Exhibit 10.1


 


EXECUTION COPY


 


	
   

  	
   

  
	
   

  	
  CONFIDENTIAL TREATMENT
  REQUESTED  

  
	
   

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

  
	
   

  	
   

  



 


 




 





 


COLLABORATION AND LICENSE AGREEMENT


 


between


 


ISIS PHARMACEUTICALS, INC.


 


and


 


ORTHO MCNEIL, INC.


 


 


 




 





 


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COLLABORATION
AND LICENSE AGREEMENT


 


THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is made and entered into this
September 12, 2007 (the “Execution
Date”), by and between Ortho McNeil, Inc., a New Jersey
Corporation (“OMI”)
having a place of business at 1000 US Route 202, Raritan, New Jersey, 08869 and
Isis Pharmaceuticals, Inc., a
Delaware Corporation (“Isis”)
having a place of business at 1896 Rutherford Road, Carlsbad, California 92008.
OMI and Isis each may be referred to herein individually as a “Party,” or
collectively as the “Parties.”


 


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


 


WHEREAS, Isis and OMI each desire to collaborate (the “Collaboration”) to
conduct:


 


•                                                                  a Development Program to advance ISIS 325568
and ISIS 377131 through human clinical trials and ultimately Commercialize them
as Products; and


 


•                                                                  a Research Program to (i) [***] and (ii) at
OMI’s option [***], in each case for OMI to advance into human clinical trials
and ultimately Commercialize as Products.


 


WHEREAS, OMI will have exclusive rights to ISIS 325568 and ISIS 377131 and
Products in the Research Program and (unless otherwise specified in the R&D
Plan) will be solely responsible for the clinical development and
Commercialization of Products worldwide, in each case on the terms set forth in
this Agreement.


 


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


 


ARTICLE 1 - DEFINITIONS


 


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


 


ARTICLE 2 - 

GRANT OF RIGHTS; EXCLUSIVITY


 


Section 2.1                                                                                   License Grants to OMI.


 


(a)                                                                                                                                  Exclusive License. Subject to the terms and conditions of this
Agreement, Isis hereby grants to OMI a worldwide, exclusive license, with the
right to grant sublicenses as set forth in Section 2.2(a) below, under the
Product Specific Patents and Product Specific Know-How to research, develop,
make, have made, use, gain regulatory approval, commercialize, sell, offer for
sale, have sold, export and import Compounds and Products for all uses.


 


(b)                                                                                                                                 Nonexclusive License. Subject to the terms and conditions of this
Agreement and the limitations set forth in Section 2.4 below, Isis hereby
grants to OMI a worldwide, nonexclusive license, with the right to grant
sublicenses as set forth in Section 2.2 below, under the Isis Know-How, Isis
Program Patents, the Isis Core Technology Patents and the Isis Manufacturing
and Analytical Patents to research, develop, make, have made, use, gain
regulatory approval, commercialize, sell, offer for sale, have sold, export and
import Compounds and Products for all uses.


 


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(c)                                                                                                                                  Nonexclusive License to
Manufacturing Improvements. Subject
to the terms and conditions of this Agreement, the Parties grant to each a
nonexclusive license to those Manufacturing Improvements provided in Sections
4.7.1 and 4.7.2, subject to the terms and restrictions set forth therein.


 


Section 2.2                                                                                   Sublicenses.


 


(a)                                                                                                                                  All Sublicenses. The licenses granted to OMI under Section 2.1
are sublicensable only in connection with a sublicense of a Compound or Product
to any Affiliate of OMI or to any Third Party, in each case for the continued
Research, Development and Commercialization of such Compound or Product in
accordance with the terms of this Agreement.


 


(b)                                                                                                                                 Isis Manufacturing and
Analytical Technology. In
addition, OMI (or its Affiliate or Licensee) may only sublicense the Isis
Manufacturing and Analytical Technology, if OMI (or its Affiliate or Licensee)
(i) uses appropriate precautions and includes provisions in such sublicense to
protect the Isis Know-How or Product Specific Know-How such that the
sublicensee will not use any Isis Know How or Product Specific Know-How to manufacture
any other compounds or products for Third Parties and (ii) promptly notifies
Isis in writing specifically identifying the Isis Manufacturing and Analytical
Technology to be disclosed to such Third Party and identifying by name such
Third Party. At Isis’ reasonable request, OMI will enforce the provisions
contemplated by clause (i) above against any sublicensee who is in breach of
such provisions.


 


Section 2.3                                                                                   Exclusivity. During the Collaboration Term and continuing
thereafter so long as the exclusive license granted to OMI under Section 2.1(a)
is in effect and subject to the limitations set forth in Section 2.4 below,
Isis agrees that it will not work independently of this Agreement for itself or
any Third Party (including the grant of any license to any Third Party) with
respect to discovery, research, development and/or commercialization activities
with respect to ASOs whose primary mechanism of action is through its
hybridization to  Collaboration Gene
Target mRNA or pre-mRNA or products containing such ASOs. Isis agrees that it
will not work with a Third Party on research and development relating to (i) a
Collaboration Gene Target or (ii) during the Research Term, a gene target that
is part of the Target Pool, in each case, unless such work is conducted in
performance of the R&D Plan.


 


Section 2.4                                                                                   License Conditions;
Limitations.


 


(a)                                                                                                                                  During the Research Term, in order to
maintain the license granted to OMI under Section 2.1, OMI must meet its
obligations to fund and perform its obligations under the Research Program and
Development Program in accordance with Section 3.5 and 6.2. If OMI fails to
meet such obligations, Isis will have the right, consistent with and pursuant
to the provisions of Section 10.3, to terminate the Agreement, including the licenses
granted to OMI under Section 2.1.


 


(b)                                                                                                                                 After the expiration of the Collaboration
Term, in order to maintain the license granted to OMI under Section 2.1, on a
Compound-by-Compound or Product-by-Product basis, OMI must meet its obligations
to use Commercially Reasonable Efforts under Section 5.1 for the applicable
Compound or Product. If OMI fails to meet its obligations to use Commercially
Reasonable Efforts under Section 5.1 for a particular Compound or Product, Isis
will have the right, consistent with and pursuant to the provisions of Section
10.4, to terminate the Agreement with respect to such Compound or Product,
including the licenses granted to OMI under Section 2.1.


 


(c)                                                                                                                                  The nonexclusive license and exclusivity
granted under Section 2.1(b) and 2.3 are subject to and limited by the (i) Isis
In-License Agreements and (ii) Prior Third Party Agreements, each as listed in APPENDIX 6 attached hereto.


 


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


 


ARTICLE 3 - 

COLLABORATION


 


Section 3.1                                                                                   Objective. The Parties will collaborate in carrying out
a program to Develop Compounds directed to the Collaboration Gene Targets and
ultimately Commercialize them as Products. The Development Program is outlined
in the R&D Plan and includes the conduct of the [***] for GCGR and the
[***] for GCCR (the “Development
Program”). In addition, the Parties will collaborate in carrying
out a research program to (i) [***] and (ii) at OMI’s option, to [***] as
provided for in the R&D Plan  (the “Research Program”).


 


Section 3.2                                                                                   R&D Plan. The Collaboration will be carried out in
accordance with a written research and development plan (the “R&D Plan”) and
corresponding written research and development budget (the “R&D Budget”). The
initial R&D Plan and R&D Budget, that have been agreed to by the
Parties as of the Effective Date (as evidenced by separate signature of each
Party on the cover page of the R&D Plan) are hereby incorporated by
reference into this Agreement. The purpose of the R&D Plan is to detail the
responsibilities and activities of Isis and OMI with respect to carrying out
the Research Program and the Development Program. The R&D Plan will include
a description of the specific activities to be performed by the Parties in
support of the Collaboration, the estimated number of Isis FTEs to perform such
activities and projected timelines for completion of such activities. The
R&D Plan will include a list of subcontractors and consultants that Isis
plans to use to fulfill its obligations under the R&D Plan. The R&D
Budget will contain the estimated costs ([***]) associated with the tasks
outlined in the R&D Plan. The R&D Plan and R&D Budget may only be
amended with the unanimous approval of the R&D Committee (as permitted by
the R&D Committee Charter). The R&D Plan and R&D Budget will be
updated and amended from time to time, but at least annually. Therefore, [***]
of each year of the Collaboration Term ([***]), the R&D Committee will
review and update the R&D Plan and R&D Budget. In the event that the
Parties cannot agree to updates or amendments to the R&D Plan and R&D
Budget, the Parties will first pursue the dispute resolution provisions of the
[***] APPENDIX 5 and thereafter follow the
provisions of section 14.4.1.


 


Section 3.3                                                                                   Collaboration Term.


 


3.3.1                                                                                                                     The Development Program will begin on the
Effective Date and will end [***] from the Effective Date (the “Development Program Term”). In the event that Isis has not
completed its responsibilities under the Development Program within the
Development Program Term, OMI, at its sole discretion, may elect to take sole
responsibility for the Development of Compounds and Isis will cooperate fully
in the transfer of data, protocols and the like to facilitate OMI’s activities.
The Research Program will be carried out during the period following the
Effective Date and ending on the [***] of the Effective Date (the “Research Term”).


 


3.3.2                                                                                                                     OMI will have the option to extend the
Research Term for [***] of the Effective Date unless extended per Section 3.3.4
or 3.6.2. For each extension of the Research Term, the Parties will negotiate
in good faith a mutually agreed amendment and restatement of the R&D Plan
and R&D Budget. For each extension, if the Parties fail to reach agreement
on a mutually agreed amendment and restatement of the R&D Plan and R&D
Budget by the end of the then effective Research Term, there will be no further
extension to that Research Term.


 


3.3.3                                                                                                                     In order to exercise its option to extend the
Research Term, OMI must provide Isis a written notice exercising OMI’s right to
extend the Research Term at least [***]s prior to the scheduled expiration of
the Research Term. If OMI does not provide such written notice, the Research
Term will end when scheduled. In addition, no earlier than the [***] prior to
the scheduled expiration of the Research Term, Isis may request in writing from
OMI a nonbinding, good faith indication of whether or not OMI intends to extend
the Research Term. In


 


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such event, OMI will provide such nonbinding,
good faith indication to Isis at least [***] prior to the scheduled expiration
of the Research Term.


 


3.3.4                                                                                                                     In addition, if a new gene target is
designated a Selected Gene Target, as defined in Section 3.6 of this Agreement
the Parties will negotiate in good faith an amendment and restatement of the
R&D Plan and R&D Budget, including if necessary an extension of the Research
Term to allow for completion of the planned Research on such new Selected Gene
Target. If no agreement is reached on the amendment and restatement of the
R&D Plan and R&D Budget under this Section 3.3.4 then the R&D Plan
proposed by OMI will take effect; however, in no event will Isis be required to
allocate resources from the current R&D Plan for the benefit of the
amendment and restatement of the R&D Plan and R&D Budget. In any event,
if Isis does not wish to participate in a Development Program for the Selected
Gene Target, OMI may, at its sole option, continue to work on the Selected Gene
Target through the end of the Development Program Term and proceed consistent
with the provisions of Section 3.6.6.


 


Section 3.4                                                                                   R&D Committee. The Parties will establish and maintain a
joint research and development committee (the “R&D Committee”) to oversee the
conduct of the Collaboration, including, but not limited to approving any
changes to the R&D Plan and R&D Budget. The R&D Committee will be
established, operated and governed in accordance with the policies and
procedures set forth in APPENDIX 5
attached hereto [***] may be amended with the unanimous approval of the R&D
Committee members.


 


As needed, the R&D
Committee will establish subcommittees and working groups that will report to
the R&D Committee to further the objectives of the Collaboration.


 


The R&D Committee and
any subcommittees and working groups established by the R&D Committee will
dissolve at the end of the Collaboration Term.


 


Section 3.5                                                                                   Collaboration Staffing;
Funding; and Resources.


 


3.5.1                                                                                                                     Staffing. OMI will fund at the FTE Rate, and Isis will
supply, Isis FTEs during the Collaboration Term to perform activities in
support of and in accordance with the then-current R&D Plan.


 


3.5.2                                                                                                                     Funding; Expenses.


 


(a)                                                                                                                                  Within [***] of receipt of invoice from Isis
in the form provided as APPENDIX 7, but
not sooner than the Effective Date, OMI will pay Isis $[***] to reimburse Isis
for the [***]. In addition, OMI will reimburse Isis for any [***] (such
reimbursements to be added to and paid for under the invoice under Section
3.5.2(b) below).


 


(b)                                                                                                                                 Within [***] of receipt of an invoice from
Isis in the form provided as APPENDIX 7, but
not sooner than the Effective Date, OMI will pay Isis for the OMI-funded Isis
FTEs assigned to the R&D Plan in accordance with Section 3.5.1 for the
period of time commencing on the Effective Date and ending on the last day of
the Third Calendar Quarter of [***].


 


(c)                                                                                                                                  Thereafter, no earlier than [***] before the
[***] of any Calendar Quarter during the Collaboration Term, Isis will invoice
OMI in the form provided as APPENDIX 7, and
within [***] of receipt of such invoice from Isis, OMI will pay Isis for the
OMI-funded Isis FTEs assigned to the R&D Plan in accordance with Section
3.5.1 for such Calendar Quarter (a prorated amount will be payable for any
portion of a Calendar Quarter). Such FTE payment obligation of OMI will be
subject to Isis providing such qualified FTE scientists. No later than [***]
following the end of each Calendar Quarter, Isis will provide OMI with a report
of the number of FTEs assigned to the Collaboration with a summary of their
activities. Any overpayment by OMI may be applied by OMI to the funding of Isis
FTEs in a subsequent Calendar Quarter.


 


(d)                                                                                                                                 Isis will bear its own costs, including costs
related to research supplies, consumables and [***], in performing its
obligations under the R&D Plan, provided
that OMI will reimburse Isis for (i) [***] expenses identified in
the R&D Budget (“Program
Costs”) and


 


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(ii) the costs of [***]. The Program Costs
may include, for example, [***], but will not include routine laboratory
supplies. For each project under the R&D Plan, the R&D Committee will
set a budget for the Program Costs. At the end of each Calendar Quarter during
the Research Term, Isis will invoice OMI in the form provided as APPENDIX 7 for the Program Costs incurred during such
Calendar Quarter, provided, however,
that (x) for any particular item of such cost in excess of [***] of the amount
allocated for such item in the budget will require the written approval of OMI
prior to being incurred and (y) OMI will not be responsible for payment for
those items of such cost in excess of [***] of the amount allocated for such
item in the budget that are incurred by Isis without OMI’s prior written
consent (which consent can be made by the R&D Committee, as evidenced by
written minutes). OMI will pay any correct invoices within [***] after receipt
thereof. Notwithstanding the foregoing, in no
event shall the R&D Budget exceed [***] of the budgeted costs in a Calendar
Quarter without the R&D Committee’s approval, except
to the extent any Program Costs specifically allocated to a different Calendar
Quarter in the R&D Budget are actually incurred in the Calendar Quarter in
question.


 


Section 3.6                                                                                   Target Pool. The Target Pool, as defined herein (“Target Pool”),  identifies up to [***] gene targets including
the gene targets selected for collaborative Research, Development and Commercialization
under the Research Program (each such gene target is a “Selected Gene Target”).
The number of Selected Gene Targets is initially limited to [***], but this
limit may be increased as contemplated by clause (iii) of Section 3.6.2 below
or upon mutual written agreement of the Parties. The gene targets that are part
of the Target Pool (including which of such gene targets are the Selected Gene
Targets and whether such gene target is in “Stage 1” or “Stage 2” under the
R&D Plan) will be listed on APPENDIX 12,
which may be updated from time to time by the Parties in accordance with this
Agreement. OMI will have [***] following the Effective Date to designate the
initial gene targets it wants to place in the Target Pool. In addition, OMI, at
a minimum, must select the first [***] Selected Gene Targets on or before the
Effective Date.


 


3.6.1                                                                                                                     Target Substitution Procedures. At any time during the Research Term the
Parties may mutually agree in writing to substitute and replace a gene target
from the Target Pool for an existing Selected Gene Target. In addition, OMI can
unilaterally (i.e. without Isis’ agreement) substitute a gene target from the
Target Pool for an existing Selected Gene Target at any time during the
Research Term; provided however,
that OMI is only allowed one such unilateral substitution in any [***] period
unless OMI is making a substitution pursuant to an Inquiry Response under
Section 3.6.2 below or OMI is substituting to replace a Selected Gene Target
for which OMI has Designated a Clinical Candidate (collectively, the “Substitution Conditions”).
OMI will provide Isis with written notice of its intent to substitute,
indicating which Selected Gene Target it wishes to substitute out and which new
gene target from the Target Pool (the “Proposed Substitution Target”) it wishes to
substitute in. Provided OMI has satisfied the Substitution Conditions, at such
time, the Proposed Substitution Target will become a Selected Gene Target and
the gene target substituted out will no longer be considered part of the Target
Pool or a Collaboration Gene Target, Isis’ obligations (including but not
limited to Section 2.3) and OMI’s licenses under this Agreement with respect to
such gene target and any ASOs targeting such gene targets will terminate. In
such event, OMI will be able to add a new gene target to the Target Pool in
accordance with Section 3.6.3 below.


 


3.6.2                                                                                                                     Third Party Inquiries. If during the Research Term, Isis receives
a [***] from a Third Party to obtain a license from or collaborate with Isis
regarding a gene target that is in the Target Pool but is not a Selected Gene
Target (a “Requested
Target”), Isis will promptly notify OMI in writing regarding
such request (without any requirement to identify such Third Party) (an “Inquiry Notice”). OMI
will have [***] from receiving an Inquiry Notice to notify Isis in writing
whether OMI wishes to (i) remove such Requested Target from the Target Pool,
(ii) substitute out a Selected Gene Target for such Requested Target in
accordance with Section 3.6.1 above, or (iii) mutually agree with Isis upon an
appropriate expansion to the R&D Plan and


 


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R&D Budget such that the R&D Plan
includes such Requested Target as a [***] (or [***], as the case may be) Selected
Target (each such notice, an “Inquiry Response”). If OMI provides Isis with an
Inquiry Response contemplated by subpart (i) above or fails to provide Isis
with an Inquiry Response within [***] of receiving an Inquiry Notice, the
Requested Target will no longer be part of the Target Pool, will no longer be
considered a Collaboration Gene Target, Isis’ obligations under this Agreement
with respect to such Requested Target (including but not limited to Section
2.3) will terminate and OMI will be able to add a new gene target to the Target
Pool in accordance with Section 3.6.3 below. If OMI provides Isis with an
Inquiry Response contemplated by subpart (iii) above, Isis and OMI will
mutually agree upon an appropriate expansion to the R&D Plan and R&D Budget
such that the R&D Plan includes such Requested Target, in which event the
Requested Target will be considered a Selected Gene Target.


 


3.6.3                                                                                                                     Adding Targets to Target Pool. If during the Research Term and as a result
of Sections 3.6.1 or 3.6.2 above or because OMI has Designated as a Clinical
Candidate a Compound to a Selected Gene Target, the Target Pool has less than
[***] gene targets, OMI may add a new gene target to the Target Pool by
providing Isis with a written notice (the “Request Notice”) of the gene target it
wishes to add to the Target Pool (the “Proposed Target”). The Request Notice will
include the gene name, the NCBI accession number or nucleic acid sequence for
the Proposed Target. Within [***] of receipt of the Request Notice, Isis will give
OMI written notice (i) stating if any of the criteria set forth in clauses (a)
through (c) below applied to such Proposed Target at the time of Isis’ receipt
of the Request Notice and (ii) fully disclosing all relevant Isis In-Licensed
Agreements and prior Third Party Agreements and other potential encumbrances
known by Isis and related to the Proposed Target (“Target Encumbrances”). If, at such
time, the Proposed Target is (a) subject to Isis’ own internal program pursuant
to which Isis has identified a lead compound, (b) encumbered by a contractual
obligation between Isis and a Third Party that would preclude Isis from
collaborating with OMI under this Agreement or from granting a license under
Section 2.1 with respect to the Proposed Target, or (c) the subject of a [***]
Isis has received from a Third Party regarding a potential license or
collaboration, then, in each case, the Proposed Target will be rejected and
will not become a part of the Target Pool. If the Proposed Target is rejected,
OMI can request another gene target in accordance with the terms of this
Section 3.6.3. If the Proposed Target is not rejected, the Proposed Target will
become a member of the Target Pool; provided,
however, that if the Proposed Target has any Target Encumbrances (and
Isis has fully disclosed such Target Encumbrances to OMI), before such Proposed
Target can become a Selected Gene Target, OMI must agree in writing (within
[***] of receiving from Isis the description of such Target Encumbrances) to
assume all applicable Target Encumbrances for such Proposed Gene Target. Target
Encumbrances assumed by OMI under this Section will be considered Isis Third
Party Payments under Section 6.5.2. In addition, whenever a gene target becomes
part of the Target Pool, the R&D Committee will agree whether a Compound
targeting such gene target is in [***] as set forth in the R&D Plan.


 


3.6.4                                                                                                                     Lapse of Third Party Interest. Notwithstanding the provisions of Section
3.6.2 and 3.6.3, if any gene target is either removed from the Target Pool
pursuant to clause (i) of Section 3.6.2 or not included in the Target Pool
pursuant to clause (c) of Section 3.6.3 and the proposed
transaction/negotiation has not, within [***] of such removal or rejection
resulted in a signed agreement preventing Isis from including such gene target
in the Target Pool, Isis will notify OMI in writing. In such event, but within
the [***] following receipt of such notice, OMI will have the right to include
such gene target in the Target Pool in addition to the gene targets already in
the Target Pool even if it increases the size of the Target Pool above [***]
gene targets.


 


3.6.5                                                                                                                     Confidentiality. The fact that OMI has included a particular
gene target in the Target Pool or has selected a gene target as a Selected Gene
Target is Confidential Information of OMI.


 


3.6.6                                                                                                                     End
of Research Term. Upon the expiration of the Research Term, any gene
targets in the Target Pool that are not Selected Gene Targets will no longer be
considered a Collaboration Gene Target and Isis’ obligations under this
Agreement with respect to such gene


 


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targets (including but not
limited to Section 2.3) will terminate. In addition, within [***] following the
end of the Research Term, if a Research Compound targeting a Selected Gene
Target has not satisfied the Designation of a Compound as Clinical Candidate,
then such Selected Gene Target will no longer be considered a Collaboration
Gene Target. Isis’ obligations (including but not limited to Section 2.3) and
OMI’s licenses under this Agreement with respect to such gene target and any
ASOs targeting such gene target will then terminate, and, subject to Article
11, Isis will own any data generated under the R&D Plan for such gene
target and any ASOs targeting such gene target. OMI will have the right to use
any data generated under the R&D Plan for its own internal research
purposes that are unrelated to any Discontinued Products.


 


Section 3.7                                                                                   Collaboration Records. Each Party and its contractors will maintain
complete and accurate records of all work conducted in the performance of the
Collaboration and all results, data, inventions and developments made in the
performance of the Collaboration. Such records will be in sufficient detail and
in good scientific manner appropriate for patent and regulatory purposes. Isis
will maintain appropriate records sufficient to document the work performed by
each of the individuals comprising the FTEs working in support of the
Collaboration and the time such individuals spent working in support of the
Collaboration. Upon reasonable prior written notice, Isis will provide OMI the
right to inspect such records, and will provide copies of all requested
records, to the extent reasonably required for the performance of OMI’s rights
and obligations under this Agreement. Upon reasonable prior written notice, and
solely with respect to Discontinued Products, OMI will provide Isis the right
to inspect such records, and will provide copies of all requested records, to
the extent reasonably required for the performance of Isis’ rights and
obligations under this Agreement. In each case, each Party will maintain such
records and the information it receives from the other Party in confidence in
accordance with Article 8 hereof and will not use such records or information
except to the extent otherwise permitted by this Agreement.


 


Section 3.8                                                                                   Disclosure of Results of
Research Program and Development Program.  The
results of all work performed by the Parties as part of the Collaboration will
be promptly disclosed to the other Party in a reasonable manner as such results
are obtained. In addition, Isis will periodically provide OMI with written
reports of the work performed under the Collaboration and the results achieved
by Isis. Isis and OMI will provide reports and analyses at each R&D
Committee meeting, and more frequently on reasonable request by the R&D
Committee, detailing the current status of the Research Program and Development
Program. In addition, on reasonable request by a Party, the other Party will
make presentations of its activities in the performance of the Collaboration to
inform such Party of the details of the work done in the performance of the
Collaboration. The results, reports, analyses and other information regarding the
Collaboration disclosed by one Party to the other Party pursuant hereto may be
used only in accordance with the rights granted and other terms and conditions
under this Agreement. Upon reasonable request by OMI, Isis will provide OMI
with additional data, results and other information with respect to the work
performed by Isis in the performance of the Collaboration. Any reports
required, excluding reports needed for submission to a Regulatory Agency, under
this Section 3.8 may take the form of and be recorded in minutes of the R&D
Committee that will contain copies of any slides relating to the results and
presented to the R&D Committee. Reports needed to support regulatory
submissions and updates to a Regulatory Agency will be provided [***] and in a
format as agreed upon by the R&D Committee or designated sub committee.


