compounds or



22









 




miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly prevents
the production of the specific miRNA, or (e) methods of treating an Indication by modulating one or
more miRNAs; except, in each case for manufacturing technology (including but not limited
to analytical methods). In the event a Licensor is in breach of this warranty, the Parties will
work in good faith to amend Schedule 2.2(A) such that the Patent Right that is the subject
of the breach is including as a Licensed Patent Right under this Agreement.




     13.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS SECTION 13, NEITHER
PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR
PURPOSE, NONINFRINGEMENT, OR VALIDITY OF PATENT CLAIMS, WHETHER ISSUED OR PENDING.



14. LIMITATION OF LIABILITY




     14.1 UNLESS RESULTING FROM A PARTY’S WILLFUL MISCONDUCT OR FROM A PARTY’S WILLFUL BREACH OF
SECTION 10, NO PARTY HERETO WILL BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF
THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSS OF PROFITS, LOSS OF DATA, LOSS
OF REVENUE, OR LOSS OF USE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER
BASED UPON WARRANTY, CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 14 IS INTENDED TO LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER THIS AGREEMENT.



15. TERMINATION




     15.1 Term. This Agreement will become effective as of the Effective Date, and will
remain in effect until the earlier of (a) the termination of this Agreement in accordance with
Section 15.2, (b) the cessation of all Development of potential Royalty-Bearing Products prior to
the first commercial sale of a Royalty-Bearing Product anywhere in the world, or (c) following the
first commercial sale of a Royalty-Bearing Product anywhere in the world, the expiration of the
Royalty Terms for Royalty-Bearing Products on a country-by-country and a Royalty-Bearing
Product-by-Royalty-Bearing Product basis.



     15.2 Termination for Breach.



          (a) If Regulus breaches any material provision of this Agreement (including any representation
or warranty), and fails to remedy such breach within sixty (60) days after written notice from the
Licensors, acting jointly, then the Licensors, acting jointly, shall have the right, but not the
obligation, to initiate the Buy-Out. In such event, the Licensors will determine which Licensor
will be considered the “Initiating Member” (as defined in the LLC Agreement) for purposes of the
Buy-Out.



23









 





          (b) If an Opt-In Party breaches any material provision of this Agreement with respect to the
relevant Development Project, and fails to remedy such breach within 60 days after written notice
from Regulus, then Regulus will have the right, but not the obligation, to terminate such Opt-In
Party’s rights and licenses with respect to such Development Project and the breaching Opt-In Party
will promptly return to the aggrieved Party(ies) all related tangible Know-How and Confidential
Information of such aggrieved Party(ies).



          (c) Except as provided in Section 15.2(b), if a Licensor breaches any material provision of
this Agreement (including any representation or warranty), and fails to remedy such breach within
sixty (60) days after written notice from any other Party, then (i) if such other Party is a
Licensor, such Licensor may initiate the Buy-Out, (ii) if such other Party is Regulus, Regulus may
not terminate this Agreement, and (iii) whether such other Party is Regulus or a Licensor, such
other Party has the right to seek other legal or equitable remedies with respect to such breach.



          (d) Notwithstanding Section 15.2(b) or 15.2(c)(i), if a non-breaching Party gives the
allegedly-breaching Party a notice pursuant to this Section 15.2 of a material breach by such
alleged-breaching Party, and, as of the end of the cure period specified above, two or more Parties
are engaged in an arbitration pursuant to Section 16.7 in which such allegedly-breaching Party is
in good faith disputing the occurrence of the alleged material breach or the sufficiency of the
cure with respect thereto, then the non-breaching Parties may not (i) initiate the Buy-Out in the
case of Section 15.2(c)(i) or (ii) terminate the applicable license in the case of Section 15.2(b),
as a result of such breach unless and until the arbitrator issues an award that such breach
occurred (if that issue was in dispute) and/or that the cure was insufficient (if that issue was in
dispute), following which the breaching Party shall have 60 days to cure such breach (or unless and
until such allegedly-breaching Party is no longer disputing such issues in good faith, if earlier).



     15.3 Effects of Termination.



          (a) Any of Regulus’ direct Sublicensees may, by providing written notice to the Licensors
within the 60 day period immediately following termination of this Agreement with respect to
Regulus, in whole or in part, obtain from each Licensor a direct license from such Licensor, on the
same terms as the sublicense granted by Regulus to such Sublicensee with respect to such Licensor’s
Licensed IP, except to the extent that any such terms are inconsistent with the rights granted by
such Licensor to Regulus under this Agreement, in which case any terms in this Agreement which are
more protective of such Licensor’s rights will instead apply. If a Sublicensee provides such
notice, the Licensors will negotiate in good faith with such Sublicensee a written agreement to
reflect such terms; provided, that, (i) such Sublicensee is, at the time of termination of
this Agreement, in compliance with its sublicense agreement with Regulus, and (ii) such Sublicensee
cures any payment default of Regulus hereunder, with respect to any royalties or Sublicense Income
Payments due to the Licensors with respect to the sublicense granted by Regulus to such Sublicensee
hereunder.



     15.4 Survival. Upon termination of this Agreement, the following sections of this
Agreement will survive: Sections 2.1, 2.3, 8, 9.1(a), 9.3, 10, 11, 12, 14, 15.2, 15.3, 15.4 and 16,
and, to the extent related to Section 9.3, Sections 9.4, 9.5 and 9.6. In addition, if this
Agreement is terminated pursuant to a Buy-Out, then, with respect to each Development Project for
which



24









 




an Opt-In Party has obtained a license under Section 5.6 before the initiation of the Buy-Out,
the following sections of this Agreement will survive with respect to such Development Project:
Sections 5.4 or 5.5 (as applicable), and Section 5.6, unless and until terminated pursuant to
Section 15.2(b), subject to Section 15.2(d) (with Regulus’ role in such termination sections being
played by the other Member following the dissolution of Regulus). Upon any expiration of this
Agreement with respect to a Royalty-Bearing Product under Section 15.1(c), the license granted
under any Know-How that is part of the Licensed IP and/or Regulus IP to a Party with respect to
such Royalty-Bearing Product will become a fully paid-up and perpetual license to Manufacture,
import, use, sell or otherwise Commercialize such Royalty-Bearing Product.




16. MISCELLANEOUS




     16.1 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by a Party without the prior written consent of the other Parties, except
(a) Regulus shall assign both this Agreement and the Services Agreement to a Person that acquires,
by merger, sale of assets or otherwise, all or substantially all of the business of Regulus to
which the subject matter of this Agreement relates, (b) each Licensor shall assign both this
Agreement and the Services Agreement along with the Transfer (as defined in the LLC Agreement) of
such Licensor’s Membership Interest (as defined in the LLC Agreement), and (c) each Party may
assign or transfer its rights to receive royalties, milestones and Sublicense Income Payments under
this Agreement (but no liabilities) to a Third Party in connection with [**]. Notwithstanding the
foregoing, each Party will have the right to assign this Agreement, in whole or in part, to an
Affiliate of such Party without the prior written consent of the other Parties; provided
that such assignee assumes in writing all obligations of the assigning Party hereunder.
Any assignment not in accordance with the foregoing will be void. This Agreement will be binding
upon, and will inure to the benefit of, all permitted successors and assigns. Each Party agrees
that, notwithstanding any provisions of this Agreement to the contrary, (y) in the event that this
Agreement is assigned by a Party in connection with the sale or transfer of all or substantially
all of the business of such Party to which the subject matter of this Agreement relates, such
assignment will not provide the non-assigning Parties with rights or access to the Know-How or
Patent Rights of the acquirer of such assigning Party, and (z) in the event of a Change of Control
of a Party, the other Parties shall not acquire rights or access to the Know-How or Patent Rights
of the acquirer of such acquired Party.



     16.2 Force Majeure. No Party will be held liable or responsible to any other Party
nor be deemed to have defaulted under or breached this Agreement for failure or reasonable delay in
fulfilling or performing any term of this Agreement (except any obligation to pay upfront payments,
milestones, royalties or Sublicense Income Payments) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected Party, which may include, without
limitation, embargoes, acts of war (whether war be declared or not), insurrections, riots, civil
commotions, acts of terrorism, strikes, lockouts or other labor disturbances, or acts of God. The
affected Party will notify the other Parties of such force majeure circumstances as soon as
reasonably practical and will make every reasonable effort to mitigate the effects of such force
majeure circumstances.



     16.3 Section 365(n) of the Bankruptcy Code. All rights and licenses granted under or
pursuant to any section of this Agreement are and will otherwise be deemed to be for purposes of
Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the



25









 




“Bankruptcy Code”), licenses of rights to “intellectual property” as defined in
Section 101(35A) of the Bankruptcy Code. The Parties will retain and may fully exercise all of
their respective rights and elections under the Bankruptcy Code. The Parties agree that each
Party, as licensee of such rights under this Agreement, will retain and may fully exercise all of
its rights and elections under the Bankruptcy Code or any other provisions of Applicable Law
outside the United States that provide similar protection for ‘intellectual property.’ The Parties
further agree that, in the event of the commencement of a bankruptcy proceeding by or against a
Party under the U.S. Bankruptcy Code or analogous provisions of applicable Law outside the United
States, the Party that is not subject to such proceeding will be entitled to a complete duplicate
of (or complete access to, as appropriate) such intellectual property and all embodiments of such
intellectual property, which, if not already in the non subject Party’s possession, will be
promptly delivered to it upon the non subject Party’s written request thereof. Any agreements
supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes
of Section 365(n) of the Bankruptcy Code.




     16.4 Notices. Any notice required or provided for by the terms of this Agreement or
the Services Agreement shall be delivered in accordance with Section 13.9 of the LLC Agreement.



     16.5 Relationship of the Parties. It is expressly agreed that the Parties will be
independent contractors hereunder and that the relationship among the Parties under this Agreement
will not constitute a partnership, joint venture or agency. No Party will have the authority under
this Agreement to make any statements, representations or commitments of any kind, or to take any
action, which will be binding on any other Party, without the prior consent of such other Party.
This Agreement will be understood to be a joint research agreement to discover miRNA Compounds and
associated uses and to develop Royalty-Bearing Products in accordance with 35 U.S.C. § 103(c)(3).



     16.6 Governing Law. This Agreement will be governed and interpreted in accordance
with the substantive laws of the State of Delaware, excluding its conflicts of law rules;
provided that matters of intellectual property law concerning the existence,
validity, ownership, infringement or enforcement of intellectual property will be determined in
accordance with the national intellectual property laws relevant to the intellectual property in
question.



     16.7 Dispute Resolution. Except (a) for matters of intellectual property law
concerning the existence, validity, ownership, infringement or enforcement of intellectual
property, which matters will not be subject to the terms of this Section 16.7, and (b) as other
dispute resolution procedures are expressly provided herein, in the event of any dispute,
controversy or claim arising out of or relating to this Agreement, the Parties will try to settle
such dispute, controversy or claim amicably between themselves, including referring such dispute,
controversy or claim to the Executive Officers of the Parties. If the Parties are unable to so
settle such dispute, controversy or claim within a period of 60 days from the date of such
referral, then upon notice by any Party to the other Parties, any such dispute, controversy or
claim arising out of or relating to any provision of this Agreement, or the interpretation,
enforceability, performance, breach, termination or validity hereof, will be finally resolved under
the Commercial Arbitration Rules of the American Arbitration Association by a single arbitrator
appointed in accordance with such rules. The Parties will be entitled to the same discovery as
permitted under the U.S. Federal Rules of Civil Procedure; provided that the
arbitrator will be entitled in its discretion to grant a



26









 




request from a Party for expanded or more limited discovery. The place of arbitration will be
New York, New York. The language of the arbitration will be English. At any time, a Party may
seek or obtain preliminary, interim or conservatory measures from the arbitrators or from a court.




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



     16.9 Entire Agreement. This Agreement (including all schedules and exhibits hereto),
the LLC Agreement and the Services Agreement constitute the entire agreement among the Parties with
respect to the subject matter herein and supersedes all previous agreements (other than those
listed in Schedule A (the “Previous Agreements”)), whether written or oral, with
respect to such subject matter. Unless otherwise expressly indicated, references herein to
sections, subsections, paragraphs and the like are to such items within this Agreement. The
Parties acknowledge that this Agreement is being executed and delivered simultaneously with the
execution and delivery by the Parties and/or their Affiliates of the LLC Agreement and the Services
Agreement. For purposes of clarity, nothing in this Agreement (other than Section 5.6(d)) will be
deemed to modify or amend any provision of any of the Previous Agreements.



     16.10 Amendment and Waiver. This Agreement may not be amended, nor any rights
hereunder waived, except in a writing signed by the properly authorized representatives of each
Party.



     16.11 No Implied Waivers. The waiver by a Party of a breach or default of any
provision of this Agreement by any other Party will not be construed as a waiver of any succeeding
breach of the same or any other provision, nor will any delay or omission on the part of a Party to
exercise or avail itself of any right, power or privilege that it has or may have hereunder operate
as a waiver of any right, power or privilege by such Party.



     16.12 Export Compliance. The Parties acknowledge that the exportation from the United
States of materials, products and related technical data (and the re-export from elsewhere of
United States origin items) may be subject to compliance with United States export Laws, including,
without limitation, the United States Bureau of Export Administration’s Export Administration
Regulations, the Federal Food, Drug and Cosmetic Act and regulations of the FDA issued thereunder,
and the United States Department of State’s International Traffic and Arms Regulations which
restrict export, re-export, and release of materials, products and their related technical data,
and the direct products of such technical data. The Parties agree to comply with all exports Laws
and to commit no act that, directly or indirectly, would violate any United States Law, or any
other international treaty or agreement, relating to the export, re-export, or release of any
materials, products or their related technical data to which the United States adheres or with
which the United States complies.



27









 





     16.13 Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original, and all of which together will constitute one and the
same instrument.



[Remainder of Page Intentionally Left Blank]




28









 





     IN WITNESS WHEREOF, the Parties hereby execute this License Agreement as of the date first
written above.



	 	 	 	 	 
	 	ALNYLAM PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Barry Greene
 	 
	 	 	Name:  	Barry Greene 	 
	 	 	Title:  	Chief Operating Officer 	 
	 



	 	 	 	 	 
	 	ISIS PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ B. Lynne Parshall
 	 
	 	 	Name:  	B. Lynne Parshall 	 
	 	 	Title:  	EVP & CFO 	 
	 



	 	 	 	 	 
	 	REGULUS THERAPEUTICS LLC

 	 
	 	By:  	/s/ Philip T. Chase
 	 
	 	 	Name:  	Philip T. Chase 	 
	 	 	Title:  	Authorized Person 	 
	 




 











 





Exhibit 1




Defined Terms




     1.1 “Additional Rights” will have the meaning set forth in Section 2.4(d).




     1.2 “Affiliate” of an entity means any other entity that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with
such first entity. For purposes of this definition only, “control” (and, with correlative
meanings, the terms “controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct the management or policies of an entity, whether through the
ownership of voting securities or by contract relating to voting rights or corporate governance.
For purposes of this Agreement (a) Regulus will not be deemed to be an Affiliate of any Licensor
and (b) a Licensor and its Affiliates will not be considered an Affiliate of Regulus.



     1.3 “Agreement” will have the meaning set forth in the Preamble.



     1.4 “Alnylam” will have the meaning set forth in the Preamble.



     1.5 “Alnylam Field” will have the meaning set forth in Section 2.3(a).



     1.6 “Approved Mimic” will have the meaning set forth in Section 1.61.



     1.7 “Approved Precursor Antagonist” will have the meaning set forth in Section 1.61.



     1.8 “Bankruptcy Code” will have the meaning set forth in Section 16.3.



     1.9 “Business Day” means a day on which the banks in New York, New York are open for
business.



     1.10 “Buy-Out” will have the meaning set forth in the LLC Agreement.



     1.11 “Change of Control” means, with respect to a Licensor, the earlier of (x) the
public announcement of or (y) the closing of: (a) a merger, reorganization or consolidation
involving such Licensor in which its shareholders immediately prior to such transaction would hold
less than 50% of the securities or other ownership or voting interests representing the equity of
the surviving entity immediately after such merger, reorganization or consolidation, or (b) a sale
to a Third Party of all or substantially all of such Licensor’s assets or business relating to this
Agreement.



     1.12 “Collaboration Working Group” means a group having equal representation from
Isis, Alnylam and Regulus which will meet on a regular basis to share information about Know-How
and Patent Rights relevant to the joint venture and to conduct the business necessary under this
Agreement. Each Party will designate two Collaboration Working Group members within 30 days of the
Effective Date. At its first meeting, which will be within 60 days of Effective Date, the
Collaboration Working Group will create and adopt a Charter that will include meeting frequency and
other relevant items.



     1.13 “Combination Product” will have the meaning set forth in Section 1.67.



 









 





     1.14 “Commercialization” or “Commercialize” means any and all activities
directed to marketing, promoting, detailing, distributing, importing, having imported, exporting,
having exported, selling or offering to sell a miRNA Therapeutic following receipt of Regulatory
Approval for such miRNA Therapeutic.



     1.15 “Commercializing Party” means the Party Manufacturing, Developing or
Commercializing a miRNA Therapeutic under this Agreement pursuant to licenses granted under
Sections 2.2 or 5.6.



     1.16 “Commercially Reasonable Efforts” means, reasonable, diligent, good faith efforts
to accomplish an objective as such Party would normally use to accomplish a similar objective,
under similar circumstances exercising reasonable business judgment. With respect to the
Development, Manufacturing or Commercialization of a miRNA Therapeutic, such efforts will be
substantially equivalent to the efforts used by such Party with respect to other products at
similar stages in their development or product life and of similar market potential, taking into
account the profile of the miRNA Therapeutic, the competitive landscape and other relevant factors
commonly considered in similar circumstances. For all Parties the level of effort will be at least
that of a typical medium sized biopharmaceutical company.



     1.17 “Completion” means, with respect to any clinical trial, the locking of the
database pertaining to such clinical trial.



     1.18 “Confidential Information” will have the meaning set forth in the LLC Agreement.



     1.19 “Control” or “Controlled” means the possession of the right (whether by
ownership, license or otherwise) to assign, or grant a license, sublicense or other right as
provided for herein without violating the terms of any agreement or other arrangement with any
Third Party; provided, however, that neither Licensor will be deemed to Control
Regulus IP and no Party other than the relevant Licensor shall be deemed to Control such Licensor’s
Licensed IP.



     1.20 “Controlling Party” will have the meaning set forth in Section 2.4(d).



     1.21 “Cover”, “Covered” or “Covering” means, (a) with respect to a
patent, that, in the absence of a license granted to a Person under a Valid Claim included in such
patent, the practice by such Person of an invention claimed in such patent would infringe such
Valid Claim, or (b) with respect to a patent application, that, in the absence of a license granted
to a Person under a Valid Claim included in such patent application, the practice by such Person of
an invention claimed in such patent application would infringe such Valid Claim if it were to issue
as a patent.



     1.22 “Develop” or “Development” means, with respect to a miRNA Compound or
miRNA Therapeutic, any discovery, characterization, preclinical or clinical activity with respect
to such miRNA Compound or miRNA Therapeutic, including human clinical trials conducted after
Regulatory Approval of such miRNA Therapeutic to seek Regulatory Approval for additional
Indications for such miRNA Therapeutic.



2









 





     1.23 “Development Compound” means, with respect to a Development Project, any miRNA
Compound directed to the miRNA(s) which is the focus of such Development Project.



     1.24 “Development Project” will have the meaning set forth in Section 4.4.



     1.25 “Development Therapeutic” means, with respect to a Development Project, any miRNA
Therapeutic containing an miRNA Compound(s) directed to the miRNA(s) which is the focus of such
Development Project.



     1.26 “Disclosing Party” will have the meaning set forth in the LLC Agreement.



     1.27 “Effective Date” will have the meaning set forth in the Preamble.



     1.28 “Exclusivity Period” means, with respect to a Royalty-Bearing Product in a
country, that period of time beginning with the first commercial sale of such Royalty-Bearing
Product in such country and ending on the later to expire of (a) the time during which the
applicable Regulatory Authority in such country is not permitted to grant Regulatory Approval for a
generic equivalent of such Royalty-Bearing Product and (b):




	 	•	 	with respect to a Royalty-Bearing Product being Commercialized by Regulus, the
last Valid Claim of the Patent Rights licensed to Regulus pursuant to this
Agreement or the Regulus Patent Rights Covering (i) the Manufacture of such
Royalty-Bearing Product in such country or (ii) the use, sale or other
Commercialization of such Royalty-Bearing Product in such country; or
	 
	 	•	 	with respect to a Royalty-Bearing Product being Commercialized by a Licensor,
the last Valid Claim of the Patent Rights licensed to such Licensor pursuant to
this Agreement Covering (i) the Manufacture of such Royalty-Bearing Product in such
country or (ii) the use, sale or other Commercialization of such Royalty-Bearing
Product in such country.





     1.29 “Executive Officer” means, with respect to a Party, the Chief Executive Officer
of such Party (or the officer or employee of such Party then serving in a substantially equivalent
capacity) or his/her designee of substantially equivalent rank.



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



     1.31 “Field” means treatment and/or prophylaxis of any or all Indications.



     1.32 “GAAP” means United States Generally Accepted Accounting Principles, consistently
applied.



     1.33 “GLP” means the then-current good laboratory practice standards promulgated or
endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable foreign regulatory standards.



     1.34 “[**]” means a [**].



3









 





     1.35 “Hatch-Waxman Act” will have the meaning set forth in Section 9.3(a)(i)(A).



     1.36 “High Terms” will have the meaning set forth in Section 5.4.



     1.37 “In-License Agreement” will have the meaning set forth in Section 2.4(b).



     1.38 “In-License Summary” will have the meaning set forth in Section 2.4(b).



     1.39 “IND” means an Investigational New Drug Application or similar foreign
application or submission for approval to conduct human clinical investigations.



     1.40 “Indication” means any disease or condition, or sign or symptom of a disease or
condition, or symptom associated with a disease or syndrome.



     1.41 “Initial Opt-In Election Period” will have the meaning set forth in Section 5.3.



     1.42 “Intellectual Property” will have the meaning set forth in the LLC Agreement.



     1.43 “Invalidity Claim” will have the meaning set forth in Section 9.4.



     1.44 “Isis” will have the meaning set forth in the Preamble.



     1.45 “Isis Field” will have the meaning set forth in Section 2.3(b).



     1.46 “Know-How” means any information, inventions, trade secrets or technology
(excluding Patent Rights), whether or not proprietary or patentable and whether stored or
transmitted in oral, documentary, electronic or other form. Know-How includes ideas, concepts,
formulas, methods, procedures, designs, compositions, plans, documents, data, discoveries,
developments, techniques, protocols, specifications, works of authorship, biological materials, and
any information relating to research and development plans, experiments, results, compounds,
therapeutic leads, candidates and products, clinical and preclinical data, clinical trial results,
and Manufacturing information and plans.



     1.47 “Law” means any law, statute, rule, regulation, ordinance or other pronouncement
having the effect of law of any federal, national, multinational, state, provincial, county, city
or other political subdivision, domestic or foreign.