 


In addition, within [***] of
OMI’s request, Isis will transfer to OMI copies of all data, results, and
information related to testing and studies of the Compounds (including
analytical test results and non-clinical pharmacology and safety data) in the
possession of Isis to the extent such data, results and/or information is
necessary or useful for the continued


 


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Development and Commercialization
of Products, including but not limited to any and all information directly
relating to manufacturing methods (including related analytical methods) of the
Compounds or Products.


 


Section 3.9                                                                                   Research Efforts; Resources,
Scientific Manner. Each Party
will use Commercially Reasonable Efforts to perform the Collaboration,
including its responsibilities under the R&D Plan.


 


3.9.1                                                                                                                     Throughout the Collaboration Term, Isis will
assign no less than the number of FTE qualified scientists specified in the
R&D Plan to perform the work set forth in the then-applicable R&D Plan.
The mixture of skills and levels of such FTEs will be appropriate to the
scientific objectives of the Research Program or Development Program (as
applicable).


 


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


 


3.9.3                                                                                                                     The Collaboration will be conducted by each
Party in good scientific manner, and in compliance with all applicable GCP, GLP
and GMP, and applicable legal requirements, to attempt to achieve efficiently
and expeditiously the Objectives of the Collaboration. Each Party will comply
with all Applicable Laws, in the performance of work under this Agreement.


 


3.9.4                                                                                                                     Isis will not perform any of its obligations
under the R&D Plan through one or more subcontractors or consultants,
without the prior written approval of OMI, such approval not to be unreasonably
withheld. OMI will promptly notify Isis regarding any Third Party OMI uses to
conduct research under the R&D Plan or that OMI transfers Compounds or
Products to, including identifying such Third Party.


 


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


 


9

















 


Section 3.11                                                                            Safety Database


 


3.11.1              OMI  shall establish the global safety database of
adverse events and pregnancy reports for the Compound/Product that will be used
for regulatory reporting and responses to safety queries from Regulatory
Authorities. Isis shall promptly transfer all clinical adverse event and drug
exposure during pregnancy data that it has regarding the Compounds or Products
to OMI for entry into the global safety database upon request from OMI.


 


3.11.2              [***] a database that includes information
regarding the safety and tolerability of [***] drug compounds, individually and
as a class, including information discovered during pre-clinical and clinical
development (the “[***]
Database”).


 


(a)                                                                                                                                  In an effort to maximize understanding of the
[***] will cooperate in connection with populating the [***] Database. In
accordance with Applicable Law and any applicable informed consents or other
Third Party obligations, [***] with copies of [***] serious adverse event final
reports related to [***]. In addition, in connection with any reported serious
adverse event (including any follow-up or amended reports), in accordance with
Applicable Law and any applicable informed consents or other Third Party
obligations and to the extent [***] has collected such data, [***], the
following [***]  All such information
[***] in connection with this Section will be [***] Confidential Information; provided, however, that [***] any Third
Party so long as [***] does not disclose to any Third Party the [***] in
connection with any such disclosure.


 


(b)                                                                                                                                 From time to time, [***] the information in
the [***] Database to conduct analyses to keep [***] informed regarding class
generic properties of [***], including with respect to safety. As such, if and
when [***] that may be relevant to a Compound or Product (including potential
class-related toxicity liabilities), [***] of such issues, and if requested,
provide the data supporting [***] regarding such issues.


 


(c)                                                                                                                                  [***]


 


(d)                                                                                                                                 In addition, each Party will notify the other
Party in writing if such Party confirms that a serious adverse event with
respect to a Product has occurred. Such notice will be provided within [***] of
confirming the serious adverse event.


 


ARTICLE 4 - 

MANUFACTURING


 


Section 4.1                                                                                   Supply of ASO for Research
Program. Isis agrees to
manufacture and supply all ASOs for use in support of the Research Program. [***]
will bear its own costs for the manufacture of all ASO needed for research
through the [***] under the R&D Plan. Once a Selected Gene Target has [***]
under the R&D Plan, OMI will order additional quantities of API for
Research Compounds directed to such Selected Gene Target in [***] increments. Isis
agrees to supply such quantities which will be supplied outside the Clinical
Manufacturing & Supply Agreement; provided, however,
that Isis will not charge for API used to [***]. The cost to manufacture such
additional quantities of ASOs will be negotiated and agreed to in good faith by
the Parties, but will not exceed $[***] per [***] for MOE Gapmers.


 


Section 4.2                                                                                   Supply of Existing Development
Compounds. Within [***] of
receipt of invoice from Isis in the form provided as APPENDIX 7,
the invoice received no sooner than the Effective Date, OMI will pay Isis
$[***] for the [***] that is in Isis’ possession on [***]. The $[***]
represents Isis’ out-of-pocket expenses incurred in connection with
manufacturing such [***]). Such API and drug product will be used as outlined
in the R&D Plan. The Parties acknowledge and agree that such API and drug
product may be used between [***] to conduct activities outlined in the R&D
Plan. Isis shall deliver such API as governed by the R&D Plan or as
otherwise requested by OMI within a reasonable period of time after such
request.


 


Section 4.3                                                                                   Clinical Supply of API
Through Completion of [***]. Isis
and OMI will enter into a manufacture and supply agreement(s) for the [***] (a “Clinical Supply Agreement”)
for each Designation of a Compound as a Clinical Candidate. Each Clinical
Supply


 


10

















 


Agreement will include customary terms and
conditions to be negotiated in good faith and the Clinical Supply Agreement is
attached hereto as APPENDIX 8 for
ISIS 325568 and ISIS 377131, which will serve as a template for future Clinical
Supply Agreements.


 


Section 4.4                                                                                   Option to Supply GCGR and
GCCR Compounds. At any time
(including, but not limited to if OMI determines that Isis is unable or
unlikely to meet Isis’ supply obligations), at OMI’s written request and
consistent with the Supply Agreement, Isis will transfer to OMI or a Third
Party manufacturer selected by OMI all documentation and information, including
Isis Manufacturing and Analytical Technology and permit OMI to reference and
use any regulatory filings, and otherwise fully cooperate with OMI to enable
OMI to make or have made API for use by OMI in accordance with this Agreement.


 


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


 


4.5.1                     Product Manufacturing Responsibility. Except
as otherwise provided in this Agreement, the Parties acknowledge and agree that
OMI will be solely responsible for the manufacturing of Compound and Product
for [***] and commercial supply, including management of the overall
manufacturing strategy and tactics, formulation, internal or contract
manufacturer selection for API and finished Product, associated audits,
stability testing, pricing, relationship with contract manufacturer(s) and any
work proposals or contract negotiations or contracts themselves.


 


4.5.2                     Clinical Supply of ISIS 325568 and ISIS
377131 API for [***]. Solely at the discretion of OMI, OMI will
notify Isis of OMI’s intent to require Isis to supply quantities of ISIS 325568
and ISIS 377131 as is necessary to fulfill OMI’s Product requirements for [***]
Studies. OMI will notify Isis of its intent, leaving a reasonable time to
permit the Parties to negotiate a [***] Clinical Supply Agreement, such that
the supply agreement is in place no later than [***] prior to the planned
delivery date for such API.


 


4.5.3                     Transfer of
Manufacturing and Analytical Technology.


 


(a)                                                                                                                                  As soon as is practicable after Isis receives
a written request from OMI to transfer any Isis Manufacturing and Analytical
Technology to OMI, but not later than 30 days after receipt of such request,
Isis will initiate transfer to OMI, or at OMI’s option, to such Third Party
Manufacturer, the Isis Manufacturing and Analytical Technology. For such
purpose, Isis will transfer to OMI or such Third Party Manufacturer all
documentation and information, and permit OMI to reference and use any
regulatory filings, and otherwise fully cooperate with OMI to enable OMI to
make or have made API and finished drug Product for use by OMI in accordance
with this Agreement at no cost to OMI. In addition, upon request by OMI, Isis
will provide OMI with a reasonable level of technical assistance and
consultation in connection with the transfer of such manufacturing and
analytical technology to help enable OMI or such Third Party manufacturer (as
applicable) to manufacture and release such API and finished drug Product. For
such purpose Isis will provide OMI with reasonable access by teleconference or
in-person at Isis’ facilities to Isis personnel involved in the manufacturing
and release of API and finished drug Product, provided
that if OMI requests such technical assistance in excess of [***] of technical
assistance, [***]. Such payment will be made to Isis within [***] after OMI’s
receipt of an invoice by Isis in the form provided as APPENDIX 7
reasonably detailing Isis’ time expended, together with reasonable
substantiation of any out-of-pocket expenses incurred.


 


(b)                                                                                                                                 OMI and/or its Third Party manufacturer will
use any Isis Know-How or Product Specific Know-How and other documentation and
information transferred pursuant to Section 4.4 and Article 4.5  solely for the purpose of manufacturing API
and Product for OMI’s (or its Affiliate’s or Licensee’s) benefit pursuant to
the exercise of OMI’s rights under this Agreement, and for no other purpose. OMI
acknowledges and agrees that any such transfer of such manufacturing technology
to a Third Party manufacturer must satisfy the conditions set forth in Section
2.2(b) and will be subject to a written agreement between such Third Party


 


11

















 


manufacturer and OMI that contains
obligations of confidentiality substantially equivalent to those of this Agreement.


 


Section 4.6                                                                                   Supply of Finished Drug
Product. Except as otherwise specified in the R&D Plan or Clinical
Manufacturing and Supply Agreement, the Parties acknowledge and agree that
[***] will be solely responsible for the manufacturing, stability testing and
supply of finished drug Product.


 


Section 4.7                                                                                   Manufacturing Improvements.


 


4.7.1                     The
entire right, title, and interest in and to all Manufacturing Improvements
developed or invented solely by employees, or consultants of OMI during the
Term will be the sole and exclusive property of OMI. OMI hereby grants Isis a
[***] license to practice under OMI’s rights to any Know-How or Patent claiming
Manufacturing Improvements to [***] and to the extent that such Manufacturing
Improvements are under the control of OMI. Notwithstanding the foregoing, Isis
recognizes that OMI may not own or control Manufacturing Improvements developed
or invented by a contract manufacturer. The license granted under this Section
4.7.1 falls within the restrictions [***].


 


4.7.2                     The
entire right, title, and interest in and to all Manufacturing Improvements
developed or invented solely by employees, or consultants of Isis during the
Term will be the sole and exclusive property of Isis. Isis hereby grants OMI
[***] license to practice under Isis’ rights to any Know-How, Product Specific
Know-How or Patent claiming such Manufacturing Improvements to make and have
made Products. The license granted under this Section 4.7.2 will be
sublicensable by OMI solely in connection with the grant of a license to
develop, make, use, import, offer for sale and sell a Product.


 


4.7.3                     The
entire right, title, and interest in and to all Manufacturing Improvements
developed or invented jointly by employees or consultants of Isis and OMI
during the Term will be the joint property of Isis and OMI. Each Party will
have an undivided joint ownership interest in such Manufacturing Improvements,
and may license its rights under such Manufacturing Improvements for its own
account and without the consent of the other Party, subject to the exclusivity
granted to OMI under Section 2.3.


 


4.7.4                     During
the first [***], if requested by a Party, the Parties will meet annually to
review Manufacturing Improvements developed by either of the Parties [***] of
the Collaboration. At such time, the Parties will disclose all such
Manufacturing Improvements Controlled by such Party in reasonable detail as to
enable the other Party to [***] will have the right to [***] with respect to
the commercialization of one or more [***]


 


Section 4.8                                                                                   Isis Regulatory Inspections. Isis will cooperate in good
faith with respect to the conduct of any inspections by any Regulatory
Authority of an Isis site or a contractor’s site and facilities if such
inspection concerns work being performed under the R&D Plan and the
Clinical Manufacturing and Supply Agreement. OMI shall be given the opportunity
to attend any inspections by any Regulatory Authority of Isis’ or Isis’
contractor’s site and facilities if such inspections concern work being
performed under the R&D Plan and the Clinical Manufacturing and Supply
Agreement, and the summary (or wrap up) meeting with a Regulatory Authority at
the conclusion of such site inspection. In the event that during an inspection
of the Isis facilities, the facilities are found by a Regulatory Authority to
be non-compliant with one or more GLP, GMP, GCP or current standards for
pharmacovigilance practice compliance standards and such facilities are being
used to conduct work under the R&D Plan and the Clinical Manufacturing and
Supply Agreement, Isis will promptly notify OMI of such finding and will submit
a proposed recovery/corrective action plan, including a time line for
implementation of the plan, within [***] of such notification of
non-compliance.


 


12

















 


Section 4.9                                                                                   Quality Agreement. A
quality agreement (the “Quality Agreement”)
will be negotiated simultaneously with the present Agreement and is attached
hereto as APPENDIX 9.


 


ARTICLE 5 - 

DEVELOPMENT & COMMERCIALIZATION


 


Section 5.1                                                                                   Development,
Commercialization and Regulatory Responsibilities. Other than Isis’ responsibilities under the
R&D Plan, OMI will have sole responsibility, including without limitation
sole responsibility for all funding, resourcing and decision-making, for all
further Development and Commercialization with respect to the Compounds and
Products. OMI hereby assumes all regulatory responsibilities in connection with
Compounds and Products, including sole responsibility for all Regulatory Documentation
and for obtaining all Approvals. OMI will comply with all Applicable Laws in
connection with the Development and Commercialization of Compounds and Products.
OMI (by itself or through its Affiliates, Licensees, (sub)contractors or
agents, as applicable) will use Commercially Reasonable Efforts to Develop and
Commercialize at least one Compound or Product for each Collaboration Gene
Product. For clarity, it is understood and acknowledged that Commercially
Reasonable Efforts in the Development of a Product in a particular country may
include sequential implementation of clinical trials and/or intervals between
clinical trials for data interpretation and clinical program planning and
approval, to the extent such implementation is consistent with the scientific,
technical and commercial factors relevant to Development of such Product in
such country. All INDs, NDAs, MAAs and other regulatory filings and Approvals
for Products will be owned by OMI. In addition, upon reasonable notice by OMI
and during normal business hours, Isis will provide OMI with a reasonable level
of assistance in the preparation of regulatory filings for Products and in
interactions with any Regulatory Authority in connection with the Development
of Products; provided that if OMI
requests such assistance in excess of [***] of assistance, [***] after receipt
by OMI of an invoice by Isis in the form provided as APPENDIX 7 reasonably
detailing Isis’ time expended, together with reasonable substantiation of any
out-of-pocket expenses incurred.


 


Section 5.2                                                                                   Reports by OMI after the Collaboration Term. After
the Collaboration Term with respect to any Compound or Product that OMI is
developing, at Isis’ request, OMI will provide a report to Isis summarizing OMI’s
activities over the [***] with respect to the identified Compound or Product
and an appropriate number of representatives from each Party will meet at least
[***] to review Development activities. OMI will consider Isis’ input regarding
such activities. The reports provided by OMI under this Section 5.2 will
contain sufficient information to allow Isis to reasonably determine whether
OMI is in compliance with its obligations to use Commercially Reasonable
Efforts under Section 5.1.


 


Section 5.3                                                                                   Product Development Plans;
Integrated Product Plans. For
each Product that OMI is clinically developing under this Agreement, OMI will
prepare a development plan outlining key aspects of the clinical development of
such Product through Approval. Each development plan will contain information
customarily contained in OMI’s development plans for its similar products at
similar stages of development (each a “Product Development Plan”). In addition, prior to the launch of a
Product, OMI will prepare a global integrated Product plan outlining the key aspects
of market launch and commercialization (the “Integrated Product Plan” or “IPP”). The
Integrated Product Plan will contain information customarily contained in OMI’s
commercialization plans. Each Product Development Plan and IPP will be updated
annually by OMI. OMI will provide to Isis a copy of the final draft of the
Product Development Plans and IPPs (original and updates) for each of the
[***], if available. OMI and Isis will meet on [***] to discuss the draft of
each Product Development Plan and IPP and OMI will consider, in its sole
discretion, any proposals and comments made by Isis for incorporation in the
final


 


13

















 


Product Development Plan or IPP (as the case
may be). Furthermore, to the extent OMI intends to make any claims in a Product
label that are class generic to MOE Gapmers, OMI will provide such claims to
Isis in advance and will consider, in its sole discretion, any proposals and
comments made by Isis.


 


ARTICLE 6 - 

FINANCIAL PROVISIONS


 


Section 6.1                                                                                   Up-Front Payment. In partial consideration for the licenses and
other rights granted under this Agreement, within [***] following the Effective
Date, OMI will pay Isis [***] $45,000,000.


 


Section 6.2                                                                                   Collaboration Funding. OMI will provide Collaboration funding to
Isis as set forth in Section 3.5.2.


 


Section 6.3                                                                                   Milestone Payments by OMI. OMI will give Isis notice promptly upon
achievement of each Milestone Event provided in Table 1. Upon receipt of an
invoice, as set forth in Appendix 7, OMI
will pay Isis the following milestone payments within [***] after receipt of
such notice, with the proviso that with respect to the [***] Milestone for
GCGR, payment shall be due [***] after notice and invoice by Isis of
achievement of such Milestone.:


 


6.3.1                                                                                                                     Development
Milestones.


 


(a)                                                                                                                                  For each Selected Gene Target, the milestone
payments under Column 1 of Table 1 below will be payable by OMI to Isis for the
first achievement of the specified milestone events by OMI, its Licensees or
their Affiliates for the first Research Compound or Research Product that
targets such Selected Gene Target to reach the specified milestone event.


 


(b)                                                                                                                                 The milestone payments under Column 2 of
Table 1 below will be payable as set forth below for the first achievement of
the specified milestone events by OMI, its Licensees or their Affiliates for
the first GCGR Compound or GCGR Product to reach the specified milestone event.


 


(c)                                                                                                                                  The milestone payments under Column 3 of
Table 1 below will be payable as set forth below after the first achievement of
the specified milestone events by OMI, its Licensees or their Affiliates for
the first GCCR Compound or GCCR Product to reach the specified milestone event.


 


Table 1


 


	
   

  	
   

  	
  Column 1

  	
   

  	
  Column 2

  	
   

  	
  Column 3

  	
   

  
	
  Milestone Event

  	
   

  	
  Payment for First

  Research Compound Per

  Selected Gene Target

  	
   

  	
  Payment for First

  GCGR Compound

  	
   

  	
  Payment for First

  GCCR Compound

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


6.3.2                                                                                                                     Approval
Milestones.


 


(a)                                  For each Selected Gene Target, the milestone
payments under Column 1 of Table 2 below will be payable by OMI to Isis for the
first achievement of the specified milestone events by OMI, its Licensees or
their Affiliates for the first Research Compound or Research Product that
target such Selected Gene Target to reach the specified milestone event.


 


14

















 


(b)                                 The milestone payments under Column 2 of Table
2 below will be payable as set forth below after the first achievement of the
specified milestone events by OMI, its Licensees or their Affiliates for the
first GCGR Compounds or GCGR Products to reach the specified milestone event.


 


(c)                                  The milestone payments under Column 3 of
Table 2 below will be payable as set forth below after the first achievement of
the specified milestone events by OMI, its Licensees or their Affiliates for
the first GCCR Compounds or GCCR Products to reach the specified milestone
event.


 


Table 2


 


	
   

  	
   

  	
  Column 1

  	
   

  	
  Column 2

  	
   

  	
  Column 3

  	
   

  
	
  Milestone
  Event

  	
   

  	
  Payment for First

  Research Compound Per

  Selected Gene Target

  	
   

  	
  Payment for First

  GCGR Compound

  	
   

  	
  Payment for First

  GCCR Compound

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


In the event that an original Compound or
Product for a Collaboration Gene Target fails in development and is replaced by
OMI with a back-up Compound or Product targeting the same Collaboration Gene
Target, any milestone payments previously paid with respect to such original
Compound or Product shall be fully creditable toward the same milestone due
with respect to the back-up Compound or Product, and OMI shall notify Isis in
writing of the selection of the back-up Compound or Product. The Parties
acknowledge that, after the approval milestone payments for a Second Indication
are paid to Isis, OMI shall not be obligated to make any additional approval
milestone payments with respect to a Product comprising the same Compound or
Product or its back-up Compound or Product, regardless of the number of
additional indications for which such Compound or Product is developed. The
Parties also acknowledge that different formulations (e.g., dosage strength,
delivery forms) of a Compound or Product (back-up Compound or Product) or
bioequivalents therefore (i.e., salts, esters, polymorphs) shall be deemed the
same Compound or Product, and all milestones due shall be payable one time only
per Compound or Product.


 


[remainder of page
intentionally left blank]


 


15

















 


Section 6.4                                                                                   Royalty Payments by OMI. In consideration of the licenses granted to
OMI by Isis hereunder and the assignments made pursuant to Section 9.2.3 (b)
OMI will pay Isis royalty payments on Products as follows:  Subject to the other provisions of this
Agreement, OMI will pay to Isis the royalty rate under Column 1 of Table 3
below for each Research Product. Subject to the other provisions of this
Agreement, OMI will pay to Isis the royalty rate under Column 2 of Table 3
below for each GCGR Product. Subject to the other provisions of this Agreement,
OMI will pay to Isis the royalty rate under Column 3 of Table 3 below for each
GCCR Product. The royalty rate payable with respect to each particular Product
will be based on the level of annual worldwide Net Sales of such Product in a
given Calendar Year period by OMI, its Affiliates and Licensees, with the
royalty rate tiered based upon the level of such worldwide Net Sales in such
Calendar Year period as set forth in the table below.


 


Table 3


 


	
  Column 1

  	
   

  	
  Column 2

  	
   

  	
  Column 3

  	
   

  	
   

  
	
  Royalty Rate

  Research

  Product

  	
   

  	
  Royalty Rate

  GCGR

  Product

  	
   

  	
  Royalty Rate

  GCCR

  Product

  	
   

  	
  Annual
  Worldwide Net Sales

  
	
  [***]%

  	
   

  	
  [***]%

  	
   

  	
  [***]%

  	
   

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

  
	
  [***]%

  	
   

  	
  [***]%

  	
   

  	
  [***]%

  	
   

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

  
	
  [***]%

  	
   

  	
  [***]%

  	
   

  	
  [***]%

  	
   

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

  



 


For
example, in the instance of a full Calendar Year, if annual OMI Net Sales of
GCGR Product in such Calendar Year worldwide are $[***], the amount due will be
$[***] ([***]% of the [***] (or $[***]) in the first increment, plus [***]% of
the next $[***] (or $[***]) in the second increment, plus [***]% of the
remaining $[***] (or $[***]) in the third increment).


 


Section 6.5                                                                                   Third Party Payment
Obligations.


 


6.5.1                                                                                                                     Isis In-License Agreements.


 


(a)                                                                                                                                  Certain of the Isis Patent Rights Controlled
by Isis as of the Effective Date that are licensed to OMI under Section 2.1 are
in-licensed or were acquired by Isis under agreements with Third Party
licensors or sellers, and certain milestone and/or royalty payments may become
payable by Isis to such Third Party under such license or purchase agreements
based on the Development and Commercialization of a Compound and Product by OMI
under this Agreement (such license or purchase agreements in effect as of the
Effective Date being the “Isis
In-License Agreements”). The Parties acknowledge that whether a
milestone and/or royalty payment becomes payable by Isis to such Third Party
licensor depends on the terms and conditions of the Isis In-License Agreement.


 


(b)                                                                                                                                  Isis will be responsible for paying [***]% of
the Isis Supported Payments as they apply to any Compound or Product.


 


6.5.2                                                                                                                     Additional Third Party
Agreements.


 


(a)                                                                                                                                  After the Effective Date, Isis may wish to
in-license or acquire rights to Know-How or Third Party Patents (such a Third
Party in-license or acquisition agreement being an “Additional Third Party Agreement”)
which, if so licensed or acquired, may be included in the Isis Patent Rights
licensed to OMI under Section 2.1. In such event (and to the extent permitted
by Isis’ confidentiality agreement with the applicable Third Party), Isis will
notify OMI regarding the nature of the technology and status of negotiations
related to the Additional Third Party Agreement through the R&D Committee. Once
Isis has executed such Additional Third


 


16

















 


Party Agreement, Isis will offer such Third
Party Patents or Know-How to OMI (including a description of the payments paid
or potentially payable by Isis thereunder). At such time, if OMI wishes to
include such Third Party Patents under the licenses granted under Section 2.1,
OMI will notify Isis of its desire to do so [***], if appropriate. As part of
this [***], Isis will share with OMI, in reasonable detail, the [***]. If OMI
does not [***], and to [***] as set forth below, then [***] will not be [***]
under this Agreement.


 


(b)                                                                                                                                  In the event that a milestone payment or a
payment on net sales of Product becomes payable by Isis to a Third Party under
an Additional Third Party Agreement, and such milestone or payment obligation
is based on [***]. (such milestone and/or payments being the “Isis Third Party Payment”),
then [***] will be responsible for the payment of such Isis Third Party Payment
obligation as long as [***]. In the event that a milestone payment or a royalty
payment on net sales of Product becomes payable by Isis to a Third Party under
an Additional Third Party Agreement, and such milestone or royalty payment
obligation is based on [***], then as long as [***] will be responsible for the
payment of such Isis Third Party Payment obligation. In both cases [***] under
this Agreement.