     1.48 “License Agreement” will have the meaning set forth in the Preamble.



     1.49 “Licensed IP” means, with respect to a Licensor, such Licensor’s Licensed
Know-How and Licensed Patent Rights.



     1.50 “Licensed Know-How” means, with respect to a Licensor, all Know-How Controlled by
such Licensor on the Effective Date or during the term of this Agreement (except as otherwise
expressly provided herein) that relates to (a) miRNA Compounds or miRNA Therapeutics in general,
(b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or
miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly prevents the
production of a specific miRNA, or (e)



4









 




methods of treating an Indication by modulating one or more miRNAs; provided,
however, that in each case, (i) for any such Know-How that include financial or other
obligations to a Third Party, the provisions of Section 2.4 will govern whether such Know-How will
be included as Licensed Know-How and (ii) Licensed Know How does not include manufacturing
technology (including but not limited to analytical methods).




     1.51 “Licensed Patent Rights” means, with respect to a Licensor, (A) all Patent Rights
Controlled by such Licensor on the Effective Date and listed on Schedule 2.2(A), and (B)
all Patent Rights Controlled by such Licensor during the term of this Agreement (except as
otherwise expressly provided herein) that claim (a) miRNA Compounds or miRNA Therapeutics in
general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or delivery of miRNA
Compounds or miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly
prevents the production of the specific miRNA, or (e) methods of treating an Indication by
modulating one or more miRNAs; provided, however, that in each case, (i) for any
such Patent Rights that include financial or other obligations to a Third Party, the provisions of
Section 2.4 will govern whether such Patent Right will be included as a Licensed Patent Right and
(ii) Licensed Patent Rights do not include manufacturing technology (including but not limited to
analytical methods).



     1.52 “Licensor” will have the meaning set forth in the Preamble.



     1.53 “Licensor Indemnitees” will have the meaning set forth in Section 11.1.



     1.54 “LLC Agreement” means the Limited Liability Company Agreement of Regulus among
the Parties, dated as of the Effective Date, as the same may be amended from time to time after the
Effective Date.



     1.55 “Losses” will have the meaning set forth in Section 11.1.



     1.56 “Low Terms” will have the meaning set forth in Section 5.5.



     1.57 “Major Country” means France, Germany, Italy, Spain and the United Kingdom.



     1.58 “Manufacture” or “Manufacturing” means any activity involved in or
relating to the manufacturing, quality control testing (including in-process, release and stability
testing), releasing or packaging, for pre-clinical, clinical or commercial purposes, of a miRNA
Compound or a miRNA Therapeutic.



     1.59 “miRNA” means a structurally defined functional RNA molecule usually between 21
and 25 nucleotides in length, which is derived from genetically-encoded non-coding RNA which is
predicted to be processed into a hairpin RNA structure that is a substrate for the double-stranded
RNA-specific ribonuclease Drosha and subsequently is predicted to serve as a substrate for the
enzyme Dicer, a member of the RNase III enzyme family; including, without limitation, those miRNAs
exemplified in miRBase (http://microrna.sanger.ac.uk/). To the extent that [**] for purposes of
this Agreement; provided, however, that nothing contained herein shall require any
Party hereto to [**].



5









 





     1.60 “miRNA Antagonist” means a single-stranded oligonucleotide (or a single stranded
analog thereof) that is designed to interfere with or inhibit a particular miRNA. For purposes of
clarity, the definition of “miRNA Antagonist” is not intended to include oligonucleotides that
function predominantly through the RNAi mechanism of action or the RNase H mechanism of action.



     1.61 “miRNA Compound” means a compound consisting of (a) a miRNA Antagonist, (b) to
the extent listed in Schedule 1.61 or otherwise agreed upon by Regulus and the relevant
Licensor(s) pursuant to Section 2.2(b), a miRNA Precursor Antagonist (an “Approved Precursor
Antagonist”), or (c) to the extent agreed upon by Regulus and the relevant Licensor(s) pursuant
to Section 2.2(b), a miRNA Mimic (an “Approved Mimic”).



     1.62 “miRNA Mimic” means a double-stranded or single-stranded oligonucleotide or
analog thereof with a substantially similar base composition as a particular miRNA and which is
designed to mimic the activity of such miRNA.



     1.63 “miRNA Precursor” means a transcript that originates from a genomic DNA and that
contains, but not necessarily exclusively, a non-coding, structured RNA comprising one or more
mature miRNA sequences, including, without limitation, (a) polycistronic transcripts comprising
more than one miRNA sequence, (b) miRNA clusters comprising more than one miRNA sequence, (c)
pri-miRNAs, and/or (d) pre-miRNAs.



     1.64 “miRNA Precursor Antagonist” means a single-stranded oligonucleotide (or a single
stranded analog thereof) that is designed to bind to a miRNA Precursor to prevent the production of
one or more miRNAs. For purposes of clarity, the definition of “miRNA Precursor Antagonist” is not
intended to include oligonucleotides that function predominantly through the RNAi mechanism of
action or the RNase H mechanism of action.



     1.65 “miRNA Therapeutic” means a therapeutic product having one or more miRNA
Compounds as an active ingredient(s).



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



     1.67 “Net Sales” means, with respect to a Royalty-Bearing Product, the gross invoice
price of all units of such Royalty-Bearing Products sold by the relevant Commercializing Party, its
Affiliates and/or their direct Sublicensees to any Third Party, less the following items: (a)
trade discounts, credits or allowances, (b) credits or allowances additionally granted upon
returns, rejections or recalls, (c) freight, shipping and insurance charges, (d) taxes, duties or
other governmental tariffs (other than income taxes), (e) government-mandated rebates, and (f) a
reasonable reserve for bad debts. “Net Sales” under the following circumstances will mean the fair
market value of such Royalty-Bearing Product: (i) Royalty-Bearing Products which are used by such
Commercializing Party, its Affiliates or direct Sublicensees for any commercial purpose without
charge or provision of invoice, (ii) Royalty-Bearing Products which are sold or disposed of in
whole or in part for non cash consideration, or (iii) Royalty-Bearing Products which are provided
to a Third Party by such Commercializing Party, its Affiliates or direct Sublicensees



6









 




without charge or provision of invoice and used by such Third Party except in the cases of
Royalty-Bearing Products used to conduct clinical trials, reasonable amounts of Royalty-Bearing
Products used as marketing samples and Royalty-Bearing Product provided without charge for
compassionate or similar uses.



Net Sales will not include any transfer between or among a Party and any of its Affiliates or
direct Sublicensees for resale.



In the event a Royalty-Bearing Product is sold as part of a Combination Product (as defined below),
the Net Sales from the Combination Product, for the purposes of determining royalty payments, will
be determined by multiplying the Net Sales (as determined without reference to this paragraph) of
the Combination Product, by the fraction, A/A+B, where A is the average sale price of the
Royalty-Bearing Product when sold separately in finished form and B is the average sale price of
the other therapeutically active pharmaceutical compound(s) included in the Combination Product
when sold separately in finished form, each during the applicable royalty period or, if sales of
all compounds did not occur in such period, then in the most recent royalty reporting period in
which sales of all occurred. In the event that such average sale price cannot be determined for
both the Royalty-Bearing Product and all other therapeutically active pharmaceutical compounds
included in the Combination Product, Net Sales for the purposes of determining royalty payments
will be calculated as above, but the average sales price in the above equation will be replaced by
a good faith estimate of the fair market value of the compound(s) for which no such price exists.
As used above, the term “Combination Product” means any pharmaceutical product which
consists of a Royalty-Bearing Product and other therapeutically active pharmaceutical compound(s).




     1.68 “Non-Controlling Party” will have the meaning set forth in Section 2.4(d).



     1.69 “[**]” means [**].



     1.70 “[**]” means the [**].



     1.71 “Operating Plan” has the meaning ascribed to it in the LLC Agreement.



     1.72 “Opt-In Election” will have the meaning set forth in Section 5.3.



     1.73 “Opt-In Party” will have the meaning set forth in Section 5.3(a) and 5.3(c).



     1.74 “Opt-In Product” means any miRNA Therapeutic that is Developed, Manufactured or
Commercialized pursuant to a Development Project for which one and only one Licensor has exercised
an Opt-In Election and which the relevant Opt-In Party subsequently licensed.



     1.75 “Optional In-License” will have the meaning set forth in Section 2.4(c).



     1.76 “Out-License Agreement” will have the meaning set forth in Section 2.4(a).



     1.77 “Out-License Summary” will have the meaning set forth in Section 2.4(a).



7









 





     1.78 “Paragraph IV Certification” will have the meaning set forth in Section
9.3(a)(i)(A).



     1.79 “Party” means Alnylam, Isis and/or Regulus; “Parties” means Alnylam, Isis
and Regulus, or any combination thereof.



     1.80 “Patent Rights” means (a) patent applications (including provisional applications
and for certificates of invention); (b) any patents issuing from such patent applications
(including certificates of invention); (c) all patents and patent applications based on,
corresponding to, or claiming the priority date(s) of any of the foregoing; and (d) any
substitutions, extensions (including supplemental protection certificates), registrations,
confirmations, reissues, divisionals, continuations, continuations-in-part, re-examinations,
renewals and foreign counterparts thereof.



     1.81 “Payee Party” will have the meaning set forth in Section 8.1.



     1.82 “Paying Party” will have the meaning set forth in Section 8.1.



     1.83 “Permitted Disclosures”. The following are Permitted Disclosures:




          (a) To the extent that a Recipient has been granted the right to sublicense under the terms
of this Agreement, such Party will have the right to provide a Disclosing Party’s Confidential
Information to the employees, consultants and advisors of such Recipient’s Affiliate and Third
Party sublicensees and potential sublicensees who have a need to know the Confidential
Information for purposes of exercising such sublicense and are bound by an obligation to
maintain in confidence the Confidential Information of the Disclosing Party; provided,
that such Persons are bound to maintain the confidentiality of such information to the same
extent as if they were parties hereto.




          (b) Each Recipient will have the right to provide a Disclosing Party’s Confidential
Information:




	 	(i)	 	to governmental or other regulatory agencies in
order to seek or obtain patents, to seek or obtain approval to conduct
clinical trials, or to gain Regulatory Approval, as contemplated by
this Agreement; provided that such disclosure may be
made only to the extent reasonably necessary to seek or obtain such
patents or approvals; and
	 
	 	(ii)	 	as necessary, if embodied in products, to
develop and commercialize such products as contemplated by this
Agreement.





     1.84 “Permitted License” means a license granted by a Licensor to a Third Party to
enable such Third Party to broadly manufacture or formulate oligonucleotides, where such Third
Party is primarily engaged in [**] and is not engaged in [**]; provided, however, that any such license will
not grant rights to research, manufacture or formulate miRNA Compounds or miRNA Therapeutics for
which the other Licensor has obtained or later obtains a license pursuant to Section 5 or pursuant
to the Buy-Out process in the LLC Agreement.



8









 





     1.85 “Person” means any corporation, limited or general partnership, limited liability
company, joint venture, trust, unincorporated association, governmental body, authority, bureau or
agency, any other entity or body, or an individual.



     1.86 “Phase IIa Clinical Trial” means, with respect to a Royalty-Bearing Product, any
human clinical trial conducted in patients with a particular Indication for the purpose of studying
the pharmacokinetic or pharmacodynamic properties and preliminary assessment of safety and efficacy
of such Royalty-Bearing Product over a measured dose response, as described in 21 C.F.R. §312.21(b)
or its foreign counterpart.



     1.87 “Phase III Clinical Trial” means, with respect to a Royalty-Bearing Product, a
controlled pivotal clinical study of such Royalty-Bearing Product that is prospectively designed to
demonstrate statistically whether such Royalty-Bearing Product is safe and effective to treat a
particular Indication in a manner sufficient to obtain Regulatory Approval to market such
Royalty-Bearing Product, as described in 21 CFR 312.21(c) or its foreign counterpart.



     1.88 “Previous Agreements” will have the meaning set forth in Section 16.9.



     1.89 “Program/Project List” will have the meaning set forth in Section 4.4.



     1.90 “Recipient” will have the meaning set forth in the LLC Agreement.



     1.91 “Regulatory Approval” means the act of a Regulatory Authority necessary for the
marketing and sale (including, if required for marketing and sales, pricing) of such product in a
country or regulatory jurisdiction, including, without limitation, the approval of an NDA by the
FDA.



     1.92 “Regulatory Authority” means any applicable government regulatory authority
involved in granting approvals for the marketing and/or pricing of a product in a country or
regulatory jurisdiction including, without limitation, the FDA.



     1.93 “Regulus” will have the meaning set forth in the Preamble.



     1.94 “Regulus Indemnitees” will have the meaning set forth in Section 11.2.



     1.95 “Regulus IP” means all Regulus Know-How and Regulus Patent Rights.



     1.96 “Regulus Know-How” means all Know-How conceived and/or developed by or on behalf
of Regulus (including by employees of a Licensor or its Affiliates in performance of the Services
Agreement), or over which Regulus otherwise acquires Control, including but not limited to any
Know-How assigned to Regulus by a Licensor under Section 9.1, but specifically excluding Licensed
IP.



     1.97 “Regulus Patent Rights” means any Patent Right claiming an invention conceived
and/or developed by or on behalf of Regulus (including by employees of a Licensor or its Affiliates
in performance of the Services Agreement), or over which Regulus otherwise acquires Control,
including but not limited to any Patent Right assigned to Regulus by a Licensor under Sections 2.1
or 9.1, but specifically excluding Licensed IP.



9









 





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



     1.99 “Research Program” will have the meaning set forth in Section 4.4.



     1.100 “Royalty-Bearing Product” means




	 	(a)	 	a miRNA Therapeutic being Developed, Manufactured or
Commercialized by Regulus that, on a country-by-country basis, is, or Regulus
reasonably believes will be, at the time of first commercial sale of such miRNA
Therapeutic, Covered in such country by a Valid Claim of a Patent Right or
covered by Know-How of (i) a Licensed Patent Right licensed to it hereunder, or
(ii) any Regulus IP (except any Regulus IP solely in-licensed or acquired by
Regulus from a Third Party); or
	 
	 	(b)	 	an Opt-In Product that, on a country-by-country basis, is, or
the relevant Opt-In Party reasonably believes will be, at the time of first
commercial sale of such Opt-In Product, Covered in such country by a Valid
Claim of a Patent Right or covered by Know-How, which Patent Right or Know-How
is licensed to the applicable Opt-In Party hereunder.





     1.101 “Royalty Term” means, with respect to each Royalty-Bearing Product in a country,
the period commencing upon first commercial sale of such Royalty-Bearing Product in such country
and ending upon the later of (a) the expiration of the Exclusivity Period, or (b) 10 years
following first commercial sale of such Royalty-Bearing Product.



     1.102 “Second Opt-In Election Period” will have the meaning set forth in Section
5.3(c)(i).



     1.103 “Services Agreement” means that certain Services Agreement by and between
Regulus, Alnylam and Isis dated the Effective Date, as the same may be amended from time to time
after the Effective Date.



     1.104 “Sublicense Income” means all amounts received by the Opt-In Party or its
Affiliates with respect to any sublicense granted to a Third Party by the Opt-In Party or its
Affiliates of the Regulus IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a),
including, without limitation, upfront payments and milestones, but excluding:



               (a) amounts received by the Opt-In Party or its Affiliates as payments for actual direct costs
for performing future Development, Manufacturing or Commercialization activities undertaken by the
Opt-In Party or its Affiliates for, or in collaboration with, such Sublicensee or its Affiliates
with respect to the relevant Opt-In Products;




               (b) amounts received by the Opt-In Party and/or its Affiliates from such Sublicensee or its
Affiliates as the purchase price for the Opt-In Party’s or any of its Affiliates’





10









 







debt or equity securities, except that amounts which exceed the fair market value of such debt
or equity securities will be considered Sublicense Income;




          (c) royalties paid by such Sublicensee or its Affiliates with respect to Net Sales of
Royalty-Bearing Products; and




          (d) amounts paid by such Sublicensee or its Affiliates to the Opt-In Party or its Affiliates
to purchase Royalty-Bearing Products; except that any amount greater than the actual cost of goods
(with no profit added) of such Royalty-Bearing Products, determined in accordance with GAAP, will
be considered Sublicense Income.




     1.105 “Sublicense Income Payments” means, with respect to a Development Project and a
calendar quarter, the Sublicense Income received by the relevant Opt-In Party or its Affiliates in
such calendar quarter with respect to such Development Project, multiplied by the relevant
percentage determined pursuant to Section 5.4(d) or 5.5(d), as applicable.



     1.106 “Sublicensee” means a Third Party to whom a Party, or its Affiliates or
Sublicensees, has granted a sublicense in accordance with the terms of this Agreement.



     1.107 “Superset Indemnitees” will have the meaning set forth in Section 11.2.



     1.108 “Third Party” means any Person other than the Parties or any of their
Affiliates.



     1.109 “Third Party Agreement” means either (i) an out-license agreement described in
the Out-License Summary, (ii) an In-License Agreement described on the In-License Summary, (iii) an
Optional In-License or (iv) an agreement pursuant to which a Controlling Party obtained Control
over an Additional Right.



     1.110 “Third Party Rights” means, with respect to a Party, any rights of, and any
limitations, restrictions or obligations imposed by, Third Parties pursuant to Third Party
Agreements.



     1.111 “Valid Claim” means a claim (a) of any issued, unexpired patent that has not
been revoked or held unenforceable or invalid by a decision of a court or governmental agency of
competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not
taken within the time allowed for appeal, and that has not been disclaimed or admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise; or (b) of any patent application
that has not been cancelled, withdrawn or abandoned, or been pending for more than [**] years.



     1.112 “Work Product” means any data, documentation, inventions and other Know-How
arising from or made in the performance of the Services (as defined in the Services Agreement) by a
Licensor.



11









 





SCHEDULE A




Previous Agreements



Strategic Collaboration & License Agreement between Isis Pharmaceuticals, Inc. and Alnylam
Pharmaceuticals, Inc., dated March 11, 2004, as supplemented or amended by letter agreements dated
March 9, 2004 (as amended by letter agreement dated October 28, 2005), March 11, 2004, and June 10,
2005



License Agreement between Max Plank Innovation GmbH (formerly Garching Innovation GmbH), Isis
Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc., dated October 18, 2004



Co-Exclusive License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc., dated August 31, 2005





 









 








Schedule 1.61




Initial miRNA Precursor Antagonists




[**]





 












 





Schedule 2.1(A)

Patents and License Agreements Assigned to Regulus by Isis




Isis Patent Applications to be Assigned to Regulus




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IsisDocket	 	 	 	 	 	 	 	 	 	Filing	 	Priority	 	 
	Number	 	Country	 	Serial Number	 	Date	 	Date	 	Title
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	[**]
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 






Isis License Agreements to be Assigned to Regulus




[**]




	 	 	 	 	 
	[**]
	 	 	[**]	 
	[**]
	 	 	[**]	 
	[**]
	 	 	[**]	 
	[**]
	 	 	[**]	 
	[**]
	 	 	[**]	 






 









 






Schedule 2.1(B)

Patents and License Agreements Assigned to Regulus by Alnylam




Alnylam Patent Applications to be Assigned to Regulus




	 	 	 	 	 	 	 	 	 	 	 
	CaseNumber	 	InvTitle	 	Country	 	CaseType	 	AppNumber	 	FilDate
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 

	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 

	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]






Alnylam License Agreements to be Assigned to Regulus



License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc. effective
August 15, 2005




[summary is attached as Exhibit 2]





2









 








Schedule 2.2(A)

Patents and Patent Applications Licensed to Regulus by Isis on the Effective Date




	 	 	 	 	 	 	 	 	 	 	 	 	 
	Isis Docket
	 	 	 	Serial
	 	 	 	Priority
	 	 	 	Patent
	Number
	 	Country
	 	Number
	 	Filing Date
	 	Date
	 	Title
	 	Number
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 





Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions.




[**]



A total of 54 pages have been omitted pursuant to a request for confidential treatment.




 









 








Patents and Patent Applications Licensed to Regulus by Alnylam on the Effective Date




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CaseNumber
	 	InvTitle
	 	Co.
	 	AppNumber
	 	FilDate
	 	PubNumber
	 	PubDate
	 	PatNumber
	 	IssDate
	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 





Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions.




[**]




A total of 6 pages have been omitted pursuant to a request for confidential treatment.




2









 








Schedule 2.4(A)

Part 1

Isis’ Existing Out-License Agreements



This Appendix 2.4(A) contains a list and summary of certain agreements in effect as of the
Effective Date between Isis and certain Third Parties that may, as applicable, place certain
encumberances or limitations on the licenses or sublicenses granted to Regulus and the
representations and warranties, where specified in the Agreement. Copies of the listed agreements
will be provided at Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.



As set forth in the Agreement, the information and disclosures contained in this Appendix are
intended only to qualify and limit the licenses granted by Isis to Regulus, the exclusivity
covenants, and the representations and warranties given by Isis under the Agreement and do not
expand in any way the scope or effect of any such licenses, representations or warranties.



Nothing herein constitutes an admission of any liability or obligation of Isis nor an admission
against any interest of Isis. The inclusion of this Appendix or the information contained in this
Appendix does not indicate that Isis has determined that this Appendix or the information contained
in this Appendix when considered individually or in the aggregate, is necessarily material to Isis.



Regulus acknowledges that certain information contained in this Appendix may constitute material
Confidential Information relating to Isis which may not be used for any other purpose other than
that contemplated by the Agreement.



Capitalized terms used herein below, but not otherwise defined herein below, have the meanings
given to such terms in the applicable agreement listed below, unless it is clear from the context
that the term has the meaning set forth in the Agreement.




[**].




Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions.



A total of 2 pages have been omitted pursuant to a request for confidential treatment.




3









 








Schedule 2.4(A)

Part 2

Alnylam’s Existing Out-License Agreements



License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation (formerly INEX
Pharmaceuticals Corporation) and Alnylam, dated January 8, 2007



License and Collaboration Agreement dated July 8, 2007, by and among Alnylam Pharmaceuticals, Inc.,
F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., effective on August 9, 2007



Research Collaboration and License Agreement between Novartis Institutes for BioMedical Research,
Inc. and Alnylam Pharmaceuticals, Inc., effective October 12, 2005, as amended by the Addendum Re:
Influenza Program effective as of December 13, 2005, Amendment No. 1 to such Addendum effective as
of March 14, 2006, and Amendment No. 2 to such Addendum effective as of May 5, 2006




[summaries are attached as Exhibit 2]




4









 





Schedule 2.4(B)

Part 1

Isis’ Existing In-License Agreements



This Appendix 2.4(B) contains a list and summary of certain agreements in effect as of the
Effective Date between Isis and certain Third Parties that may, as applicable, place certain
encumberances or limitations on the licenses or sublicenses granted to Regulus and the
representations and warranties, where specified in the Agreement. Copies of the listed agreements
will be provided at Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.



As set forth in the Agreement, the information and disclosures contained in this Appendix are
intended only to qualify and limit the licenses granted by Isis to Regulus, the exclusivity
covenants, and the representations and warranties given by Isis under the Agreement and do not
expand in any way the scope or effect of any such licenses, representations or warranties.



Nothing herein constitutes an admission of any liability or obligation of Isis nor an admission
against any interest of Isis. The inclusion of this Appendix or the information contained in this
Appendix does not indicate that Isis has determined that this Appendix or the information contained
in this Appendix when considered individually or in the aggregate, is necessarily material to Isis.



Regulus acknowledges that certain information contained in this Appendix may constitute material
Confidential Information relating to Isis which may not be used for any other purpose other than
that contemplated by the Agreement.



Capitalized terms used herein below, but not otherwise defined herein below, have the meanings
given to such terms in the applicable agreement listed below, unless it is clear from the context
that the term has the meaning set forth in the Agreement.




[**].




Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions.



A total of 4 pages have been omitted pursuant to a request for confidential treatment.




 









 








Schedule 2.4(B)

Part 2

Alnylam’s Existing In-License Agreements



License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc. effective
May 8, 2006 (the “Tuschl Agreement”)



Co-Exclusive License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc. effective August 31, 2005



License Agreement among Garching Innovation GmbH, Alnylam Pharmaceuticals, Inc. and Isis
Pharmaceuticals, Inc. effective October 18, 2004




[summaries are attached as Exhibit 2]




2









 





Schedule 2.4(C)

Part 1

Isis’ Optional In-Licenses 



This Appendix 2.4(C) contains a list and summary of certain agreements in effect as of the
Effective Date between Isis and certain Third Parties that may, as applicable, place certain
encumberances or limitations on the licenses or sublicenses granted to Regulus and the
representations and warranties, where specified in the Agreement. Copies of the listed agreements
will be provided at Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.



As set forth in the Agreement, the information and disclosures contained in this Appendix are
intended only to qualify and limit the licenses granted by Isis to Regulus, the exclusivity
covenants, and the representations and warranties given by Isis under the Agreement and do not
expand in any way the scope or effect of any such licenses, representations or warranties.



Nothing herein constitutes an admission of any liability or obligation of Isis nor an admission
against any interest of Isis. The inclusion of this Appendix or the information contained in this
Appendix does not indicate that Isis has determined that this Appendix or the information contained
in this Appendix when considered individually or in the aggregate, is necessarily material to Isis.



Regulus acknowledges that certain information contained in this Appendix may constitute material
Confidential Information relating to Isis which may not be used for any other purpose other than
that contemplated by the Agreement.



Capitalized terms used herein below, but not otherwise defined herein below, have the meanings
given to such terms in the applicable agreement listed below, unless it is clear from the context
that the term has the meaning set forth in the Agreement.




[**].




Confidential Materials omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions.




[**]



A total of 3 pages have been omitted pursuant to a request for confidential treatment.




 









 








Schedule 2.4(C)

Part 2

Alnylam’s Optional In-Licenses



Amended and Restated Exclusive Patent License Agreement between Massachusetts Institute of
Technology (“MIT”) and Alnylam, dated May 9, 2007



License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation (formerly INEX
Pharmaceuticals Corporation) (“Tekmira”) and Alnylam, dated January 8, 2007



The Sublicense Agreement between Tekmira and Alnylam, dated January 8, 2007




[summaries are attached as Exhibit 2]





2











 





Schedule 5.6(f)




Examples regarding Payments Due




Example 1: [**]

Party opts-in at [**]

Party responsible for High Terms

Party sublicenses product mid Phase IIb at terms below




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	 	 	 
	 	 	“Guaranteed	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	“Sublicense	 	“Sublicense	 	 	 	 
	 	 	Payments”	 	 	 	 	 	“Guaranteed	 	 	 	 	 	 	 	 	 	Income	 	Income	 	“Cumulative	 	Payments
	 	 	Due Under	 	Paid Before	 	Payments”	 	Sublicense	 	“Sublicense	 	Payments”	 	Payments”	 	Amount	 	Payable By
	Milestones	 	High Terms	 	Sublicense	 	Payable	 	Milestones	 	Income”	 	Due ([**]%)	 	Due	 	Owed”	 	Opt-in Party
	Upfont
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	IND filing
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Completion of Phase
IIa
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Phase III start
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	FDA filing
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	EU filing
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	FDA approval
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	EU approval
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 
	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 
	Total
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 






 









 






Example 2: [**]

Party opts-in at [**]

Party responsible for Low Terms

Party sublicenses product after IND at terms below




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	 	 	 
	 	 	“Guaranteed	 	 	 	 	 	Cumulative	 	 	 	 	 	 	 	 	 	“Sublicense	 	“Sublicense	 	 	 	 
	 	 	Payments”	 	 	 	 	 	“Guaranteed	 	 	 	 	 	 	 	 	 	Income	 	Income	 	“Cumulative	 	Payments
	 	 	Due Under	 	Paid Before	 	Payments”	 	Sublicense	 	“Sublicense	 	Payments”	 	Payments”	 	Amount	 	Payable By
	Milestones	 	Low Terms	 	Sublicense	 	Payable	 	Milestones	 	Income”	 	Due ([**]%)	 	Due	 	Owed”	 	Opt-in Party
	Upfont
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	IND filing
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Upfront sublicense
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Completion of Phase
IIa
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Phase III start
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	P3 end
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	FDA filing
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	EU filing
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	FDA approval
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	EU approval
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	Japan approval
	 	 	[**]	 	 	 	 	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 
	Total
	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 	 	 	[**]	 
	 






2









 






Example 3: [**]

Party opts-in at [**]

Party responsible for High Terms

Party sublicenses product mid Phase III at terms below




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cumulative	 	 	 	 
	 	 	“Guaranteed	 	 	 	Cumulative	 	 	 	 	 	“Sublicense	 	“Sublicense	 	 	 	 
	 	 	Payments”	 	 	 	“Guaranteed	 	 	 	 	 	Income	 	Income	 	“Cumulative	 	Payments
	 	 	Due Under	 	Paid Before	 	Payments”	 	Sublicense	 	“Sublicense	 	Payments”	 	Payments”	 	Amount	 	Payable By
	Milestones	 	High Terms	 	Sublicense	 	Payable	 	Milestones	 	Income”	 	Due ([**]%)	 	Due	 	Owed”	 	Opt-in Party
	Upfont

	 	[**]
	 	[**]
	 	[**]
	 	 	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	IND filing

	 	[**]
	 	[**]
	 	[**]
	 	 	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	Completion of Phase
IIa

	 	[**]
	 	[**]
	 	[**]
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Phase III start

	 	[**]
	 	[**]
	 	[**]
	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 

	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 

	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	FDA filing

	 	[**]
	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	EU filing

	 	[**]
	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	FDA approval

	 	[**]
	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	EU approval

	 	[**]
	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 

	 	 	 	 	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 
	Total

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 





 3









 





Exhibit 2




Alnylam Agreement Summaries





 











 





Exhibit 2




Alnylam Summaries




Attachments to Schedules 2.1(B), 2.4(A) Part 2, 2.4(B) Part 2 and 2.4(C) Part 2



Copies of the following agreements, some in redacted form, have been, or shall be, made available
to Licensee as of the Effective Date:



Schedule 2.1(B): Patents and License Agreements Assigned to Regulus by Alnylam



• License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc.
effective August 15, 2005



Schedule 2.4(A) Part 2: Alnylam’s Existing Out-License Agreements



• License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation (formerly
INEX Pharmaceuticals Corporation) and Alnylam Pharmaceuticals, Inc., dated January 8, 2007.



• License and Collaboration Agreement dated July 8, 2007, by and among Alnylam
Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., effective on August 9,
2007



• Research Collaboration and License Agreement between Novartis Institutes for BioMedical
Research, Inc. and Alnylam Pharmaceuticals, Inc., effective October 12, 2005, as amended by the
Addendum Re: Influenza Program effective as of December 13, 2005, Amendment No. 1 to such Addendum
effective as of March 14, 2006, and Amendment No. 2 to such Addendum effective as of May 5, 2006



Schedule 2.4(B) Part 2: Alnylam’s Existing In-License Agreements



• License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc.
effective May 8, 2006



• Co-Exclusive License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc. effective August 31, 2005



• License Agreement among Garching Innovation GmbH, Alnylam Pharmaceuticals, Inc. and Isis
Pharmaceuticals, Inc. effective October 18, 2004



Schedule 2.4(C) Part 2: Alnylam’s Optional In-Licenses



• Amended and Restated Exclusive Patent License Agreement between Alnylam Pharmaceuticals,
Inc. and Massachusetts Institute of Technology, dated May 9, 2007.




Page 1 of  61









 







• The Sublicense Agreement between Tekmira Pharmaceuticals Corporation (formerly INEX
Pharmaceuticals Corporation) and Alnylam Pharmaceuticals, Inc., dated January 8, 2007.




     This In-License Summary, Out-License Summary and summary of assigned contracts
and Optional In-Licenses highlights certain obligations of, or restrictions on, Alnylam and/or its
assignees or sublicensees of Licensed IP under In-License Agreements, Out-License Agreements,
assigned contracts and Optional In-Licenses, including without limitation In-License Agreement
payment obligations, which are applicable to Regulus under the Agreement, in each case subject to
the terms and conditions of such In-License Agreements. The summaries set forth in these summaries
are not intended to be comprehensive or inclusive of all obligations or restrictions which may be
applicable to assignees of such assigned contracts or sublicensees of Licensed IP under such
In-License Agreements, Out-License Agreements or Optional In-Licenses.



     Unless otherwise expressly stated, capitalized terms not otherwise defined in these summaries
shall have the meanings ascribed to them in the applicable In-License Agreement, Out-License
Agreement, assigned contract or Optional In-License and references to sections, articles, schedules
or exhibits made in these summaries shall be to sections, articles, schedules or exhibits, as the
case may be, in or to such applicable In-License Agreement, Out-License Agreement, assigned
contract or Optional In-License.



Page 2 of  61
















 





ROCKEFELLER (Stoffel)



License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc. effective
August 15, 2005 (“Stoffel Agreement”)




Brief Summary of Technology Covered by License:



• Alnylam and The Rockefeller University jointly own intellectual property relating to
chemically modified oligonucleotides as therapeutic agents for reduction or elimination of microRNA
expression. These oligonucleotides or “antagomirs” target a miRNA by complimentary base pairing to
a miRNA or pre-miRNA nucleotide sequence. Antagomirs may be chemically modified to resist
nucleolytic degradation, or to enhance delivery into cells (e.g. by conjugation to cholesterol).




Scope of License (Section 1.1)



• Alnylam’s worldwide, exclusive, sublicensable license is limited to a license to make, have
made, use, have used, import, have imported, sell, offer for sale and have sold Licensed Products
for all uses.



• Rockefeller reserves the right to use, and to permit other non-commercial entities to use
the Rockefeller Patent Rights for educational and non-commercial research purposes.



• Rockefeller Patent Rights were developed with funding from the U.S. National Institutes of
Health. The United States government retains rights in such intellectual property, including, but
not limited to, requirements that products, which result from such intellectual property and are
sold in the United States, must be substantially manufactured in the United States.




Certain Sublicense Terms (Section 1.5)





	 	•	 	Alnylam will prohibit the sublicensee from further sublicensing and require the
sublicensee to comply with the terms and conditions of the Stoffel Agreement.
	 
	 	§	 	Within thirty (30) days after Alnylam enters into a sublicense agreement, Alnylam will
deliver to Rockefeller a copy of the sublicense agreement which may be redacted with
respect to content that is not relevant to Alnylam’s obligations under the Stoffel
Agreement.
	 
	 	§	 	Alnylam is primarily liable to Rockefeller for any act or omission of a sublicensee
that would be a breach of the Stoffel Agreement if performed or omitted by Alnylam, and
Alnylam will be deemed to be in breach of the Stoffel Agreement as a result of such act or
omission.




Page 3 of 61









 











Diligence (Section 2)





	 	•	 	By end of the year 2007, Alnylam (or sublicensees) will select the method of delivery.
	 
	 	•	 	By the end of the year 2008, Alnylam (or sublicensees) will optimize the lead compound.
	 
	 	•	 	By the end of the year 2010, Alnylam (or sublicensees) will conclude preclinical
development





Payment Obligations (Sections 3 and 4)



• The following milestones are payable:




	 	 	 	 	 
	•First issuance in the U.S. of a patent under the
Rockefeller Patent Rights covering a Licensed Product
	 	 	•$[**]	 
	• First dosing of a subject in a Phase II clinical
trial for the first Licensed Product
	 	 	•$[**]	 
	• Approval by the U.S. FDA of a New Drug Application
for the first Licensed Product
	 	 	•$[**]	 






•



• A [**]% royalty is payable to Rockefeller on Net Sales of Licensed Products by Alnylam, its
Affiliates and its sublicensees (no offsets).



• If Alnylam grants a sublicense under the Stoffel Agreement and receives payment in
connection with such grant in the form of upfront fees, maintenance fees and milestone payments
(net of any sums due to Rockefeller under this Agreement for the same milestone event), Alnylam
will pay Rockefeller [**]% of such payments, excluding payments for costs incurred by Alnylam,
Payments to Alnylam in the form of royalties paid by a sublicensee, equity investments in Alnylam
by a sublicensee, loan proceeds paid to Alnylam by a sublicensee in an arms length transaction,
full recourse debt financing and research and development funding paid to Alnylam in a bona fide
transaction are also excluded from the sublicense income calculation.



• Payments are due to Rockefeller within 60 days after the end of the quarter in which the
royalties or fees accrue.




Books and Records (Sections 4.3 and 4.4)



• Sub-licensees are required to keep complete and accurate books and records to verify Net
Sales, and all of the royalties, fees, and other payments payable under the



Page 4 of 61









 






Stoffel Agreement. The records for each quarter will be maintained for at least three (3) years
after submission of the applicable report required under the Stoffel Agreement.



• Upon reasonable prior written notice to Alnylam, sublicensees will provide an independent,
reputable CPA appointed by Rockefeller and reasonably acceptable to Alnylam with access to all of
the books and records required by the Stoffel Agreement to conduct a review or audit of Net Sales,
and all of the royalties, fees, and other payments payable under the Stoffel Agreement. If the
audit determines that Alnylam has underpaid any royalty payment by 5% or more, Alnylam will also
promptly pay the costs of the review or audit.




Non-Use of Name (Section 5.4)



• Sublicensees may not use the name, logo, seal, trademark, or service mark (including any
adaptation of them) of Rockefeller or any Rockefeller school, organization, employee, student or
representative, without the prior written consent of Rockefeller, except for purposes of compliance
with securities regulations.




Termination (Section 6.2)



• Alnylam may terminate for convenience



• Sublicenses will survive for 90 days following termination and Rockefeller agrees to enter
into license agreement(s) directly with sublicensees upon the same terms as the terms of the
Stoffel Agreement



• Alnylam must promptly inventory all finished product and works-in-product of Licensed
Products of its sublicensees. Inventory may be sold off unless Rockefeller terminates for a breach
by Alnylam or its sublicensees or Alnylam’s bankruptcy.




Prosecution and Enforcement (Section 7)



• Alnylam will prepare the Rockefeller Patent Rights, but Rockefeller will prosecute and
maintain the Rockefeller Patent Rights with Alnylam’s input. Alnylam has a right to manage the
prosecution and enforcement. Alnylam will reimburse Rockefeller’s prosecution and maintenance
costs.



• Alnylam must inform Rockefeller promptly, but no later than 30 days, after learning of
infringement of the Rockefeller Patent Rights. Alnylam and Rockefeller will consult each other
concerning response to infringement. Alnylam may enforce the Rockefeller Patent Rights;
recoveries, after the parties’ expenses are reimbursed, are treated as Net Sales subject to
royalties. Rockefeller has step-in enforcement rights.




Definitions



     “Licensed Products” means products that are made, made for, used, used for, imported,
imported for, sold, sold for or offered for sale by Alnylam or its Affiliates or



Page 5 of 61









 






sublicensees and that either (i) in the absence of this Agreement, would infringe at least one
Valid Claim of the Rockefeller Patent Rights, or (ii) use a process or machine covered by a Valid
Claim of Rockefeller Patent Rights.




     “Net Sales” means with respect to each Licensed Product the gross amount invoiced by
Alnylam or its Affiliates or sublicensees on sales or other dispositions of such product to third
parties less Qualifying Costs directly attributable to a sale and actually taken and/or identified
on the invoice and borne by Company, or its Affiliates or sublicensees. “Qualifying Costs”
means: (a) customary discounts in the trade for quantity purchased, prompt payment or wholesalers
and distributors; (b) credits, allowances or refunds for claims or returns or retroactive price
reductions (including government healthcare programs and similar types of rebates) that do not
exceed the original invoice amount; (c) prepaid outbound transportation expenses and transportation
insurance premiums; and (d) sales, transfer, excise and use taxes and other fees imposed by a
governmental agency. Sales for clinical study purposes or compassionate, named patient or similar
use shall not constitute Net Sales



     “Rockefeller Patent Rights” means Rockefeller’s interests in a specified patent
application ([**]) and related patent family relating to reduction or elimination of miRNA
expression.



Page 6 of 61









 





TEKMIRA



License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation (formerly INEX
Pharmaceuticals Corporation) (“Tekmira”) and Alnylam, dated January 8, 2007 (“Effective
Date”) (“Tekmira Agreement”)




Brief Summary of Technology Covered by License:





	•	 	Tekmira (f.k.a. Inex Pharmaceuticals Corp.) granted Alnylam a license relating to liposomal
delivery of siRNA and miRNA products. Alnylam granted Tekmira (i) an option to obtain
exclusive, royalty-bearing, worldwide licenses under its fundamental siRNA intellectual
property for 3 genetic targets and (ii) an exclusive, royalty bearing license to certain
intellectual property relating to immunostimulatory RNA oligonucleotide compositions (“IOC
Technology”). Alnylam retained certain rights to participate with Tekmira in
commercialization of IOC Technology. In addition, Alnylam provided funding for a 2-year
formulation development collaboration with Tekmira, a multi-year loan for capital expenditure
purposes, and Tekmira will provide exclusive manufacturing services for Alnylam’s development
programs up until completion of Phase 2 clinical studies.





Limitations on Scope of License (Sections 6.1 and 6.4)



• The license granted to Alnylam is limited to an exclusive, royalty-bearing, worldwide
license under Inex Technology, Inex Collaboration IP and Tekmira’s interest in Joint Collaboration
IP to Develop, Manufacture and Commercialize Alnylam Royalty Products in the Alnylam Field, subject
to (a) Tekmira’s non-exclusive license under Alnylam’s rights in Inex Technology and Collaboration
IP for purposes of performing Tekmira’s obligations under the Collaboration with respect to Alnylam
Royalty Products, and the Manufacturing Activities, and (b) Tekmira’s exclusive, worldwide license
under Alnylam’s rights in Inex Technology and Collaboration IP to Develop, Manufacture and
Commercialize Inex Development Products (as defined below) in the Alnylam Field.



• Any license granted by Alnylam to a Third Party under Alnylam RNAi Technology and Alnylam
Collaboration IP would be subject to a non-exclusive, worldwide license granted to Tekmira for
purposes of performing Tekmira’s obligations under the Collaboration with respect to Alnylam
Royalty Products, and the Manufacturing Activities.



• Any license granted by Alnylam to a Third Party under Alnylam Core Patent Rights, Alnylam
Lipidoid Patent Rights, Alnylam Collaboration IP and Alnylam’s interest in Joint Collaboration IP
would be subject to an exclusive, worldwide license granted to Tekmira to Develop, Manufacture and
Commercialize RNAi Products directed to up to three (3) Targets (each such Target, an “Inex
Development Target,” and such RNAi Products, the “Inex Development Products”) which
Tekmira may select (as described below) in the Alnylam Field. During the Selection Term, Tekmira
has the right to nominate a Target, subject to (a) Alnylam’s contractual obligation to a Third
Party that would be breached by the inclusion of such Target as an Inex Development Target under



Page 7 of 61









 






the Tekmira Agreement, and (b) Alnylam’s determination after good faith review of its ongoing or
planned scientific and/or business activities that such Target is a Target of interest to Alnylam.
If neither of these criteria apply, the Target is deemed to have been successfully nominated as an
“Inex Development Target” and Alnylam is obligated to use Commercially Reasonable Efforts
consistent with the terms of the Novartis Agreement to obtain Novartis’ consent to such selection.
If an Inex Development Target is not available for license, then Tekmira may nominate an additional
Target, until an aggregate of 3 Inex Development Targets have been identified and approved for
selection. If all 3 Inex Development Targets have not been approved for selection by the
expiration of the Selection Term, the Selection Term will be extended until the earlier of (i) the
date on which an aggregate of 3 such Inex Development Targets have been identified and approved for
selection, and (ii) January 8, 2014.



• Any license granted by Alnylam to a Third Party under Alnylam IOC Technology, Alnylam
Collaboration IP and Alnylam’s interest in Joint Collaboration IP would be subject to an exclusive
license granted to Develop, Manufacture and Commercialize IOC Products in the Inex IOC Field in and
for the United States.




Restrictions on Sublicensing by Alnylam (Sections 6.2 and 6.4)



• Alnylam may grant sublicenses to Third Parties to Develop, Manufacture and Commercialize
Alnylam Royalty Products; provided, that (i) with respect to any sublicense of
Alnylam’s rights under Section 6.1.1(a) (i.e., the exclusive license under Inex Technology to
develop and commercialize Alnylam Royalty Products in the Alnylam Field) of the Tekmira Agreement
in respect of any Alnylam Royalty Product for which Tekmira has not initiated Manufacturing of
batches of finished dosage form for GLP toxicology studies, Alnylam is required to use Commercially
Reasonable Efforts to facilitate a business discussion between Tekmira and Alnylam’s Sublicensee
(other than Tekmira or its Affiliates) with respect to the provision of manufacturing services by
Tekmira to such Sublicensee; and (ii) with respect to any sublicense of Alnylam’s rights under
Section 6.1.1(a) of the Tekmira Agreement in respect of any Alnylam Royalty Product for which
Tekmira has initiated Manufacturing of batches of finished dosage form for GLP toxicology studies,
Alnylam’s Sublicensee (other than Tekmira or its Affiliates) will be required to obtain its
requirements of the bulk finished dosage form of such Alnylam Royalty Product from Tekmira on the
terms set forth in Article 5 of the Tekmira Agreement. However, Tekmira agrees to negotiate in
good faith with Alnylam and/or Alnylam’s Sublicensee either an alternate or modified supply
arrangement or the release of such Sublicensee from such exclusive supply obligation in return for
reasonable compensation to Tekmira.