 


(c)                                                                                                                                  Any Pass Through Obligations OMI is
responsible for paying under this Section 6.5.2 will be [***] and OMI will
satisfy such obligation by paying Isis directly.


 


6.5.3                                                                                                                     OMI Third Party Licenses. OMI will be responsible for negotiating and
entering into any Third Party licenses that OMI determines may be necessary or
useful or may relate to the Development or Commercialization of Products. If
OMI, in its reasonable judgment, is required to obtain a license from any Third
Party under any patent covering technology necessary or useful for the
Development or Commercialization of a Product, and the infringement of such
patent cannot reasonably be avoided by OMI, and if OMI is required to pay to
such Third Party in consideration for such license for a Product any royalty
payment calculated on sales of a Product (such royalty payments collectively
being a “OMI Third Party
Royalty Payment”) then OMI may reduce the royalty payable to Isis
under Section 6.4 by up to [***]% of the amount of the OMI Third Party Royalty,
subject to the limitation set forth in Section 6.5.4. Notwithstanding the foregoing, no
reduction of the royalties payable to Isis under Section 6.4 will be permitted
with respect to OMI Third Party Payments with respect to any Third Party patent
covering (x) methods or materials used in the [***], (y) any [***] which is not
a Compound (i.e., a non-Compound active ingredient in a Combination Product) or
(z) [***].


 


6.5.4                                                                                                                     For any additional royalty rate payments
payable by OMI under Section 6.5.2 or 6.5.3, OMI may reduce its obligation to
pay Isis royalty payments under Section 6.4 by [***]% of the amount of such
additional payments payable by OMI as set forth in Sections 6.5.2 and 6.5.3; provided, however that no such
reduction(s) in the aggregate will reduce the royalty payments payable to Isis
under Section 6.4 in any given Calendar Quarter period below [***] of Isis’
[***] royalty under Section 6.4 (i.e. [***]% multiplied by [***] of the
applicable royalty rate under Section 6.4 [***] the royalty payments payable by
Isis under Section 6.5.1(b)). For example, royalty payments payable for GCGR
may not be reduced below [***]% (in the first increment) [***]% (hypothetical
example of Isis Supported Payments under Section 6.5.1(b)) multiplied by
[***]%, or [***]% ([***]% - [***]% = [***]% x [***]% = [***]%). In this
instance, royalty payments payable in the first increment for GCGR would not be
reduced below [***]% ([***]% + [***]% = [***]%).


 


Section 6.6                                                                                   [***]. If the portion of [***] (calculated in
accordance with Appendix 16
attached hereto) for the [***] sold in
the US and EU (the “[***]”)
exceeds [***]% of annual Net Sales in the U.S. and EU in a given year, then the
royalty rate provided in Section 6.4, Table 3 payable for worldwide sales of
such Product for such year will be [***]. Notwithstanding
the foregoing, at no time will, as the result of this calculation
and allowance, the Royalty Rate provided in Section 6.4, Table 3 be reduced
below [***]. The parties will use Commercially Reasonable Efforts and work in
good faith to [***]


 


17

















 


Section 6.7                                                                                   The royalty rates under Section 6.4 will be
subject to the following conditions:


 


(a)  that only one royalty rate will be due to
Isis hereunder with respect to the same unit of Product;


 


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


 


(c)  no royalty payments will be due on the
disposition of Product in reasonable quantities by OMI, its Affiliates or
Licensees as part of an Expanded Access Program to include compassionate use,
named patients or other similar use or as part of Phase 4 Trials or as bona
fide samples or as donations to non-profit institutions or government agencies
for non-commercial purposes, provided,
in each case, that neither OMI, its Affiliate or Licensees receives any payment
or other in-kind consideration for such Product;[***]


 


(d)  a Product will only be eligible for the full royalty
rate designated under Section 6.4 in a given country, if, as of the date of the
First Commercial Sale of such Product in such country, the making, using or
selling of such Product (or the Compound contained in such Product) in that
country is [***];


 


(e)  if, as of the date of the First Commercial
Sale of a Product in a given country, the making, using or selling of such
Product (or the Compound contained in such Product) in that country is either
(i) not [***] or (ii) only
[***], then the Net Sales in that country will be reduced by [***]% before
adding such Net Sales to the Net Sales of all of the other countries used in
arriving at the aggregate annual Net Sales upon which the royalty is based;


 


(f)  If no royalty payment is due in a country on
a Product but a royalty payment is still payable by Isis under the Isis
Supported Payments or as the result of any Target Encumbrance under 3.6.3, then
OMI will pay Isis a royalty equal to the amount the applicable royalty under
the Isis Supported Payments and Target Encumbrances for so long as and in the
amount that such royalty payment is owing. Once a Product is determined to be
eligible for the applicable base royalty payment under part (d) or (e) above,
it will continue to be eligible at such base rate for the applicable Royalty
Term, subject to the other terms and conditions of this Agreement (including
but not limited to any applicable adjustment under Section 6.5, 6.6 or 6.8).


 


Section 6.8                                                                                   Generic Competition. Solely with respect
to Products for which the full royalty applies under part (d) of Section 6.6
above, if there are one or more
unauthorized Third Parties selling a Generic Product, then the Net Sales in
that country will be reduced by [***]% before adding such Net Sales to the Net
Sales of all of the other countries used in arriving at the aggregate annual
Net Sales upon which the royalty is based ; provided,
however, that, in no event will the royalties payable to Isis under
6.4 above be reduced below [***].


 


Section 6.9                                                                                   Royalty Term. Royalties payable under Section 6.4 (subject
to and including any reduction set forth in Sections 6.5, 6.6 and 6.7) will be
payable for each Product on a Product-by-Product and country-by-country basis
from the First Commercial Sale of the applicable Product in such country until
the date that is the later of (i) [***] after the First Commercial Sale of the
Product in such country or (ii) the expiration of the last to expire Valid
Claim within the Product Specific Patents or Isis Core Technology Patents which
would be infringed by the sale of the applicable Product in the applicable
country by an unauthorized party or (iii) the expiration of any applicable
period of exclusivity as contemplated under Section 9.6 for the Product in the
applicable country. Such period during which royalties are payable with respect
to a Product in a country is referred to herein as the “Royalty Term” in
such country with respect to such Product.


 


18

















 


Section 6.10                                                                            Royalty Report and Payment. During the Term following the First
Commercial Sale of any Product, within [***] after the end of each Calendar
Quarter, OMI will pay to Isis royalty payments payable for such Calendar
Quarter and provide a royalty report showing, on a Product-by-Product and
country-by-country basis:


 


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


 


(b)                                 the royalties which will have accrued
hereunder with respect to such Net Sales.


 


In
addition, during the Term following the First Commercial Sale of any Product,
within [***] after the end of each Calendar Quarter, OMI will provide Isis a
preliminary non-binding quarterly royalty report showing the total Net Sales of
Product and royalty payable for such Calendar Quarter. Furthermore, OMI agrees
to supply Isis the information Isis reasonably requires to comply with any Pass
Through Obligations.


 


If no royalty or payment is due for any royalty period
hereunder, OMI will so report. OMI will keep, and will require its Licensees
and their respective Affiliates to keep (all in accordance with GAAP,
consistently applied), complete and accurate records in sufficient detail to
properly reflect the Net Sales and to enable the royalties payable hereunder to
be determined. Upon reasonable request by Isis (but no more frequently than
once in any 12-month period), OMI will report to Isis the quantity of Product
not subject to royalties distributed by OMI, its Affiliates or Licensees as
part of an Expanded Access Program to include compassionate use, named patients
or other similar use or as part of Phase 4 Trials or as bona fide samples or as
donations to non-profit institutions or government agencies for non-commercial
purposes. All information disclosed by OMI to Isis under this Section 6.9 will
be OMI Confidential Information.


 


Section 6.11                                                                            Manner of Payment and
Exchange Rate. All payments
to be made by OMI to Isis hereunder will be made by deposit of [***] by wire
transfer in immediately available funds in the requisite amount to such bank
account Isis may from time to time designate by notice to OMI. [***]


 


Section 6.12                                                                            Audits, including
Audits  of Royalty Reports.


 


6.12.1
Audits of Royalty Reports. Upon the written request of Isis and not more than once in each
Calendar Year, OMI will permit an independent certified public accounting firm
of nationally recognized standing selected by Isis and reasonably acceptable to
OMI, at Isis’ expense and upon execution of a confidentiality agreement with
OMI, to have access during normal business hours to such records of OMI and/or
its Affiliates as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder for any Calendar Year ending not more than [***]
prior to the date of such request. These audit rights (but not any obligation
to pay unpaid royalties for such periods) with respect to any Calendar Year
will terminate [***] after the end of any such Calendar Year. Isis will provide
OMI with a copy of the accounting firm’s written report within [***] of
completion of such report.


 


If such accounting firm
concludes that an overpayment or underpayment was made, then the owing Party
will pay the amount due within [***] of the date Isis delivers to OMI such
accounting firm’s written report so correctly concluding. Isis will bear the
full cost of such audit unless such audit correctly discloses that the
additional payment payable by OMI for the audited period is more than [***]% of
the amount of the royalties paid for that audited period, in which case OMI
will pay the reasonable fees and expenses charged by the accounting firm. However,
if the result of the audit is contested, then the Parties agree to retain a
mutually acceptable independent certified public accounting firm or equivalent
thereof within [***] to review the relevant books and records and to submit to
the Parties its written determination as to the amount in dispute and the basis
for its determination. The determination by the accounting firm will be binding
on the Parties absent manifest error. If such accounting firm determines that


 


19

















 


the result of the original
audit was correct (within a margin of error of [***]%) then the Party who
contested the original audit will pay the fees and expenses of the accounting
firm for such determination and vice versa.


 


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


 


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


 


6.12.2
Audit by OMI. OMI shall have the right to audit Isis’
books and records, and the records of any successors hereto for the purpose of
accurate accounting and compliance with the terms of this agreement including
its activities under the R&D Plan. Isis shall maintain complete and
accurate records in accordance with GAAP, which are relevant to costs, expenses
and payments under this Agreement and such records shall be made available to
OMI upon its reasonable request but no more than [***], during reasonable
business hours for a period of [***] from creation of individual records, for examination
at OMI’s expense by an independent certified public accounting firm selected by
OMI and acceptable to Isis for the sole purpose of verifying the correctness of
calculations or such costs, expenses or payments made under this Agreement. In
the absence of material discrepancies (in excess of [***] percent ([***]%) in
any audit period resulting from such audit, the accounting expense shall be
paid by OMI. If such material discrepancies do result, Isis shall bear the
reasonable audit expense and shall promptly pay the amount of discrepancy. All financial information subject to review
under this Section will be Isis Confidential Information and will be treated in
accordance with the confidentiality provisions of this Agreement.


 


Section 6.13                                                                            Taxes.


 


(a)  OMI will
make all payments to Isis under this Agreement without deduction or withholding
for taxes except to the extent that any such deduction or withholding is
required by law in effect at the time of payment.


 


(b)  Any tax required to be
withheld on amounts payable under this Agreement will promptly be paid by OMI
on behalf of Isis to the appropriate governmental authority, and OMI will
furnish Isis with proof of payment of such tax. Any such tax required to be
withheld will be an expense of and borne by Isis.


 


(c)  OMI and Isis will cooperate with respect to
all documentation required by any taxing
authority or reasonably requested by OMI to secure a reduction in the rate of
applicable withholding taxes.


 


20

















 


If OMI had a duty to
withhold taxes in connection with any payment it made to Isis under this
Agreement but OMI failed to withhold, and such taxes were assessed against and
paid by OMI, then Isis will indemnify and hold harmless OMI from and against such
taxes (including interest but excluding any penalties).


 


Section 6.14                                                                            Blocked Currency. In each country where the local currency is
blocked and cannot be removed from the country, royalties accrued in that
country will be paid to Isis in the country in local currency by deposit in a
local bank designated by Isis, unless the Parties otherwise agree.


 


Section 6.15                                                                            Sublicenses. In the event OMI grants licenses or
sublicenses to a Licensee to sell Products which are subject to royalties under
Section 6.4, such licenses or sublicenses will include an obligation for the
Licensee to account for and report its sales of Products on the same basis as
if such sales were Net Sales by OMI.


 


Section 6.16                                                                            Interest. If OMI fails to make any payment due to Isis
under this Agreement, then interest will accrue on a [***]; provided, however, that if OMI cures such late payment as
provided for in Article 10 and OMI has not been late with respect to any other
payment under this Agreement in the same Calendar Year, then no such interest
will accrue during the applicable cure period for such first late payment.


 


ARTICLE 7 - 

PRESS RELEASES & PUBLICATIONS


 


Section 7.1                                                                                   Press Releases; Public
Disclosure.


 


7.1.1                                                                                                                     Upon execution of this Agreement, the Parties
may issue a press release announcing the existence of this Agreement in a form
and substance mutually agreed to in writing, in advance of the Execution Date,
by the Parties. Each Party agrees not to issue any other press release or other
public statement disclosing other information relating to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
Party, which consent will not be unreasonably withheld or delayed, provided however,  that each Party may make disclosures
permitted by, and in accordance with, Article 8. Each Party agrees to provide
to the other Party a copy of any public announcement regarding this Agreement
or the subject matter thereof as soon as reasonably practicable under the
circumstances prior to its scheduled release. Except under extraordinary
circumstances, each Party will provide the other with an advance copy of any
such announcement at least [***] prior to its scheduled release. Each Party
will have the right to expeditiously review and recommend changes to any such
announcement and, except as otherwise permitted by Article 8, the Party whose
announcement has been reviewed will remove any information the reviewing Party
reasonably deems to be inappropriate for disclosure. The contents of any
announcement or similar publicity which has been reviewed, approved and
released by the reviewing Party can be re-released by either Party without a
requirement for re-approval. Notwithstanding the foregoing and subject to
Article 8, the Parties agree that such Public Disclosures shall minimize the
disclosure of financial information.


 


7.1.2                                                                                                                     Each Party will immediately notify (and
provide as much advance notice as possible to) the other of any event
materially related to Products (including any regulatory approval) so that the
Parties may analyze the need to or desirability of publicly disclosing or
reporting such event. Notwithstanding Section 7.1.1 above, any press release or
other similar public communication by either Party related to a Product’s
efficacy or safety data and/or results, will be submitted to the other Party
for review and approval at least [***] [***] in advance of such proposed public
disclosure. Except as permitted by Article 8, such public disclosures shall be
permitted at the sole discretion of OMI.


 


21

















 


Section 7.2                                                                                   Publication of Research
Results. During the
Collaboration Term, neither Party will
publish, present or otherwise disclose to the public the Research Results
exclusively licensed to OMI hereunder or information relating to Collaboration
Gene Targets, except as specifically approved by the R&D Committee. The R&D Committee 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 exclusively licensed to OMI
hereunder or information relating to Collaboration Gene Targets. For
clarification, this Section 7.2 will not apply with respect to the use and
disclosure of Confidential Information as specifically provided for in Section
7.1 or Article 8 (i.e., a disclosure expressly permitted and made in accordance
with Section 7.1 or Article 8). At the termination of the Collaboration Term
and solely with respect to Selected Gene Targets for which OMI has Designated a
Compound as a Clinical Candidate, OMI may publish, present or otherwise
disclose Research Results to the public at its sole discretion subject to
Article 8; however, OMI will notify Isis [***] in advance of the publication.


 


ARTICLE 8 - 

CONFIDENTIALITY


 


Section 8.1                                                                                   Disclosure and Use
Restriction. Each Party
agrees that, for so long as this Agreement is in effect and for a period of
[***] thereafter, a Party (the “Receiving Party”) receiving Confidential Information of
the other Party (the “Disclosing
Party”) will (i) maintain in confidence such Confidential
Information using not less than the efforts such Receiving Party uses to
maintain in confidence other proprietary industrial information of similar kind
and value, (ii) not disclose such Confidential Information except to the
Receiving Party’s employees, or Affiliates of the Receiving Party having a
need-to-know such Confidential Information solely for purposes of performing
Receiving Party’s obligations under this Agreement, (iii) not disclose such
Confidential Information to any Third Party without the prior written consent
of the Disclosing Party, except for disclosures expressly permitted by this
Agreement, and (iv) not use such Confidential Information for any purpose
except those expressly permitted by this Agreement. For avoidance of doubt,
Isis will be permitted to use the OMI Confidential Information solely for
purposes of performing the Research Program in accordance with the R&D Plan
and for no other purpose. Upon completion of the Research Program or earlier
upon written request by OMI, Isis will return to OMI or destroy any OMI
Confidential Information.


 


Section 8.2                                                                                   Authorized Disclosure. To the extent (and only to the extent) that
it is reasonably necessary or appropriate to fulfill its obligations or
exercise its rights under this Agreement, a Party may disclose Confidential
Information belonging to the other Party in the following instances:


 


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


 


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


 


(c)                                  prosecuting or defending litigation;


 


(d)                                 complying with applicable governmental laws
and regulations (including, without limitation, the rules and regulations of
the Securities and Exchange Commission or any national securities exchange, and
compliance with tax laws and regulations) and with judicial process, if (i) in
the reasonable opinion of the Receiving Party’s counsel, such disclosure is
necessary for such compliance and (ii) such disclosure is made in accordance
with Section 8.3 or 8.4 as applicable; and


 


(e)                                  disclosure, in connection with the
performance of this Agreement and solely on a need-to-know basis,  potential or actual collaborators (including
potential Licensees), potential or


 


22

















 


actual investment bankers, investors,
lenders, or acquirers,  or  employees, independent contractors
(including without limitation consultants and clinical investigators) or
agents, each of whom prior to disclosure must be bound by written obligations
of confidentiality and non-use no less restrictive than the obligations set
forth in this Article 8; provided, however,
that the Receiving Party will remain responsible for any failure by
any Person who receives Confidential Information pursuant to this Article 8 to
treat such Confidential Information as required under this Article 8.


 


If
and whenever any Confidential Information is disclosed in accordance with this
Section 8.2, such disclosure will not cause any such information to cease to be
Confidential Information except to the extent that such permitted disclosure
results in a public disclosure of such information (other than by breach of
this Agreement). Where reasonably possible and subject to Sections 8.3 and 8.4,
the Receiving Party will notify the Disclosing Party of the Receiving Party’s
intent to make such disclosure pursuant to clauses (a) through (d) of this Section
8.2 sufficiently prior to making such disclosure so as to allow the Disclosing
Party adequate time to take whatever action it may deem appropriate to protect
the confidentiality of the information.


 


For
purposes of this Article 8, during the Collaboration Term, the Research Results
will be treated as Confidential Information of both Parties. After the
expiration of the Collaboration Term, the Research Results will be treated as
Confidential Information of OMI (unless such Research Results are transferred
to Isis under Article 11).


 


Section 8.3                                                                                   Required
Disclosure. A
Receiving Party may disclose Confidential Information pursuant to
interrogatories, requests for information or documents, subpoena, civil
investigative demand issued by a court or governmental agency or as otherwise
required by Law; provided however,
that the Receiving Party will notify the Disclosing Party promptly upon receipt
thereof, giving (where practicable) the Disclosing Party sufficient advance
notice to permit it to oppose, limit or seek confidential treatment for such
disclosure, and to file for patent protection if relevant; and provided, further, that the Receiving
Party will furnish only that portion of the Confidential Information which it
is advised by counsel is legally required whether or not a protective order or
other similar order is obtained by the Disclosing Party.


 


Section 8.4                                                                                   Securities Filings. In the event either Party
proposes to file with the Securities and Exchange Commission or the securities
regulators of any state or other jurisdiction a registration statement,
periodic report, or any other disclosure document which describes or refers to
this Agreement under the Securities Act of 1933, as amended, the Securities
Exchange Act, of 1934, as amended, or any other applicable securities Law, the
Party will notify the other Party of such intention and will provide such other
Party with a copy of relevant portions of the proposed filing not less than
three (3) business days prior to such filing (provided
that, whenever practicable, such portions will be provided not less than 5
business days prior to such filing) (and any material revisions to such
portions of the proposed filing a reasonable time prior to the filing thereof),
including any exhibits thereto relating to the Agreement, and will obtain
confidential treatment of any information concerning the Agreement that such
other Party requests be kept confidential (except
to the extent advised by counsel that confidential treatment is not available
for such information), and will only disclose Confidential Information which it
is advised by counsel is legally required to be disclosed. No such notice will
be required under this Section 8.4 if the substance of the description of or
reference to this Agreement contained in the proposed filing has been included
in any previous filing made by the either Party hereunder or otherwise approved
by the other Party.


 


Section 8.5                                                                                   Terms of Agreement. The existence and the terms
and conditions of the Agreement that the Parties have not specifically agreed
to disclose pursuant to Article 6 or Section 8.4 will be considered
Confidential Information of both Parties. Either Party may disclose such terms
to a bona fide potential
Licensee, investor, investment banker, acquirer,


 


23

















 


merger
partner or other potential financial partner, and their attorneys and agents, provided that each such Person to whom
such information is to be disclosed is informed of the confidential nature of
such information and has entered into a written agreement with the Party
requiring such Person to keep such information confidential.


 


Section 8.6                                                                                   Injunctive Relief. The Parties hereto
understand and agree that remedies at Law may be inadequate to protect against
any breach of any of the provisions of this Article 8 by either Party or their
employees, agents, officers or directors or any other person acting in concert
with it or on its behalf. Accordingly, each Party may be entitled to seek
injunctive relief by a court of competent jurisdiction against any action that
constitutes any such breach of this Article 8.


 


ARTICLE 9 - 

PATENTS


 


Section 9.1                                                                                   Ownership of Inventions and Patents.


 


(a)                                  Title
to inventions, discoveries, improvements and other technology, whether or not patentable,
conceived, made or reduced to practice in the performance of the Research
Program and Development Program under this Agreement (collectively, the “Program Inventions”)
and any Patents claiming such Program Inventions (“Program Patents”), are retained by the
Party that is the employer of the inventor (or, in the case of consultants and
(sub)contractors, the Party for which the consultant or (sub)contractor is
providing its services). The Parties agree that the United States federal
patent law on inventorship will determine the inventorship of any invention and
the names of the inventors on any patent filings, whether sole or joint
inventions, which arise in connection with activities conducted pursuant to
this Agreement. OMI will own Program Inventions, including those inventions
described in Section 4.7.1, invented solely by employees, consultants and/or
(sub)contractors of OMI (the “OMI Inventions”) and any Patents claiming such Program
Inventions (the “OMI
Program Patents”). Isis will own Program Inventions, including
those inventions described in Section 4.7.2, invented solely by employees,
consultants and/or (sub)contractors of Isis (the “Isis Inventions”) and any Patents
claiming such Program Inventions (the “Isis Program Patents”). Isis and OMI will
own jointly such Program Inventions, including those inventions described in
Section 4.7.3, invented jointly by employees, consultants and/or
(sub)contractors of Isis and OMI (the “Joint Inventions”) and any Patents claiming
such Program Inventions (the “Joint Patents”). Isis will promptly disclose to OMI any
such Isis Invention or Joint Invention, and OMI will promptly disclose to Isis
any OMI Invention or Joint Invention, arising from or made in the performance
of the Research Program and any patent or patent application claiming such
Program Invention.


 


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


 


Section 9.2                                                                                   Filing, Prosecution and Maintenance of Patents.


 


9.2.1                                                                                                                     Solely Owned Patents. Subject to the other
sections of this Article 9, including the other subsections of this Section 9.2
below, each Party will have the sole right, at its cost and expense and at its
sole discretion, to prepare, file, prosecute (including, without limitation, to
control any interferences, reissue proceedings, oppositions and
reexaminations), maintain, enforce and defend throughout the world any Patents
solely owned or Controlled by such Party, including with respect to Isis, the
Isis Core Technology Patents and the Isis Manufacturing and Analytical Patents.


 


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


 


(a)                                  As
between Isis and OMI, Isis will be responsible for the preparation, filing,
prosecution (including, without limitation, any interferences, reissue
proceedings, oppositions and reexaminations) and maintenance of Isis Core
Technology Patents and Isis


 


24

















 


Manufacturing
and Analytical Patents, and Isis will be responsible for all costs incurred by
Isis with respect to such preparation, filing, prosecution and maintenance of
Isis Core Technology Patents and Isis Manufacturing and Analytical Patents. At
OMI’s reasonable request, Isis, or its outside counsel, will promptly provide
OMI with an update of the filing, prosecution and maintenance status for each
of the Isis Core Technology Patents and Isis Manufacturing and Analytical
Patents, including without limitation an update of APPENDIX 3
and 4.


 


9.2.3                                                                                                                     Filing,
Prosecution and Maintenance of Product Specific Patents.


 


(a)                                                                                                                                  [***]. In accordance with this Section 9.2.3 and subject to Section 9.2.4,
for Product Specific Patents related to Selected Gene Targets that OMI has [***]
Isis will have lead responsibility (using internal or outside counsel selected
by Isis) for preparing, filing, prosecuting (including,
without limitation, any interferences, reissue proceedings, oppositions and
reexaminations) and
maintaining such Product Specific Patents at Isis’ expense. In addition, within
[***], for each Selected Gene Target, Isis will have filed a patent application
claiming at a minimum the specific composition of matter of the Research
Compound(s) targeting such Selected Gene Target. OMI will
cooperate with Isis in the filing and prosecution of such patent applications,
including consulting with and assisting Isis and its patent counsel in drafting
patent applications and responses. At OMI’s reasonable request, Isis,
or its outside counsel, will promptly provide OMI with an update of the filing,
prosecution and maintenance status for each of the Product Specific Patents
[***].


 


(b)                                                                                                                                 [***]. In accordance with this Section 9.2.3, for Product Specific Patents
related to Selected Gene Targets that OMI [***], Isis will
assign to OMI, in the form provided as provided in Appendix 17, all of Isis’ rights, title and interest in all Product Specific
Patents, Research Results and data from the R&D Plan that relate to such
Compound or Product.


 


(c)                                                                                                                                  Cooperation.                           In each case under Section 9.2.3 subparagraph
(a) or (b) above, upon request by the Party prosecuting Product Specific
Patents (the “Prosecuting Party”), the
other Party will provide such assistance and execute such documents as are
reasonably necessary to permit the filing, prosecution and/or maintenance of
such Product Specific Patents or the issuance, maintenance and/or extension of
any resulting patent or permit enforcement of such patent application or any
such patent. At the request of the other Party, the Prosecuting Party, or its
outside counsel, will provide the other Party with an update of the filing,
prosecution and maintenance status for each of the Product Specific Patents on
a periodic basis for which the Prosecuting Party assumes lead responsibility
and will reasonably consult with and cooperate with the other Party with
respect to the preparation, filing, prosecution and maintenance of such Product
Specific Patents. If requested in writing by the other Party, the Prosecuting
Party, or its outside counsel, will provide to the other Party copies of any
papers relating to the filing, prosecution and maintenance of such Product
Specific Patents promptly upon their being filed or received.


 


(d)                                                                                                                                 Election Not to File, Prosecute, or Maintain
Product Specific Patents. In
the event that the Prosecuting Party elects not to pursue or continue the
filing, prosecution (including any material reduction in claim scope) or
maintenance of any Patents or subject matter included in such Product Specific
Patents in any country, it will provide the other Party with an opportunity to
assume responsibility and costs for such filing, prosecution or maintenance of
such Product Specific Patents as set forth in this Section 9.2.3. The
Prosecuting Party will not knowingly permit any such Product
Specific Patent to be abandoned in any country, or elect not to file a new
patent application claiming priority to a patent application within such
Product Specific Patents either before such patent application’s issuance or
within the time period required for the filing of an international (i.e.,
Patent Cooperation Treaty), regional (including European Patent Office) or
national application, without the other Party’s written consent or the other
Party otherwise first being given an opportunity to assume full responsibility
(at the assuming Party’s expense) for the continued prosecution and maintenance
of such Product Specific Patents, or the filing of such new patent application.
Accordingly, the Prosecuting Party, or its outside counsel, will, to the extent
that it is able, provide the other Party with notice of the


 


25

















 


allowance
and expected issuance date of any patent within the Product Specific Patents,
or any of the aforementioned filing deadlines, and the other Party will provide
the Prosecuting Party with prompt notice as to whether the other Party desires
the Prosecuting Party to file any such new patent application.


 


(e)                                                                                                                                  National
Phase Filing Decisions for Product Specific Patents. At the time that a Product Specific Patent is
ready to enter National Phase outside of the United States, the Prosecuting
Party shall provide notice to the other Party at least 30 Business Days prior
to the National Phase deadline that an election of countries is required. OMI
will provide notice to Isis of the countries it intends to elect and OMI shall
bear the reasonable costs of such election.. At a minimum, OMI must elect the
countries in which OMI typically enters National Phase for OMI’s products
(collectively, the “Minimum OMI Countries”). The
Minimum OMI Countries as of the Execution Date are set forth in APPENDIX 13 attached hereto. Isis shall have the right and
option to elect other countries for National Phase entry in writing with notice
to OMI. Upon such notice to Isis, Isis shall promptly notify OMI of its
election and OMI will use Commercially Reasonable Efforts to comply with Isis’
election. Each Party shall bear the costs of their respective elections and
prosecution. In the case where a Party wishes to pursue subject matter the
Prosecuting Party (under subparagraph (a) or (b) above as the case may be) has
deleted from a claim (where such Prosecuting Party has elected to not otherwise
pursue the subject matter of such claim in the same or another application),
the other Party may pursue at its own cost (including costs associated with
transfer, filing, prosecution or maintenance) such subject matter in a
corresponding continuation or divisional application (where permissible under
law) in accordance with and subject to this Section 9.2.3.


 


(f)                                                                                                                                    Filing, Prosecution and Maintenance of
Product Specific Patents by OMI.. For so long as OMI retains lead responsibility under this Section
9.2.3 with respect to a particular Product Specific Patent, OMI will not
knowingly take any action or knowingly fail to take any action during the
filing, prosecution and/or maintenance of such product Specific Patents that
would result in claims that no longer cover the Product. In the case where OMI
assumes responsibility, under subsection (b) of this section, for the
preparation, filing, prosecution or maintenance of any patent or patent
application as set forth above, and has used all good faith, reasonable efforts
to comply with its obligations to provide notice and information as set forth
in this Section 9.2.3, OMI will not be liable to Isis in any way with respect
to its handling of, or the results obtained from, the filing, prosecution, issuance,
extension or maintenance of such application or any resulting patent or any
failure by it to so file, prosecute, extend or maintain.


 


(g)                                                                                                                                 Filing, Prosecution and Maintenance of
Product Specific Patents by Isis. For so long as Isis retains lead responsibility under Section 9.2.3
with respect to a particular Product Specific Patent, Isis will not knowingly
take any action or knowingly fail to take any action during the filing,
prosecution and/or maintenance of such Product Specific Patents that would materially
adversely affect such Product Specific Patents (including any material
reduction in claim scope), without providing OMI written notice and information
as set forth above. In the case where Isis assumes responsibility, under
subsection (a) of this section, for the preparation, filing, prosecution or
maintenance of any patent or patent application as set forth above, and has
used all good faith, reasonable efforts to comply with its obligations to
provide notice and information as set forth in this Section 9.2.3, Isis will
not be liable to OMI in any way with respect to its handling of, or the results
obtained from, the filing, prosecution, issuance, extension or maintenance of
such application or any resulting patent or any failure by it to so file, prosecute,
extend or maintain.


 


9.2.4                     Filing, Prosecution and Maintenance of Certain Program
Patents, including Joint Patents.


 


(a)                                                                                                                                  This
Section 9.2.4 will apply to Program Patents that are not Product Specific
Patents (the preparation, filing, prosecution and maintenance of the Program
Patents that are Product Specific Patents are governed by Section 9.2.3) and to
Joint Patents under Section 9.1(a). Each Party will have lead responsibility for Program
Patents invented solely by its own


 


26

















 


employees
as provided in Section 9.1(a), and OMI will cooperate fully, with respect to
the preparation, filing, prosecution (including,
without limitation, any interferences, reissue proceedings, oppositions and
reexaminations) and
maintenance of the Program Patents with respect to Joint Patents claiming
Program Inventions for the Term. Each Party will be
responsible for all of its own out-of-pocket costs with respect to such
preparation, filing, prosecution and maintenance of Program Patents that are
not Product Specific Patents.


 


(b)                                                                                                                                 With
respect to Joint Inventions claming Program Patents that are not Product
Specific Patents, pursuant to 9.1(a), OMI will promptly disclose to Isis such
Joint Inventions, and Isis will have the right, and bear the costs, in
accordance with this Section 9.2.4 to file and prosecute any new patent
application claiming such inventions. OMI will cooperate with Isis in the
filing and prosecution of such patent applications, including consulting with and
assisting Isis and its patent counsel in drafting patent applications and
responses. In addition, upon request by Isis, OMI will provide such assistance
and execute such documents as are reasonably necessary to permit the filing,
prosecution or maintenance of such patent or patent application or the
issuance, maintenance or extension of any resulting patent or permit
enforcement of such patent application or any such patent. Isis, or its outside
counsel, will provide OMI with an update of the filing, prosecution and
maintenance status for each of the Program Patents on a periodic basis for
which Isis assumes lead responsibility and will reasonably consult with and
cooperate with OMI with respect to the preparation, filing, prosecution and
maintenance of such Joint Patents, including providing OMI with drafts of
proposed filings in sufficient time to allow OMI’s review and comment before
such filings are due. Isis, or its outside counsel, will provide to OMI copies
of any papers relating to the filing, prosecution and maintenance of such Joint
Patents promptly upon their being filed or received. In the event that Isis
elects not to pursue or continue the filing, prosecution or maintenance of any
Joint Patents in any country, Isis will provide OMI with an opportunity to
assume responsibility for such filing, prosecution or maintenance of such
Patents to the same manner and under the same conditions that Isis is able to
assume responsibility for Product Specific Patents from OMI as provided in
Section 9.2.3, such that such Program Patent Rights will be treated in the same
manner as Product Specific Patents under Section 9.2.3. In the case where
either Party assumes responsibility for the preparation, filing, prosecution or
maintenance of any patent or patent application as set forth above, and has
used good faith, reasonable efforts to comply with its obligations to provide
notice and information as set forth is this Section 9.2.4, that Party will not
be liable to the other Party in any way with respect to its handling of, or the
results obtained from, the filing, prosecution, issuance, extension or
maintenance of such application or any resulting patent or any failure by it to
so file, prosecute, extend or maintain.


 


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


 


Section 9.3                                                                                   Patent Term Extension. Isis and OMI will each
cooperate with one another and will use Commercially Reasonable Efforts in
obtaining patent term restorations and/or extensions (including without
limitation, any pediatric exclusivity extensions as may be available) or
supplemental protection certificates or their equivalents in any country with
respect to patent rights covering those Products licensed by OMI hereunder. If
elections with respect to obtaining such patent term extensions or supplemental
protection are to be made, OMI will have


 


27

















 


the
right to make such election, provided
that such election will be made in accordance with applicable Law so as to
maximize the period of marketing exclusivity for the Product.


 


Section 9.4                                                                                   Enforcement of Patents


 


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


 


9.4.2                     Enforcement by Isis. If OMI elects not to settle,
defend or bring any action for infringement described in Section 9.4.1 and so
notifies Isis, including following any request by Isis to do so, then Isis may
defend or bring such action at its own expense, in its own name, provided however that, Isis agrees not to
so settle, defend or bring any action for infringement of a Product Specific
Patent Right upon OMI’s request based on OMI’s good faith reasonable
determination, the basis for which will be provided to Isis, that it is not in
the best interest of the Parties to so settle, defend or bring such action for
infringement. In the case where Isis proceeds to settle, defend or bring an
action for such infringement, the following will apply. OMI will reasonably
assist Isis in any action or proceeding being defended or prosecuted if so
requested, and will lend its name to such actions or proceedings if requested
by Isis or required by Applicable Law. Isis will reimburse OMI for the
documented external costs OMI reasonably incurs, including attorneys fees, in
providing such assistance as specifically requested in writing by Isis. OMI will
have the right to participate and be represented in any such suit by its own
counsel at its own expense, provided
that Isis will retain overall responsibility for the prosecution of such suit
or proceedings in such event. No settlement of any action or proceeding
defended or brought by Isis with respect to a Product Specific Patent, which
restricts the scope, or adversely affects the enforceability, of a Product
Specific Patent, or which could be reasonably expected to have a material
adverse financial impact on OMI, may be entered into by Isis without the prior
written consent of OMI, which consent will not be unreasonably withheld,
delayed or conditioned. In addition, if OMI elects not to settle, defend or
bring any action for infringement against an infringing Third Party described
in Section 9.4.1, then any infringing products sold by


 


28

















 


such Third Party will not be included in the calculation of sales of
Generic Products under Section 6.7.


 


9.4.3                     Withdrawal. In addition to Section 9.4.2, if
either Party brings an action or proceeding under this Section 9.4 and
subsequently ceases to pursue or withdraws from such action or proceeding, it
will promptly notify the other Party and the other Party may substitute itself
for the withdrawing Party and pursue such action or proceeding in accordance
with the terms of this Section 9.4 (including but not limited to the proviso in
the first sentence of Section 9.4.2).


 


9.4.4                     Enforcement and Defense of Joint Patent Rights. With
respect to infringement of a Joint Patent that is not a Product Specific
Patent, the Party responsible for filing, prosecution and maintenance of such
Joint Patent under Section 9.2.5 will have the first right to bring and control
any enforcement action or proceeding with respect to such Joint Patent, and
will bear all expenses thereof, and the other Party will have the right, at its
own expense, to be represented in any such action.


 


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


 


9.4.6                     Damages. In the event that either Party
exercises the rights conferred in this Section 9.4 and recovers any damages or
other sums in such action, suit or proceeding or in settlement thereof, such
damages or other sums recovered will first be applied to all out-of-pocket
costs and expenses incurred by the Parties in connection therewith, including,
without limitation, attorneys fees. Except as otherwise provided in this
Section 9.4, each Party will bear its own expenses with respect to any suit or
other proceeding against an infringer. If such recovery is insufficient to
cover all such costs and expenses of both Parties, it will be shared pro rata
in proportion to the total of such costs and expenses incurred by each Party. If
after such reimbursement any funds will remain from such damages or other sums
recovered, such funds will be divided as follows: (i) as to ordinary damages
based on lost sales or profit, OMI will retain such funds and such funds will
be treated as Net Sales and royalties will be payable by OMI to Isis with
respect to such Net Sales in accordance with this Agreement and (ii) as to
special or punitive damages, the Party that brought the enforcement action at
its expense will receive [***]% of the amount of such special or punitive
damages and the other Party will receive [***]% of the amount of such special
or punitive damages.


 


9.4.7                     Enforcement of Isis Core Technology Patents and Isis
Manufacturing and Analytical Patents by OMI. In the event that Isis or
OMI becomes aware of a suspected infringement of any Isis Core Technology
Patents and Isis Manufacturing and Analytical Patents by a Third Party where
such infringement involves the manufacture, use or sale of an ASO targeting a
Collaboration Gene Target (including but not limited to infringement which is
the subject of a notice under Section 9.5), the Parties will confer and discuss
in good faith an enforcement strategy with respect to such Isis Core Technology
Patents and Isis Manufacturing and Analytical Patents against such Third Party,
and Isis will consider in good faith and not unreasonably deny or delay OMI’s
request to enforce such Isis Core Technology Patents and Isis Manufacturing and
Analytical Patents in the same manner as a Product Specific Patent as set forth
above in this Article 9.


 


Section 9.5                                                                                   Notification of Patent Certification. Isis
will notify and provide OMI with copies of any allegations of alleged patent
invalidity, unenforceability or non-infringement of an Isis Patent Right
Covering a Compound or Product (including methods of use thereof) pursuant to a
Paragraph IV Patent Certification by a Third Party filing an Abbreviated New
Drug Application, an application under §505(b)(2) or other similar patent
certification by a Third Party, and any foreign equivalent thereof for a
Generic Product. Such notification and copies will be


 


29

















 


provided
to OMI by Isis as soon as practicable and at least within five (5) days after
Isis receives such certification, and will be sent by facsimile and overnight
courier to the address set forth below:


 


Ortho McNeil, Inc.


1000 US Route 202


Raritan, New Jersey, 08869


Attention:  President


Facsimile:  908-707-9757


 


With copy to:


 


Johnson & Johnson Chief Patent
Counsel


Johnson & Johnson


1 Johnson & Johnson Plaza


New Brunswick, NJ 08933


Facsimile:  732-524-5575


 


Section 9.6                                                                                   Data Exclusivity and Orange Book Listings. With
respect to data exclusivity periods (such as those periods listed in the FDA’s
Orange Book (including without limitation any available pediatric extensions)
or periods under national implementations of Article 11.1(a)(iii) of Directive
2001/EC/83, or similar periods as may be applicable to a biologic, and all
international equivalents), OMI will use Commercially Reasonable Efforts
consistent with its obligations under applicable law (including any applicable
consent order) to seek, maintain and enforce all such data exclusivity periods
available for the Products exclusively licensed by OMI hereunder. With respect
to filings in the FDA Orange Book or other similar filings or listings as may
be applicable (and foreign equivalents) for issued patents for a Product, upon
reasonable request by OMI, Isis will provide reasonable cooperation to OMI in
filing and maintaining any such listing and filings. All listing and filing
decisions shall be at the sole discretion of OMI; provided
,however that OMI will not list Isis Core Technology Patents in the
FDA Orange Book without Isis’ prior written consent, such consent not to be
unreasonably withheld or delayed. In no event will Isis withhold or delay such
consent where the listing of such Isis Core Technology Patent is required under
applicable law.


 


Section 9.7                                                                                   Further Actions. Each Party will, upon the
reasonable request of the other Party, provide such assistance and execute such
documents as are reasonably necessary for such Party to exercise its rights
and/or perform its obligations pursuant to this Article 9; provided however, that neither Party will
be required to take any action pursuant to Article 9 that such Party reasonably
determines in its sole judgment and discretion conflicts with or violates any
applicable court or government order or decree.


 


Section 9.8                                                                                   Infringement Claims; Oppositions. OMI
and Isis will promptly inform the other in writing of any written notice to it
of alleged infringement or misappropriation, based on the research,
development, making, using, importing, exporting or selling of a Compound or
Product, of a Third Party’s intellectual property rights of which it will
become aware. The Parties will confer on the handling of such matter. Isis will
not acknowledge to a Third Party the validity of any such allegation or admit
liability without the prior written consent of OMI, and OMI will not
acknowledge to a Third Party the validity of any such allegation or admit
liability without the prior written consent of Isis to the extent such action
would reasonably be expected to create any liability for Isis. OMI and Isis
will each keep the other advised of all material developments in the conduct of
any proceedings in defending any claim of such alleged infringement or


 


30
















 


misappropriation
and will cooperate with the other in the conduct of such defense. In no event
may either Party settle any such infringement or misappropriation claim in a
manner that would limit the rights of the other Party or impose any obligation
on the other Party, without such other Party’s prior written consent, such
consent not to be unreasonably withheld or delayed.


 


OMI
and Isis will promptly inform the other in writing of any written notice to it
of actual or threatened opposition related to the Product Specific Patents. The
Parties will confer on the handling of such matter and such matters will be
handled in accordance with Section 9.2.3 and 9.2.4 above.


 


Section 9.9                            Records Regarding Isis Patents. Each
Party will assign patent counsel representatives who will be responsible for
coordinating activities between the Parties in accordance with this Article 9. Such
representatives will use Commercially Reasonable Efforts to maintain a report
listing the Isis Patents that are subject to the license granted to OMI under
Section 2.1. Such report will be used to facilitate the identification and
tracking of the Isis Patents licensed under this Agreement, but will not,
unless specifically agreed to in a separate written agreement signed by
authorized representatives of both Parties, be considered to be a then-current
complete and binding list of the Isis Patents licensed under this Agreement.


 


ARTICLE 10 - 

TERM AND TERMINATION


 


Section 10.1                         Term. The term of this Agreement (the “Term”) commences
upon the Execution Date and, unless earlier terminated in accordance with the
provisions of this Article 10 or Article 11, will continue until (i) the
expiration of all obligations to pay royalties on all Products to Isis
(including any Pass Through Royalties) and (ii) the making, using or selling of
a Compound or Product is not covered by a Valid Claim within any Isis Patent
Right, provided, however, that in accordance with Section 14.13, certain
provisions of this Agreement will only become effective and binding on the
Parties as of the Effective Date upon the satisfaction of the conditions set
forth in Section 14.13(c).


 


31

















 


Section 10.2


OMI Right to Terminate.


 


(a)           At
any time prior to the Effective Date, OMI may terminate this Agreement in
accordance with the terms of Section 14.13(f) of this Agreement.


 


(b)           After
the expiration of the Collaboration Term, OMI may terminate this Agreement
(including its license rights under this Agreement) in full (but not in part),
effective upon [***] prior written notice. For purposes of clarification,
milestone and royalty payments will be due on milestones achieved and Products
sold during the period between notice of termination and the effective date of
termination.


 


(c)           At any time During the Collaboration Term, but following payment by OMI
of the technology access fee under Section 6.1, OMI shall be entitled to
terminate this Agreement (including its license rights under this
Agreement) in full (but not in part) in the event of the detection in a test population of adverse
experiences associated with the administration of MOE Gapmers as a generic
class of compounds that are significant, serious or life threatening to the
patient or demonstrate significant toxicological effect(s) of MOE Gapmers as a
generic class on one or more body tissues that are not balanced by a
countervailing benefit to the patient. The safety of MOE Gapmers will be
determined by OMI in view of the risk to benefit relationship of such MOE
Gapmers in the relevant patient population.


 


(d)           OMI shall be entitled
to terminate this license at any time on a Product by Product basis for safety
reasons, including the detection in a test population of adverse experiences
associated with the administration of the Product that are significant, serious
or life threatening to the patient or demonstrate significant toxicological
effect(s) of such Product on one or more body tissues that are not balanced by
a countervailing benefit to the patient. The safety of a Product will be
determined by OMI in view of the risk to benefit relationship of such Product
in the relevant patient population.


 


Section 10.3                         Material Breach.


 


(a)           If
either Party believes that the other is in material breach of this Agreement
(other than with respect to a breach of OMI’s obligations under Section 5.1,
which is governed by Section 10.4), then the non-breaching Party may deliver
notice of such breach to the other Party. In such notice the non-breaching
Party will identify the actions or conduct that it wishes such Party to take
for an acceptable and prompt cure of such breach (or will otherwise state its
good faith belief that such breach is incurable); provided that such identified actions or conduct will not be
binding upon the other Party with respect to the actions that it may need to
take to cure such breach. If the breach is curable, the allegedly breaching
Party will have [***] to either cure such breach (except to the extent such
breach involves the failure to make a payment when due, which breach must be
cured within [***] following such notice) or, if a cure cannot be reasonably
effected within such [***] period, to deliver to the non-breaching Party a plan
for curing such breach which is reasonably sufficient to effect a cure within a
reasonable period. If the breaching Party fails to (i) cure such breach within
the [***] period or (ii) use Commercially Reasonable Efforts to carry out the
plan and cure the breach, the non-breaching Party may terminate this Agreement
on a Product-by-Product basis by providing written notice to the breaching
Party.


 


(b)           Notwithstanding the
foregoing, if the allegedly breaching Party disputes in good faith the
existence, materiality, or failure to cure of any such breach which is not a
payment breach, and provides notice to the non-breaching Party (the “Other Party”) of
such dispute within such [***] period, the Other Party will not have the right
to terminate this Agreement in accordance with this Section 10.3 unless and
until it has been determined in accordance with Section 14.4 that this
Agreement was materially breached by the allegedly breaching Party and


 


32

















 


that Party fails to cure
such breach within [***] following such determination. It is understood and
acknowledged that during the pendency of such a dispute, all of the terms and
conditions of this Agreement will remain in effect and the Parties will
continue to perform all of their respective obligations hereunder.


 


(c)           This Section 10.3 will be
subject to and will not limit the provisions of Section 10.4 and Section 10.5.


 


Section 10.4                         Termination by Isis For Failure of OMI to Use Commercially
Reasonable Efforts.


 


(a)                                           Subject
to Section 10.4(b) and 10.4(c), at any time after the expiration of the Collaboration
Term, Isis will have the right to terminate the License granted under Section
2.1 on a country-by-country basis, if OMI is in breach of its obligations to
use Commercially Reasonable Efforts as set forth in Section 5.1, provided however, that the Agreement will
not so terminate unless (i) OMI is given [***] prior written notice by Isis of
Isis’s intent to terminate, stating the reasons and justification for such
termination and recommending steps which OMI should take, and (ii) OMI, or its
Licensee, has not used good faith Commercially Reasonable Efforts during the
[***] period following such notice to diligently pursue the Development and/or
Commercialization of at least one Compound or Product for each Collaboration
Gene Target. Any such termination will be limited in force and effect to the
country or countries and Products to which such breach relates. For clarity, it
is understood and acknowledged that Commercially Reasonable Efforts in the
Development of a Product in a particular country may include sequential
implementation of clinical trials and/or intervals between clinical trials for
data interpretation and clinical program planning and approval, to the extent
such implementation is consistent with the scientific, technical and commercial
factors relevant to Development of such Product in such country.


 


(b)                                           It
is understood and acknowledged that if OMI (by itself or through its Affiliates
or Licensees) uses Commercially Reasonable Efforts to Develop a Product in each
and every Major Market Country, OMI will be deemed to be in compliance with its
obligation under Section 5.1 to use Commercially Reasonable Efforts to Develop
a Product with respect to all countries in the world. Termination under this
Section 10.4 will apply to all Compounds and Products that target the
applicable Collaboration Gene Target, but only for the affected country or
countries.