• Each license and/or sublicense granted by Alnylam under the Tekmira Agreement to develop,
manufacture and commercialize Alnylam Royalty Products must be subject and subordinate to the terms
and conditions of the Tekmira Agreement and must contain terms and conditions consistent with those
in the Tekmira Agreement, including, without limitation, the requirements of Section 6.4 of the
Tekmira Agreement (see below). Commercializing Sublicensees are also required to: (i) submit
applicable sales or other reports consistent with those required under the Tekmira Agreement; (ii)
comply with an


Page 8 of 61









 






audit requirement similar to the requirement set forth in Section 7.6 of the Tekmira Agreement; and
(iii) comply with the confidentiality and non-use provisions of Article 8 of the Tekmira Agreement
with respect to both Parties’ Confidential Information. If Alnylam becomes aware of a material
breach of any sublicense by a Third Party Sublicensee, Alnylam is required to promptly notify
Tekmira of the particulars of same and take all Commercially Reasonable Efforts to enforce the
terms of such sublicense.



• Section 6.4 of the Tekmira Agreement states that all licenses and other rights granted to
Alnylam with respect to Inex Technology under Article 6 of the Tekmira Agreement are subject to (i)
the rights granted to Tekmira, and to Tekmira’s ability to grant rights to Alnylam under the Inex
In-Licenses, and (ii) the provisions of the UBC Sublicense Documents governing or relating to the
rights sublicensed to Alnylam.




Diligence and Annual Reports (Section 6.7)



• Alnylam is required to use Commercially Reasonable Efforts to Develop and Commercialize an
Alnylam Royalty Product.



• Alnylam is required to deliver to Tekmira an annual report, due no later than December 31
of each Contract Year during the Agreement Term, which summarizes the major activities undertaken
by Alnylam during the preceding 12 months to Develop and Commercialize its Royalty Products in the
applicable field. The report will include an outline of the status of any such Royalty Products in
clinical trials and the existence of any sublicenses with respect to such Royalty Products which
have not been previously disclosed.




Financial Obligations (Sections 7.2-7.4 and 6.1.3)



Milestone Payments:



• (a) Alnylam will make milestone payments to Tekmira as set forth below on a
Target-by-Target basis, no later than 30 calendar days after the earliest date on which the
corresponding milestone event has been achieved with respect to the first Alnylam Royalty Product
directed to a Target (other than a Biodefense Target) to achieve such milestone event:




	 	 	 	 	 
	Milestone Event	 	Payment
	Initiation of first Phase I Study
	 	$	[**]	 
	Initiation of first Phase II Study
	 	$	[**]	 
	Acceptance by a Regulatory Authority in a Major Market of the
first NDA for filing
	 	$	[**]	 
	First NDA Regulatory Approval in a Major Market
	 	$	[**]	 
	Aggregate worldwide cumulative Net Sales equals or exceeds $[**]
	 	$	[**]	 






Page 9 of 61









 





• (b) If, however, the Target is a Biodefense Target, in lieu of the milestone payments set
forth above, the following milestone payments will be payable, on a Target-by-Target basis, no
later than 30 calendar days after the later of (i) the earliest date on which the corresponding
milestone event has been achieved with respect to the first Alnylam Royalty Product directed to a
Biodefense Target to achieve such milestone event and (ii) receipt by Alnylam of all funding from a
Funding Authority that Alnylam is eligible to receive for the achievement of such milestone event:




	 	 	 	 	 
	Milestone Event	 	Payment
	Approval of the first IND filed by Alnylam
	 	$	[**]	 
	Positive safety data from the first Phase I Study to be completed
	 	$	[**]	 
	First Commercial Sale
	 	$	[**]	 





• Notwithstanding the foregoing: (i) if the first Alnylam Royalty Product directed to a
Target to achieve a milestone event as set forth in clause (a) or (b) above is comprised of a
formulation Covered by or employing any Third Party Liposome Patent Rights, then only [**]% of the
corresponding milestone payment will be payable to Tekmira; and (ii) notwithstanding that a Target
is a Biodefense Target, if Alnylam or its Related Parties Commercialize or sell an Alnylam Royalty
Product directed to such Target other than to a Funding Authority, the milestone payment amounts
set forth in clause (a) will then apply in lieu of the amounts set forth in clause (b).



• Each milestone payment by Alnylam to Tekmira hereunder will be payable only once for each
Target, regardless of the number of times the milestone is achieved with respect to one or more
Alnylam Royalty Products directed to such Target.



• On and after [**], Alnylam will be entitled to reduce each milestone payment payable by
Alnylam under the Tekmira Agreement (after application of appropriate deductions by [**]% of such
milestone payment, until such time as the aggregate amount of all such reductions hereunder equals
$[**]. For clarity, Alnylam may offset (i) its obligation to pay the resulting milestone payment
against (ii) certain obligations of Tekmira owed to Alnylam pursuant to the Loan Agreement, as
provided in the Loan Agreement.




Royalty Payments:



• Royalties are payable to Tekmira on Net Sales of Alnylam Royalty Products worldwide as
follows:




Page 10 of 61









 









	 	 	 	 	 
	Aggregate Calendar Year Net Sales of the	 	Royalty
	Alnylam Royalty Product	 	(as a percentage of Net Sales)
	on the first $[**] — $[**]
	 	 	[**]	%
	On the subsequent $[**] — $[**]
	 	 	[**]	%
	Greater than $[**]
	 	 	[**]	%





• Notwithstanding the foregoing, if an Alnylam Royalty Product is comprised of a formulation
Covered by or employing any Third Party Liposome Patent Rights then royalties on Net Sales of
Alnylam Royalty Products will be calculated as follows:




	 	 	 	 	 
	Aggregate Calendar Year Net Sales of the	 	Royalty
	Alnylam Royalty Product	 	(as a percentage of Net Sales)
	on the first $[**] — $[**]
	 	 	[**]	%
	On the subsequent $[**] — $[**]
	 	 	[**]	%
	Greater than $[**]
	 	 	[**]	%





• If the Development, Manufacture or Commercialization of an Alnylam Royalty Product in
accordance with the Tekmira Agreement infringes Necessary Third Party IP, the applicable royalties
in each country payable to Tekmira will be reduced by [**]% of the amount paid by Alnylam of any
royalties under all licenses of such Necessary Third Party IP that are reasonably allocable to the
Development, Manufacture and Commercialization of the Alnylam Royalty Product in or for such
country in the Alnylam Field; provided, however, that, on a country-by-country
basis, in no event will the royalties payable to Tekmira with respect to Net Sales in a country for
any Calendar Quarter be reduced below the greater of: (i) [**]% of the royalties otherwise payable
to Tekmira for such Calendar Quarter, and (ii) the amount of any royalties payable under the
In-licenses of Alnylam that are reasonably allocable to the Commercialization or Manufacture of the
Alnylam Royalty Product in or for such country in the Field (where the royalties are calculated by
adding one percentage point to the applicable royalty rate(s) in the applicable In-License(s)).



• If Alnylam is required to make any payments to UBC in respect of the Inex Technology or
Inex Collaboration IP licensed to Alnylam pursuant to the UBC Sublicense Agreement, then Alnylam
will be entitled to offset any amounts payable by Alnylam to Tekmira under the Tekmira Agreement by
the amount of Alnylam’s payments to UBC until such amounts have been credited in full.




Royalty Reports; Payment and Audit Rights (Sections 7.3.4 and 7.6)



• Commencing upon the First Commercial Sale of an Alnylam Royalty Product, Alnylam is
required to provide to Tekmira a quarterly written report showing the quantity of Alnylam Royalty
Products sold in each country (as measured in saleable units of product), the gross sales of such
Alnylam Royalty Product in each country, total deductions for such Alnylam Royalty Product for each
country included in the calculation of Net Sales, the Net Sales in each country of such Alnylam
Royalty Product subject to royalty payments and the royalties payable with respect to such Alnylam
Royalty


Page 11 of 61









 






Product. Quarterly reports are due no later than the 25th day following the close of each Calendar
Quarter. Royalties shown to have accrued by each royalty report are due and payable on the date
such royalty report is due.



• Complete and accurate records must be kept in sufficient detail to enable the royalties and
other payments payable under the Tekmira Agreement to be determined.



• Upon the written request of Tekmira and not more than once in each Calendar Year, a
Sublicensee must permit an independent certified public accounting firm of nationally recognized
standing selected by Tekmira and reasonably acceptable to such Sublicensee to have access during
normal business hours to such of the records of Sublicensee as may be reasonably necessary to
verify the accuracy of the royalty and other financial reports required to be delivered under the
Tekmira Agreement for any Calendar Year ending not more than [**] months prior to the date of such
request, for the sole purpose of verifying the basis and accuracy of payments made under Article 7
of the Tekmira Agreement.




Prosecution and Enforcement (Sections 10.2, 10.3 and 10.4)



• Alnylam is solely responsible, at Alnylam’s discretion, for filing, prosecuting, conducting
ex parte and inter partes proceedings (including the defense of any interference or opposition
proceedings) and maintaining all Patent Rights comprising Alnylam RNAi Technology, Alnylam IOC
Technology or Alnylam Collaboration IP, in Alnylam’s name.



• Tekmira, at Tekmira’s discretion, for filing, prosecuting, conducting ex parte and inter
partes proceedings, (including the defense of any interference or opposition proceedings), and
maintaining all Patent Rights comprising Inex Technology or Inex IOC Technology, in Tekmira’s name,
or Inex Collaboration IP, in UBC’s name.



• Subject to Tekmira’s continuing right to the prior review of, comment on, revision to and
approval of material documents, which will not be unreasonably delayed or withheld, Alnylam is
solely responsible, at Alnylam’s discretion, for filing, conducting ex parte and inter partes
prosecution, and maintaining (including the defense of any interference or opposition proceedings)
all Patent Rights comprising Joint Collaboration IP, in the names of both Tekmira and Alnylam.



• If Alnylam elects not to seek or continue to seek or maintain patent protection on any
Alnylam IOC Technology or Alnylam Collaboration IP which is subject to Tekmira’s licensed rights
under the Tekmira Agreement, or Joint Collaboration IP, then Tekmira will have step-in rights. If
Alnylam declines to file, prosecute and/or maintain Valid Claims at Tekmira’s request in Joint
Collaboration IP, then Tekmira will have step-in rights.



• If Tekmira elects not to seek or continue to seek or maintain patent protection on any Inex
Technology or Inex Collaboration IP, which is subject to Alnylam’s licensed rights under the
Tekmira Agreement, then subject to the provisions of the UBC


Page 12 of 61









 






Sublicense Documents, Alnylam will have rights (but not the obligation), at its expense, to
prosecute and maintain in any country patent protection on such Inex Technology in the name of
Tekmira or Inex Collaboration IP in the name of UBC.



• Each Party 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; (b) to
provide the other Party with copies of all material correspondence pertaining to prosecution with
the patent offices; (c) to cooperate, if necessary and appropriate, with the other Party in gaining
patent term extensions wherever applicable to Patent Rights; and (d) 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.



• The patent filing, prosecution and maintenance expenses incurred after the Effective Date
with respect to Patent Rights comprised of Alnylam Core Patent Rights, Alnylam IOC Technology,
Alnylam Lipidoid Patent Rights, Inex Technology, Inex IOC Technology and Collaboration IP will be
borne by each Party having the right to file, prosecute and maintain such Patent Rights under the
Tekmira Agreement.



• Subject to the provisions of any Inex In-License and the provisions of the UBC Sublicense
Documents, in respect of the Alnylam Royalty Products in the Alnylam Field, Alnylam will have the
sole and exclusive right to initiate an infringement or other appropriate suit anywhere in the
world against any Third Party who at any time has infringed, or is suspected of infringing, any
Patent Rights, or of using without proper authorization, any Know-How, comprising any Inex
Technology or Collaboration IP that is licensed to Alnylam under the Tekmira Agreement.



• Alnylam will have the sole and exclusive right to initiate an infringement or other
appropriate suit anywhere in the world against any Third Party who at any time has infringed, or is
suspected of infringing, any Patent Rights, or of using without proper authorization any Know-How,
comprising Alnylam RNAi Technology, Alnylam IOC Technology or Alnylam Collaboration IP; provided,
that if Alnylam fails to initiate a suit or take other appropriate action with respect to Alnylam
IOC Technology in the United States with respect to an IOC Product that it has the initial right to
initiate or take pursuant thereto within 90 days after becoming aware of the basis for such suit or
action, then Tekmira may, in its discretion, provide Alnylam with written notice of Tekmira’s
intent to initiate a suit or take other appropriate action with respect to such IOC Product. If
Alnylam fails to initiate a suit or take such other appropriate action within 30 days after receipt
of such notice from Tekmira, then Tekmira will have the right to initiate a suit or take other
appropriate action that it believes is reasonably required to protect its licensed interests under
the Alnylam IOC Technology and Alnylam Collaboration IP with respect to such IOC Product.



• Alnylam may defend any Infringement Claim brought against either Party or its Affiliates or
Sublicensees arising out of the Development, Manufacture or Commercialization of any Alnylam
Royalty Product in the Alnylam Field. Tekmira may


Page 13 of 61









 






defend any Infringement Claim brought against either Party or its Affiliates or Sublicensees
arising out of the Development, Manufacture or Commercialization of any Inex Royalty Product and in
(a) the Alnylam Field, in the case of Inex Development Products or (b) the Inex IOC Field, in the
case of Inex IOC Products.



• As the responsible party, Alnylam must keep Tekmira informed, and from time to time consult
with Tekmira regarding the status of any such claims and provide Tekmira with copies of all
documents filed in, and all written communications relating to, any suit brought in connection with
such claims. Tekmira also has the right to participate and to be presented in any such claim or
related suit. If Alnylam fails to exercise its right to assume such defense within 30 days
following written notice of such Infringement Claim, Tekmira has the sole and exclusive right to
control the defense of such Infringement Claim.




Termination for Patent Challenge (Section 11.5)



• If any Sublicensee asserts in any court or other governmental agency of competent
jurisdiction that an Inex Patent Right or a Patent Right Controlled by Tekmira by virtue of the
Inex-UBC License Agreement and sublicensed to Alnylam pursuant to the UBC Sublicense (in either
case, an “Inex Patent”) is invalid, unenforceable, or that no issued Valid Claim embodied
in such Inex Patent excludes a Third Party from making, having made, using, selling, offering for
sale, importing or having imported an Alnylam Royalty Product in such jurisdiction, then Tekmira
may, upon written notice to Alnylam, terminate all licenses granted to Alnylam for such Alnylam
Royalty Product(s) covered by such Inex Patent that is under challenge in the applicable
jurisdiction; provided, however, that Tekmira will not terminate such license if within 30 days of
Alnylam’s receipt of Tekmira’s notification under the Tekmira Agreement (a) it is confirmed by
written notice to Tekmira that Sublicensee no longer intends to challenge the validity or
enforceability of such Inex Patent; or (b) documentation is provided to Tekmira to confirm
Sublicensee’s withdrawal of its filing, submission, or other process commenced in any court or
other governmental agency of competent jurisdiction to challenge the validity or enforceability of
any such Inex Patent.




Definitions



“Alnylam Collaboration IP” means, generally (a) any improvement, invention, or Know-How
first discovered or developed by employees of Alnylam or its Affiliates or other persons not
employed by Tekmira acting on behalf of Alnylam, in the performance of the Collaboration, the
Manufacturing Activities, and/or Alnylam’s obligations under the Original Agreements, and (b) any
Patent Rights which claim, cover or relate to such Know-How. Alnylam Collaboration IP excludes
Alnylam’s interest in Joint Collaboration IP.



“Alnylam Core Patent Rights” means those Patent Rights set forth in Schedule 1.3 of the
Tekmira Agreement, including various Tuschl I and Tuschl II patents and patent applications, as
such Schedule is supplemented from time to time pursuant to Section 6.5.1 of the Tekmira Agreement.




Page 14 of 61









 







“Alnylam Field” means the treatment, prophylaxis and diagnosis of diseases in humans using
an RNAi Product or miRNA Product.



“Alnylam IOC Technology” mean, generally (a) Know-How Controlled by Alnylam as of the
Effective Date that is useful or necessary to Develop, Commercialize and/or Manufacture an IOC
Product in the Inex IOC Field (excluding any Alnylam Collaboration IP and Alnylam’s interest in
Joint Collaboration IP), and (b) those Patent Rights set forth in Schedule 1.5 of the Tekmira
Agreement, including USSN [**].



“Alnylam Lipidoid Patent Rights” means those Patent Rights Controlled by Alnylam under a
license from the Massachusetts Institute of Technology pursuant to the MIT License Agreement and
that are set forth in Schedule 1.6 of the Tekmira Agreement, including USSN [**].



“Alnylam RNAi Know-How” means, generally, Know-How Controlled by Alnylam that Alnylam
determines in its reasonable judgment to be useful or necessary to Develop, Commercialize and/or
Manufacture an Alnylam Royalty Product in the Alnylam Field (excluding any Alnylam Collaboration IP
and Alnylam’s interest in Joint Collaboration IP).



“Alnylam RNAi Patent Rights” means, generally, Patent Rights Controlled by Alnylam that
claim (a) Alnylam RNAi Know-How, or (b) the identification, characterization, optimization,
construction, expression, formulation, use or production of an Alnylam Royalty Product, as the case
may be, and which Alnylam determines in its reasonable judgment to be useful or necessary to
Develop, Commercialize and/or Manufacture an Alnylam Royalty Product in the Alnylam Field
(including, without limitation, the Alnylam Core Patent Rights and the Alnylam Lipidoid Patent
Rights, but specifically excluding Alnylam IOC Technology and any Patent Rights included in Alnylam
Collaboration IP or Alnylam’s interest in Joint Collaboration IP).



“Alnylam RNAi Technology” means, collectively, Alnylam RNAi Know-How and Alnylam RNAi
Patent Rights.



“Alnylam Royalty Product” means any RNAi Product or a miRNA Product that, but for the
licenses granted hereunder, would be Covered by one or more Valid Claims of the Inex Patent Rights.



“Biodefense Target” means (a) a Target within the genome of one or more Category A, B and C
pathogens, as defined by the National Institute of Allergy and Infectious Diseases, including
without limitation, pathogens listed on Schedule 1.12 of the Tekmira Agreement, but specifically
excluding influenza virus, or (b) an endogenous cellular Target against which Alnylam Develops
and/or Commercializes an Alnylam Royalty Product for commercial supply to one or more Funding
Authorities.



“Collaboration IP” means, collectively, Alnylam Collaboration IP, Inex Collaboration IP and
Joint Collaboration IP.




Page 15 of 61









 







“Existing Inex In-Licenses” means the Third Party agreements listed on Schedule 1.30 to the
Tekmira Agreement.



“IOC” or “Immunostimulatory Oligonucleotide Composition” means a single-stranded or
double-stranded ribonucleic acid (“RNA”) composition, or derivative thereof, that has
activity solely through an immunostimulatory mechanism and has no RNAi activity against a human
gene transcript or viral genomic sequence.



“IOC Product” means a product containing, comprised of or based on IOCs or IOC derivatives.



“Inex Collaboration IP” means, generally (a) any improvement, invention or Know-How first
discovered or developed by employees of Tekmira or its Affiliates or other persons not employed by
Alnylam acting on behalf of Tekmira, in the performance of the Collaboration, the Manufacturing
Activities, and/or Tekmira’s obligations under the Original Agreements, and (b) any Patent Rights
which claim, cover or relate to such Know-How. Inex Collaboration IP excludes Tekmira’s interest
in Joint Collaboration IP.



“Inex In-License” means an agreement between Tekmira or its Affiliates, and a Third Party,
pursuant to which Tekmira or any of its Affiliates Control(s) Inex Technology relating to the
Alnylam Field under a license or sublicense from such Third Party, including without limitation,
the Existing Inex In-Licenses.



“Inex IOC Field” means the treatment, prophylaxis and diagnosis of diseases in humans using
an IOC Product.



“Inex IOC Technology” means, generally (a) Know-How Controlled by Tekmira or its Affiliates
with respect to IOC Products and/or IOCs, and (b) Patent Rights Controlled by Tekmira and its
Affiliates that claim such Know-How or the identification, characterization, optimization,
construction, expression, formulation, delivery, use or production of an IOC Product and/or IOC,
and are useful or necessary to Develop, Commercialize and/or Manufacture IOC Products in the Field.



“Inex Know-How” means, generally, Know-How Controlled by Tekmira or its Affiliates with
respect to an RNAi Product or miRNA Product (excluding any Inex Collaboration IP, Tekmira’s
interest in Joint Collaboration IP and any such Know-How sublicensed to Alnylam pursuant to the UBC
Sublicense).



“Inex Patent Rights” means, generally, Patent Rights Controlled by Tekmira or its
Affiliates that claim (a) Inex Know-How or (b) the identification, characterization, optimization,
construction, expression, formulation, delivery, use or production of an RNAi Product or miRNA
Product, and are useful or necessary to Develop, Commercialize and/or Manufacture RNAi Products or
miRNA Products in the Alnylam Field (excluding any Patent Rights included in Inex Collaboration IP,
Tekmira’s interest in Joint Collaboration IP and any such Patent Rights licensed to Alnylam
pursuant to the UBC Sublicense).




Page 16 of 61









 







“Inex Royalty Product” means any (a) Inex Development Product that, but for the licenses
granted hereunder, would be Covered by one or more Valid Claims under the Alnylam Core Patent
Rights or the Alnylam Lipidoid Patent Rights, or (b) IOC Product that but for the licenses granted
hereunder, would be Covered by one or more Valid Claims under the Alnylam IOC Technology.



“Inex Technology” means, collectively, Inex Know-How and Inex Patent Rights.



“Inex-UBC License Agreement” means that certain license agreement between Tekmira and the
University of British Columbia (“UBC”) dated effective July 1, 1998, as amended by
Amendment Agreement between Tekmira and UBC dated effective July 11, 2006, and Second Amendment
Agreement dated effective the Effective Date.



“Joint Collaboration IP” means, generally (a) any improvement, discovery or Know-How first
discovered or developed jointly by the Parties or their Affiliates or others acting on behalf of
Tekmira and Alnylam in the performance of the Collaboration, the Manufacturing Activities and/or
the obligations of the Parties under the Original Agreements, and (b) any Patent Rights which
claim, cover or relate to such Know-How.



“Manufacturing Activities” means those activities performed by a party relating to the
manufacture and supply of Alnylam Royalty Products.



“miRNA Product” means a product containing, comprised of or based on native or chemically
modified RNA oligomers designed to either modulate an miRNA and/or provide the function of an
miRNA.



“Necessary Third Party IP” means, on a country-by-country basis, Know-How or Patent Rights
in such country owned or controlled by a Third Party that cover a Royalty Product.



“Pre-Existing Alliance Agreements” are listed on Schedule 1.79 to the Tekmira Agreement.



“RNAi Product” means a product containing, comprised of or based on siRNAs or siRNA
derivatives or other moieties effective in gene function modulation and designed to modulate the
function of particular genes or gene products by causing degradation of a Target mRNA to which such
siRNAs or siRNA derivatives are complementary (“RNAi Interference Mechanism”), and that is
not an miRNA Product.



“Royalty Product” means, either (a) an Alnylam Royalty Product, or (b) an Inex Royalty
Product.



“Selection Term” means the period commencing on the Effective Date and continuing for five
(5) Contract Years thereafter, unless such period is extended pursuant to Section 2.2 of the
Tekmira Agreement.