 


(c)                                           If
OMI disputes in good faith the existence or materiality of an alleged breach
specified in a notice provided by Isis pursuant to Section 10.4(a), and
provides notice to Isis of such dispute within the [***] following such notice
provided by Isis, Isis will not have the right to terminate this Agreement
unless and until the existence of such material breach or failure by OMI has
been determined in accordance with Section 14.4 and OMI fails to cure such
breach within [***] following such determination. It is understood and
acknowledged that during the pendency of such a dispute, all of the terms and
conditions of this Agreement will remain in effect and the Parties will
continue to perform all of their respective obligations hereunder.


 


Section 10.5                         Consequences of Termination.


 


10.5.1                                     Licenses. Upon termination of this Agreement
in its entirety by either Party pursuant to this Article 10, the licenses
granted by Isis to OMI hereunder will terminate.


 


10.5.2                                     Return of Information and Materials. Upon
termination of this Agreement in its entirety by either Party pursuant to this
Article 10, the Parties will return (or destroy, as directed by the other
Party) all data, files, records and other materials containing or comprising
the other Party’s Confidential Information. Notwithstanding the foregoing, the
Parties will be permitted to retain one copy of such data, files, records, and
other materials for archival purposes.


 


Section 10.6                         Accrued Rights; Surviving Obligations.


 


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


 


10.6.2                                     Survival. Articles 7, 8, 9, 10, 11, 12 and
14, and
Section 6.11, 6.15 and Section 13.4 of this Agreement will survive expiration
or termination of this Agreement for any reason. Furthermore, Isis hereby
grants to OMI a worldwide non-exclusive license, with the right to grant
sublicenses under Section 2.2, to Isis Know-How existing now or in the future
and disclosed to OMI during the Term, solely for the further manufacture and
sale of Compounds and Products after the expiration of the Term. Isis further
acknowledges and agrees that upon the expiration of the Term, (i) OMI will no
longer have an obligation to pay royalties to Isis on any Product, and (ii) the
making, using or selling of a Compound or Product will not be covered by a
Valid Claim within any Isis Patent Right.


 


Section 10.7                         Rights in Bankruptcy. All rights and licenses
granted under or pursuant to this Agreement by Isis or OMI are, and will
otherwise be deemed to be, for purposes of Section 365(n) of the U.S.
Bankruptcy Code (i.e., Title 11 of the U.S. Code) or analogous provisions of
Applicable Law outside the United States, licenses of rights to “intellectual
property” as defined under Section 101 of the U.S. Bankruptcy Code or analogous
provisions of Applicable Law outside the United States. The Parties agree that
each Party, as licensee of such rights under this Agreement, will retain and
may fully exercise all of its rights and elections under the U.S. Bankruptcy
Code or any other provisions of Applicable Law outside the United States that
provide similar protection for ‘intellectual property.’  The Parties further agree that, in the event
of the commencement of a bankruptcy proceeding by or against a Party under the
U.S. Bankruptcy Code or analogous provisions of Applicable Law outside the
United States, the Party that is not subject to such proceeding will be
entitled to a complete duplicate of (or complete access to, as appropriate)
such intellectual property and all embodiments of such intellectual property,
which, if not already in the non subject Party’s possession, will be promptly
delivered to it upon the non subject Party’s written request therefor. Any
agreements supplemental hereto will be deemed to be “agreements supplementary
to” this Agreement for purposes of Section 365(n) of the U.S. Bankruptcy Code.


 


ARTICLE 11 - 

ISIS REVERSION RIGHT


 


Section 11.1                         Isis Reversion Rights.


 


11.1.1     If
(i) OMI terminates the Agreement under Section 10.2, (ii) OMI makes a
substitution under Section 3.6.1, or (iii) Isis terminates the Agreement under
Section 10.3 or 10.4, Isis may elect to continue to Develop and Commercialize
any Compound or Product that is the subject of such termination or substitution
(a “Discontinued Product”)
by notice in writing to OMI within [***] of such termination (an “Election Notice”)
that Isis is exercising its rights under this Section 11.1, in which case OMI
will (x) grant to Isis a fully-paid, sublicensable, worldwide license or sublicense,
as the case may be, to [***] as of the date of the Election Notice solely as
they are [***] to make, have made, use, sell, offer for sale, have sold and
import Discontinued Products, and (y) transfer to Isis, for Isis’ use with
respect to the Development and Commercialization of the Discontinued Products,
any data, results, regulatory information and files in the possession of OMI as
of the date of the Election Notice that relate to such


 


34

















 


Discontinued
Products. Further, any
Product Specific Patents assigned to OMI pursuant to 9.2.3 (c) shall be
reassigned back to Isis.


 


11.1.2     In consideration for the rights granted by
OMI to Isis under parts (x) and (y) of Section 
11.1.1, Isis will pay a royalty on net sales of each Discontinued
Product by Isis, its Affiliates and licensees as follows: (i) [***]% of net
sales of such Discontinued Product if the Election Notice occurs after the
applicable Compound or Product achieved the [***] milestone, and OMI makes the
corresponding payment to Isis under Section 6.3, (ii) [***]% of net sales of
such Discontinued Product if the Election Notice occurs after the applicable
Compound or Product achieved the [***] milestone, and OMI makes the
corresponding payment to Isis under Section 6.3. Such royalty payment
obligation will be governed by Sections 6.8 through 6.15 (and the definition of
Net Sales) which shall apply to Isis in the same way as they applied to OMI
prior to such termination of the Agreement.


 


ARTICLE 12 -


 


INDEMNIFICATION, INSURANCE AND LIMITATION OF LIABILITY


 


Section 12.1                         Indemnification of Isis. OMI agrees to defend Isis,
its Affiliates and their respective directors, officers, employees and agents,
and their respective successors, heirs and assigns (collectively, the “Isis Indemnitees”),
and will indemnify and hold harmless the Isis Indemnitees, from and against any
liabilities, losses, costs, damages, fees or expenses payable to a Third Party,
and reasonable attorneys’ fees and other legal expenses with respect thereto
(collectively, “Losses”)
arising out of any claim, action, lawsuit or other proceeding by a Third Party
(collectively, “Third
Party Claims”) brought against any Isis Indemnitee and resulting
from or occurring as a result of: (a) 
the Development, manufacture, use, handling, storage, sale or other
Commercialization or disposition of any Compound or Product in the Territory by
OMI or its Affiliates, Licensees or contractors, (b) any breach by OMI of any
of its representations or warranties pursuant to this Agreement or any of the
agreements or covenants in this Agreement that contemplate performance or
compliance by OMI on or prior to the Effective Date or (c) to the extent
resulting from the  negligence or willful
misconduct of OMI or any OMI Affiliate or Licensee in connection with this
Agreement; except in any such
case to the extent such Losses result from: (i) the negligence or willful
misconduct of any Isis Indemnitee or (sub)contractor of Isis, (ii) any breach
by Isis of any of its representations, warranties, covenants or obligations
pursuant to this Agreement or under any agreement with a Third Party, or (iii)
any breach of Applicable Law by any Isis Indemnitee or (sub)contractor of Isis.


 


Section 12.2                         Indemnification of OMI. Isis agrees to defend OMI,
its Affiliates, Licensees and their respective directors, officers, employees
and agents, and their respective successors, heirs and assigns (collectively,
the “OMI Indemnitees”),
and will indemnify and hold harmless the OMI Indemnitees, from and against any
Losses and Third Party Claims brought against any OMI Indemnitee and resulting
from or occurring as a result of: (a) any breach by Isis of any of its
representations or warranties pursuant to this Agreement or any of the
agreements or covenants in this Agreement that contemplate performance or
compliance by Isis on or prior to the Effective Date or (b) to the extent
resulting from the negligence or willful misconduct of any Isis Indemnitee or
any (sub)contractor of OMI in connection with this Agreement; except in any such case to the extent such
Losses result from: (i) the negligence or willful misconduct of any OMI
Indemnitee or (sub)contractor of OMI, (ii) any breach by OMI of any of its
representations, warranties, covenants or obligations pursuant to this
Agreement or under any agreement with a Third Party, or (iii) any breach of
Applicable Law by any OMI Indemnitee or (sub)contractor of OMI.


 


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Section 12.3                         Notice of Claim. All indemnification claims
provided for in Sections 12.1 and 12.2 will be made solely by such Party to
this Agreement (the “Indemnified
Party”). The Indemnified Party will give the indemnifying Party
prompt written notice (an “Indemnification
Claim Notice”) of any Losses or the discovery of any fact upon
which the Indemnified Party intends to base a request for indemnification under
Section 12.1 or 12.2, but in no event will the indemnifying Party be liable for
any Losses to the extent such Losses result from any delay in providing such
notice. Each Indemnification Claim Notice must contain a description of the
claim and the nature and amount of such Loss (to the extent that the nature and
amount of such Loss is known at such time). The Indemnified Party will furnish
promptly to the indemnifying Party copies of all papers and official documents
received in respect of any Losses and Third Party Claims.


 


Section 12.4                         Defense, Settlement, Cooperation and Expenses.


 


(a)           Control of Defense. At its option, the
indemnifying Party may assume the defense of any Third Party Claim by giving
written notice to the Indemnified Party within 30 calendar days after the
indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption
of the defense of a Third Party Claim by the indemnifying Party will not be
construed as an acknowledgment that the indemnifying Party is liable to
indemnify the Indemnified Party in respect of the Third Party Claim, nor will
it constitute a waiver by the indemnifying Party of any defenses it may assert
against the Indemnified Party’s claim for indemnification. Upon assuming the
defense of a Third Party Claim, the indemnifying Party may appoint as lead
counsel in the defense of the Third Party Claim any legal counsel selected by
the indemnifying Party. In the event the indemnifying Party assumes the defense
of a Third Party Claim, the Indemnified Party will as soon as is reasonably
possible deliver to the indemnifying Party all original notices and documents
(including court papers) received by the Indemnified Party in connection with
the Third Party Claim. Should the indemnifying Party assume the defense of a
Third Party Claim, except as provided in Section 12.4(b), the Indemnified Party
will be responsible for the legal costs or expenses subsequently incurred by
such Indemnified Party in connection with the analysis, defense or settlement
of the Third Party Claim. In the event that it is ultimately determined that
the indemnifying Party is not obligated to indemnify, defend or hold harmless
the Indemnified Party from and against the Third Party Claim, the Indemnified
Party will reimburse the indemnifying Party for any and all costs and expenses
(including attorneys’ fees and costs of suit) and any Third Party Claims
incurred by the Indemnifying Party solely attributed to the defense of the
Third Party Claim on behalf of the Indemnified Party (but not those costs and
expenses otherwise attributable to the defense of the Indemnifying Party).


 


(b)           Right to Participate in Defense. Without
limiting Section 12.4(a), any Indemnified Party will be entitled to participate
in, but not control, the defense of such Third Party Claim and to employ
counsel of its choice for such purpose; provided,
however, that such employment will be at the Indemnified Party’s own
cost and expense unless (i) the employment thereof has been specifically
authorized by the indemnifying Party in writing, (ii) the indemnifying Party
has failed to assume the defense and employ counsel in accordance with Section
12.4(a) (in which case the Indemnified Party will control the defense) or (iii)
the interests of the Indemnified Party and the indemnifying Party with respect
to such Third Party Claim are sufficiently adverse to prohibit the
representation by the same counsel of both Parties under Applicable Law,
ethical rules or equitable principles in which case the indemnifying Party will
be responsible for any such costs and expenses of counsel for the Indemnified
Party.


 


(c)           Settlement. With respect to any Third Party
Claims relating solely to the payment of money damages in connection with a
Third Party Claim and that will not admit liability or violation of Law on the
part of the Indemnified Party or result in the Indemnified Party’s becoming
subject to injunctive or other relief or otherwise adversely affecting the
business of the Indemnified Party in any manner (such as granting a license or
admitting the invalidity of a Patent Controlled by an Indemnified Party), and
as to which the indemnifying Party will have


 


36

















 


acknowledged
in writing the obligation to indemnify the Indemnified Party hereunder, the
indemnifying Party will have the sole right to consent to the entry of any
judgment, enter into any settlement or otherwise dispose of such Loss, on such
terms as the indemnifying Party, in its sole discretion, will deem appropriate.
With respect to all other Losses in connection with Third Party Claims, where
the indemnifying Party has assumed the defense of the Third Party Claim in
accordance with Section 12.4(a), the indemnifying Party will have authority to
consent to the entry of any judgment, enter into any settlement or otherwise
dispose of such Loss provided it obtains the prior written consent of the
Indemnified Party (which consent will not be unreasonably withheld). The
indemnifying Party will not be liable for any settlement or other disposition
of a Loss by an Indemnified Party that is reached without the written consent
of the indemnifying Party. Regardless of whether the indemnifying Party chooses
to defend or prosecute any Third Party Claim, no Indemnified Party will admit
any liability with respect to or settle, compromise or discharge, any Third
Party Claim without the prior written consent of the indemnifying Party, such
consent not to be unreasonably withheld.


 


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


 


(e)           Costs and Expenses. Except as provided above in
this Section 12.4, the costs and expenses, including attorneys’ fees and
expenses, incurred by the Indemnified Party in connection with any claim will
be reimbursed on a Calendar Quarter basis by the indemnifying Party, without
prejudice to the indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified
Party.


 


Section 12.5                         Insurance. OMI will maintain at its cost and
expense, adequate liability insurance (including product liability insurance
covering OMI’s products undergoing clinical trials and commercialized products)
to protect against potential liabilities and risk arising out of activities to
be performed by OMI under this Agreement and any agreement related hereto and
upon such terms (including coverages, deductible limits and self-insured
retentions) as are customary in the U.S. pharmaceutical industry for the
activities to be conducted by  OMI under
this Agreement. OMI will promptly notify Isis of any material change in
insurance or self-insurance coverage or lapse in coverage in that regard. Furthermore,
OMI will provide Isis the information Isis reasonably requests to allow Isis to
maintain Isis’ clinical trial insurance covering the clinical trials for
Compounds or Products conducted by OMI. Isis agrees to procure and maintain in
full force and effect during the Term, valid and collectible insurance policies
as outlined in Appendix 14. Upon written request,
Isis shall provide OMI with certificates of insurance evidencing the required
coverage.


 


37

















 


ARTICLE 13 - 

REPRESENTATIONS AND WARRANTIES


 


Section 13.1                         Representations, Warranties and Covenants. Each
Party hereby represents and warrants as of both the Execution Date and
Effective Date and covenants to the other Party that:


 


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


 


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


 


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


 


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


 


Section 13.2                         Isis Representations, Warranties, and Covenants. Isis’
representations and warranties under this Agreement regarding gene targets are
limited to GCCR, GCGR on both the Execution Date and Effective Date and the
gene targets that are part of the Target Pool on the Execution Date. Similarly,
Isis’ representations and warranties under this Agreement regarding Compounds
are limited to (i) Compounds that inhibit GCCR and GCGR Compounds identified
and known by Isis both on the Execution Date and Effective Date and (ii)
Compounds that inhibit the gene targets that are part of the Target Pool on the
Execution Date. As such, Isis  hereby
represents and warrants as of the Execution Date and, where indicated, as of
the Effective Date and covenants to OMI that:


 


(a)           subject to the limitations
set forth in Appendix 6, Isis has the
sufficient legal and/or beneficial title and ownership or right to license (or
sublicense as the case may be) with respect to the Isis Patents as is necessary
to fulfill its obligations under this Agreement and further, that, with respect
to the Compounds, the grant of the licenses (or sublicenses as the case may be)
to OMI pursuant to this Agreement does not, and as of the Effective Date will
not, violate any right known to Isis of any agreement Isis has with a Third
Party;


 


(b)           with respect to agreements
between Isis and any Third Party existing on the Execution Date, the only
financial Pass Through Obligations for ISIS 325568 and ISIS 377131 are the Isis
Supported Payments and further that Isis is not aware of any other Third Party
Patents that are necessary for OMI to make, use or sell ISIS 325568 and ISIS
377131 other than those provided in Appendix 6. Any existing
Pass Through Royalties encumbering the Compounds or gene targets in the Target
Pool are listed in Appendix 6;


 


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


 


38

















 


(d)           subject to the limitations
set forth in Appendix 6, it has, and as of the
Effective Date, will have, the ability to grant to OMI the licenses granted or
to be granted by Isis under this Agreement on the terms set forth herein;


 


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


 


(f)            it
has not granted, or permitted to be attached, and it will not grant or permit
to be attached during the Term, any lien, security interest or other
encumbrance with respect to the Isis Technology, Research Results or Program
Inventions which would adversely effect the rights granted to OMI hereunder;


 


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


 


(h)           it has not granted, as of
the Effective Date will not have granted, any license, option or other rights
to any other Third Party with respect to any Product Specific Patents (with the
exception of the material transfer agreements listed as numbers 20-29 in Appendix 6);


 


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


 


(j)            the
Isis In-License Agreements that Isis considers in good faith to be most
relevant to the manufacture, use or sale of Compounds and Products as
contemplated under the initial R&D Plan (together with any associated
potential Pass Through Obligations) are included in the list of agreements
identified in Appendix 6;


 


(k)           Isis
owns or possesses adequate licenses or other rights to use all existing
research tools that it uses or has used to identify the Compounds;


 


(l)            unless
disclosed in writing between the Parties to this Agreement or their respective
agents, to Isis’ knowledge, (i) there are no issued patents of a Third Party
that would be infringed by OMI’s manufacture, use or sale of the Compounds and
(ii)  no Third party is currently
infringing any Product Specific Patents licensed hereunder;


 


(m)          the
license and/or transfer of any data related to the Compounds that is part of
the Isis Know-How and Product Specific Know-How under this Agreement will not
violate the terms of any agreement Isis has with a Third Party;


 


(n)           Isis
has written evidence that [***];


 


(o)           Isis
is not aware of any Third Party Patents, apart from those encompassed in the
licenses listed in Appendix 6 that
are necessary for OMI to make, use or sell ASOs directed to gene targets that
are part of the Target Pool; and


 


(p)           on
or prior to the Effective Date, Isis will have exercised the Purchase Option,
consummated the Purchase Option Closing and terminated the Technology License
Agreement (as such terms are defined in Section 14.13 herein) and re-acquired
Isis’ GCCR Program and GCGR Programs pursuant to the Purchase Option Agreement
such that neither Symphony GenIsis Inc. nor Symphony GenIsis Holdings LLC will
have any rights that would prevent or encumber or otherwise limit the licenses
granted by Isis to OMI under this Agreement or Isis’ ability to perform its
obligations under the R&D Plan.


 


Section 13.3                         OMI Representation and Covenant. OMI  hereby represents and warrants as of both
the Execution Date and the Effective Date and covenants to Isis that:


 


39

















 


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


 


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


 


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


 


(d)           certain OMI Affiliate
employee(s) were previously employed by Isis and may work on the subject matter
of this Agreement; therefore OMI represents that, while the employee(s)
Know-How learned at Isis may be employed to the benefit of this Collaboration,
such information shall remain Confidential pursuant to Article 8 herein.


 


Section 13.4                         DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS
WARRANTIES SET FORTH IN THIS ARTICLE 13, OMI AND ISIS MAKE NO REPRESENTATIONS
AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF
LAW, BY STATUTE OR OTHERWISE, AND OMI AND ISIS EACH SPECIFICALLY DISCLAIM ANY
OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY
WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE
OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF
ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.


 


ARTICLE 14 - 

MISCELLANEOUS


 


Section 14.1                         Assignment; OMI Affiliates. Except
as expressly set forth in this Agreement, without the prior written consent of
the other Party hereto, neither Party will sell, transfer, assign, delegate,
pledge or otherwise dispose of, whether voluntarily, involuntarily, by
operation of law or otherwise, this Agreement or any of its rights or duties
hereunder; provided, however,
that (i) either Party hereto may assign or transfer this Agreement or any of
its rights or obligations hereunder without the consent of the other Party to
any Third Party with which it has merged or consolidated, or to which it has
transferred all or substantially all of its assets or stock to which this
Agreement relates if in any such event the Third Party assignee or surviving
entity assumes in writing all of the assigning Party’s obligations under this
Agreement or (ii) Isis may assign or transfer its rights under Article 6 (but
no liabilities) to a Third Party in connection with a royalty factoring
transaction. Any purported assignment or transfer in violation of this Section
14.1 will be void ab initio and
of no force or effect. Isis acknowledges and agrees that certain of OMI’s
responsibilities and obligations may be performed by one or more of OMI’s
Affiliates; provided, however, that OMI will
continue to be liable to Isis for any breach of this Agreement by any of OMI’s
Affiliates.


 


Section 14.2                         Severability. If any provision of this
Agreement is held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, such adjudication will not affect or impair, in whole
or in part, the validity, enforceability, or legality of any remaining portions
of this Agreement. All remaining portions will remain in full force and effect
as if the original Agreement had been executed without the invalidated,
unenforceable or illegal part.


 


Section 14.3                         Governing Law; Jurisdiction. This
Agreement will be governed by and construed and enforced in accordance with the
laws of the State of New York, USA without reference to any rules of conflicts
of laws. Each of the Parties hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of any federal
court of the United States of America sitting in the City of Chicago, Illinois
and any appellate


 


40

















 


court
from any jurisdiction thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the Parties hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in any
such federal court in Chicago. For clarification, any dispute relating to the
scope, validity, enforceability or infringement of any Patents will be governed
by and construed and enforced in accordance with the patent laws of the
applicable jurisdiction.


 


Section 14.4                         Dispute Resolution.


 


14.4.1                                     Resolution by Senior Representatives. The
Parties will seek to settle amicably any and all disputes, controversies or
claims arising out of or in connection with this Agreement. Any dispute within
the R&D Committee’s decision-making authority will be finally decided as
set forth in Appendix 5. Any dispute between
the Parties which is outside the R&D Committee’s decision-making authority
will be promptly presented to each Party’s respective co-chair of the R&D
Committee for resolution, and if the co-chairs of the R&D Committee are
unable to resolve such dispute, such dispute will then be presented to the
President, R&D of OMI and the Executive Vice President and CFO of Isis (the
“Senior Representatives”),
or their respective designees, for resolution. Such Senior Representatives, or
their respective designees, will meet in-person or by teleconference as soon as
reasonably possible thereafter, and use their good faith efforts to mutually
agree upon the resolution of the dispute, controversy or claim. Any dispute
within the R&D Committee’s decision-making authority will not be subject to
arbitration.


 


14.4.2                                     Arbitration and Mediation. If after negotiating in good faith pursuant to Section 14.4.1, after
good faith discussions undertaken within reasonable promptness, to reach an
amicable agreement within 90 days, then either Party may upon written notice to
the other submit to mediation and binding arbitration pursuant to Sections
14.4.2.2 and 14.4.2.3 below. No statements made by either Party during such
discussions will be used by the other Party or admissible in arbitration or any
other subsequent proceeding for resolving the dispute.


 


14.4.2.1 Arbitration.


 


a.               Any dispute, claim or controversy arising
from or related in any way to this Agreement or the interpretation,
application, breach, termination or validity thereof, including any claim of
inducement of this Agreement by fraud or otherwise, not resolved under the
provisions of Sections 14.4.1 and 14.4.2.3 will be submitted for resolution to
arbitration pursuant to the rules then pertaining of the CPR Institute for
Dispute Resolution for Non-Administered Arbitration (available at www.cpradr.org/arb-rules.htm),
or successor (“CPR”), except where those rules conflict with these provisions,
in which case these provisions control. The arbitration will be held in
Chicago, Illinois.


 


b.              The arbitration panel shall consist of three
arbitrators chosen from the CPR Panels of Distinguished Neutrals (or, by
agreement, from another provider of arbitrators). Unless otherwise agreed by
the Parties, each of the arbitrators will be a lawyer with at least 15 years
experience with a law firm or corporate law department of over 25 lawyers or
who was a judge of a court of general jurisdiction. In the event the aggregate
damages sought by the claimant Party are stated to be less than $[***], and the
aggregate damages sought by the counterclaimant Party are stated to be less
than $[***], and neither side seeks equitable relief, then a single arbitrator
shall be chosen, having the same qualifications and experience specified above.
Each arbitrator shall be neutral, independent, disinterested, and impartial and
shall abide by The CPR-Georgetown Commission Proposed Model Rule for the Lawyer
as Neutral available at www.cpradr.org/cpr-george.html.


 


c.               The Parties agree to cooperate (1) to attempt
to select the arbitrator(s) by agreement within 45 days of initiation of the
arbitration, including jointly interviewing the final candidates, (2) to meet
with the arbitrators within 45 days of selection, and (3) to agree at that
meeting or before upon procedures for discovery and as to the conduct


 


41

















 


of
the hearing which will result in the hearing being concluded within no more
than nine (9) months after selection of the arbitrators and in the award being
rendered within 60 days of the conclusion of the hearings, or of any post-hearing
briefing, which briefing will be completed by both sides within 45 days after
the conclusion of the hearings.


 


d.              In the event the Parties cannot agree upon
selection of any arbitrators, the CPR will select arbitrators as follows: CPR
shall provide the Parties with a list of no less than 25 proposed arbitrators
(15 if a single arbitrator is to be selected) having the credentials referenced
above. Within 25 days of receiving such list, the Parties shall rank at least
65% of the proposed arbitrators on the initial CPR list, after exercising cause
challenges. The Parties may then interview the five candidates (three if a
single arbitrator is to be selected) with the highest combined rankings for no
more than one hour each and, following the interviews, may exercise one
peremptory challenge each. The panel will consist of the remaining three
candidates (or one, if one arbitrator is to be selected) with the highest
combined rankings. In the event these procedures fail to result in selection of
the required number of arbitrators, CPR shall select the appropriate number of
arbitrators from among the members of the various CPR Panels of Distinguished
Neutrals, allowing each side challenges for cause and three peremptory
challenges each.


 


e.               In the event the Parties cannot agree upon
procedures for discovery and conduct of the hearing meeting the schedule set
forth in paragraph (c) above, then the arbitrators shall set dates for the
hearing, any post-hearing briefing, and the issuance of the award in accord
with the paragraph (c) schedule. The arbitrators shall provide for discovery
according to those time limits, giving recognition to the understanding of the
Parties that they contemplate reasonable discovery, including document demands
and depositions, but that such discovery be limited so that the paragraph (c)
schedule may be met without difficulty. In no event will the arbitrators,
absent agreement of the Parties, allow more than a total of ten days for the
hearing or permit either side to obtain more than a total of 20 hours of
deposition testimony from all witnesses, including both fact and expert
witnesses, or serve more than 10 individual requests for documents, including
subparts, or 10 individual requests for admission or interrogatories, including
subparts. Multiple hearing days will be scheduled consecutively to the greatest
extent possible.


 


f.                 The arbitrators must render their award by
application of the substantive law of Illinois, except regarding any patent
disputes or other such issues where state law is preempted by federal law, in
which event US federal law shall apply, and are not free to apply “amiable
compositeur” or “natural justice and equity.” 
The arbitrators shall render a written opinion setting forth findings of
fact and conclusions of law with the reasons therefor stated. A transcript of
the evidence adduced at the hearing shall be made and shall, upon request, be
made available to either Party. The arbitrators shall have power to exclude
evidence on grounds of hearsay, prejudice beyond its probative value,
redundancy, or irrelevance and no award shall be overturned by reason of such
ruling on evidence. To the extent possible, the arbitration hearings and award
will be maintained in confidence.


 


g.              In the event the panel’s award exceeds $[***]
in monetary damages or includes or consists of equitable relief, or rejects a
claim in excess of that amount or for that relief, then the losing Party may
obtain review of the arbitrators’ award or decision by a single appellate
arbitrator (the “Appeal Arbitrator”) selected from the CPR Panels of
Distinguished Neutrals by agreement or, failing agreement within seven working
days, pursuant to the selection procedures specified in paragraph d above.
If CPR cannot provide such services, the Parties will together select another
provider of arbitration services that can. No Appeal Arbitrator shall be
selected unless he/she


 


42

















 


can
commit to rendering a decision within forty-five days following oral argument as
provided in this paragraph. Any such review must be initiated within thirty
(30) days following the rendering of the award referenced in f above.


 


h.              The Appeal Arbitrator will make the same
review of the arbitration panel’s ruling and its basis that the U.S. Court of
Appeals of the Circuit where the arbitration hearings are held would make of
findings of fact and conclusions of law rendered by a district court after a
bench trial and then modify, vacate or affirm the arbitration panel’s award or
decision accordingly, or remand to the panel for further proceedings. The
Appeal Arbitrator will consider only the arbitration panel’s findings of fact
and conclusions of law, pertinent portions of the hearing transcript and
evidentiary record as submitted by the Parties, opening and reply briefs of the
Party pursuing the review, and the answering brief of the opposing Party, plus
a total of no more than four (4) hours of oral argument evenly divided between
the Parties. The Party seeking review must submit its opening brief and any
reply brief within seventy-five (75) and one hundred thirty (130) days,
respectively, following the date of the award under review, whereas the
opposing Party must submit its responsive brief within one hundred ten (110)
days of that date. Oral argument shall take place within five (5) months after
the date of the award under review, and the Appeal Arbitrator shall render a
decision within forty-five (45) days following oral argument. That decision
will be final and not subject to further review, except pursuant to the Federal
Arbitration Act.


 


i.                  The Parties consent to the jurisdiction of
the State or Federal District Court for the district in which the arbitration
is held for the enforcement of these provisions and the entry of judgment on
any award rendered hereunder (including after review by the Appeal Arbitrator
where such an appeal is pursued). Should such court for any reason lack
jurisdiction, any court with jurisdiction shall act in the same fashion.


 


j.                  Each Party has the right before or, if the
arbitrator(s) cannot hear the matter within an acceptable period, during the
arbitration to seek from the appropriate court provisional remedies such as
attachment, preliminary injunction, replevin, etc., to avoid irreparable harm,
maintain the status quo, or preserve the subject matter of the arbitration.


 


k.               EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL
OF ANY ISSUE BY JURY.


 


l.                  EACH PARTY HERETO WAIVES ANY CLAIM TO
PUNITIVE, EXEMPLARY OR MULTIPLIED DAMAGES FROM THE OTHER. EACH PARTY HERETO
WAIVES ANY CLAIM OF CONSEQUENTIAL, INDIRECT  OR INCIDENTAL DAMAGES FROM THE OTHER. EACH PARTY HERETO WAIVES ANY CLAIM FOR
ATTORNEYS’ FEES AND COSTS AND PREJUDGMENT INTEREST FROM THE OTHER. IN ADDITION,
THE RIGHTS OF TERMINATION BY ISIS UNDER SECTION 10.4 AND THE EFFECT OF SUCH
TERMINATION AS SET FORTH IN SECTIONS 10.5 AND 11.1 WILL BE ISIS’ ONLY REMEDY
AND OMI’S ONLY LIABILITY WITH RESPECT TO OR RESULTING FROM OMI’S BREACH OF ITS
OBLIGATIONS AS SET FORTH IN SECTION 5.1.


 


14.4.2.2                 Mediation.


 


a.               Any dispute, controversy or claim arising out
of or related to this Agreement, or the interpretation, application, breach,
termination or validity thereof, including any claim of inducement by fraud or
otherwise, which claim would, but for this provision, be submitted to
arbitration shall, before submission to arbitration, first be mediated through
non-binding mediation in accordance with The CPR Mediation Procedure then in
effect of the CPR Institute for Dispute Resolution (CPR) available at
www.cpradr.org/m_proced.htm, except where that procedure conflicts with these
provisions, in which case these provisions control. The mediation shall be
conducted


 


43

















 


in
Chicago, Illinois and shall be attended by a senior executive with authority to
resolve the dispute from each of the Parties.


 


b.              The mediator shall be neutral, independent,
disinterested and shall be selected from a professional mediation firm such as
ADR Associates or JAMS/ENDISPUTE or CPR.


 


c.               The Parties shall promptly confer in an
effort to select a mediator by agreement. In the absence of such an agreement
within 10 days of initiation of the mediation, the mediator shall be selected
by CPR as follows: CPR shall provide the Parties with a list of at least 15 names
from the CPR Panels of Distinguished Neutrals. Each Party shall exercise
challenges for cause, two peremptory challenges, and rank the remaining
candidates within 5 working days of receiving the CPR list. The Parties may
together interview the three top-ranked candidates for no more than one hour
each and, after the interviews, may each exercise one peremptory challenge. The
mediator shall be the remaining candidate with the highest aggregate ranking.


 


d.              The mediator shall confer with the Parties to
design procedures to conclude the mediation within no more than 45 days after
initiation. Under no circumstances may the commencement of arbitration under
Section 14.3.4.2 above be delayed more than 45 days by the mediation process
specified herein absent contrary agreement of the Parties.


 


e.               Each Party agrees not to use the period or
pendency of the mediation to disadvantage the other Party procedurally or
otherwise. No statements made by either side during the mediation may be used
by the other or referred to during any subsequent proceedings.


 


f.                 Each Party has the right to pursue
provisional relief from any court, such as attachment, preliminary injunction,
replevin, etc., to avoid irreparable harm, maintain the status quo, or preserve
the subject matter of the arbitration, even though mediation has not been
commenced or completed.


 


14.4.3                     Disputes Regarding Material Breach. If
the Parties are in dispute as to whether one Party is in material breach of
this Agreement, then the arbitrator will first determine if material breach has
in fact occurred, and if so, will grant the defaulting Party the cure period
provided pursuant to Section 10.3 (or 10.2, as applicable). If the material
breach is not cured within the time period provided pursuant to Section 10.3 (or
10.2, as applicable), the arbitration will continue and the arbitrator will, as
part of the same arbitration, award actual direct damages to the non-defaulting
Party.


 


Section 14.5                         Notices. Except as otherwise provided for in
this Agreement, all notices or other communications that are required or
permitted hereunder will be in writing and delivered personally with
acknowledgement of receipt, sent by facsimile (and promptly confirmed by
personal delivery, registered or certified mail or overnight courier as
provided herein), sent by nationally-recognized overnight courier or sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:


 


If to OMI, to:


 


Ortho McNeil, Inc.


1000 US Route 202


Raritan, New Jersey, 08869 Attention:  President


Facsimile:  908-707-9757


 


With copy to:


 


Chief Patent Counsel


Johnson & Johnson


One Johnson & Johnson Plaza


 


44

















 


New Brunswick, New Jersey 08933


Facsimile:  (732) 524-5575


 


If to Isis, to:


Isis Pharmaceuticals, Inc.


1896 Rutherford Road


Carlsbad, California 92008


Attention: Executive Vice President
and CFO


Facsimile: (760) 603-4650


 


With a copy to:


Attention:  General Counsel


Facsimile: (760) 268-4922


 


or to such other address as the Party
to whom notice is to be given may have furnished to the other Party in writing
in accordance herewith. Any such communication will be deemed to have been
given (i) when delivered, if personally delivered or sent by facsimile on a
Business Day, (ii) on the Business Day after dispatch, if sent by
nationally-recognized overnight courier, and (iii) on the third Business Day
following the date of mailing, if sent by mail. It is understood and agreed
that this Section 14.5 is not intended to govern the day-to-day business
communications necessary between the Parties in performing their duties, in due
course, under the terms of this Agreement.


 


Section 14.6                         Entire Agreement; Modifications. This
Agreement (including the attached Appendices and the R&D Plan) sets forth
and constitutes the entire agreement and understanding between the Parties with
respect to the subject matter hereof and all prior agreements, understanding,
promises and representations, whether written or oral, with respect thereto are
superseded hereby. Each Party confirms that it is not relying on any
representations or warranties of the other Party except as specifically set
forth herein. No amendment, modification, release or discharge will be binding
upon the Parties unless in writing and duly executed by authorized
representatives of both Parties.


 


Section 14.7                         Headings. The headings of Articles and
Sections of this Agreement are for ease of reference only and will not affect
the meaning or interpretation of this Agreement in any way.


 


Section 14.8                         Relationship of the Parties. It
is expressly agreed that the Parties will be independent contractors of one
another and that the relationship between the Parties will not constitute a
partnership, joint venture or agency.


 


Section 14.9                         Waiver. Any term or condition of this
Agreement may be waived at any time by the Party that is entitled to the
benefit thereof, but no such waiver will be effective unless set forth in a
written instrument duly executed by or on behalf of the Party waiving such term
or condition. Any such waiver will not be deemed a waiver of any other right or
breach hereunder.


 


Section 14.10                       Counterparts. This Agreement may be
executed in two or more counterparts, each of which will be deemed an original,
but all of which together will constitute one and the same instrument.


 


Section 14.11                       No Benefit to Third Parties. The
representations, warranties, covenants and agreements set forth in this
Agreement are for the sole benefit of the Parties hereto and their


 


45

















 


successors
and permitted assigns, and they will not be construed as conferring any rights
on any other parties.


 


Section 14.12                       Further Assurances. Each Party will duly execute
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including
the filing of such assignments, agreements, documents and instruments, as may
be necessary to carry out the provisions and purposes of this Agreement.


 


Section 14.13                       HSR Act Filing; Symphony GenIsis
Purchase Option Closing and Technology License Termination; Effective Date.


 


(a) The Parties will each, prior to or as
promptly as practicable after the Execution Date, file or cause to be filed
with the U.S. Federal Trade Commission and the U.S. Department of Justice
(requesting early termination of the waiting period) any notifications required
to be filed under the HSR Act with respect to the transactions contemplated
hereby; provided that the Parties will each file
the notifications required to be filed under the HSR Act no later than five (5)
Business Days after the Execution Date of this Agreement. Each Party will be
responsible for its own costs in connection with such filing. The Parties will
use commercially reasonable efforts to respond promptly to any requests for
additional information made by either of such agencies, and to cause the
waiting periods under the HSR Act and any applicable foreign equivalent thereof
to terminate or expire at the earliest possible date after the date of filing.


 


Notwithstanding the
foregoing or any other provision of this Agreement, neither OMI nor any of its
affiliates shall be required to agree to any sale, transfer, license, separate
holding, divestiture or other disposition of, or to any prohibition of, or any
limitation on, the acquisition, ownership, operation, effective control or
exercise of full rights of ownership of (a “Divestiture”), any asset or assets
of OMI or its affiliates.


 


(b)
Isis will, upon receipt of notice of the expiration or earlier termination of
the waiting period under the HSR Act in the United States with respect to the
transactions contemplated hereby (“HSR Clearance”), immediately
(i) exercise the Purchase Option pursuant to the Purchase Option Agreement,
dated April 7, 2006 (the “Purchase Option Agreement”),
among Isis, Sympony GenIsis Holdings LLC (“Holdings”) and Symphony
GenIsis Inc. (“Symphony GenIsis”), (ii) consummate the Purchase Option
Closing and re-acquire the rights to Isis’ GCCR Program and GCGR Program
pursuant to the Purchase Option Agreement, and (iii) terminate the Novated and
Restated Technology License Agreement, dated April 7, 2007 (the “Technology License Agreement”),
between Isis, Holdings and Symphony GenIsis.


 


(c)                                           Notwithstanding
anything in this Agreement to the contrary, Articles  2, 3, 
4, 5, 6, 9, and 11 of this Agreement 
will not become effective and binding on the Parties until (i) receipt
of HSR Clearance (ii) the consummation of the Purchase Option Closing and the
termination of the Technology License Agreement, and (iii) receipt by OMI of a
Confirmation of Closing, in the form set forth in Appendix 15 hereto, executed by Isis and Holdings, a
Confirmation of Termination, in the form set forth in Appendix 15 hereto,
executed by Isis and Symphony GenIsis, and other evidence reasonably
satisfactory to OMI that the Purchase Option Closing has been consummated and
the Technology License Agreement has been terminated. The date of satisfaction
of the conditions set forth in this Section 14.13(c) is referred to in this
Agreement as the “Effective Date.”


 


(d)                                           At
OMI’s request, Isis will deposit into escrow with legal counsel mutually
agreeable to both Parties, all documents that are necessary to exercise the
Purchase Option and required by Isis to consummate the Purchase Option Closing
and terminate the


 


46

















 


Technology
License Agreement, with instructions to deliver such documents to Symphony
GenIsis and Holdings and declare such documents automatically effective upon
receipt of HSR Clearance.


 


(e)                                           Defined
terms used in this Section 14.13, but not otherwise defined in this Agreement,
will have the meaning ascribed to them in the Purchase Option Agreement.


 


(f)                                            If
the conditions set forth in Section 14.13(c)(ii) and (iii) above shall not have
been satisfied within 10 (ten) Business Days of receipt of HSR Clearance, OMI
shall have the unilateral right to terminate this Agreement without any prior
notice to Isis.


 


(g)                                           In
the event of a termination of this Agreement under part (f) above,
notwithstanding the provisions of Section 10.6.2 herein, only Articles  7, 8, 10, 12 and 14 and Section 13.4 of this
Agreement shall survive such termination.


 


Section 14.14                       Force Majeure. Neither Party will be charged
with any liability for delay in performance of an obligation under this
Agreement to the extent such delay is due to a cause beyond the reasonable
control of the affected Party, such as war, riots, labor disturbances, fire,
explosion, and compliance in good faith with any governmental Law, regulation
or order. The Party affected will give prompt written notice to the other Party
of any material delay due to such causes.


 


Section 14.15                       Interpretation.


 


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


 


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


 


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


 


47

















 


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


 


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


 


[SIGNATURE PAGE FOLLOWS]


 


48

















 


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


 


 


	
  ISIS
  PHARMACEUTICALS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ B. Lynne Parshall

  	
   

  	
   

  
	
  Name:

  	
  B. Lynne Parshall

  	
   

  	
   

  
	
  Title:

  	
  Executive Vice President &
  CFO

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ORTHO MCNEIL, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael J. Grissing

  	
   

  	
   

  
	
  Name:

  	
  Michael J. Grissing

  	
   

  	
   

  
	
  Title:

  	
  VP Corporate Development

  	
   

  	
   

  
								



 


49

















 


List of Appendices


 


	
  Appendix 1:

  	
  Definitions

  
	
   

  	
   

  
	
  Appendix 2:

  	
  Product Specific Patents

  
	
   

  	
   

  
	
  Appendix 3:

  	
  Isis Core Technology Patents

  
	
   

  	
   

  
	
  Appendix 4:

  	
  Isis Manufacturing &
  Analytical Patents

  
	
   

  	
   

  
	
  Appendix 5:

  	
  [***]

  
	
   

  	
   

  
	
  Appendix 6:

  	
  Isis In-License Agreements &
  Prior 3rd Party Agreements

  
	
   

  	
   

  
	
  Appendix 7:

  	
  Form of Invoice

  
	
   

  	
   

  
	
  Appendix 8:

  	
  Clinical Supply Agreement

  
	
   

  	
   

  
	
  Appendix 9:

  	
  Clinical Quality Agreement

  
	
   

  	
   

  
	
  Appendix 10:

  	
  J&J Universal Calendar

  
	
   

  	
   

  
	
  Appendix 11:

  	
  Description of ISIS 325568 &
  377131

  
	
   

  	
   

  
	
  Appendix 12:

  	
  Target Pool & Selected Gene
  Targets

  
	
   

  	
   

  
	
  Appendix 13:

  	
  Minimum OMI Countries

  
	
   

  	
   

  
	
  Appendix 14:

  	
  Isis Insurance Requirements

  
	
   

  	
   

  
	
  Appendix 15:

  	
  Symphony GenIsis Confirmation of
  Closing and Confirmation of Termination

  
	
   

  	
   

  
	
  Appendix 16:

  	
  [***]

  
	
   

  	
   

  
	
  Appendix 17:

  	
  Assignment of Product Specific
  Patents

  



 


50

















 


APPENDIX 1


 


DEFINITIONS


 


“Additional Third Party Agreement”
has the meaning set forth in Section 6.5.2.


 


“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.


 


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


 


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


 


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


 


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


 


“ASO” [***]


 


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


 


“Calendar Quarter” means a Johnson & Johnson Calendar Quarter of the
Johnson & Johnson Calendar Year, based on the Johnson & Johnson
Universal Calendar for that year, a copy of which, for 2007is attached hereto
as Appendix 10, and which is used for OMI’s internal business purposes; provided, however, that wherever this Agreement refers to
the timing of when Isis will provide an invoice to OMI, any reference to
Calendar Quarter will mean the respective periods of three consecutive
calendar months ending on March 31, June 30, September 30 and December 31.


 


“Calendar Year” shall mean a calendar year based on the J&J Universal
Calendar for that year.


 


“Clinical Supply Agreement” has
the meaning set forth in 4.2 and attached in Appendix 8.


 


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


 


“Commercialize”, “Commercializing” and “Commercialization” means activities
directed to manufacturing, obtaining pricing and reimbursement approvals,
carrying out Phase 4 Trials for, marketing, promoting, distributing, importing
or selling a Product.


 


“Collaboration” has the following meaning.
A Development Program to advance ISIS 325568 and ISIS 377131 through
human clinical trials and ultimately Commercialize them as Products; and A Research Program to (i) [***] and (ii) at
OMI’s option [***] in each case for OMI to advance into human clinical trials
and ultimately Commercialize as Products.


 


51

















 


“Collaboration
Gene Targets” means GCGR, GCCR or a Selected
Gene Target. For purposes of clarification, once a Collaboration Gene Target
has been returned to Isis pursuant to Section 3.6 or Article 11, such gene
target will no longer be considered a Collaboration Gene Target.


 


 “Collaboration Term”
means, the period of time beginning on the Effective Date and ending on the
later to expire of the Research Term and the Development Program Term.


 


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


 


“Compound” means a Research Compound,
a GCGR Compound and/or a GCCR Compound.


 


“Confidential Information” means
all information and Know-How and any tangible embodiments thereof provided by
or on behalf of the Disclosing Party to the Receiving Party either in
connection with the discussions and negotiations pertaining to this Agreement
or in the course of performing this Agreement, including without limitation
data; knowledge; practices; processes; ideas; R & D Plans plans;
engineering designs and drawings; research data; manufacturing processes and
techniques; scientific, manufacturing, marketing and business plans; and
financial and personnel matters relating to the Disclosing Party or to its
present or future products, sales, suppliers, customers, employees, investors
or business; regardless of whether any of the foregoing are marked
“confidential” or “proprietary” or communicated to the other by the Disclosing
Party in oral, written, graphic or electronic form. For all purposes of this
Agreement, the Research Results (for so long as and to the extent OMI has
rights hereunder) will be treated as being Confidential Information of both
Parties. Accordingly, each Party will be considered the Receiving Party with
respect to the Research Results and will be subject to all of the restrictions
and obligations of this Agreement with respect to the disclosure and use of
such Research Results to the same extent as applicable to Confidential
Information disclosed to such Party by the other Party. Nothwithstanding the
foregoing, upon the transfer of the ownership of relevant Research Results and
data pursuant to Section 9.2.3 of this Agreement, such Research Results and
data will be the sole property of OMI and Isis will continue to maintain their
confidential nature pursuant to the terms of Article 8 of this Agreement.


 


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


 


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


 


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


 


(c)           became generally available
or known to parties reasonably skilled in the field to which such information
or Know-How pertains, or otherwise became part of the public domain, after its
disclosure to such Receiving Party through no fault of the Receiving Party, provided, Confidential Information shall not be deemed to
have entered the public domain merely by reason of its having been filed with
any Regulatory Authority;


 


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


 


52

















 


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


 


“Control” means, with respect to any
Know-How, Patent or other intellectual property right, possession by a Party
(including its Affiliates) of the right (whether by ownership, license or
otherwise) to grant to the other Party access, ownership, a license, sublicense
and/or other right to or under such Know-How, Patent or other intellectual
property right as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party. Notwithstanding anything
to the contrary under this Agreement, with respect to any Third Party that
later becomes an Affiliate of Isis after the Effective Date (including a Third
Party acquirer), no intellectual property of such Third Party will be included
in the licenses granted hereunder by virtue of such Third Party becoming an
Affiliate of Isis.


 


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


 


“Designation
of a Compound as a Clinical Candidate” means
the designation by an appropriate committee of OMI of a Compound as ready for
the initiation of IND-Enabling Studies. The initiation of IND-Enabling studies
for a Compound for which a Product Specific Patent filing has been made will
together be conclusive evidence that “Designation of a Compound as a Clinical
Candidate” has occurred for such Compound.


 


“Development”
means non-clinical (such as, but not limited to, IND-enabling toxicology and
production of GMP quality Product) and clinical development activities
reasonably related to the development and submission of information to a
Regulatory Authority, including, without limitation,  chemical synthesis, toxicology, pharmacology,
test method development and stability testing, manufacturing process
development, formulation development, delivery system development, quality
assurance and quality control development, manufacturing, statistical analysis,
and clinical studies. When used as a verb, “Develop”
means to engage in Development.


 


“Development Compound”
means ISIS 377131 and ISIS 325568.


 


“Development Program” has
the meaning set forth in 3.1.


 


“Development Program Term” has
the meaning set forth in 3.3.1


 


“Disclosing Party” has the meaning set forth
in Section 8.1.


 


“Discontinued Product”
has the meaning set forth in 11.1.


 


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


 


“Effective Date” has the meaning set forth
in Section 14.13 of this Agreement.


 


 “Election
Notice” has the meaning set forth in 11.1.


 


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


 


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


 


“Execution Date” has the meaning set forth
in the opening paragraph of this Agreement.


 


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


 


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


 


“FTE” means the equivalent of the work
of one (1) employee with appropriate professional scientific and/or technical
or managerial experience, working on a dedicated full time basis for 


 


53

















 


one
(1) year (consisting of at least a total of [***] hours per year of dedicated
effort, excluding vacations and holidays) of work on or directly related to the
R&D Plan, carried out by an Isis employee, or Third Party mutually agreed upon
by the R&D Committee and expressly stated in the R&D Plan. Overtime
will not be counted toward the number of hours that are used to calculate the
FTE contribution. No one person will be permitted to account for more than
[***] hours of FTE contribution per year. Any person who devotes less than
[***] hours per year will be treated as an FTE on a pro-rata basis, based upon
the actual number of hours worked divided by [***].


 


“FTE Rate” means the rate that OMI
will fund Isis FTEs which is $[***] per FTE for the year ending December 31,
2007. For the year ending December 31, 2008 and each year thereafter such FTE rate will increase by a factor that
reflects the [***] for such year.


 


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


 


“GCCR” means glucocorticoid receptor
(GenBank accession #NM_000176),
or any alternate splice variants, mutants, polymorphisms and fragments thereof.