“Small Interfering RNA” or “siRNA” means a double-stranded ribonucleic acid (RNA)
composition designed to act primarily through an RNA Interference Mechanism that


Page 17 of 61









 






consists of either (a) two separate oligomers of native or chemically modified RNA that are
hybridized to one another along a substantial portion of their lengths, or (b) a single oligomer of
native or chemically modified RNA that is hybridized to itself by self-complementary base-pairing
along a substantial portion of its length to form a hairpin.



“Target” means: (a) a polypeptide or entity comprising a combination of at least one
polypeptide and other macromolecules, that is a site or potential site of therapeutic intervention
by a therapeutic agent; or a nucleic acid which is required for expression of such polypeptide; (b)
variants of a polypeptide, cellular entity or nucleic acid described in clause (a); (c) a defined
non-peptide entity, including a microorganism, virus, bacterium or single cell parasite; provided
that the entire genome of a virus will be regarded as a single Target; or (d) a naturally occurring
interfering RNA or miRNA or precursor thereof.



“Third Party Liposome Patent Rights” means, with respect to an Alnylam Royalty Product, (a)
the Alnylam Lipidoid Patent Rights and/or (b) other technology comprising a lipid component or
liposomal formulation useful or necessary for the Development, Manufacture or Commercialization of
such Alnylam Royalty Product and Controlled by Alnylam under a license from a Third Party, and in
each case with respect to which Intellectual Property Rights Alnylam has granted to Tekmira a
non-exclusive, royalty- and milestone fee-bearing (on a pass-through basis) license to Develop,
Manufacture and Commercialize Inex Royalty Products in the Alnylam Field in the case of Inex
Development Product, and in the Inex IOC Field in the case of IOC Products.



“UBC Sublicense Documents” means the collective reference to (a) the Sublicense Agreement
dated as of the Effective Date between the Parties (the “UBC Sublicense”), (b) the Consent
and Agreement dated as of the Effective Date among the Parties and UBC, and (c) the Assignment
dated the Effective Date between Tekmira and UBC.




Page 18 of 61









 








ROCHE



License and Collaboration Agreement dated July 8, 2007, by and among Alnylam Pharmaceuticals, Inc.,
F. Hoffmann-La Roche Ltd (“Roche Basel”) and Hoffmann-La Roche Inc. (together with Roche
Basel, “Roche”) (“Roche Agreement”), effective on August 9, 2007 (“Effective
Date”)




Brief Description of Technology Covered by License



• Alnylam granted Roche and its Affiliates a non-exclusive, worldwide license under Alnylam’s
rights to Architecture and Chemistry IP and Delivery IP as it existed at the effective time of the
Agreement, to develop and commercialize RNAi Products for treatment/prophylaxis of indications in
at least the fields of cancer, certain liver diseases, metabolic disease and pulmonary disease.
Roche has the option to enter additional therapeutic fields and, prior to granting exclusive
licenses in the other Fields, Alnylam must give Roche a right of first negotiation.




Limitations on Scope of License



Any license granted by Alnylam to a Third Party under Architecture and Chemistry IP or Delivery IP
would be subject to the following limitations:



• License Grant to Roche. Roche and its Affiliates have a non-exclusive, worldwide license
to develop and commercialize RNAi Products for the treatment/prophylaxis of indications in at least
the primary fields of cancer, certain liver diseases, metabolic disease and pulmonary disease)
and any additional fields (which are listed in a schedule to the Roche Agreement) to which
Roche acquires non-exclusive rights (collectively, “Field”).



• Designated Targets. If Roche selects a Target which is not a Blocked Target and such
Target is cleared through the Novartis ROFO mechanism, Roche has non-exclusive rights within the
scope of its basic license grant to develop and commercialize RNAi Products directed to such
“Designated Target” in the Field.



• Alnylam/Roche Discovery Collaboration. Roche and Alnylam have agreed to collaborate on a
specified number of targets during the term of the agreement.



• ROFN. If Alnylam intends to grant to any Third Party an exclusive license to any
particular additional field which has not yet been acquired by Roche, Alnylam must first offer
Roche the right to extend its non-exclusive licenses into such additional field upon payment of a
specified field option fee.



• Extension into Additional Fields. Roche may extend its development and commercialization
activities directed to a Target into any additional field, provided that Roche notify Alnylam of
such extension and pay certain milestone payments.




Prosecution and Enforcement





Page 19 of 61









 







• Alnylam is obligated to take reasonable measures to protect and, to the extent Alnylam has
such a right, to enforce the IP being licensed to Roche under the Roche Agreement.



• Alnylam is also obligated to assume control of the defense of any aspects of any third
party infringement claim that involves the validity, scope and/or enforceability of such licensed
IP. Roche has the right to control the defense of any other third party infringement claim or
aspect thereof related to the licensed IP. Alnylam must keep Roche advised of status and consider
Roche’s recommendations.




Definitions



• “Architecture and Chemistry Intellectual Property” refers, generally, to Know-How
and Patent Rights listed on Schedule C to the Roche Agreement, in each case Controlled by
Alnylam as of the Effective Date, and covering (a) the general structure, architecture, or design
of double-stranded oligonucleotide molecules which engage RNAi mechanisms in a cell; (b) chemical
modifications of double-stranded oligonucleotides (including any modification to the base, sugar or
internucleoside linkage, nucleotide mimetics, and any end modifications) which do not abolish the
RNAi activity of the double-stranded oligonucleotides in (a); (c) manufacturing techniques for the
double-stranded oligonucleotide molecules or chemical modifications of (a) and (b); or (d) all uses
or applications of double-stranded oligonucleotide molecules or chemical modifications in (a) or
(b); but excluding (i) IP to the extent specifically related to Blocked Targets,
and (ii) Delivery IP. Includes future Patent Rights that claim priority to or common priority with
any of the aforementioned Patent Rights.



• “Blocked Target” means any Target that is subject to a contractual obligation of a
Pre-Existing Alliance Agreement that would be breached by the inclusion of such Target as a
Designated Target under this Agreement



• “Delivery Intellectual Property” refers, generally, to Know-How and Patent Rights
listed on Schedule C to the Roche Agreement, in each case Controlled by Alnylam as of the
Effective Date, and covering (a) delivery technologies necessary or useful for delivery of
double-stranded oligonucleotide molecules; or (b) manufacturing techniques for such delivery
technologies of (a); but excluding Patent Rights which relate specifically to
Blocked Targets. Includes future Patent Rights that claim priority to or common priority with any
of the aforementioned Patent Rights.



• “RNAi Compound” means any compound that, in vitro or otherwise, functions through
the mechanism of RNAi and consists of or encodes double-stranded oligonucleotides, and which
double-stranded oligonucelotides optionally may be chemically modified to contain modified
nucleotide bases or non-RNA nucleotides, and optionally may be administered in conjunction with a
delivery vehicle or vector.



• “RNAi Product” means any product that contains one or more RNAi Compounds as an
active ingredient.




Page 20 of 61









 







• “Target” means (a) a polypeptide or entity comprising a combination of at least one
polypeptide and other macromolecules, that is a site or potential site of therapeutic intervention
by a therapeutic agent; or a nucleic acid which is required for expression of such polypeptide; (b)
variants of a polypeptide (including any splice variant thereof), cellular entity or nucleic acid
described in clause (a); or (c) a defined non-peptide entity, including a microorganism, virus,
bacterium or single cell parasite; provided that the entire genome of a virus shall
be regarded as a single Target.




Page 21 of 61









 








NOVARTIS



Research Collaboration and License Agreement between Novartis Institutes for BioMedical Research,
Inc. and Alnylam Pharmaceuticals, Inc., effective October 12, 2005, as amended by the Addendum Re:
Influenza Program effective as of December 13, 2005, Amendment No. 1 to such Addendum effective as
of March 14, 2006, and Amendment No. 2 to such Addendum effective as of May 5, 2006 (“Novartis
Agreement”)




Brief Description of Technology Covered by License





	•	 	Alnylam granted Novartis a right to exclusively develop a certain number of Targets using
intellectual property controlled by Alnylam during the term of the Agreement. Some of the
Targets would be developed through collaborative work between Novartis and Alnylam. In
addition, Novartis has the right to convert their license from an exclusive license with
respect to certain Targets to a broad, non-exclusive license.





Scope of Rights



• Novartis may select a specified number of Targets (“Selected Targets”). Alnylam
and Novartis entered into a Research Collaboration to identify and optimize RNAi Compounds directed
against Selected Targets and develop improved RNAi technology to enable and enhance the utility of
such RNAi Compounds. (Section 2)



• Alnylam granted Novartis and its Affiliates worldwide licenses under Alnylam Intellectual
Property to (i) perform Novartis’s obligations under the Research Collaboration, (ii) Discover RNAi
Compounds, (iii) Discover RNAi Compounds directed at the Selected Targets, and (iv) Discover,
Develop, Commercialize or Manufacture Discovered RNAi Compounds and Collaboration Products. The
rights under clauses (i) and (ii) are non-exclusive and non-sublicenseable, under clause (iii) are
exclusive and non-sublicenseable, and under clause (iv) are exclusive and sublicenseable.
(Sections 3.1(a) and (b))



• For a period of time, Novartis has an option, exercisable upon notice and payment of a fee,
to obtain for itself and its Affiliates a non-exclusive, non-sublicenseable (except to third party
contractors), worldwide, perpetual license under Broad RNAi Intellectual Property for any human,
veterinary or agricultural applications (the “Adoption License”). Alnylam may not grant
any exclusive rights or licenses under any Broad RNAi Intellectual Property except with respect to
an opportunity Novartis does not acquire under the ROFO or in accordance with agreements existing
before the effective date of the Novartis Agreement. (Section 3.1(c) and (e))



• Exclusivity: Alnylam and its Affiliates may not, either alone or directly or
indirectly in conjunction with a Third Party, conduct Discovery of any RNAi Compound or RNAi
Products directed to a Selected Target, or Discovery, Development, Commercialization or Manufacture
of Discovered RNAi Compounds, Collaboration


Page 22 of 61









 






Products, or RNAi Compounds or RNAi Products directed to Selected Targets. Alnylam and its
Affiliates may not grant to any Third Party any rights under Alnylam Intellectual Property to
engage in any of the foregoing activities. (Section 2.6(a))



• ROFO: If Alnylam or any of its Affiliates seek, directly or indirectly in
conjunction with a Third Party (with limited exceptions), or to license a Third Party (with limited
exceptions) the right, to Discover, Develop, Commercialize or Manufacture any RNAi Compounds or
RNAi Products directed at a Target(s), Alnylam must first provide written notice to Novartis.
Novartis has a period of time to accept or reject the opportunity. If Novartis rejects an
opportunity for a program for which no IND has been filed in the US or Major Market Countries, or
Novartis and Alnylam are unable to come to terms on a post-IND program, Alnylam may, within a
specified period of time, enter an agreement with a Third Party, which can be no more favorable
overall to such Third Party than those offered to Novartis under Section 2.6(c)(i). (Sections
2.6(b) and (c))



• In-Licensing IP: To the extent applicable, Alnylam must comply with Sections
2.6(b) and (c) when acquiring or licensing rights from Third Parties. In the course of acquiring
or licensing additional Broad RNAi Intellectual Property or any other Alnylam Intellectual Property
covering a Collaboration Product, Alnylam must use its best efforts to ensure that such rights
include the right to sublicense to Novartis such Broad RNAi Intellectual Property or other Alnylam
Intellectual Property. (Sections 2.6(d), 3.1(f))



• Technology Transfer: Alnylam will periodically deliver to Novartis all Alnylam
Intellectual Property specifically relating to the Discovered RNAi Compounds, relating to the
Research Collaboration, or otherwise necessary or useful to the Discovery, Development,
Commercialization or Manufacture of Discovered RNAi Compounds or Collaboration Products. Once
Novartis acquires the Adoption License, Alnylam will periodically deliver to Novartis all Broad
RNAi Intellectual Property. The deliveries will include un-redacted copies of agreements that
directly or indirectly grant or restrict rights in Alnylam Intellectual Property, which may be
redacted to comply with confidentiality obligations and to exclude terms that do not relate to
Novartis’s rights or obligations; provided, that Alnylam will use commercially reasonable efforts
to ensure that Novartis is granted access to un-redacted copies of such agreements.



• Alnylam may not assign, license or otherwise grant any rights or dispose of any Broad RNAi
Intellectual Property or other Alnylam Intellectual Property covering a Collaboration Product
without making such disposition expressly subject to Novartis’s rights. (Section 3.1(g))




IP Ownership, Prosecution and Enforcement (Section 6)



• Novartis owns all IP jointly created by the parties in the Research Collaboration.
Novartis grants Alnylam a worldwide, non-exclusive, sublicenseable (solely to Controlled
Contractors) license under such jointly-created IP that is Broad RNAi Intellectual Property, to
engage in any and all research activities directed to human, veterinary or agricultural
applications.




Page 23 of 61









 







• Novartis has a step-in right to prosecute Alnylam Patent Rights that pertain to a
Discovered RNAi Compound or a Licensed Product.



• Alnylam will promptly report in writing to Novartis any known or suspected infringement or
misappropriation of Alnylam Intellectual Property and will provide Novartis with all available
evidence supporting such infringement or misappropriation.



• Alnylam has the right to protect the Alnylam Intellectual Property, and Alnylam will
consult with Novartis regarding the status of any such action and will provide Novartis with copies
of all material documents relating to such action. Notwithstanding the foregoing, Novartis has the
sole and exclusive right to initiate a suit under Alnylam Intellectual Property to protect a
Discovered RNAi Compound, a Licensed Product or IP created solely by Novartis or jointly by
Novartis and Alnylam in the Research Collaboration; Alnylam must provide reasonable assistance at
Novartis’ request. Recoveries will be shared in a specified manner.



• Novartis and Alnylam will cooperate in responding to a claim challenging the validity of
any Alnylam Patent Right covering a Discovered RNAi Compound or a Licensed Product.




Definitions




     “Adopted Product” means a product containing RNAi Compound(s) that are Discovered,
Developed, Commercialized or Manufactured pursuant to the Adoption License.



     “Alnylam Intellectual Property” means Know-How and Patent Rights now or in the future
owned or licensed by Alnylam or its Affiliates, including Broad RNAi Intellectual Property.



     “Broad RNAi Intellectual Property” means all Know-How and Patent Rights now or in the
future owned or licensed by Alnylam or its Affiliates that relate to RNAi technology, products or
processes, including (a) the general structure, architecture, or design of nucleic acid based
molecules which engage RNAi mechanisms in a cell; (b) chemical modifications of nucleic acids
(including any modification to the base, sugar or internucleoside linkage, nucleotide mimetics, and
any end modifications) which do not abolish the RNAi activity of the nucleic acid molecules in (a);
(c) manufacturing techniques for the nucleic acid based molecules or chemical modifications of (a)
and (b); and (d) all uses or applications of nucleic acid based molecules or chemical modifications
in (a) or (b); but excluding Patents which relates solely to (i) a specific Target or small group
of Targets; or (ii) delivery technologies which may be broadly employed for delivery of nucleic
acid based molecules.



     “Collaboration Product” means any product that contains one or more Discovered RNAi
Compound(s) as active ingredient(s).



Page 24 of 61









 





     “Discovered RNAi Compound” means an RNAi Compound directed to a Selected Target that
is Discovered during the course of a program under the Novartis Agreement, together with all
derivatives of such RNAi Compound, where “derivative” means a compound that may contain
modified nucleotides or may have been modified by chemical or molecular genetic means but which
still, at least in vitro, functions through an RNAi mechanism against the same Target.



     “Licensed Products” means the Collaboration Products and the Adopted Products.



     “RNAi Compound” means any compound that in vitro or otherwise functions through the
mechanism of RNAi and consists of or encodes double-stranded RNA, and which double-stranded RNA is
optionally chemically modified to contain modified nucleotide bases or non-RNA nucleotides, and
optionally may be administered in conjunction with a delivery vehicle or vector.



     “RNAi Product” means any product that contains one or more RNAi Compounds as an active
ingredient.



     “Target” means: (a) a polypeptide or entity comprising a combination of at least one
polypeptide and other macromolecules, that is a site or potential site of therapeutic intervention
by a therapeutic agent; or a nucleic acid which is required for expression of such polypeptide; (b)
variants of a polypeptide, cellular entity or nucleic acid described in clause (a); (c) a defined
non-peptide entity, including a microorganism, virus, bacterium or single cell parasite; provided
that the entire genome of a virus shall be regarded as a single Target; or (d) a naturally
occurring interfering RNA or microRNA or precursor thereof.




Page 25 of 61











 





ROCKEFELLER (Tuschl)



License Agreement between The Rockefeller University and Alnylam Pharmaceuticals, Inc. effective
May 8, 2006 (“Tuschl Agreement”)




Brief Summary of Technology Covered by License:



The Rockefeller University granted Alnylam a license to intellectual property developed by Dr.
Thomas Tuschl relating to sequence-specific inhibition of microRNAs (RU 681) (also known as “Tuschl
IV”).




Scope of License (Section 1.1)



•      Alnylam’s non-exclusive, world-wide, sublicensable license is limited to a license to
research, develop, make, have made, use, have used, import, have imported, sell, offer for sale and
have sold Licensed Products for human and animal therapeutics.



•      Rockefeller Patent Rights were developed with funding from the U.S. National Institutes of
Health. The United States government retains rights in such intellectual property, including, but
not limited to, requirements that products, which result from such intellectual property and are
sold in the United States, must be substantially manufactured in the United States.




Certain Sublicense Terms (Section 1.5)





	 	•	 	Alnylam will only have the right to grant sublicenses if such sublicense (a) is granted
in conjunction with a license or sublicense of Alnylam’s rights under proprietary
intellectual property that is in addition to the Rockefeller Patent Rights, and (b) is
granted in connection with a bona fide collaboration with one or more third parties
established by written agreement that is for purposes of research and/or development of
products under a jointly prepared research plan.
	 
	 	•	 	Alnylam will prohibit the sublicensee from further sublicensing and require the
sublicensee to comply with the terms and conditions of the Tuschl Agreement (other than
Alnylam’s payment and reporting obligations).
	 
	 	§	 	Within thirty (30) days after Alnylam enters into a sublicense agreement, Alnylam will
deliver to Rockefeller a copy of the sublicense agreement which may be redacted except
with respect to terms, including financial terms that re not relevant to Alnylam’s
obligations under the Tuschl Agreement.




•      Upon an Alnylam bankruptcy event, payments due to Alnylam from its Affiliates or
sublicensees under the sublicense agreement in the form of milestone payments and royalties on
Licensed Products will, upon notice from Rockefeller to such Affiliate or sublicensee, become
payable directly to Rockefeller for the account of Alnylam. Upon receipt of such funds,
Rockefeller will remit to Alnylam the amount by which such payments exceed the amounts owed by
Alnylam to Rockefeller.




Page 26 of 61









 









	 	§	 	Alnylam is primarily liable to Rockefeller for any act or omission of a sublicensee
that would be a breach of the Stoffel Agreement if performed or omitted by Alnylam, and
Alnylam will be deemed to be in breach of the Stoffel Agreement as a result of such act or
omission.





Diligence (Section 2)





	 	•	 	Alnylam must provide Rockefeller within 30 days of the third and each subsequent
anniversary of the Effective Date with written progress reports discussing the
development, evaluation, testing and commercialization of all Licensed Products.





Payment Obligations (Sections 3 and 4)



• The following milestones are payable for each Licensed Product against an individual Gene
Target:




	 	 	 
	Receipt of IND approval.

	 	$[**]
	Dosing of first patient in Phase II Clinical Trials.

	 	$[**]
	Dosing of first patient in Phase III Clinical Trials.

	 	$[**]
	Receipt of NDA approval.

	 	$[**]






•



• A [**]% royalty is payable to Rockefeller on Net Sales of Licensed Products by Alnylam, its
Affiliates and its sublicensees (no offsets).



• If Rockefeller grants a license under the Rockefeller Patent Rights to any third party,
which will permit such third party to manufacture or sell for any use within the scope of the
license at a lower royalty rate than that provided in the Tuschl Agreement, Rockefeller will
promptly notify Alnylam of such license, including all material terms and conditions of such
license, and offer to Alnylam the lower royalty rates and all of the material terms and conditions
of such license. If Alnylam accepts such terms in writing, the royalty rate and all material terms
and conditions of such notice shall thereafter apply to Alnylam and the parties will promptly
execute an amendment to the Tuschl Agreement reflecting such terms and conditions.



• Alnylam must pay Rockefeller a one-time fee of $[**] within 30 days after granting a
sublicense to a permitted sublicensee.



• Payments are due to Rockefeller within 60 days after the end of the quarter in which the
royalties or fees accrue.




Books and Records (Sections 4.3 and 4.4)



• Sub-licensees are required to keep complete and accurate books and records to verify Sales,
Net Sales, and all of the royalties, fees, and other payments payable under


Page 27 of 61









 






the Tuschl Agreement. The records for each quarter will be maintained for at least 3 years after
submission of the applicable report required under the Tuschl Agreement.



• Upon reasonable prior written notice to Alnylam, sublicensees will provide an independent,
reputable CPA appointed by Rockefeller and reasonably acceptable to Alnylam with access to all of
the books and records required by the Tuschl Agreement to conduct a review or audit of Sales, Net
Sales, and all of the royalties, fees, and other payments payable under the Tuschl Agreement. If
the audit determines that Alnylam has underpaid any royalty payment by 5% or more, Alnylam will
also promptly pay the costs of the review or audit.




Non-Use of Name (Section 5.4)



• Sublicensees may not use the name, logo, seal, trademark, or service mark (including any
adaptation of them) of Rockefeller or any Rockefeller school, organization, employee, student or
representative, without the prior written consent of Rockefeller.




Termination (Section 6.2)



• Alnylam may terminate for convenience



• Alnylam must promptly inventory all finished product and works-in-product of Licensed
Products of its sublicensees. Inventory may be sold off unless Rockefeller terminates for a breach
by Alnylam or its sublicensees or Alnylam’s bankruptcy.




Prosecution and Enforcement (Section 7)



• Rockefeller controls the preparation, prosecution and maintenance of the Rockefeller Patent
Rights and the selection of patent counsel, with input from Alnylam. Alnylam will be copied on,
and allowed to comment upon, all substantive issues in the patent prosecution.



• Alnylam shall pay a pro rata share, not to exceed [**]%, for all reasonable out of pocket
attorney charges and official fees incident to the preparation, prosecution, and maintenance of
such patent applications and patents, not exceeding $[**]/year. If Rockefeller chooses not to
prosecute or maintain the patent rights, Alnylam may do so and receive a credit against its royalty
obligations in an amount equal to its expenses.



• Alnylam must inform Rockefeller promptly after learning of infringement of the Rockefeller
Patent Rights. Alnylam and Rockefeller will consult each other concerning response to
infringement. Rockefeller may enforce any infringement of the Rockefeller Patent Rights at
Rockefeller’s expense and retain the recoveries. If Rockefeller requests Alnylam to join such
enforcement litigation and Alnylam elects to do so, the recoveries will be shared between Company
and Rockefeller in proportion with their respective shares of the aggregate litigation
expenditures. Alnylam has step-in enforcement rights. Alnylam must not settle or compromise any
such litigation in a manner that imposes any


Page 28 of 61









 






obligations or restrictions on Rockefeller or grants any rights to the Rockefeller Patent Rights
without Rockefeller’s prior written permission. Step-in recoveries, after Alnylam’s expenses are
reimbursed, are treated as Net Sales subject to royalties.