 


“GCCR Compound” means (i) ISIS 377131 or
[***]


 


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


 


“GCGR” means glucagon receptor (GenBank
accession #NM_000160),
or any alternate splice variants, mutants, polymorphisms and fragments thereof.


 


“GCGR Compound” means (i) ISIS 325568 or
[***]


 


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


 


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


 


“Good Clinical Practice” or “GCP” shall mean the then current standards
for clinical trials for pharmaceuticals, as set forth in the United States Code
of Federal Regulations, ICH guidelines and applicable regulations, laws or
rules as promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the European Union and
other organizations and governmental agencies in countries in which a Licensed
Product is intended to be sold to the extent such standards are not less
stringent than United States GCP.


 


“Good Laboratory Practice”
or “GLP” shall mean the then
current standards for laboratory activities for pharmaceuticals, as set forth
in the FDA’s GLP regulations and/or ICH guidelines and applicable regulations.


 


“Good Manufacturing Practice(s)” or “GMP” shall mean the regulatory requirements
for current good manufacturing practices promulgated in the United States Code
of Federal Regulations including those rules promulagated by the United States
Food and Drug Administration  under the
U.S. Food, Drug and Cosmetic Act, 21 C.F.R. § 210 et seq. (“FD&C Act”)
and ICH Guidelines and applicable regulations, as the same may be amended from
time to time.


 


“Holdings” has the meaning set forth in
Section 14.13.


 


 “HSR Act” means the U.S. Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended from time to time, and the rules,
regulations, guidance and requirements promulgated thereunder as may be in
effect from time to time.


 


“HSR Clearance” has the meaning set forth in 14.13.


 


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


 


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


 


54

















 


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


 


“Indemnified Party” has the meaning set forth
in 12.3.


 


“Indemnification Claim Notice”
has the meaning set forth in 12.3.


 


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


 


“Initiation of Phase 1 Trial” means the
dosing of the [***] human subject in a Phase 1 Trial.


 


“Initiation of Phase 2b Trial” means the
dosing of the [***] human patient in the first Phase 2b Trial.


 


“Initiation of Phase 3 Trial” means
the dosing of the [***] human patient in a Phase 3 Trial. In the case where a
Phase 2b/3 Trial precedes any Phase 3 Trial for a given Product, the first
dosing of such Product in a human patient following the review of interim data
and decision to extend the period of such Phase 2b/3 Trial in order to provide
sufficient evidence of safety and efficacy to be included as a Phase 3 Trial in
filings with Regulatory Authorities will be deemed to be the “start of Phase 3
Trial” for such Product.


 


“Inquiry Notice” has the meaning set forth in Section
3.6.2.


 


“Inquiry Response” has the meaning set forth in Section
3.6.2.


 


“Integrated Product Plan or IPP” has the
meaning set forth in Section 5.3


 


“ISIS 325568” means
the compound known as ISIS 325568 as specifically set forth in Appendix 11.


 


“ISIS 377131” means
the compound known as ISIS 377131 as specifically set forth in Appendix 11.


 


“Isis
Core Technology Patents” means Patents Controlled by Isis or its
Affiliates on the Effective Date and/or at any time thereafter, in each case
that are useful or necessary for the Development and Commercialization of
Compound and Products; provided however,
that for any such Patents that include Pass Through Obligations, the provisions
of Section 6.5 will govern whether such Patent will be included as an Isis Core
Technology Patent. In addition, Isis Core Technology Patents will exclude the
Product Specific Patents and the Isis Manufacturing and Analytical Patents. A
representative list of the Isis Core Technology Patents as of the Effective
Date is listed in Appendix 3 hereto. For clarification, any Isis Program Patent
Rights or any Joint Patent satisfying the definition above will be considered
an Isis Core Technology Patent.


 


“Isis Database” has the
meaning set forth in Section 3.11.


 


“Isis In-License
Agreements” has the meaning set forth in Section 6.5.1.


 


“Isis
Inventions” has the meaning set forth in Section 9.1.


 


“Isis
Know-How” means all Know-How Controlled by Isis or its Affiliates as
of the Effective Date and/or at any time thereafter that is useful for the
Research, discovery, Development, manufacturing and Commercialization of MOE
Gapmers. The Isis Know-How shall not include Product Specific Know-How.


 


“Isis
Manufacturing and Analytical Patents” means Patents Controlled by
Isis or its Affiliates on the Effective Date and/or or at any time through the
period ending on the [***] anniversary of the expiration of the Collaboration
Term, in each case that claim methods and materials used in the synthesis of
ASOs; provided however, that for
any such Patents that include Pass Through Obligations, the provisions of
Section 6.5 will govern whether such Patent will be included as an Isis
Manufacturing Patent. A representative list of Isis Manufacturing and
Analytical Patents is attached hereto as Appendix 4. Isis Manufacturing and
Analytical Patents will exclude the Product Specific Patents and the Isis Core
Technology Patents. For clarification, any Isis Program Patent Rights or any
Joint Patent satisfying the definition above will be considered an Isis
Manufacturing Patent.


 


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


 


55

















 


“Isis
Patents” means the Isis Core Technology Patents, the Product
Specific Patents and the Isis Manufacturing and Analytical Patents (including
patents licensed to Isis under an Isis In-License Agreement in accordance with
Section 6.5.1).


 


“Isis
Program Patent” has the meaning set forth in Section 9.1.


 


“Isis
Supported Payment” means the royalty or milestone obligations of
Isis, if any, applicable with respect to a Compound or Product under Isis’
agreement with [***].


 


“Isis
Technology” means collectively the, Product Specific Know-How and
the Isis Patent.


 


“Isis
Third Party Payments” has the meaning set forth in Section 6.5.2.


 


“Johnson &
Johnson Universal Calendar” means
the universal calendar Johnson & Johnson uses as part of its financial
reporting system, as provided to Isis from time to time and as consistent with
the 2007 universal calendar attached hereto as Appendix 10.


 


“Joint Invention” has
the meaning set forth in Section 9.1


 


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


 


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


 


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


 


“Losses” has the meaning set forth
in Section 12.1.


 


“Manufacturing Improvements” means
any and all scientific and technical data, information, methods, techniques,
protocols, inventions, and processes that are useful in the manufacture of MOE
Gapmer ASO compounds developed by or coming under Control of a Party after the
Collaboration Term. Manufacturing Improvements will exclude any proprietary or
patented methods employed by a contract manufacturer under contract with OMI to
manufacture ASO or Products.


 


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


 


“Major Market
Country” means Canada, France,
Germany, Italy, Japan, Spain, the United Kingdom, and the United States.


 


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


 


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


 


“MOE Gapmer” means a single stranded ASO
of less than [***] nucleotides (i) wherein all of the backbone linkages are
modified by substituting a sulfur at the non-bridging oxygen (phosphorothioate)
and (ii) having a gap region of unsubstituted 2’ deoxy nucleotides positioned
between two wing regions each composed entirely of 2’-O-(methoxyethyl) substituted
nucleotides.


 


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


 


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


 


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


 


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


 


56

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“OMI Third Party Payment”
has the meaning set forth in 6.5.3.


 


“OMI Third Party Royalty Payment”
has the meaning set forth in 6.5.3.


 


“OMI Indemnitees” has the meaning set forth
in 12.2.


 


“OMI Inventions” has the meaning set forth
in 9.1.


 


“OMI Product Specific Patent” means any
Patents (including all claims and the entire scope of claims therein)
Controlled by OMI or its Affiliates on the Effective Date and/or at any time
thereafter, in each case claiming (a) the sequence or a portion thereof
corresponding to the GCCR, GCGR or Selected Gene Target gene sequence or a
portion thereof, (b) the specific composition of matter of a Product, (c)
methods of using a Compound or Product as a therapeutic or (d) methods of using
a Compound as a therapeutic).


 


“OMI Program Patents”
has the meaning set forth in 9.1.


 


“Other party” has the meaning set forth
in 10.3.


 


“Objective” means the objective of the R&D Plan
set forth in Section 3.1.


 


“Party (ies)” has the meaning set forth
in the opening paragraph of this Agreement.


 


57

















 


“Pass Through Royalties” means any
royalty on net sales of Product that becomes payable by Isis to a Third Party
under an Isis In-License Agreement with respect to a Product Developed and
Commercialized by OMI under this Agreement, where such royalty obligation is
based on the manufacture, use or sale of the Product being Covered by an Isis
Patent licensed to OMI under Section 2.1 which Isis Patent Right is licensed to
Isis under such Isis In-License Agreement and includes any Target Encumbrances
assumed by OMI under Section 3.6.3.


 


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


 


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


 


 “Permitted License” means a
license granted by Isis to a Third Party (i) under the Isis Core Technology
Patents or the Isis Manufacturing and Analytical Patents (but not under the
Product Specific Patents) to use ASOs (or supply ASOs to end users) solely to
conduct Research, or (ii) under the Isis Manufacturing and Analytical Patents
(but not under the Isis Core Technology Patents or Product Specific Patents) to
enable such Third Party to broadly manufacture or formulate ASOs, where such
Third Party is primarily engaged in providing contract manufacturing or
services and is not engaged in drug discovery, development or
commercialization.


 


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


 


“Phase 1 Trial” means the
initial clinical testing of a Product in humans (first-in-humans study) with
the intention of gaining a preliminary assessment of the safety of such
Product.


 


“Phase 2 Clinical Supply” has the
meaning set forth in Section 4.3.


 


“Phase 2 Trial” means a human
clinical trial of a Product, the principal purpose of which is a determination
of preliminary short-term safety and efficacy in the target patient population,
as described in 21 C.F.R. 312.21(b) for the United States, or a similar clinical
study prescribed by the Regulatory Authorities in a foreign country.


 


“Phase 2b Trial” means a Phase
2 Trial, designed to support and immediately precede the initiation of
a Phase 3 Trial program without any further Phase 2 Trials, to evaluate the dose-dependent
effectiveness of a pharmaceutical product for a particular indication or
indications in patients with the disease or condition under study and to
determine the common side effects and risks associated with the pharmaceutical
product.


 


“Phase 2b/3 Trial” means a human
clinical trial of a Product, the principal purpose of which is a further
determination of efficacy and safety, in the target population, at the intended
clinical dose or doses or range of doses, on a sufficient number of subjects
and for a sufficient period of time to confirm the optimal manner of use of the
Product (dose and dose regimen) prior to initiation of the pivotal Phase 3
Trials, and which itself provides sufficient evidence of safety and efficacy to
be included as a Phase 3 Trial in filings with Regulatory Authorities.


 


“Phase 3 Trial” means a human
clinical trial of a Product on a sufficient number of subjects that is designed
to establish that a pharmaceutical product is safe and efficacious for its
intended use, and to determine warnings, precautions and adverse reactions that
are associated with such pharmaceutical product in the dosage range to be
prescribed, which trial is intended to support 


 


58

















 


Approval of a Product, as described in
21 C.F.R. 312.21(c) for the United States, or a similar clinical study
prescribed by the Regulatory Authorities in a foreign country.


 


“Phase 4 Trial” means a human
clinical trial for a Product commenced after receipt of Approval in the country
for which such trial is being conducted and that is conducted within the
parameters of the Approval for the Product. Phase 4 Trials may include, without
limitation, epidemiological studies, modeling and pharmacoeconomic studies,
investigator sponsored clinical trials of Product and post-marketing
surveillance studies.


 


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


 


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


 


“Product Development Plan” has the
meaning set forth in Section 5.3


 


“Product Specific Know-How” means
all chemical, biological and structure activity relationship information,
technical information and materials, including without limitation, technology,
software, instrumentation, devices, data, biological materials, assays,
constructs, unpatented inventions, practices, methods, knowledge, know-how,
trade secrets, skill and experience solely related to the Compounds or
Products, existing as of the effective date and anytime thereafter.


 


“Product Specific Patents” means all
Patents (including all claims and the entire scope of claims therein)
Controlled by Isis or its Affiliates on the Effective Date and/or at any time
thereafter, including those patents assigned to OMI pursuant to Article 9 in
each case claiming (a) the sequence or a portion thereof corresponding to the
GCCR, GCGR or Selected Gene Target gene sequence or a portion thereof, (b) the
specific composition of matter of a Product, (c) methods of using a Compound or
Product as a therapeutic or (d) methods of using a Compound as a therapeutic); provided however, that (x) for any such
Patents that include Pass Through Obligations, the provisions of Section 6.5
will govern whether such Patent will be included as an Product Specific Patent
and (y) unless the Parties otherwise agree in writing, Patents that include
claims that are directed to subject matter and have a scope that is applicable
to ASOs in general, and not specifically directed to a Compound or Product,
will be considered to be Isis Core Technology Patents (or Isis Manufacturing
and Analytical Patents, as applicable). For clarification, any Isis Program
Patent or any Joint Patent satisfying the definition above, will be considered
a Product Specific Patent. The Product Specific Patents as of the Effective
Date are listed in Appendix 2 attached hereto.


 


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


 


“Program Inventions” has the meaning set forth in Section
9.1.


 


“Program Patents” has the meaning set forth in Section
9.1.


 


“Proposed Substitution Target” has the
meaning set forth in Section 3.6.1


 


“Proposed Target” has the meaning set forth in Section
3.6.3


 


“Purchase Option Agreement” has the meaning
set forth in Section 14.13


 


“R&D Budget” has the
meaning set forth in Section 3.2.


 


“R&D Committee Charter” has the
meaning set forth in Section 3.4.


 


“R&D Committee” has the
meaning set forth in Section 3.4.


 


“R&D Plan” has the
meaning set forth in Section 3.2.


 


“R&D Budget” has the
meaning set forth in Section 3.2


 


“R&D Year” means each 12 month period during the
Collaboration Term, with the first R&D Year beginning on the Effective
Date.


 


“Receiving Party” has the meaning set forth in Section
8.1.


 


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


 


59

















 


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


 


“Request Notice” has the meaning set forth in Section
3.6.3.


 


“Requested Target” has the meaning set forth in Section
3.6.2.


 


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


 


 “Research Compound” means any MOE
Gapmer that modulates the expression of a Selected Gene Target where its primary mechanism of action is through its
hybridization to such Selected Gene Target mRNA or pre-mRNA and that is identified by
Isis as of the Effective Date or during the 
Collaboration.


 


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


 


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


 


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


 


“Research Term” has the meaning set forth in Section
3.3.1.


 


“Royalty Term” has the meaning set forth in Section
6.8.


 


“sNDA” means a Supplemental New Drug
Application filed with the FDA after the first NDA Approval for a Product in
the U.S.


 


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


 


“Selected Gene Target” has the
meaning set forth in Section 3.6.


 


“Senior Representatives” has the
meaning set forth in Section 14.4.


 


“Substitution Conditions” has the
meaning set forth in Section 3.6.1


 


“Symphony GenIsis” has the meaning provided
in Section 14.13.


 


“Target Encumbrances” has the
meaning set forth in Section 3.6.3


 


“Target Pool” has the meaning set forth in Section
3.6.


 


“Technology License Agreement” has the
meaning set forth in Section 14.13.


 


“Term” has the meaning set forth in Section
10.1.


 


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


 


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


 


“Third Party Claims” has the meaning set forth
in 12.1.


 


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


 


60

















 


counsel selected by the parties the event that the parties disagree as
to whether there is a reasonable bona fide basis for patentability for such a
claim).


 


61
















APPENDIX 2


 


PRODUCT-SPECIFIC
PATENTS

(as of the Effective Date)


 


GCCR Applications


 


[***]


 


GCGR Applications


 


[***]


 


62

















 


APPENDIX 3


 


ISIS CORE TECHNOLOGY
PATENTS


 


[***]


 


Also includes (x) all U.S. patents and patent
applications, (y) any substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations,
extensions, supplementary protection certificates and the like, and any
provisional applications, of any of the above listed patents or patent
applications, and (z) any foreign or international equivalent of any of the
above to the extent they satisfy the definition of Isis Core Technology Patent
as set forth in Appendix 1 of the Agreement.


 


63

















 


APPENDIX 4


 


ISIS MANUFACTURING
& ANALYTICAL PATENTS


 


[***]


 


64

















 


APPENDIX 5


 


[***]


 


Purpose


 


The
Joint Research Committee is established by Isis and OMI to oversee the
Collaboration under the Agreement.


 


Responsibilities


 


[***]Composition


 


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


 


2.                                             Each
R&D Committee member will have the requisite background, experience and
training to carry out the duties and obligations of the R&D Committee.


 


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


 


Decisions


 


4.                                             Each
Party’s R&D Committee members will collectively have 4 votes, regardless of
the number of its R&D Committee members participating in any meeting. No
votes will be taken unless there is at least one R&D Committee member
representing each of Isis and OMI participating in such meeting. Each Party may
allocate its 4 votes among its attending R&D Committee members in any
manner, at such Party’s discretion. If only one R&D Committee member is
attending on behalf of a given Party, such R&D Committee member may cast
all the votes allocated to such Party. Unless otherwise specified herein, all
actions taken by the R&D Committee as a committee will be by majority vote.
If the R&D Committee members reach a deadlock on any vote, then the
deadlock will be resolved in accordance with Paragraph 8 below. Notwithstanding
anything to the contrary, no decision by the R&D Committee will require the
other Party to: (i) [***]; (ii) perform [***]; or (iii) violate any Applicable
Law or principles of scientific integrity.


 


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


 


6.                                             [***]


 


Operations;
Meetings


 


7.                                             During
the Collaboration Term the R&D Committee will initially meet once per
month, unless and until the R&D Committee determines that such meetings
should occur once per Calendar Quarter (in either case, each a “Scheduled Meeting”).
Scheduled Meetings may be held in person or by audio or video teleconference
when appropriate, but at a minimum, once each year in person (which in-person
meeting will be held on an alternating basis in Spring House, PA and in Carlsbad, CA). In addition, any two members of the R&D Committee may 


 


65

















 


jointly
call for an ad hoc meeting of the
R&D Committee by teleconference at any time, by giving the other members of
the R&D Committee advance written notice of at least two Business Days
(each, an “Ad Hoc
Meeting”). An Ad Hoc Meeting may be called to address any
time-sensitive matter.


 


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


 


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


 


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


 


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


 


APPENDIX 6


 


ISIS IN-LICENSE
AGREEMENTS

AND

PRIOR THIRD PARTY AGREEMENTS


 


[***]


 


66

















 


APPENDIX 7


 


[***]


 


67

















 


APPENDIX 8


 


SUPPLY AGREEMENT


CLINICAL MANUFACTURING AND SUPPLY AGREEMENT


 


This Clinical Manufacturing and Supply Agreement (the “Supply Agreement”) is entered into
as of the      th day of                ,
2007 (the “Effective Date”) by and between Isis Pharmaceuticals, Inc.
(“Isis”) and Ortho McNeil, Inc. (“OMI”). OMI
and Isis may each be referred to herein as a “Party” or together as the “Parties”.
Capitalized terms not defined herein will have the meaning given to such terms
in the Collaboration and License Agreement between the Parties dated                ,
2007 (the “License Agreement”). The Parties agree as follows:


 


WHEREAS, the Parties have signed the License Agreement contemporaneous
with the present Clinical Manufacturing and Supply Agreement;


 


WHEREAS, the License Agreement provides that Isis shall be responsible
for the manufacture of Compound through [***];


 


WHEREAS, the Parties agree that the terms of this Supply Agreement will
apply to all manufactured lots of active pharmaceutical ingredient (API) made
and supplied under this Supply Agreement and further that this Supply Agreement
will be construed in a manner consistent with the License Agreement, including
its defined terms.


 


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


 


1.              Scope — Isis
will produce under cGMP conditions and in accordance with the Quality Agreement
between the Parties and referencing this Supply Agreement (the “Quality
Agreement”), the bulk API for the Compounds and in the amount specified in the
applicable Firm Order for use in preclinical and clinical Development through
the completion of [***]. Isis will use Commercially Reasonable Efforts to
maintain available capacity of facilities and equipment to meet OMI’s needs at
the Isis production facilities.


 


2.              Supply; Forecasting.


 


(a)   Isis
and OMI will establish an [***] Calendar Quarter rolling forecast (the “Rolling
Production Forecast”) that sets forth a good faith estimate of the quantity of
API for each Compound OMI expects to receive from Isis within the following
[***] Calendar Quarter period. This Rolling Production Forecast will be updated
on the first business day of each subsequent Calendar Quarter by OMI’s project
manager. The first [***] Calendar Quarters of the Rolling Production Forecast
constitute a firm order (“Firm Order”). OMI will provide purchase orders for
Firm Orders with each new Rolling Production Forecast. Quarters [***] through
[***] are estimated quantities to be used for 


 


68

















 


planning purposes only. Not later than [***]
after the Effective Date, OMI’s project manager will provide Isis with the
first Rolling Production Forecast, which will initially cover the [***] quarter
period beginning October 1, 2007. The quantities set forth in a Firm Order will
be binding on both parties, and OMI will be obligated to purchase from Isis,
and Isis will be obligated to supply, the specified quantities of API.


 


Notwithstanding the foregoing, the Parties
will use commercially reasonable efforts to deliver the API to support the
planned clinical trials starting in [***] for ISIS 325568 and ISIS 377131. In
addition, upon OMI’s Designation of a Compound as a Clinical Candidate, Isis
and OMI will mutually agree on an initial quantity and delivery date for API
for such Compound to support the rapid and efficient start of IND-Enabling
Studies and first human dose for such Compound (such quantity and delivery
dates to be consistent with Isis’ then existing manufacturing schedule).


 


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


 


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


 


•                  Isis will not be
required to supply [***] Compounds during any Calendar Quarter.


 


•                  For the first
order for Compound ordered under this Supply Agreement, the minimum order is
[***].


 


•                  For any
subsequent orders of Compounds under this Supply Agreement, the minimum order
is [***] unless agreed to in advance by Isis.


 


•                  Isis will not be
required to supply more than [***] of the API forecasted for a Calendar Quarter
when that Calendar Quarter was the [***] Calendar Quarter of a Rolling
Production Forecast.


 


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


 


3.              Delivery - For
each Calendar Quarter in a Firm Order, Isis will set the delivery date for the
API ordered in such quarter and will promptly notify OMI of such delivery date
(each, a “Delivery Date”). Isis will deliver the API ordered in each Firm Order
by the applicable Delivery Date. The quantity of API specified in each Firm
Order, invoiced and paid for will be [***] the API after lyophilization [***]. In
addition, so long as Isis supplies the quantity of API specified in the
applicable Firm Order for such Compound within [***], Isis will be deemed to
have satisfied the amount specified in the Firm Order and the full purchase
Price specified in the Firm Order will apply to such quantity of API delivered.


 


69

















 


4.              Shortfall


 


(a)   In
the event that at any time Isis anticipates that it will be unable to supply in
whole or in part the quantities of API set forth in an agreed-upon Firm Order
for any reason, including without limitation force majeure, Isis will notify
OMI in writing within [***] of the prediction of such non-supply.


 


(b)   If
Isis cannot Manufacture as set forth in (a) above, or should OMI determine at
any time after the Effective Date, at its sole discretion that it shall pursue
a different manufacturing source at any time, upon written request by OMI, Isis
will transfer to OMI all documentation and information, and permit OMI to reference
and use any regulatory filings, and otherwise fully cooperate with OMI to
enable OMI to make or have made API for use by OMI in accordance with the
License Agreement. In the event that OMI has elected to pursue a different
manufacturing source, the provisions of 4.5.3 of the License Agreement shall
control.


 


5.              Specifications —
For each Firm Order of Compound OMI requests Isis to supply under this Supply
Agreement, Isis and OMI will mutually agree on the specifications for such API
and will attach and/or reference such specifications (as maintained in the
Quality Agreement) in the applicable Firm Order (the “Specifications”).


 


6.              API Pricing - In
[***] of each year, starting [***], Isis will provide OMI the purchase price
(each, a “Purchase Price”) applicable to the manufacture and supply of API
scheduled for delivery in the following calendar year. Such Purchase Prices
will be binding on both Parties; provided, however,
that such price will (i) not exceed [***] of API and (ii) represent Isis’ good
faith estimate of its [***] to manufacture such API [***]. Upon reasonable
request, OMI reserves the right to confirm such methodology annually, not to
exceed one time per year. This price includes [***]  All payments are in US Dollars. If Isis
supplies active pharmaceutical ingredient for another ASO having similar length
and chemistry as the API supplied hereunder to a Third Party at similar volumes
on terms when taken as a whole are more favorable than the terms provided OMI
under this Agreement, OMI will have the right to receive the clinical supply of
API on the same terms offered by Isis to such Third Party.


 


7.              Terms of Payment
—


 


•                  A pre-payment
representing [***] of the Purchase Price contained in a Firm Order from OMI is
payable in cash by OMI to Isis by wire transfer or other customary means within
[***] from the date of receipt by OMI of a corresponding invoice from Isis
reflecting said component not prior to delivery of the applicable Firm Order.


 


•                  The remaining
amount of the Purchase Price is due in cash by OMI to Isis by wire transfer or
other customary means within [***] from the 


 


70

















 


date of receipt of invoice by OMI, following
shipment by Isis to OMI or its designee of the API.