Definitions




     “Gene Target” means a genomic microRNA locus, any portion thereof, any RNA transcribed
from within or overlapping such locus or portion, and all transcript and allelic variants thereof.



     “Licensed Products” means products that are researched, developed, made, made for,
used, used for, imported, imported for, sold, sold for or offered for sale by Alnylam or its
Affiliates or sublicensees and that either (i) in the absence of this Agreement, would infringe at
least one Valid Claim of the Rockefeller Patent Rights, or (ii) use a process or machine covered by
a Valid Claim of Rockefeller Patent Rights.



     "Net Sales” means with respect to each Licensed Product the gross amount invoiced by
Alnylam or its Affiliates or sublicensees on sales or other dispositions of such product to third
parties less Qualifying Costs directly attributable to a sale and actually taken and/or identified
on the invoice and borne by Company, or its Affiliates or sublicensees. “Qualifying Costs”
means: (a) customary discounts in the trade for quantity purchased, prompt payment or wholesalers
and distributors; (b) credits, allowances or refunds for claims or returns or retroactive price
reductions (including government healthcare programs and similar types of rebates) that do not
exceed the original invoice amount; (c) prepaid outbound transportation expenses and transportation
insurance premiums; and (d) sales, transfer, excise and use taxes and other fees imposed by a
governmental agency. Sales for clinical study purposes or compassionate, named patient or similar
use shall not constitute Net Sales



     “Rockefeller Patent Rights” means a patent application entitled “Anti Micro-RNA
Oligonucleotide Molecules” and related patent family, relating to sequence-specific inhibition of
microRNAs (RU 681).



Page 29 of 61









 





STANFORD (Sarnow/miR-122)



Co-Exclusive License Agreement among The Board of Trustees of the Leland Stanford Junior
University, Alnylam Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc. effective August 31, 2005
(each of Alnylam and Isis, a “Licensee”) (“Sarnow/miR-122”)



Brief Summary of Technology Covered by License:



• Co-exclusive license to use of mir-122 to reduce HCV replication (Stanford Docket S04-097);
research done in Sarnow lab supported by NIAID.




Scope of License (Section 3):



• Stanford grants to each of the Licensees a co-exclusive, worldwide right and license under
the Licensed Patents in the Exclusive Licensed Field of Use to develop, make, have made, use, have
used, import, offer to sell, and sell Licensed Products in the Licensed Territory.



• Stanford grants to each of Licensees a non-exclusive, worldwide right and license under the
Licensed Patent in the Non-Exclusive Licensed Field of Use to develop, make, have made, use, have
used, import, offer to sell and sell Licensed Products in the Licensed Territory.



• Stanford retains the right, on behalf of itself and all other non-profit academic research
institutions, to practice the Licensed Patents for any non-profit purpose, including sponsored
research and collaborations. Licensee agrees that, notwithstanding any other provision of this
Agreement, it has no right to enforce the Licensed Patents against any such institution. Stanford
and any such other institution have the right to publish any information included in the Licensed
Patents. If Stanford alters its requirements for license agreements with respect to the subjects
addressed in this Section, or enters into a license agreement with terms more favorable to a
licensee than those set forth in this Section, Stanford agrees to negotiate in good faith with the
Licensees to amend the terms of this Section based upon the reasonable written request of either
Licensee.



• The Bayh-Dole Act, including U.S. manufacturing obligations, applies.



Sublicensing Rights (Section 4):



• Each Licensee may grant sublicenses in connection with (Section 4.1):



• a bona fide collaboration with one or more third parties established by written agreement
(i) for purposes of research and/or development of products under a jointly prepared research plan;
and (ii) which includes a license or sublicense of such Licensee’s rights under related
intellectual property covering proprietary know-how or patent rights in addition to a sublicense to
the Licensed Patents; and/or




Page 30 of 61









 







• provision of services to such Licensee, including without limitation contract
manufacturing, and other services relating to development and commercialization of Licensed
Products.



• If both of Licensees or their sublicensees are unable or unwilling to serve or develop a
potential market or market territory for which there is a company willing to be a sublicensee,
Stanford may request the Licensees to negotiate in good faith a sublicense under the Licensed
Patents.



• Any sublicense:



• will prohibit any grant of a further sublicense by a sublicensee;



• will expressly include the provisions of Articles 8 (Royalty Reports, Payments, and
Accounting), 9 (Exclusions and Negations of Warranties) and 10 (Indemnity) for the benefit of
Stanford;



• will require the assumption of all obligations, including the payment of royalties
specified in the sublicense, to Stanford or its designee, if this Agreement is terminated; and



• is subject to this Agreement.



• Each Licensee will submit to Stanford a copy of each sublicense after it becomes effective,
which copy may be redacted except as to matters directly pertinent to such Licensee’s obligations
under this Agreement.



• If either Licensee grants a sublicense pursuant to Section 4.1(A), and receives an upfront
payment in connection therewith, the following amounts, if applicable, will be due to Stanford from
such Licensee within 60 days of the full execution of the agreement establishing such
collaboration:



• (A) if such agreement includes an upfront payment equal to or less than $[**], a payment
will be due to Stanford in the amount of $[**];



• (B) if such agreement includes an upfront payment greater than $[**] and equal to or less
than $[**], a payment will be due to Stanford in the amount of $[**];



• (C) if such agreement includes an upfront payment greater than $[**], a payment will be due
to Stanford in the amount of $[**].



• If Licensees jointly enter into a bona fide collaboration with a third party, the relevant
upfront payment shall be due only once for such collaboration. Any amounts representing the
reimbursement of costs previously incurred by a Licensee, including fully burdened personnel costs
and patent expenses, will not be included in determining the amount of any up front payment.




Page 31 of 61









 







• If Licensee pays all royalties due Stanford from a sublicensee’s Net Sales, Licensee may
grant that sublicensee a royalty-free or non-cash sublicense or cross-license.



Diligence:



• Each Licensee will use commercially reasonable efforts to (a) develop, manufacture, and
sell Licensed Products and develop markets for Licensed Products; and (b) meet the milestones shown
in its respective Appendix (see below). If a Licensee does not meet a milestone in its Appendix by
its corresponding date, it will have 30 days to submit to Stanford a specific written plan designed
to meet its obligations under this Section as promptly as possible using commercially reasonable
efforts. Each plan shall be subject to Stanford’s written approval, which will not be unreasonably
withheld. Such Licensee will have 3 months to demonstrate to Stanford’s reasonable satisfaction
its compliance with such plan.



• (Appendices) Each Licensee will be solely responsible for meeting the following diligence
milestones in its development programs:



• By the end of the year 2006, such Licensee will commence optimization of miRNA inhibitors.



• By the end of the year 2007, such Licensee will select the method of delivery for such
miRNA inhibitors.



• By the end of the year 2008, such Licensee (i) optimize a lead miRNA inhibitor and (ii)
propose additional clinical milestones to Stanford.



• By the end of the year 2010, such Licensee will complete preclinical development



· If Alnylam and Isis are jointly developing a given Licensed Product, both will be deemed in
compliance with their respective diligence obligations if either of Alnylam and Isis is fulfilling
such obligations.



• By March 1 of each year, each Licensee will submit a written annual report to Stanford
covering the preceding calendar year.



Payment Obligations (Section 7):



• The following annual maintenance fees are due under this Agreement:



• (A) $[**] on the first 4 anniversaries of the Effective Date;



• (B) $[**] on the 5th through 8th anniversaries of the Effective Date; and



• (C) $[**] on the 9th anniversary of the Effective Date and each anniversary thereafter.




Page 32 of 61









 









Unless instructed otherwise by Licensees, Stanford will send invoices for one half of the
above amounts to each Licensee.


•  (Section 7.3)The following milestones are payable for each Licensee for the first
Licensed Product in the Exclusive Field of Use:




	 	 	 
	IND acceptance in U.S. or first dosing of a subject outside the U.S.

	 	$[**]
	Dosing of first subject in first Phase III Clinical Trial

	 	$[**]
	NDA approval in U.S. or a foreign equivalent

	 	$[**]






•




•



• Milestones payable with respect to the first Licensed Product of each Licensee in the
Non-Exclusive Field of Use are [**]%) of those above..



• Milestones payable with respect to the second Licensed Product (i.e. a new molecular
entity) of each Licensee in the Non-Exclusive Field of Use are [**]%) of those in the first chart
above.



• For clarity, if Alnylam achieves any of the above milestone events, it does not relieve
Isis of the obligation to pay similar milestones when Isis, or its sublicensee achieves the same
milestone events; provided, however, that if Alnylam and Isis are jointly developing a given
Licensed Product, payments are due only once in respect of the achievement of a milestone event for
such Licensed Product.



• (Section 7.4) Each Licensee will pay Stanford earned royalties on Net Sales of [**]% of
Net Sales of such Licensee’s Licensed Product. If a Licensee becomes obligated to pay royalties to
any third parties in connection with the sale of a Licensed Product, the royalties due to Stanford
from such Licensee under this Section for such Licensed Product will be reduced in connection with
amounts paid to such third parties as follows: for every [**]% of Net Sales which is paid to such
third parties (in the aggregate) in a given calendar year, the royalty rate due to Stanford will be
reduced by [**]%. In no event, however, will the royalty payable to Stanford by such Licensee be
reduced below a floor of [**]%. If the Licensees are jointly developing and/or commercializing a
Licensed Product, the royalty set forth above shall be due only once with respect to such Licensed
Product.



• Royalty payments due to Stanford under Section 7.4 above in a particular year will be
reduced by the license maintenance fee paid by such Licensee and applicable to such year.



Non-Use of Names (Section 12.2):



• The Licensees will not identify Stanford in any promotional statement, or otherwise use the
name of any Stanford faculty member, employee, or student, or any


Page 33 of 61









 






trademark, service mark, trade name, or symbol of Stanford or its affiliated hospitals and clinics,
including the Stanford name, unless Stanford has given its prior written consent or as required by
law, rule or regulation. Permission may be withheld at Stanford’s sole discretion.



Prosecution and Enforcement (Section 13):



• Subject to Stanford’s approval, Isis will coordinate and be responsible for preparing,
filing, prosecuting and maintaining the Licensed Patents in Stanford’s name. The parties shall
work together to develop a prosecution strategy and decide in which countries the Licensed Patents
will be filed.



• Isis will



• (i) keep Stanford and Alnylam informed as to the filing, prosecution, maintenance and
abandonment, as applicable, of the Licensed Patents;



• (ii) furnish Stanford and Alnylam copies of documents relevant to any such filing,
prosecution maintenance and abandonment, as applicable;



• (iii) allow Stanford and Alnylam reasonable opportunity to timely comment on documents to
be filed with any patent office which would affect the Licensed Patents;



• (iv) give good faith consideration to the comments and advice of Stanford and Alnylam;
provided however that Stanford will have the opportunity to provide Isis with final approval on how
to proceed in any response or taking any such action; and



• (v) provide copies of any official written communications relating to the Licensed Patents
to Stanford and Alnylam within 10 days of Isis receiving such communication and Stanford and
Alnylam will provide any applicable comments to Isis no later than 5 days prior to the first
deadline (without extensions) to file a response or take any action relating to such communication.



• Isis may use counsel of its choice, which must be acceptable to Stanford and Alnylam, for
the filing, prosecution and maintenance of the Licensed Patents and the Licensees shall be billed
directly by such counsel.



• A Licensee or the Licensees will reimburse Stanford the following costs:



• all Stanford’s reasonable and actual out-of-pocket patenting expenses incurred after the
Effective Date related to the Licensed Patents.



• If one and only one Licensee decides to abandon ongoing prosecution and/or maintenance of
any of the Licensed Patents, on a country-by-country and Licensed Patent-by-Licensed Patent basis,
the continuing Licensee will pay 100% of the ongoing expenses for such Licensed Patent. Stanford
shall have the right to continue payment for such Licensed Patent in its own discretion and at its
own expense if both Licensees


Page 34 of 61









 






decide to abandon ongoing prosecution and/or maintenance of the Licensed Patents. If Stanford
decides to maintain such Licensed Patent, the license with respect to such Licensed Patent in such
country under this Agreement shall terminate with respect to the ceasing Licensee(s). Cessation of
payment by one Licensee as to a Licensed Patent will not affect the rights of the other Licensee
with respect to such Licensed Patent. If Isis is the Licensee wishing to cease payment of a
Licensed Patent, the responsibility for the prosecution of such Licensed Patent will transfer to
Stanford.



• Each Licensee may assign its rights and obligations under Sections 13.1 and 13.2 to a
sublicensee, subject to prior notification to and approval from Stanford.



• Stanford has the first right to institute action against a third party infringer which will
be executed (if at all) within 90 days after Stanford first becomes aware of the infringing
activity, and may name one or both Licensees as a party for standing purposes. Each Licensee may
elect to jointly prosecute the action (with Stanford) by providing written notice within 30 days
after the date of the notice from Stanford. If both Licensees elect not to jointly prosecute,
Stanford may pursue the suit, at its sole cost (including costs of litigation) and in such event
will be entitled to retain the entire amount of any recovery or settlement that is in excess of the
parties’ costs; if one or both Licensees elect to jointly prosecute, Stanford and the jointly
prosecuting Licensees will proceed in accordance with the Joint Suit provisions. If a Licensee
elects not to join a suit, that Licensee will discuss in good faith with Stanford the assignment of
rights, causes of action, and damages necessary for Stanford to prosecute the alleged infringement.



• Joint Suit. If Stanford and either or both Licensees are jointly prosecuting an
action against a third party infringer, they will share the out-of-pocket costs and any recovery or
settlement equally; and agree how they will exercise control over the action.



• (Sections 13.6 and 13.7) If Stanford elects not to participate in a suit, either or both
Licensee(s) may institute and prosecute a suit so long as it conforms with the requirements of this
Section. The Licensee(s) will reach agreement on the institution and prosecution of such suit and
the sharing of such costs among themselves and will diligently pursue the suit and the Licensee(s)
instituting the suit will bear the entire cost (including necessary expenses incurred by Stanford)
of the litigation. The Licensee(s) will keep Stanford reasonably apprised of all developments in
the suit, and will seek Stanford’s input and approval on any substantive submissions or positions
taken in the litigation regarding the scope, validity and enforceability of the Licensed Patents.
The Licensee(s) will not prosecute, settle or otherwise compromise any such suit in a manner that
adversely affects Stanford’s interests without Stanford’s prior written consent. If either or both
Licensees sue under Section 13.6, then any recovery in excess of any unrecovered litigation costs
and fees will be shared with Stanford as follows:



• Any recovery for past sales by the infringer of products, which, if sold by a Licensee,
would be Licensed Products will be deemed Net Sales for purposes of this Agreement, and such
Licensees will pay Stanford royalties;




Page 35 of 61









 







• Licensee and Stanford will negotiate in good faith appropriate compensation to Stanford for
any non-cash settlement, non-cash cross-license or payment for the right to make future sales.



Term and Termination (Section 14, 18.1):



• Any termination shall only terminate this Agreement between Stanford and the affected
Licensee, and it shall remain in full force and effect between Stanford and the non-affected
Licensee.



• Each Licensee may terminate its rights and obligations under this Agreement by giving
Stanford at least 30 days written notice.



• A breach by one Licensee of its obligations to Stanford under this Agreement may not be
used as a basis for termination of this Agreement by the non-breaching Licensee, nor may a breach
of any obligation arising between the Licensees under this Agreement be used as a basis for
termination by one Licensee.



Assignment (Section 15):



• Each Licensee may assign this Agreement as part of a sale, regardless of whether such a
sale occurs through an asset sale, stock sale, merger or other combination, or any other transfer
of such Licensee’s entire business, or that part of the Licensee’s business to which this Agreement
relates.



Definitions:




     “Exclusive Licensed Field of Use” means the research, development, commercialization
and monitoring of therapeutics for the treatment and prevention of Hepatitis C and directly related
conditions and diseases (including without limitation chronic hepatitis, cirrhosis and primary
liver cancer). The Exclusive Field of Use specifically excludes:




(A) diagnostics; and




(B) commercialization of reagents.



     “Licensed Patents” means Stanford’s U.S. Provisional Patent Application, Serial Number
[**], and the related patent family. “Licensed Patent” excludes any continuation-in-part (CIP)
patent application or patent unless the subject matter of such CIP patent application is
specifically described or claimed in another Licensed Patent and is filed within three (3) years of
the Effective Date. Licensed Patents exclude any claims relating to new matter that is invented by
Stanford after the Effective Date.



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     “Licensed Product” means a product in either the Exclusive Licensed Field of Use or
the Non-Exclusive Licensed Field of Use the making, using, importing or selling of which, absent
this license, infringes a Valid Claim of a Licensed Patent.



     “Non-Exclusive Licensed Field of Use” means the research, development,
commercialization and monitoring of therapeutics for the treatment and prevention of all conditions
or diseases other than Hepatitis C and directly related conditions or diseases.




Page 36 of 61












 





GARCHING (Co-Exclusive)




License Agreement among Garching Innovation GmbH (“GI”), Alnylam Pharmaceuticals, Inc. and
Isis Pharmaceuticals, Inc. effective October 18, 2004



Brief Summary of Technology Covered by License:




	•	 	The Max Planck Society granted co-exclusive rights Alnylam and Isis to patent applications
(known as “Tuschl III”) based on the microRNA work of Dr. Thomas Tuschl. These microRNAs have
the potential to be new drug targets or therapeutic products and are the subjects of the
licensed patent applications.





Scope of License (Section 2.1):




• GI hereby grants to each Alnylam and ISIS and their Affiliates a royalty-bearing
co-exclusive worldwide license, with the right to grant sublicenses, under the Patent Rights to
develop, make, have made, use, sell and import Licensed Products in the Field.



• MPG retains the right to practice under the Patent Rights for non-commercial scientific
research, teaching, education, non-commercial collaboration (including industry-sponsored
scientific collaborations) and publication purposes.



• Alnylam and ISIS acknowledge that the German government retains a royalty-free,
non-exclusive, non-transferable license to practice any government-funded invention claimed in any
Patent Rights for government purposes.



Sublicensing (Section 2.2):



• Alnylam and ISIS may each grant sublicenses to the rights granted to them under Section 2.1
to Third Parties, however only (i) as Naked Sublicenses, (ii) in connection with a Drug Discovery
Collaboration or Development Collaboration, or (iii) to a Sales Partner.



• Each Naked Sublicense shall be subject to the prior written approval of GI, which shall not
unreasonably be withheld. Alnylam or ISIS, as applicable, shall inform GI in writing at least 30
days prior to the intended signature of any such sublicense agreement in sufficient detail (in
particular regarding financial terms and other relevant information) to permit GI to decide whether
or not to approve. Any requested approval is deemed to be granted if GI does not refuse the
approval in writing within 30 days after receiving the necessary information; in particular, GI may
withhold its approval if GI deems the received information not sufficient.



• Each sublicense granted under this Agreement shall be subject and subordinate to, and
consistent with, the terms and conditions of this Agreement. Alnylam or ISIS, as applicable, shall
be liable that any subsequent sublicenses granted by the Sublicensees are subject and subordinate
to, and consistent with, the terms and conditions of this Agreement. In the event of a material
default by any sublicensee under an Isis or



Page 38 of 61









 







Alnylam sublicense, the applicable party will inform GI and take commercially reasonable efforts to
cause the sublicensee to cure the default or will terminate the sublicense. (Section 4.6)



• Within 30 days after the signature of each sublicense granted under this Agreement, Alnylam
or ISIS, as applicable, shall provide GI with a reasonably redacted copy of the signed sublicense
agreement.



Diligence (Section 4):



• Alnylam and ISIS shall each use commercially reasonable efforts, and shall oblige their
Affiliates and Sublicensees to use commercially reasonable efforts, to develop and commercialize
their respective Licensed Products.



• Semi-annual progress reports. ALNYLAM and ISIS shall each furnish, and require their
Affiliates to furnish to ALNYLAM and ISIS, to GI in writing, semi-annually, within 60 days after
the end of each calendar half year, with a report, stating in reasonable detail the activities and
the progress of their efforts (including the efforts of their Sublicensees) during the immediately
preceding half year to develop and commercialize their respective Licensed Products, on a
product-by-product and country-by-country basis. The report shall also contain a discussion of
intended development and commercialisation efforts for the calendar half year in which the report
is submitted.



Financial Obligations (Section 5):



• Alnylam and ISIS shall each pay to GI the following milestone payments for each of their
respective Licensed Products (including Licensed Products of their Affiliates and Sublicensees)
within 30 days:



	 	 	 	 	 
	Milestone Event	 	Milestone Payment
	First Initiation of Phase I Clinical Study
	 	$	[**]	 
	First Initiation of Phase II Clinical Study
	 	$	[**]	 
	First Initiation of Phase III Clinical Study
	 	$	[**]	 
	Regulatory Approval in USA, Japan or Europe
	 	$	[**]	 







	 	 	Each of the above milestone payment is due from the Party that is engaged in the
development and commercialization of such Licensed Product.
	 
	 	 	For each Licensed Product, milestone payments will only be due the first time such Licensed
Product achieves such milestone. A Licensed Product will be considered the same Licensed
Product as long as it has not been modified in such a way (unless as the result of
stabilizing, formulation or delivery technology) that would require the filing of a
different IND for such Licensed Product.
	 
	•	 	Royalties (Section 5.3):





Page 39 of 61









 





• Alnylam and ISIS shall each pay to GI for each of their respective Licensed Products
(including Licensed Products of their Affiliates and Sublicensees) covered by Valid Claims the
following running royalties on the incremental portion of annual Net Sales:



	 	 	 	 	 
	•  	 	Less than or equal to $[**] US Dollars
	 	[**]%
	 	 	 
	 	 
	•	 	Between $[**] US Dollars and $[**] US Dollars
	 	[**]%
	 	 	 
	 	 
	•	 	Between $[**] US Dollars and $[**] US Dollars
	 	[**]%
	 	 	 
	 	 
	•	 	Greater than $[**] US Dollars 
	 	[**]%






• Alnylam and ISIS shall each pay to GI for each of their respective Licensed Products
(including Licensed Products of their Affiliates and Sublicensees) covered by Pending Claims [**]%
of running royalties above



• If Alnylam or ISIS, or any of their Affiliates or Sublicensees, licenses any patents or
patent applications Controlled by a Third Party in order to make, use, or sell a Licensed Product
(explicitly excluding, without limitation, any Third Party patents and patent applications covering
any formulation, stabilization, or delivery technology, or any target for a Licensed Product) the
running royalties set forth in Sec. 5.3 will be reduced, on a country-by-country and
product-by-product basis, from the date running royalties have to be actually paid to such Third
Party, by [**]% of any running royalty owed to a Third Party for the manufacture, use or sale of a
Licensed Product, provided however that the running royalties due to GI will not be reduced to less
than [**]%.



• The running royalties stated in Section 5.3 shall in no event be reduced by the application
of this Section 5.4 to less than a minimum royalty rate of (i) [**]% for Licensed Products covered
by Valid Claims, and (ii) [**]% for Licensed Products covered by Pending Claims.



• In no event shall the total cumulative running royalty burden of Alnylam or Isis for a
Licensed Product arising out of this Agreement and any Existing GI Licenses, calculated on a
product-by-product and country-by-country basis, exceed [**]% for such a Licensed Product.



• Sublicense Revenues (Section 5.5):



• Subject to Section 5.5(d), in the event that Alnylam or ISIS grant a Naked
Sublicense to a Third Party pursuant to Section 2.2 (a), Alnylam or ISIS, as applicable, shall
pay to GI [**]% of their respective Sublicense Consideration received, due within 30 days after
receipt.



• Subject to Section 5.5(d), in the event that Alnylam or ISIS grant a sublicense to a Third
Party pursuant to Section 2.2 (a) in connection with a Drug Discovery Collaboration or Development
Collaboration, Alnylam or ISIS, as applicable, shall pay to



Page 40 of 61









 







GI the following percentages of their respective Sublicense Consideration received, due within 30
days after receipt:



	 	 	 	 	 
	•  	 	Sublicense granted
	 	Percentage due to GI
	 	 	 
	 	 
	•	 	Up to, but not including, filing of an IND:
	 	[**]%
	 	 	 
	 	 
	•	 	After filing of an IND
	 	[**]%
	 	 	 
	 	 
	•	 	After initiation of Phase II Clinical Study
	 	[**]%
	 	 	 
	 	 
	•	 	After initiation of Phase III Clinical Study
	 	[**]%
	 	 	 
	 	 
	•	 	After filing of a NDA
	 	[**]%






• If Alnylam or ISIS receives any non-cash Sublicense Consideration, Alnylam or ISIS, as
applicable, shall pay GI, at GI’s election, either (i) a cash payment equal to the fair market
value of the Sublicense Consideration, or (ii) the in-kind portion, if practicable, of the
Sublicense Consideration.



• (Section 5.5(d)) If Alnylam or ISIS grant a sublicense that includes, in addition to the
Patent Rights, patents or patent applications Controlled by Alnylam or ISIS, the percentage of the
Sublicense Consideration due to GI shall be based on the value reasonably attributable to the
Patent Rights relative to the value of the patents or patent applications Controlled by Alnylam or
ISIS included in such sublicense (such relative value of the Patent Rights hereinafter the “Patent
Rights Value”).



• Together with the copy of any sublicense agreement to be provided to GI according to Sec.
2.2, Alnylam or ISIS, as applicable, shall suggest to GI the Patent Rights Value based on a good
faith fair market value determination, together with any information reasonably necessary or useful
for GI to evaluate such suggestion.



• If a “fair market value” has to be determined, the Party obliged to suggest such fair
market value shall provide the other Party in due time with a good faith determination of the fair
market value, together with any information necessary or useful to support such determination. The
other Party shall have the right to provide the suggesting Party in due time with a
counter-determination of the fair market value, which shall include any information necessary or
useful to support such counter-determination.



Prosecution and Enforcement (Section 6):



• GI shall, in its sole discretion, apply for, seek issuance of, maintain, or abandon the
Patent Rights during the Term.



• Alnylam, ISIS and GI shall cooperate, if necessary and appropriate, with each other in
gaining patent term extension wherever applicable to the Patent Rights, and shall use reasonable
efforts to agree upon a joint strategy relating to patent term extensions.



Page 41 of 61









 





• Alnylam and ISIS shall together pay to GI [**]%, and each of Alnylam and ISIS shall pay
[**]% of such [**]% share, of all fees and costs, including attorneys fees, relating to the filing,
prosecution, maintenance and extension of the Patent Rights, which incur during the Term.



• If Alnylam or ISIS wish to cease payment for any of the Patent Rights, GI shall have the
right to continue payment for such Patent Rights in its own discretion and at its own expense; such
Patent Rights shall no longer be covered by this Agreement with respect to the ceasing party from
the date Alnylam or ISIS informs GI of its cessation of payments.



• Enforcement (Section 6.3):



• Alnylam and ISIS shall each promptly inform GI in writing if they become aware of any
suspected or actual infringement of the Patent Rights by any Third Party, and of any available
evidence thereof.



• Subject to the right of each Alnylam and ISIS to join in the prosecution of infringements
set forth below, GI shall have the right, but not the obligation, to prosecute (whether judicial or
extrajudicial) in its own discretion and at its own expense, all infringements of the Patent
Rights. The total costs of any such sole infringement action shall be borne by GI, and GI shall
keep any recovery or damages (whether by way of settlement or otherwise) derived therefrom. In any
such infringement suits, Alnylam and ISIS shall each, at GI’s expense, cooperate with GI in all
respects.



• Alnylam and ISIS shall each have the right at their sole discretion to join GI’s
prosecution of any infringements of the Patent Rights. GI and the joining Party(ies) will agree in
good faith on the sharing of the total cost of any such joint infringement action and the sharing
of any recovery or damages derived therefrom.



• If GI decides not to prosecute infringements of the Patent Rights, neither solely nor
jointly with Alnylam or ISIS, GI shall offer to Alnylam and ISIS to prosecute (whether jointly by
Alnylam and ISIS or solely by one of them) any such infringement in their own discretion and at
their own expense. GI shall, at the expense of the prosecuting Party(ies), cooperate. The total
cost of any such sole infringement action shall be borne by the prosecuting Party(ies), and the
prosecuting Party(ies) shall keep any recovery or damages derived therefrom.



• If a Party prosecuting infringements intends to settle the infringement (such as granting a
license or entering a settlement agreement), any such arrangement needs the prior written approval
of the other Parties, which shall not unreasonably be withheld. Any sublicense granted by Alnylam
or ISIS to a Third Party infringer shall be regarded and treated as a Naked Sublicense under this
Agreement.



Page 42 of 61









 





Term and Termination (Section 9):



• Alnylam and ISIS shall each have the right to terminate this Agreement, for any reason,
upon at least 3 months prior written notice to GI. Termination of this Agreement by either Isis or
Alnylam shall not be deemed to be termination by the other.



• If at least 50% of issued and outstanding shares of Alnylam or ISIS are assigned or
transferred to a Third Party, Alnylam or ISIS, as applicable, shall provide GI, upon GI’s request,
with written reports in reasonable detail on the actual and intended future activities of Alnylam
or ISIS, as applicable, to develop and commercialize Licensed Products. If the reports are not
provided to GI in due time and/or in sufficient detail, after 60 days written notice from GI, such
failure will be a material breach, and GI shall have the right to terminate this Agreement with
respect to such breaching party in accordance with the procedures set forth in Section 9.6. Alnylam
or ISIS, as applicable, shall inform GI promptly of the implementation of any such assignment or
transfer.



• GI shall have the right to terminate this Agreement upon 30 days prior written notice to
Alnylam or ISIS, if Alnylam or ISIS, as applicable, or any of their Affiliates, attack, or have
attacked or support an attack through a Third Party, the validity of any of the Patent Rights.



• If any license granted to Alnylam or ISIS under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license shall remain in full
force and effect, provided that (i) the Sublicensee is not then in breach of its sublicense
agreement, and (ii) the Sublicensee agrees, in writing within 30 days after the effective date of
termination, to be bound to GI as licensor under the terms and conditions of the sublicense
agreement, provided that GI shall have no other obligation than to leave the sublicense granted by
Alnylam or ISIS in place.



Non-Use of Names (Section 4.5):



• Neither Alnylam nor ISIS, nor their Affiliates or Sublicensees, may use the name of “Max
Planck Institute”, “Max Planck Society”, “Garching Innovation” or any variation, adaptation, or
abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents,
or any trademark owned by any of the aforementioned, in any promotional material or other public
announcement or disclosure without the prior written consent of GI or in the case of an individual,
the consent of that individual.



Assignment (Section 10.4):



• Neither this Agreement no any rights or obligations may be assigned or otherwise
transferred by Alnylam or ISIS to a Third Party without the prior written consent of GI.
Notwithstanding the foregoing, Alnylam and ISIS each may assign this Agreement to a Third Party in
connection with the merger, consolidation, or sale of all or substantially all of their assets or
that portion of their business to which this Agreement relates; provided, however, that this
Agreement shall immediately terminate if the proposed Third Party assignee fails to agree in
writing to be bound by the terms and conditions of this



Page 43 of 61









 







Agreement on or before the effective date of assignment. After the effective date of assignment,
the Third Party assignee shall provide GI, upon GI’s request, with written reports in reasonable
detail on the actual and intended future activities of the Third Party assignee to develop and
commercialize Licensed Products. If the Third Party assignee does not maintain a program to
develop and commercialize Licensed Products that is substantially similar or greater in scope to
the program of Alnylam or ISIS after the effective date of assignment, then GI has the right to
limit the scope of the co-exclusive license granted under this Agreement to such Licensed Products
actually covered by the program of the Third Party assignee.



Definitions:



     “Development Collaboration” means a collaboration by Alnylam and/or ISIS with a Third
Party whose purpose is the (i) further development and/or commercialization of a Licensed Product
discovered by Isis or Alnylam either on their own or as part of a Drug Discovery Collaboration or
(ii) further joint development and/or joint commercialization of Licensed Products, in each case,
beginning after the initiation of IND-Enabling Tox Studies for such Licensed Products.
Collaborations that do not include or involve the licensed Patent Rights shall not
constitute Development Collaborations.



     “Drug Discovery Collaboration” means a collaboration by Alnylam and/or ISIS with a
Third Party whose purpose is the joint discovery, joint development and/or joint optimization of
Licensed Products up to, but not including, IND-Enabling Tox Studies for such Licensed Products.



     “Existing GI Licenses” means any license agreement between Alnylam and GI in force and
effect prior to the Effective Date of this Agreement and relating to patents or patent applications
of MPG that also cover the manufacture, use and sale of Licensed Products.



     “Field” means use of Licensed Products



     (i) for each Party’s internal and collaborative research use, and



     (ii) for all therapeutic and prophylactic uses in human diseases,



     specifically excluding any commercial provision of Licensed Products as research reagents for
research purposes, and any diagnostic use.



     “Licensed Products” means any product, or part thereof, the manufacture, use or sale
of which, absent the license granted hereunder, would infringe one or more Pending Claims or one or
more Valid Claims of the Patent Rights.



     “Naked Sublicenses” means any sublicense to the Patent Rights granted by Alnylam
and/or ISIS to a Third Party that is not a license in connection with a Drug Discovery
Collaboration, Development Collaboration or Sales Partner agreement. Licenses that do not include
or involve rights to the Patents Rights shall not constitute Naked Sublicenses.



Page 44 of 61









 





     “Patent Rights” means the patents and applications listed on Exhibit A and the related
patent family.



     “Sales Partner” means any legal entity that is granted a sublicense to the Patent
Rights by Alnylam, ISIS, their Affiliates or Sublicensees solely to market, promote, distribute or
sell, or otherwise dispose of, Licensed Products in finished form.



     “Sublicense Consideration” means any consideration, whether in cash (e.g. initial or
upfront payments, technology access fees, annual fixed payments) or in kind (e.g. devices,
services, use rights, equity), received by Alnylam or ISIS and their Affiliates from Sublicensees
as consideration for the sublicense granted. Sublicense Consideration specifically excludes (i) any
milestone payments relating to the achievement of certain clinical events, (ii) any running
royalties on sales of products, (iii) payments specifically committed to reimburse Alnylam or ISIS
for the fully-burdened cost of research and development, (iv) payments made by the Sublicensee in
consideration of equity (shares, options, warrants or any other kind of securities) of Alnylam or
ISIS at fair market value, and (iv) equity (shares, options, warrants or any other kind of
securities) of the Sublicensee purchased by Alnylam or ISIS at fair market value.



Page 45 of 61









 





MIT




Amended and Restated Exclusive Patent License Agreement between Massachusetts Institute of
Technology (“MIT”) and Alnylam, dated May 9, 2007 (“MIT Agreement”)



Brief Summary of Technology Covered by License:




	•	 	M.I.T. granted Alnylam exclusive rights to develop and commercialize for human RNAi
therapeutics certain technology relating to novel lipid compositions that are potential
components of cationic liposomal formulations for cellular delivery of oligonucleotides. The
technology was developed in the laboratory of Professor Robert Langer.





Limitations on Scope of License (Sections 2.1, 2.3 and 2.5)




• The license granted to Alnylam is limited to a exclusive (for the Exclusive Period),
worldwide license under the Patent Rights to develop, make, have made, use and import Library
Products and Licensed Processes to develop, make, have made, use, sell, offer to sell, lease, and
import Licensed Products in the Field and to develop and perform Licensed Processes in the Field.



• Alnylam does not have the right to sell or offer for sale the Library Products separately
from a sale or offer for sale of a Licensed Product.



• MIT retains the right to practice under the Patent Rights for research, teaching, and
educational purposes. The U.S. federal government retains a royalty-free, non-exclusive,
non-transferable license to practice any government-funded invention claimed in any Patent Rights
as set forth in 35 USC 201-211, and the regulations promulgated thereunder, including the
requirement that Library Products, whether or not part of Licensed Products, used or sold in the
U.S. must be manufactured substantially in the U.S.



• The Patent Rights may not be asserted against non-for-profit research institutions that
practice the Patent Rights for research funded by (i) the institutions themselves, (ii) not-for
profit foundations, or (iii) any federal, state or municipal government. Alnylam may assert the
Patent Rights against not-for-profit research institutions only if the infringement activity of the
not-for-profit research institution was performed in the fulfillment of research sponsored by a
for-profit entity and the assertion of infringement must be limited to those specific activities.



Restrictions on Sublicensing by Alnylam (Sections 2.1 and 2.3)




• Alnylam may grant sublicenses under commercially reasonable terms and conditions only
during the Exclusive Period. Any sublicenses by Alnylam may extend past the expiration date of the
Exclusive Period, but any exclusivity of such sublicense will expire upon the expiration of the
Exclusive Period.



Page 46 of 61









 





• The sublicense must incorporate terms and conditions sufficient to enable Alnylam and its
Affiliates to comply with the MIT Agreement. Such sublicenses will also include provisions to
provide that if Sublicensee brings a Patent Challenge against MIT (except as required under a court
order or subpoena), Alnylam may terminate the sublicense.



• Upon termination of the MIT Agreement, any Sublicensee not then in default will have the
right to seek a license from MIT, and MIT agrees to negotiate such licenses in good faith under
reasonable terms and conditions.



• Alnylam may permit third parties (i) to use Library Products and Licensed Processes for the
purpose of research with academic or nonprofit institutions and contract research, including for
the conduct of clinical trials of a Licensed Product, and (ii) to sell Licensed Products under an
agency, consignment or equivalent arrangement, wherein such rights are not sublicense rights.



• Alnylam will promptly furnish MIT with a fully signed photocopy of any sublicense
agreement, which copy may be redacted except with respect to terms directly relevant to Alnylam’s
obligations under the MIT Agreement.



Diligence and Reporting (Sections 3.1 and 3.2)




• Sublicensees are required to use diligent efforts to develop Library Products and Licensed
Products and to introduce Licensed Products into the commercial market; thereafter Sublicensees are
required to make Licensed Products reasonably available to the public. Specifically, the following
obligations must be fulfilled:



• Written reports are due within [**] days after the end of each calendar year on the
progress of efforts during the immediately preceding calendar year to develop and commercialize
Licensed Products. Such reports will include the number of [**], a description of [**], and the
[**] that have been tested. The report will also contain a discussion of intended efforts and
sales projections for the year in which the report is submitted.



• Funding for research at MIT pursuant to the Budget set forth in Attachment C of the
Research Agreement.



• By [**], Library Products will be evaluated for use in [**].



• Prior to [**], at least [**] will be advanced to [**] studies in support of [**] for [**]
studies.



• Filing of [**] for Licensed Product [**] by [**].



• Commencement of [**] trial for a Licensed Product within [**] years of IND filing for such
Licensed Product.



Page 47 of 61









 





• First Commercial Sale of a Licensed Product within [**] for each such Licensed Product.



• If any Sublicensee is determined to have failed to fulfill any obligation under Sections
3.1(a) and 3.1(c) — (g) above, MIT may treat such failure as a material breach, subject to any
changes to such diligence requirements as may be mutually-agreed by the parties below.



• If Alnylam anticipates a failure to meet an obligation set forth in Section 3.1(c), (d),
(e), (f) or (g) above will occur, Alnylam will promptly advise MIT, and representatives of each
party will meet to review the reasons for anticipated failure. Alnylam and MIT will enter into a
written amendment to the MIT Agreement with respect to any mutually agreed upon change(s) to the
relevant obligation. If, after good faith discussion, Alnylam and MIT are unable to agree upon an
amendment to the obligation, Alnylam, at its discretion, may elect to extend the due date to meet
the obligation for such diligence obligation by one year by providing written notice to MIT along
with payment in the amount of $[**]. Alnylam may extend the due date of each diligence obligation
set forth in Section 3.1(c), (d), (e), (f) or (g) of the MIT Agreement only once during the term.



Financial Obligations (Section 4.1)




License Maintenance Fees:



• Alnylam will pay MIT the following license maintenance fees on the dates set forth below:



	 	 	 	 	 
	Each January 1st for 2008 and 2009
	 	$	[**]	 
	Each January 1st for 2010 and 2011
	 	$	[**]	 
	Each January 1st for 2012 and 2013
	 	$	[**]	 
	Each January 1st for 2014 and 2015
	 	$	[**]	 
	Each January 1st of every year thereafter
	 	$	[**]	 






• The annual license maintenance fee is nonrefundable, but may be credited to running
royalties subsequently due on Net Sales earned during the same calendar year, if any. License
maintenance fees paid in excess of running royalties due in such calendar year will not be
creditable to amounts due for future years.



Royalty Payments:



• Running royalties of [**]% of Net Sales of Licensed Products and Licensed Processes are due
within [**] days of the end of each calendar quarter.



• If Alnylam or an Affiliate is legally required to pay royalties to one or more third
parties in order to obtain a license or similar right necessary to practice the Patent Rights,
Alnylam will be entitled to credit up to [**]% of the amounts payable to such third



Page 48 of 61









 







parties against the royalties due to MIT for the same reporting period; provided, however, that (i)
in no event will the running royalties due to MIT, when aggregated with any other offsets and
credits allowed under the MIT Agreement, be less than [**]% of Net Sales in any reporting period,
and (ii) royalties due to third parties with respect to [**] patents (see Appendix B to MIT
Agreement) will not qualify for purposes of the foregoing offset against royalties.



Milestone Payments:



• Alnylam will pay MIT the amounts set forth below upon achievement by Alnylam or any of its
Affiliates or Sublicensees of certain milestone events as set forth below. Payments will be due in
respect of the achievement of such milestone events for each first Licensed Product containing an
miRNA Therapeutic(s) and/or an siRNA Therapeutic(s) towards a specific Target or a specific
combination of Targets; provided, however, that if in the course of development a given Licensed
Product is discontinued and replaced with a different Licensed Product for the same therapeutic
indication containing an miRNA Therapeutic(s) and/or an siRNA Therapeutic(s) towards at least one
Target that was also a Target of the discontinued Licensed Product, milestone payments already paid
for the discontinued Licensed Product will not be due for achievement of the same milestone
event(s) by the substituted Licensed Product.



	 	 	 	 	 
	Milestone Event	 	Payment
	Filing of an Investigational New Drug Application (or equivalent)
	 	$	[**]	 
	Dosing of first patient in a Phase 2 clinical trial (or equivalent)
	 	$	[**]	 
	Dosing of first patient in a Phase 3 clinical trial (or equivalent)
	 	$	[**]	 
	First Commercial Sale
	 	$	[**]	 






• In the event of an assignment as described in Article 10 of the MIT Agreement, the
milestone payments set forth above that have not yet come due, will instead be replaced with the
milestone events and payments set forth below.



	 	 	 	 	 
	Milestone Event	 	Payment
	Filing of Investigational New Drug Application (or equivalent)
	 	$	[**]	 
	Dosing of first patient in a Phase 2 clinical trial (or equivalent)
	 	$	[**]	 
	Dosing of first patient in a Phase 3 clinical trial (or equivalent)
	 	$	[**]	 
	First Commercial Sale
	 	$	[**]	 






Page 49 of 61









 






• The milestone events set forth in the two tables above are intended to be successive. In
addition and notwithstanding the foregoing, if any milestone is reached without achieving a
preceding milestone, then the amount which would have been payable on achievement of the preceding
milestone will be payable upon achievement of the next successive milestone. Alnylam will notify
MIT within ten (10) days of the achievement of any of the above milestones by Alnylam or any of its
Affiliates or Sublicensees.



Sublicense Income:



• If Alnylam or an Affiliate grants a sublicense of its rights under Section 2.1 of the MIT
Agreement, Alnylam will pay MIT, as applicable:



• [**]% of all Sublicense Income received by Alnylam or Affiliates from Sublicensees which
are also receiving rights to substantial technology and/or patent rights owned or controlled by
Alnylam or Affiliates related to the development of Licensed Products, whether such Sublicense
Income is received under the same agreement as the sublicense to Alnylam’s rights under Section 2.1
of the MIT Agreement and/or in a separate agreement. (To the extent that the only other patents
and/or technology rights received by Sublicensees are sublicense rights under the patent rights
listed in Appendix B, then any sharing of Sublicense Income will fall under clause (b)
below); and



• [**]% of all Sublicense Income received by Alnylam or Affiliates from Sublicensees if such
Sublicensees are receiving a sublicense to Alnylam’s rights under Section 2.1 of the MIT Agreement
alone or with a sublicense to the patent rights listed in Appendix B, without substantial
additional technology and/or other patent rights from Alnylam or Affiliates, whether or not in the
same agreement, as part of the same business arrangement related to Licensed Products.



• Such amount will be payable for each reporting period and will be due to MIT within [**]
days of the end of each reporting period.



Reports (Sections 5.1 and 5.2)




• Prior to First Commercial Sale of a Licensed Product or first commercial performance of a
Licensed Process, Alnylam is required to deliver annual reports within [**] days of the end of each
calendar year, containing information concerning the immediately preceding year, as further
described in Section 5.2 of the MIT Agreement (see below). The date of First Commercial Sale of a
Licensed Product or commercial performance of a Licensed Process must be reported to MIT within
[**] days of its occurrence.



• After First Commercial Sale of a Licensed Product or commercial performance of a Licensed
Process, reports are required to be delivered to MIT within [**] days of the end of each reporting
period containing information concerning the immediately preceding reporting period, as further
described in Section 5.2 of the MIT Agreement (see below).