 


•                  In addition to
the price stated in this Agreement, OMI will pay to Isis all taxes and duties
(except income tax) imposed upon Isis, in connection with the API and will
reimburse Isis for the insurance and freight expenses discussed in Section 9
below.


 


8.              Term – This
Supply Agreement will remain in effect as long as Isis and OMI mutually agree
for Isis to supply Compounds as described in the License Agreement.


 


9.              Title &
Transportation: Isis will ship the API to OMI when released by OMI Quality
Assurance Department as specified in the Clinical Trial Material Quality
Agreement attached as Appendix 9 in the License Agreement. In the event that
OMI has not concluded its review suitable to release such API within [***] of
Isis’ delivery of all required release documentation (“OMI Review Period”),
Isis will be allowed to invoice for the remaining amounts due on such API at
the expiration of the OMI Review Period. Title to API will transfer to OMI EXW
(Incoterms 2000) Isis’ facility. Isis will insure against the replacement cost
of the API until title transfers. Risk of loss passes simultaneously with the
title. Transportation and transit insurance arrangements will be made by Isis
as specified by OMI. Isis will pay all freight and other charges for such
transportation and transit insurance and add such costs to the invoice. For the
purposes of this Section 9, Incoterms 2000 means the International Commercial
Terms published by the International Chamber of Commerce, as amended from time
to time, codifying the contractual rules for the interpretation of standardized
commercial terms for transactions.


 


10.       Drug Product; Stability
Testing


 


Isis will manage the stability testing of any
API manufactured under this Supply Agreement per Isis’ current stability
protocol, [***]


 


Isis will perform stability testing on ISIS
325568 finished drug product pursuant to the protocol [***].


 


Isis will complete the ongoing preparation of
final drug product through its contract manufacturer for the ISIS 377131 drug
product that is scheduled to be completed in the [***]  Isis will notify its contract manufacturer of
its relationship with OMI prior to the manufacturing in the [***] and request
its contract manufacturer to continue its manufacturing relationship with OMI
substantially the same as it currently exists with Isis. Isis will instruct its
contract manufacturer that OMI shall have access to any and all information
connected with the ISIS 377131 drug product manufacturing that is in the
contract manufacturer’s possession. Isis shall transfer or assign any relevant
documents to OMI to support such transfer of the manufacturing relationship. Isis
will perform stability testing on such drug product pursuant to a stability 


 


71

















 


protocol that is mutually developed and
agreed to by OMI and Isis, [***]. Isis will instruct the contract manufacturer
to retain suitable samples for retesting or other purposes from such production
as directed by OMI.


 


The price for the stability testing of the API will be [***]


 


The price for the stability testing of drug
product will be [***]. The price for the stability testing is payable within
[***] of the end of the Calendar Quarter in which such testing was performed.


 


Except as otherwise specified in the R&D
Plan or this Supply Agreement, the Parties acknowledge and agree that OMI will
be solely responsible for the manufacturing, stability testing and supply of
finished drug Product.


 


11.       CMC Work – Except as
specifically set forth in the R&D Plan, OMI will be responsible for all CMC
work associated with the API and drug product. OMI may engage Isis to perform
CMC work for the API and drug product, including without limitation support in
preparing regulatory filings, in accordance with Section 5.1 of the License
Agreement.


 


12.       Intellectual Property;
Technology Transfer — Isis will retain the rights to any inventions it
develops while producing the API. Isis will license all of its Intellectual
Property necessary for the manufacture of the Compounds and subsequent
improvements to OMI as per the terms of the License Agreement.


 


Isis and OMI will perform a technology
transfer related to manufacturing technology in accordance with Section 4.5.3
of the License Agreement. In addition, OMI shall have the right to observe the
manufacturing process at any time upon giving Isis reasonable advance notice
thereof.


 


13.       Hazards; Risk Sharing


 


If after the raw materials for a batch of API
[***], Isis encounters any unforeseen difficulties or hazards during the
manufacturing of the API that prevent Isis from successfully manufacturing such
batch of API in accordance with this Agreement (including but not limited to
the failure of such API to conform to the warranty set forth in Section 14),
Isis will use commercially reasonable efforts to [***], such that OMI receives
such API as close to the originally-scheduled delivery date as possible.


 


For any such [***], the cost of the
manufacture will be [***] by OMI and Isis as follows:  Isis will be responsible for the [***]
components for such batch of API; and, to the extent not [***], OMI will be
responsible for the [***] component; provided, however
that OMI will not be responsible if such failure results from Isis’ gross
negligence. For purposes of clarity and assuming none of the exceptions above
apply, the total price payable upon delivery of such API will equal the price
for such API originally quoted in the Firm Order plus
the [***] attributable to the [***]. For purposes of clarity, any batch
failures due to incorrect addition of raw materials or utility failures for any
reason or other pre-solution losses of any kind will be solely for the account
of 


 


72

















 


Isis. Further, Isis will be responsible for
the cost of any equipment replacement, as necessary.


 


14.       Limited Warranty;
Certificate of Compliance:  SUBJECT
TO THE LIMITATIONS OF PARAGRAPHS 15, 16 AND 17, Isis warrants, with respect to
all the API, that at the time of the applicable shipment of the API to
OMI:  (a) any API manufactured by Isis
meets the applicable Specifications and was manufactured in accordance with
cGMP and the obligations of the Quality Agreement, (b) that the API is free
from BSE/TSE, and (c) the API is conveyed with good and marketable title, free
from any and all security interests, liens or encumbrances. Furthermore, Isis
will include with the API at the time of transfer a certificate of conformance
(or its equivalent) in accordance with the Quality Agreement.


 


15.       Disclaimer Of
Warranties:  THE LIMITED WARRANTIES
CONTAINED IN PARAGRAPH 14 OF THIS DOCUMENT ARE THE SOLE WARRANTIES WITH RESPECT
TO THE API AND ARE MADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES
OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER EXPRESS
OR IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON LAW OR STATUTE.


 


16.       Limitation Of Remedies:
OMI’S EXCLUSIVE REMEDY AND ISIS’ TOTAL LIABILITY TO OMI FOR CLAIMS BASED UPON
SUPPLY OF THE API (OR FAILURE TO SUPPLY) (INCLUDING, WITHOUT LIMITATION, THOSE
ARISING OUT OF STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) IS
EXPRESSLY LIMITED TO THE REMEDY SET FORTH IN SECTIONS 4 AND 13 ABOVE.


 


OMI WAIVES ALL OTHER CLAIMS BY OMI AGAINST
ISIS UNDER THIS SUPPLY AGREEMENT WITH RESPECT TO SUPPLY OF THE API. NEITHER
PARTY WILL BE UNDER ANY LIABILITY TO THE OTHER PARTY FOR ANY INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES. THE FOREGOING LIMITATION
WILL NOT APPLY TO OR BE DEEMED TO LIMIT ANY CLAIMS FOR INDEMNIFICATION IN
ACCORDANCE WITH THE TERMS AND CONDITIONS OF SECTION 20.


 


17.       Inspection And Notice Of
Claims:  Promptly upon receipt of
each shipment of API, OMI will inspect and test (or cause to be inspected and
tested if API is shipped to a third party) such API for any damage, defect or
shortage. ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF
STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) BY OMI WILL BE DEEMED
WAIVED UNLESS MADE BY OMI IN WRITING AND RECEIVED BY ISIS WITHIN [***] OF THE
RECEIPT OF THE API, EXCEPT THAT IN THE CASE OF A LATENT FAILURE OF THE API TO
MEET THE 


 


73

















 


SPECIFICATIONS SUCH TIME LIMIT WILL BE
EXTENDED TO [***] OF THE RECEIPT OF THE API.


 


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


 


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


 


20.       Indemnity. All Sections
of Article 12 of the License Agreement will apply to this Supply Agreement and
the matters covered by this Supply Agreement.


 


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


 


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


 


23.       Termination. Either
Party will have the right to terminate this Supply Agreement if the other Party
materially breaches its obligations under this Supply Agreement in accordance
with Section 10.3 of the License Agreement.


 


24.       Survival:  Sections
12 through 17, 19 through 26, and 28 through 35 will survive expiration or
termination of the Agreement. Any expiration or early termination of this
Agreement will be without prejudice to the rights of either Party against the
other accrued or accruing under this Agreement prior to 


 


74

















 


termination. No expiration of
this Agreement will relieve a Party of its obligation to pay fees.


 


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


 


26.       Defined Terms. Unless
otherwise specified in this Supply Agreement, the terms used in this Supply
Agreement shall have the meaning given to such terms in the License Agreement.


 


27.       Representations and
Warranties.


 


a.               Isis represents and warrants that the
execution, delivery and performance of this Supply Agreement does not conflict
with any agreement, instrument or understanding, oral or written, or Law by
which it is bound and Isis covenants that it will not enter into any such
conflicting agreements during the term of this Agreement.


 


b.              Isis represents, warrants and covenants
that neither it nor any of its employees performing hereunder, have ever been,
or are currently the subject of a proceeding that could lead to it or such
employees or agents becoming, as applicable, a Debarred Entity or Individual,
an Excluded Entity or Individual or Convicted Entity or Individual. Isis
further covenants, represents and warrants that if, during the term of this
Supply Agreement, it, or any of its employees or agents performing hereunder,
become or are the subject of a proceeding that could lead to Isis becoming, as
applicable, a Debarred Entity or Individual, an Excluded Entity or Individual
or a Convicted Entity or Individual, Isis shall immediately notify OMI and OMI
shall have the right to immediately terminate this Supply Agreement. For
purposes of this provision, the following definitions shall apply:


 


i.                  A “Debarred Individual” is an
individual who has been debarred by the FDA pursuant to 21 U.S.C 335(a) or (b)
from providing services in any capacity to a person that has an approved or
pending drug product application.


 


ii.               A “Debarred Entity” is a corporation,
partnership or association that has been debarred by the FDA pursuant to 21 USC
335 (a) or (b) from submitting or assisting in the submission of any
abbreviated drug application, or a subsidiary or affiliate of a Debarred
Entity.


 


75

















 


iii.            An “Excluded Individual or entity” is (a)
an individual or entity, as applicable who has been excluded, debarred,
suspended or is otherwise ineligible to participate in federal health care
programs such as Medicare or Medicaid by the Office of the Inspector General
(OIG/HHS) of the US Department of Health and Human Services, or (b) is an
individual or entity as applicable, who has been excluded, debarred, suspended
or is otherwise ineligible to participate in federal procurement and
non-procurement programs, including those produced by the US Genearl Services
Administration (GSA).


 


iv.           A “Convicted Individual or Entity” is an
individual or entity, as applicable, who has been convicted of a criminal
offense that falls within the ambit of 21 USC 335(a) or 42 USC 1320a-7(a), but
has not yet been excluded, debarred, suspended or otherwise declared
ineligible.


 


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


In the case of Isis,


 


Isis
Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA 92008

Attention:  VP, Manufacturing/Operations

Facsimile:  760-603-4655


 


With a copy to:


 


1.               General Counsel (fax:  760.268.4922); and


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


 


In the Case of OMI:


 


Ortho McNeil, Inc.

1000 US Route 202

Raritan, New Jersey, 08869

Attention:  President

Facsimile:  908-707-9757


 


With copy to:


 


Chief Patent
Counsel

Johnson & Johnson

One Johnson & Johnson Plaza

New Brunswick, New Jersey 08933

Facsimile:  (732) 524-5575


 


76

















 


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


 


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


 


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


 


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


 


32.       Construction:  Each Party to this Supply Agreement and its
counsel have reviewed and revised this Supply Agreement. The rule of
construction to the effect that any ambiguities are to be resolved against the
drafting Party will not be employed in the interpretation of this Supply
Agreement or any amendment or Attachment to this Supply Agreement.


 


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


 


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


 


35.       Entire Agreement: This
Supply Agreement, the related Quality Agreement and the related License
Agreement constitute the full understanding of the Parties, and is the final,
complete and exclusive statement of the terms and conditions of their agreement
regarding the subject matter hereof. All representations, offers, and
undertakings, of the Parties made prior to the signing of this Agreement are
hereby superseded. All amendments or


 


77

















 


modifications to this Supply Agreement must
be in writing, identified as an Amendment to this Supply Agreement and signed
by an authorized representative of each Party.


 


The Parties executing this Supply Agreement:


 


	
  ISIS PHARMACEUTICALS, INC.

  	
  ORTHO MCNEIL, INC.

  
	
   

  	
   

  
	
  NAME:

  	
   

  	
   

  	
  NAME:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE:

  	
   

  	
   

  	
  SIGNATURE:

  	
   

  
								



 


78

















 


APPENDIX 9


 


CLINICAL QUALITY AGREEMENT


Isis Pharmaceuticals and Ortho McNeil, Inc.


 


The purpose of this Clinical Quality Agreement is to
establish, clarify and communicate quality expectations primarily for the
manufacture and testing of API performed by Isis Pharmaceuticals, Carlsbad, CA
(“Isis”) for Ortho McNeil Inc.’s (“OMI”) use in clinical trials. For
contractual responsibilities, refer to the Manufacturing and Supply Agreement
dated                  ,
2007.


 


WHEREAS, the Parties have signed a Collaboration and License
Agreement contemporaneous with the present Clinical Quality Agreement;


 


WHEREAS, the Collaboration and License Agreement provides
that Isis shall be responsible for the manufacture of Compound through [***];


 


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


 


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


 


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


 


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


 


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


 


79

















 


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


 


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


 


6.               Isis will provide OMI with a copy of batch
records, and a certificate of analysis (COA) which will contain (i) analytical
results from Isis and any associated contract laboratories and (ii) a statement
of compliance with cGMP, and signed by Isis QA. OMI will be responsible
for the final review, approval, and release of the API, and retains full
responsibility for the disposition and release of the API for any purpose.


 


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


 


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


 


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


 


10.         Material
changes to master batch records, specifications, test methods, and stability
protocols (in each case as they apply to drug product provided by Isis) will be
agreed and approved by both parties.


 


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


 


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


 


13.         Isis
will ship or will arrange for third parties to ship all API once the lot(s) are
released by both parties to OMI or other designated site(s) with appropriate
documentation and in suitable, labeled containers. This will also include the
use of temperature monitoring devices if deemed by OMI necessary to ensure the
quality of the API.


 


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


 


15.         Isis will
discuss with OMI in advance if Isis desires to use Subcontractors (Third Party)
outside of Isis’ approved list of subcontractors. Isis will be responsible for
qualification and routine compliance auditing of suppliers and subcontractors,
in accordance with Isis’s current procedures.


 


16.         Isis will
inform OMI of a notice and result of any regulatory investigation by a
Regulatory Authority (including any OMI documentation requested) relating to or
impacting any API or service being provided to OMI. OMI will have the
opportunity to review and give input to the response to such investigations.


 


17.         If
Regulatory Authorities audit OMI, make investigations at OMI or ask questions
of OMI about the activities conducted at Isis or third parties retained by
Isis, then Isis will fully


 


80

















 


cooperate
with OMI to provide adequate answers to and documentation for the Regulatory
Authorities. Isis will have the opportunity to review and give input to the
response to such investigations.


 


18.         Once
every [***], a maximum or [***] OMI representatives will be entitled to visit
and inspect (“audit”) the production, manufacturing, quality control and
warehousing facilities Isis is using in connection with the API, including the
corresponding documentation. Such audit may not exceed [***]. Isis agrees to provide
OMI with the necessary assistance and information. OMI will provide Isis with
at least [***] advanced notice of a requested inspection. Isis will provide
corrective action plans to address identified non-compliance concerns. As
necessary, the Parties will mutually agree in good faith to additional
inspections.


 


19.         Subject
to applicable law, Isis will inform OMI within [***], and vice-versa, on any
matter which, in Isis’ reasonable judgment, may have a bearing on drug safety
or pharmaceutical quality in relation to the APIs, and supply all necessary
information and co-operation for the investigation of such events. In cases
where patient/subject safety may be concerned, Isis must inform OMI by
telephone and in writing as soon as practicable, and vice-versa.


 


20.         Isis will
retain samples ([***]) for all API and other OMI material produced to date
including the API. Isis will retain the samples through a date specified in
writing by OMI, and such date will not exceed [***] after the last lot produced
by Isis of the drug product in which the API was used. Thereafter, OMI will
make arrangements to assume responsibility for storage of such samples.


 


21.         In
event of an out of specification (OOS) result encountered in release or
stability testing, Isis QA shall promptly (within [***] of confirmation) notify
OMI QA.


 


22.         All
product complaints, as established by principle investigator entities, clinical
monitoring bodies or international authorities (e.g., customs) will be handled
principally by OMI and supported by Isis in conjunction with OMI. All complaint
events will be shared between both parties within [***] of receipt.


 


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


 


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


 


The
Parties Quality Assurance representatives executing this Agreement:


 


 


	
  ISIS
  PHARMACEUTICALS, INC.

  	
   

  	
  OMI

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NAME:

  	
   

  	
   

  	
  NAME:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
   

  	
   

  	
  TITLE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE:

  	
   

  	
   

  	
  SIGNATURE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE:

  	
   

  	
   

  	
  DATE:

  	
   

  	
   

  
								



 


81

















 


APPENDIX 10


 


JOHNSON & JOHNSON UNIVERSAL CALENDAR


 


2007 UNIVERSAL CALENDAR


 


	
   

  	
   

  	
  M

  	
   

  	
  T

  	
   

  	
  W

  	
   

  	
  T

  	
   

  	
  F

  	
   

  	
  S

  	
   

  	
  S

  	
   

  	
   

  	
   

  	
  M

  	
   

  	
  T

  	
   

  	
  W

  	
   

  	
  T

  	
   

  	
  F

  	
   

  	
  S

  	
   

  	
  S

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JAN

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  JUL

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  
	
  (4
  Weeks)

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  (4
  Weeks)

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  
	
   

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
   

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  
	
   

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
   

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  FEB

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  AUG

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (4
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  (4
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  
	
   

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
   

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  
	
   

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
   

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  
	
   

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
   

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MAR

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  SEP

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  
	
  (5
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  (5
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  
	
   

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
   

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  
	
   

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  
	
   

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
   

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  
	
   

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  APR

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  OCT

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  
	
  (4
  Weeks)

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  (4
  Weeks)

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  
	
   

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
   

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  
	
   

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
   

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MAY

  	
   

  	
  30

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  NOV

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (4
  Weeks)

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  (4
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  
	
   

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
   

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  
	
   

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
   

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
  18

  
	
   

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
   

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JUN

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
  31

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  DEC

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
   

  	
   

  	
   

  
	
  (5
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  (5
  Weeks)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
  2

  
	
   

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
   

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  
	
   

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  	
   

  	
  17

  	
   

  	
   

  	
   

  	
  10

  	
   

  	
  11

  	
   

  	
  12

  	
   

  	
  13

  	
   

  	
  14

  	
   

  	
  15

  	
   

  	
  16

  
	
   

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  	
   

  	
  24

  	
   

  	
   

  	
   

  	
  17

  	
   

  	
  18

  	
   

  	
  19

  	
   

  	
  20

  	
   

  	
  21

  	
   

  	
  22

  	
   

  	
  23

  
	
   

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  24

  	
   

  	
  25

  	
   

  	
  26

  	
   

  	
  27

  	
   

  	
  28

  	
   

  	
  29

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


82

















 


APPENDIX 11


 


DESCRIPTION FOR ISIS
325568 AND ISIS 377131


 


[***]


 


83

















 


APPENDIX 12


 


TARGET POOL &
SELECTED GENE TARGETS


 


[***]


 


84

















 


APPENDIX 13


 


OMI MINIMUM COUNTRIES


 


[***]


 


85

















 


APPENDIX 14


 


ISIS INSURANCE REQUIREMENTS


 


Insurance Requirements


 


Isis shall procure and maintain, at all times, and at its own expense,
during the Collaboration Term the types of insurance(s) specified below. For
product liability/completed operations and clinical trials, insurance coverage
will remain in effect through at least [***] after the Term of the Agreement.
Isis’ insurance will cover Isis, its contractors, subcontractors and
consultants performing work under the R&D Plan.


 


A.                                    Commercial
General Liability


Isis shall provide coverage on a Commercial
General Liability Occurrence Form with the exception of product
liability/completed operations and clinical trials which will be written on a
Claims Made Form. The limits will not be less than $[***] each occurrence and
$[***] annual aggregate. Such insurance shall include worldwide coverage
including coverage for USA jurisdiction claims and occurrences.


 


B.                                    Property Insurance


Isis shall provide  Property
Insurance in an amount not less than [***], as is comparable to the insurance
reasonably and customarily carried by a company of similar size, location and
business as Isis.


 


C.                                    Miscellaneous


All insurance companies must be rated [***]
or better with a financial rating of [***] or better in the most recent A. M. Best’s Rating Guide.


 


Isis will promptly notify OMI in writing in
the event of [***] of an insurance policy that is the subject of this Appendix.


 


Certificates of insurance for all required coverages shall be provided
to OMI prior to commencement of any work on the project. Failure by OMI to
request such copies or documents shall not waive OMI’s rights to coverage under
this agreement.


 


86

















 


APPENDIX 15


PART 1


CONFIRMATION OF CLOSING


               ,
2007


 


WHEREAS,
Isis Pharmaceuticals, Inc. (“Isis”) and Symphony GenIsis Holdings LLC
(“Holdings”) are parties to the Purchase Option Agreement dated April 7, 2006
(the “Purchase Option Agreement”);


 


WHEREAS,
Isis has exercised the Purchase Option, pursuant to which Isis has purchased
all of the outstanding Symphony GenIsis Equity Securities by paying the
Purchase Price to Holdings; and


 


WHEREAS,
in connection with the Purchase Option Closing, Isis and Holdings hereby
acknowledge, confirm and agree as follows;


 


1.               The Purchase Option Closing occurred on              ,
2007;


 


2.               Holdings has received the full Purchase
Price;


 


3.               Title to all of the Symphony GenIsis
Equity Securities has been transferred to Isis;


 


4.               Holdings has removed all directors
serving on the Symphony GenIsis Board, other than the Isis Director from
Symphony GenIsis Board;


 


5.               The Development Committee is disbanded
and terminated;


 


6.               Holdings consents to the termination of
the Novated Technology License Agreement by Isis and Symphony GenIsis; and


 


7.               Except for the rights and obligations
that specifically survive termination, as set forth in Section 7.3 of the
Novated Technology License Agreement, Holdings has no residual rights in the
Licensed Intellectual Property, including but not limited to any residual
royalty interest or information rights.


 


Capitalized terms used, but not otherwise defined herein will have the
meaning ascribed to them in the Purchase Option Agreement.


 


[SIGNATURES FOLLOW ON NEXT PAGE]


 


87

















 


IN WITNESS WHEREOF, the parties hereto have
signed this Confirmation of Closing as of the day and year first above written.


 


	
   

  	
  ISIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  B. Lynne Parshall, J.D.

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, CFO and

  
	
   

  	
   

  	
   

  	
  Secretary

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SYMPHONY GENISIS HOLDINGS LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Symphony Capital Partners, L.P.,

  
	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Symphony Capital GP, L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Symphony GP, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Mark Kessel

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  



 


88

















 


APPENDIX 15


PART 2


CONFIRMATION OF TERMINATION


               ,
2007


 


WHEREAS,
Isis Pharmaceuticals, Inc. (“Isis”) and Symphony GenIsis, Inc. (“Symphony
GenIsis”) are parties to the Novated and Restated Technology License Agreement
dated April 7, 2006 (the “Technology License Agreement”);


 


WHEREAS,
Isis has exercised the Purchase Option, pursuant to which Isis has purchased
all of the outstanding Symphony GenIsis Equity Securities by paying the
Purchase Price to Holdings; and


 


WHEREAS,
Isis and Symphony GenIsis hereby acknowledge, confirm and agree that,
notwithstanding Section 7.2, 7.3 or any other provision of the Technology
License Agreement, the Technology License Agreement is terminated in full such that all of the rights, obligations and other
terms of the technology License Agreement are no longer in force or effect with
no survival.


 


Capitalized terms used, but not otherwise defined herein will have the
meaning ascribed to them in the Technology License Agreement.


 


IN WITNESS WHEREOF, the parties hereto have
signed this Confirmation of Termination as of the day and year first above
written.


 


	
   

  	
  ISIS PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  B. Lynne Parshall, J.D.

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President, CFO and

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SYMPHONY GENISIS, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stanley T. Crooke, M.D., Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Sole Director

  



 


89

















 


APPENDIX 16


 


[***]


 


90

















 


APPENDIX 17


 


Assignment of Isis Product Specific Patents


 


Isis
Pharmaceuticals, Inc. conveys, assigns and transfers its entire right, title
and interest in and to Isis Product Specific Patents, Research results and data
from the R&D Plan that relate to the Designated Compound or Product,
pursuant to Section 9.2.3(b) of the Agreement. In consideration for this
Assignment, Ortho-McNeil, Inc. agrees to pay Isis’ royalties pursuant to the
provisions of Table 3 of Article 6 of the Agreement. In this Assignment, all
defined terms have the same definition as in the Agreement.


 


	
   

  	
   

  	
   

  
	
   

  	
  ISIS
  Pharmaceuticals, Inc.

  



 


91