Page 50 of 61









 





• Section 5.2 states that reports must include at least the following information for the
immediately preceding reporting period:



• the number of Licensed Products sold, leased, or distributed to independent third parties
in each country and, if applicable, the number of [**] used in the provision of services in each
country;



• a description of Licensed Processes performed in each country as may be pertinent to a
royalty accounting under the MIT Agreement;



• gross price charged in each country and, if applicable, the gross price charged for each
Licensed Product used to provide services in each country; and the gross price charged for each
Licensed Process performed in each country;



• calculation of Net Sales in each country, including a listing of applicable deductions;




• total royalty payable on Net Sales in U.S. dollars, together with the exchange rate used
for conversion;



• the amount of Sublicense Income received by Alnylam and its Affiliates and the amount due
to MIT from such sublicense income, including an itemized breakdown of the sources of income
comprising the Sublicense Income;



• [**] categorized by rights relating to [**];




• the dates on which milestone events are achieved and the milestone payments due; and




• [**] in accordance with the requirements of Article [**] of the MIT Agreement.



   If no amounts are due to MIT for any reporting period, the report will so state.



Recordkeeping and Audit Rights (Section 5.4)




• Sublicensees are required to maintain complete and accurate records reasonably relating to
(i) the rights and obligations under the MIT Agreement, and (ii) any amounts payable to MIT in
relation to the MIT Agreement, which records will contain sufficient information to permit MIT to
confirm the accuracy of any reports and payments delivered to MIT and compliance in other respects
with the MIT Agreement. Such records will be retained for at least [**] years following the end of
the calendar year to which they pertain, during which time a certified public accountant selected
by MIT (who will be required to enter into a confidentiality obligation with Sublicensee) may
inspect such records upon advance notice and during normal business hours solely for the purpose of
verifying any reports and payments or compliance in other respects with the MIT Agreement.



Page 51 of 61









 





Prosecution and Enforcement (Sections 6.1, 7.1-7.3 and 7.7)




• MIT will prepare, file, prosecute, and maintain all of the Patent Rights. Alnylam will
cooperate with MIT in such filing, prosecution and maintenance.



• So long as Alnylam remains the exclusive licensee of the Patent Rights in the Field,
Alnylam, to the extent permitted by law, will have the right, under its own control and at its own
expense, to prosecute any third party infringement of the Patent Rights in the Field, subject to
Sections 2.5(c) (Non-assert), 7.4 (Offsets) and 7.5 (Recovery) of the MIT Agreement. Prior to
commencing any such action, Alnylam will consult with MIT and will consider the views of MIT
regarding the advisability of the proposed action and its effect on the public interest.



• If Alnylam is unsuccessful in persuading the alleged infringer to desist or fails to have
initiated an infringement action within a reasonable time after Alnylam first becomes aware of the
basis for such action, MIT will have the right, at its sole discretion, to prosecute such
infringement under its sole control and at its sole expense, and to keep any recovery.



• If a Patent Challenge is brought against Alnylam by a third party, MIT, at its option, will
have the right within 20 days after commencement of such action to take over the sole defense of
the action. If MIT does not exercise this right, Alnylam may take over the sole defense of such
action.



• So long as Alnylam remains the exclusive licensee of the Patent Rights in the Field,
Alnylam will have the sole right to sublicense any alleged infringer in the Field for future use of
the Patent Rights in accordance with Alnylam’s rights under and the terms and conditions of this
Agreement. Any upfront fees as part of such sublicense will be shared equally between Alnylam and
MIT; other revenues to Alnylam pursuant to such sublicense will be treated as set forth in Article
4 of the MIT Agreement.



Consequences of a Patent Challenge by Sublicensee (Sections 12.5 and 4.3)




• If a Sublicensee brings a Patent Challenge against MIT (except as required under a court
order or subpoena), MIT may send a written demand to Alnylam to terminate the sublicense. If
Alnylam fails to so terminate such sublicense within 30 days of MIT’s demand, MIT may immediately
terminate the MIT Agreement and/or the license granted thereunder.



• Notwithstanding the foregoing, if MIT decides not to terminate the MIT Agreement and the
Patent Challenge is successful, Alnylam will have no right to recoup any royalties paid during the
period of challenge. If the Patent Challenge is unsuccessful, Alnylam will reimburse MIT for all
of its costs and expenses it incurred as a result of such Patent Challenge, including without
limitation attorneys fees, court costs, litigation related disbursements, and third party and
expert witness fees (collectively, “Litigation Costs”). Reimbursement for Litigation Costs
will be made within thirty (30) days of receipt of one or more invoices from MIT for such
Litigation Costs.



Page 52 of 61









 





Certain Termination Rights (Sections 12.1, 12.2 and 12.4)




• Alnylam has the right to terminate the MIT Agreement for any reason upon at least 6 months’
prior written notice to MIT and payment of all amounts due to MIT through the effective date of
termination.



• If Alnylam ceases to carry on its business related to the MIT Agreement, MIT will have the
right to terminate the MIT Agreement immediately upon written notice to Alnylam.



• MIT, at its sole discretion, may terminate the Exclusive Period upon ten (10) days written
notice to Alnylam if any of the following events occurs:  (a) Alnylam is in uncured material
default under the Research Agreement, including uncured failure to make any payments due
thereunder; or (b) the Research Agreement is terminated for any reason other than for (i) material
breach by MIT, (ii) the inability of Dr. Robert Langer to continue to serve as Principal
Investigator, and the inability of the parties to agree upon a replacement Principal Investigator,
an interim Principal Investigator, or an alternate arrangement for the performance of the Research
after Dr. Langer is no longer able to serve as Principal Investigator (capitalized terms used in
the foregoing clause have the meanings ascribed to them in the Research Agreement); or (iii)
circumstances beyond MIT’s reasonable control that preclude the continuation of the Research, as
provided for under the Research Agreement.



Definitions




“Development Candidate” means a pre-clinical Licensed Product which possesses desirable
properties of a therapeutic agent for the treatment of a clinical condition based on in vitro and
animal proof-of-concept studies.



“Exclusive Period” means the term of the MIT Agreement.



“Field” means therapeutic use in humans.



“Immunomodulatory Nucleic Acid” means a nucleic acid molecule that (i) stimulates or blocks
immune system functions, and (ii) the nucleotide sequence of which does not specifically target and
modulate gene expression. Immunomodulatory Nucleic Acid specifically excludes siRNA, miRNA and
nucleic acids that function through an RNA interference mechanism.



“Library Component” means a Library Product which is a set of reaction products formed by
an addition reaction between two individual monomers, which set will include all reaction products
and combinations within such set, including all isomers; and any compounds identical to any of the
foregoing, including individual reaction products within such set, regardless of the means by which
said compounds are prepared, manufactured or synthesized.



“Library Product” means any product that, in whole or in part: (i) absent the license
granted hereunder, would infringe one or more Valid Claims of the Patent Rights; or



Page 53 of 61









 





(ii) is manufactured by using a Licensed Process or that, when used, practices a Licensed Process.



“Licensed Process” means any process that, in whole or in part: (i) absent the license
granted hereunder, would infringe one or more Valid Claims of the Patent Rights; or (ii) when
practiced, uses a Library Product.



“Licensed Product” means any product that contains both (i) an RNAi Product and (ii) a
Library Product. Licensed Product specifically excludes any products containing or incorporating
any other therapeutically or pharmaceutically active agents, including without limitation proteins
or peptides, antibodies, Small Molecules, non-siRNA and non-miRNA nucleic acids, and
Immunomodulatory Nucleic Acids.



“miRNA” (“microRNA”) means a class of endogenous, non-coding, sequence specific
ribonucleic acid (RNA) between 21 to 25 nucleotides in length that modulates gene expression.
miRNA specifically excludes messenger RNA, and any other RNA that encodes a polypeptide, and
Immunomodulatory Nucleic Acids.



“miRNA Therapeutic” means a therapeutic containing, composed of or based on oligomers of
native or chemically modified RNA designed to either modulate an miRNA and/or provide the function
of an miRNA.



“ND98 Library Component” means the Library Component which is described in Appendix
C of the MIT Agreement.



“Patent Rights” means the patent applications listed on Appendix A to the MIT
Agreement entitled “Amine-Containing Lipids and Uses Thereof” and “A Combination Library of
Lipidoids: Efficient Systemic siRNA Delivery”, and resulting patents and patent applications.



“Research Agreement” means the sponsored research agreement between MIT and Alnylam
effective on May 8, 2007.



“Research Support Payment” means payments to Alnylam or an Affiliate from a Sublicensee for
the purposes of funding the costs of bona fide research and development of Licensed Products and/or
Library Products under a jointly prepared research plan and only to the extent such payments were
spent on such research and development of Licensed Products and/or Library Products, and only to
fund or pay for direct and indirect costs and fully loaded personnel costs, all as calculated under
GAAP. For the avoidance of doubt, Research Support Payments will mean payments that are expressly
intended only to fund or pay for (i) equipment, supplies, products or services, and (ii) the use of
employees and/or full time consultants, incurred or to be incurred on behalf of such Sublicensee to
achieve a research or development goal for Licensed Products and/or Library Products.



“RNAi Product” means a product containing one or more siRNA Therapeutics and/or miRNA
Therapeutics towards one or more Targets. For the avoidance of doubt, RNAi Product specifically
includes siRNA Therapeutics and miRNA Therapeutics in



Page 54 of 61









 







association with other molecules which are not therapeutically or pharmaceutically active, but
which function to improve delivery to cells, including, without limitation, siRNA and miRNA
Therapeutics which are covalently linked to, or otherwise associated with, lipids, carbohydrates,
peptides, proteins, aptamers and Small Molecules.



“siRNA” (“small interfering RNA”) means a double-stranded ribonucleic acid (RNA)
molecule designed to act through an RNA interference mechanism that consists of either (a) two
separate oligomers of native or chemically modified RNA that are hybridized to one another along a
substantial portion of their lengths, or (b) a single oligomer of native or chemically modified RNA
that is hybridized to itself by self-complementary base-pairing along a substantial portion of its
length to form a hairpin. siRNA specifically excludes messenger RNA, and any other RNA that
encodes a polypeptide, and Immunomodulatory Nucleic Acids.



“siRNA Therapeutic” means a therapeutic containing, composed of or based on siRNA and
designed to modulate the function of particular genes or gene products by causing degradation of a
messenger RNA to which such siRNA is complementary, and that is not an miRNA Therapeutic.



“Small Molecule” means a non-polymeric bioactive molecule that is not a peptide, protein,
DNA, RNA or a complex carbohydrate.



“Sublicense Income” means any payments that Alnylam or an Affiliate receives from a
Sublicensee in consideration of the sublicense of the rights granted Alnylam and Affiliates under
Section 2.1 of the MIT Agreement, including without limitation equity, license fees, milestone
payments (net of any sums due to MIT under this Agreement for the same milestone event), license
maintenance fees, and other payments, but specifically excluding:




	 	o	 	royalties on Net Sales;
	 
	 	o	 	minimum royalty upfront payments only to the extent such payments
equal actual royalties due to Alnylam;
	 
	 	o	 	fair market value of equity investments in Alnylam or an Affiliate by
a Sublicensee;
	 
	 	o	 	reimbursement of out of pocket patent expenses for the Patent Rights;
	 
	 	o	 	Research Support Payments;
	 
	 	o	 	loan proceeds paid to Alnylam by a Sublicensee in an arms length,
full recourse debt financing; and
	 
	 	o	 	any amounts received under an indemnification obligation.





Page 55 of 61









 





     For clarity, the amounts received by Alnylam or its affiliates related to the development of
Licensed Products will be considered Sublicense Income.



“Target” means (a) a single gene, as defined in the NCBI Entrez Gene database or any
successor database thereto, or a product of such gene, that is a site or potential site of
therapeutic intervention by an siRNA Therapeutic and/or an miRNA Therapeutic; (b) naturally
occurring variants of a gene or gene product described in clause (a); or (c) a naturally occurring
interfering RNA or miRNA or precursors thereof; provided that for the purposes of this definition a
viral genome will be regarded as a single gene, and that the DNA sequence encoding a specific miRNA
precursor will also be regarded as a single gene.



Page 56 of 61









 





TEKMIRA/UBC




The Sublicense Agreement between Tekmira and Alnylam, dated January 8, 2007 (“UBC Sublicense
Agreement”)



Brief Summary of Technology Covered by License: See Tekmira-Alnylam Agreement above.



Limitations on Scope of License (Sections 3.1 and 3.3)




• The sublicense granted to Alnylam is limited to an exclusive, worldwide license under the
rights granted to Tekmira in the University License Agreement (see below) with respect to
Technology to research, develop, manufacture, have made, distribute, import, use, sell and have
sold Products in and for the Alnylam Field. In addition, any sublicense granted by Tekmira to
Alnylam would be subject to Tekmira’s sublicense to Esperion Technologies, Inc. of certain
technology relating to liposome compositions and methods for the treatment of atherosclerosis.



• Under the University License Agreement, Tekmira obtained from the University an exclusive,
worldwide license to use and sublicense the Technology and to make, have made, distribute, import
and use goods, the manufacture, use or sale of which would, but for the license granted herein,
infringe a Valid Claim of any Patent, including a license to use and sublicense the Technology for
(a) the delivery of and use with nucleic acid constructs, and (b) the treatment, prophylaxis and
diagnosis of diseases in humans using an RNAi Product or miRNA Product, and to research, develop,
make, have made, distribute, import, use, sell and have sold RNAi Products and miRNA Products.



• University retains the right to use the Technology without charge in any manner whatsoever
for non-commercial research, scholarly publication, educational or other non-commercial use.



Restrictions on Sublicensing by Alnylam (Sections 3.2 and 4.2)




• Any further sublicense granted by Alnylam to a third party would be subject to the grant of
the following licenses by Alnylam to Tekmira under Alnylam’s rights in the Technology: (a) to
perform Tekmira’s obligations under the Collaboration with respect to Products, and the
Manufacturing Activities, on a non-exclusive basis, and (b) to develop, manufacture and
commercialize Inex Royalty Products for the treatment, prophylaxis and diagnosis of diseases in
humans, on an exclusive basis.



• Alnylam may grant sublicenses to third parties with respect to the Technology only upon
written notice to Tekmira and the University, and provided that the Sublicensee
agrees (i) to perform the terms of the UBC Sublicense Agreement as if such Sublicensee were Alnylam
under the UBC Sublicense Agreement; (ii) to represent that Sublicensee is not, as of the effective
date of the relevant sublicense agreement, engaged in a dispute with the University; and (iii) to
be subject to a written sublicense agreement that contains terms consistent with “the terms of this
Agreement” described in Section



Page 57 of 61









 





4.2(c) of the UBC Sublicense Agreement (see below) and that provides that the University is a third
party beneficiary of, and has the right to enforce directly against the sublicensee, the terms in
such sublicense agreement that are consistent with the terms listed in Section 4.2(c)(ii) of the
UBC Sublicense Agreement.



• Section 4.2(c)(ii) of the UBC Sublicense Agreement states that the “terms of this
Agreement” means (i) the terms set forth in the UBC Sublicense Agreement; (ii) terms in such
sublicense agreement consistent with Sections 1.3 (Alnylam Consent to Certain Disclosures to the
University), 1.7 (Rights of the University), 2.1 (Limited Warranties), 2.2 (Disclaimer of Product
Liability), 2.3 (Indemnification of the University), 2.4 (Monetary Cap Respecting UBC License), 2.5
(Disclaimer of Consequential Losses by the University), 2.6 (Litigation), 2.7 (UBC Trademark), 2.8
(Confidentiality of Terms) and 2.13 (Alnylam Warranties) of the Consent Agreement among Alnylam,
Tekmira and the University of even date with the UBC Sublicense Agreement (“Consent
Agreement”); and (iii) other customary and reasonable terms, including but not limited to terms
relating to breach and termination, that are consistent with Alnylam’s obligations to Tekmira under
the UBC Sublicense Agreement and the Tekmira Agreement.



• Any sublicense granted by Alnylam under the UBC Sublicense Agreement will survive
termination of the licenses or other rights granted to Alnylam under the UBC Sublicense Agreement,
and be assumed by Tekmira, as long as (i) the sublicensee is not then in breach of its sublicense
agreement, (ii) the sublicensee agrees in writing to be bound to Tekmira as a sublicensor and to
the University under the terms and conditions of the UBC Sublicense Agreement, and (iii) the
sublicensee agrees in writing that in no event will Tekmira assume any obligations or liabilities,
or be under any obligation or requirement of performance, under any such sublicense extending
beyond Tekmira’s obligations and liabilities under the UBC Sublicense Agreement.



• Alnylam is required to furnish Tekmira with a copy of each sublicense granted within 30
days after execution. Any such copy may contain reasonable redactions as Alnylam may make,
provided that such redactions do not include provisions necessary to demonstrate
compliance with the requirements of the UBC Sublicense Agreement. If University requests of
Tekmira that a less redacted version of any sublicense be provided to University, Alnylam agrees to
discuss in good faith with Tekmira and the University the University’s concerns.



Financial Obligations (Section 5.0)




• The consideration for the rights granted to Alnylam to the Technology under the UBC
Sublicense Agreement, and the consideration for the rights granted by Tekmira to Alnylam to other
technologies under the Tekmira Agreement, is the payment by Alnylam of milestones and royalties in
accordance with Article 7 of the Tekmira Agreement.



Prosecution and Enforcement (Section 7.7)




• Tekmira will have the right, with reasonable input from Alnylam, to identify any process,
use or products arising out of the Technology that may be patentable and will



Page 58 of 61









 







take all reasonable steps to apply for a patent in the name of the University, provided that
Tekmira pays all costs of applying for, registering, and maintaining the patent in those
jurisdictions in which Tekmira determines that a Patent is required.



• On the issuance of a patent for the Technology, Tekmira will have the right to become, and
will become the licensee of the same, all pursuant to the terms contained in the University License
Agreement, and Alnylam will have the right to become, and will become the sublicensee of such
rights pursuant to the terms contained in the UBC Sublicense Agreement.



• Should Tekmira:



• discontinue pursuing one or more patent applications, patent protection or patent
maintenance in relation to the Patent(s) or any continuation, continuation in-part, division,
reissue, re-examination or extension thereof; or



• not pursue patent protection in relation to the Patent(s) in any specific jurisdiction; or



• discontinue or not pursue patent protection in relation to any further process, use or
products arising out of the Technology in any jurisdiction;|



• then Tekmira will provide Alnylam with notice of its decision to discontinue or not to
pursue such patent protection concurrently with the notice provided to the University by Tekmira
pursuant to Section 6.6 of the University License Agreement.



• In the event of an alleged infringement by a third party of the Technology or any right
with respect to the Technology, or any complaint by Alnylam alleging any infringement by a third
party with respect to the Technology or any right with respect to the Technology, in each case that
is licensed to Alnylam under the UBC Sublicense Agreement, Alnylam will, subject to Tekmira having
first obtained the University’s consent as required by Article 7 of the University License
Agreement, have the right to prosecute such litigation at Alnylam’s expense.



• In the event of any litigation, Alnylam will keep Tekmira fully informed of the actions and
positions taken or proposed to be taken by Alnylam (on behalf of itself or a sublicensee) and
actions and positions taken by all other parties to such litigation.



• In the event of an alleged infringement of the Technology or any third party use of the
Technology which is Confidential Information, Alnylam and Tekmira agree that they will reasonably
cooperate to enjoin such third party’s use of the Technology.



• If any complaint alleging infringement or violation of any patent or other proprietary
rights is made against Alnylam (or a sublicensee of Alnylam) with respect to the manufacture, use
or sale of Product, then:



Page 59 of 61









 





• Alnylam will promptly notify Tekmira upon receipt of any such complaint and will keep
Tekmira fully informed of the actions and positions taken by the complainant and taken or proposed
to be taken by Tekmira (on behalf of itself or a sublicensee);



• Alnylam (or any sublicenseee, as the case may be) will pay all costs and expenses incurred
by Alnylam (or any sublicensee of Alnylam) in investigating, resisting, litigating and settling
such a complaint, including the payment of any award or damages and/or costs to any third party;
and



• if as a result of such suit it is decided that a Product infringes any valid claim on a
patent owned by another, Tekmira will consider fair distribution of Royalty Income.



Diligence and Reporting (Section 10.2)




• Alnylam is required to use its reasonable commercial efforts to promote, market and sell
the Products and utilize the Technology and to meet or cause to be met the market demand for the
Products and the utilization of the Technology.



• Alnylam is required to deliver to Tekmira an annual report, due on December 31 of each
year, which summarizes the major activities Alnylam has undertaken in the course of the preceding
12 months to develop and commercialize and/or market the Technology. The report must include an
outline of the status of any Products in clinical trials and the existence of any sublicenses of
the Technology.



Certain Termination Rights (Section 16.1)




• If Alnylam’s rights to Inex Technology are terminated under the Tekmira Agreement, the UBC
Sublicense Agreement and the license granted to Alnylam thereunder also terminates.



Definitions




Capitalized terms not otherwise defined below have the meanings given to them under the Tekmira
Agreement.



“1999 CRA” means the Collaborative Research Agreement between Tekmira and the University
dated effective January 1, 1999 and successor agreements to such Know-How.



“2007 CRA” means the Collaborative Research Agreement between Tekmira and the University
dated effective January 1, 2007 and successor agreements to such Know-How.



“Alnylam Field” means the use of Products for the treatment, prophylaxis and diagnosis of
diseases in humans.



“Improvements” means, generally (i) any and all patents and any and all patent applications
that claim priority to Patents; and (ii) any and all inventions arising therefrom. Notwithstanding
anything to the contrary in the University License Agreement, ownership of all Improvements (A)
that fall within clause (i) above will be



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assigned to the University; and (B) that fall within clause (ii) above will follow inventorship as
determined by U.S. patent law, except that the University will own all Improvements made by its
employees, whether alone or jointly with Tekmira, under the 1999 CRA or 2007 CRA.



“miRNA Product” means a product containing, comprised of or based on native or chemically
modified RNA oligomers designed to either modulate a micro RNA transcript and/or provide the
function of a micro RNA transcript.



“Patent(s)” means, generally, the patents and patent applications, including certain
“Wheeler Patents,” listed on Schedule A to the UBC Sublicense Agreement, and any claims of CIPs and
of resulting patents which are to the UBC Sublicense Agreement, and any reissues of such patents.



“Product(s)” means any RNAi Product or miRNA Product that, the manufacture, use or sale of
which would, but for the license granted herein, infringe a Valid Claim of one or more of the
Patent(s).



“RNAi Product” means a product containing, comprised of or based on small interfering RNAs
or small interfering RNA derivatives or other moieties effective in gene function modulation and
designed to modulate the function of particular genes or gene products by causing degradation of a
target mRNA to which such small interfering RNAs or small interfering RNA derivatives are
complementary, and that is not an miRNA Product.



“Technology” means the Patent(s) and any and all knowledge, know-how and/or technique or
techniques invented, developed and/or acquired, being invented, developed and/or acquired by the
University solely or jointly with Tekmira relating to the Patent(s), including, without limitation,
all research, data, specifications, instructions, manuals, papers or other materials of any nature
whatsoever, whether written or otherwise, relating to same.



“University License Agreement” means the License Agreement dated effective July 1, 1998, as
amended, pursuant to which Tekmira is the exclusive licensee of certain Patents owned by the
University of British Columbia (the “University”).




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