Isis Pharmaceuticals, Inc.

  	
   

  
	
  requests that the marked portions of the agreement
  be granted confidential treatment under

  Rule 24b-2 of the Securities Exchange Act of 1934.

   

  	
  Exhibit 10.2

  






 


LICENSE
AND COLLABORATION AGREEMENT


 


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


 


INTRODUCTION


 


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


 


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


 


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


 


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


 


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


 


1.             DEFINITIONS


 


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


 


2.             ASSIGNMENT;
LICENSES


 


2.1           Assignments
to Regulus.


 


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


 


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


 

















 


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


 


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


 


2.2           Licenses
Granted to Regulus.


 


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


 


(i)            to Develop miRNA
Compounds and miRNA Therapeutics,


 


(ii)           to Manufacture miRNA
Compounds and miRNA Therapeutics, and


 


(iii)          to Commercialize miRNA
Therapeutics.


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


2.4           Third
Party Rights; Additional Rights.


 


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


 


(b)           Existing In-Licenses from Third Parties.


 


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


 


3

















 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


2.5         Sublicenses.


 


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


 


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


 


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


 


5

















 


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


 


3.             TECHNOLOGY
TRANSFER


 


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


 


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


 


4.             DILIGENCE



 


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


 


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


 


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


 


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


 


6

















 


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


 


5.             RIGHT
TO OPT-IN


 


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


 


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


 


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


 


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


 


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


 


7

















 


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


 


(i)            If, despite diligent
efforts, Regulus is unable to finalize such term sheet with a Third Party with
respect to the Development Project within such [***] month period, or Regulus
is able to finalize such term sheet with a Third Party with respect to the
Development Project within such [***] month period, but Regulus is unable to
execute a definitive agreement substantially in conformance with such term
sheet within [***] months after finalizing such term sheet, Regulus will notify
Licensors thereof and each Licensor will again have the right, exercisable by
providing written notice to Regulus and the other Licensor, within [***] days
following Regulus’ notice (“Second Opt-In Election Period”), to elect to
continue to pursue the Development and Commercialization of such Development
Project on the Low Terms set forth in Section 5.5.


 


(ii)           If only one, but not
both, of the Licensors, makes an Opt-In Election within the Second Opt-In
Election Period (the “Opt-In Party”), the Low Terms set forth in Section 5.5
and the terms of Section 5.6 will apply following the end of such Second
Opt-In Election Period and the Licensor who did not make an Opt-In Election,
within such Second Opt-In Election Period, will have waived its right to opt-in
with respect to such Development Project.


 


(iii)          If, within the Second
Opt-In Election Period, neither Licensor makes an Opt-In Election (or both
Licensors fail to submit any response), then Regulus will retain all rights to
such Development Project.


 


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


 


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


 


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


 


8

















 


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


 


	
   On the portion of Net Sales

   during the calendar year:

    

   	
    

   Royalty Rate 

   on Net Sales During Exclusivity Period

    

   	
    

   Royalty Rate 

   on Net Sales After

   Exclusivity Period

    

   
	
  Less than or equal to $[***]:

   

  	
  [***]%

  	
  [***]%

  
	
  Greater than $[***]:

   

  	
  [***]%

  	
  [***]%

  



 


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


 


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


 


	
   Milestone
   Event:

   	
   Payment

   [***]:

    

   
	
  (i) Filing of IND for first Royalty-Bearing
  Product

   

  	
  $[***]

  
	
  (ii) Upon Completion of the first Phase IIa
  Clinical Trial

   

  	
  $[***]

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

   

  	
  $[***]

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

   

  	
  $[***]

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

   

  	
  $[***]

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



  	
  $[***]

  
	
  (vii) Regulatory Approval in any Major Country
  in the European Union for the first Royalty-Bearing Product

   

  	
  $[***]

  



 


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


 


9

















 


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


 


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


 


	
    

   Sublicense agreement initially entered
   into

   during this timeframe:

    

   	
    

   Percentage of 

   Sublicense Income

   
	
  Prior to Completion of first Phase IIa Clinical
  Trial

   

  	
  [***]%

  
	
  After Completion of first Phase IIa Clinical Trial,
  but prior to completion of first Phase III Clinical 

  Trial

   

  	
  [***]%

  
	
  After Completion of first Phase III Clinical Trial

   

  	
  [***]%

  



 


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


 


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


 


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


 


	
   On the portion of Net Sales

   during the calendar year:

    

   	
    

   Royalty Rate 

   on Net Sales During

   Exclusivity Period

    

   	
    

   Royalty Rate 

   on Net Sales After

   Exclusivity Period

    

   
	
  Less than or equal to $[***]:

   

  	
  [***]%

  	
  [***]%

  
	
  Greater than $[***]:

   

  	
  [***]%

  	
  [***]%

  



 


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


 


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


 


10

















 


	
    

   Milestone Event:

   	
    

   Payment for 

   Royalty-Bearing

   Product  

   [***]:

    

   
	
  (i)  Filing of IND for first Royalty-Bearing
  Product

   

  	
  $[***]

  
	
  (ii)  Upon Completion of the first Phase IIa
  Clinical Trial

   

  	
  $[***]

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

   

  	
  $[***]

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

   

  	
  $[***]

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

   

  	
  $[***]

  



 


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


 


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


 


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


 


	
    

   Sublicense agreement initially entered
   into

   during this timeframe:

    

   	
    

   Percentage of 

   Sublicense Income

   
	
  Prior to Completion of first Phase IIa Clinical
  Trial

   

  	
  [***]%

  
	
  After Completion of first Phase IIa Clinical Trial,
  but prior to completion of first Phase III Clinical Trial

   

  	
  [***]%

  
	
  After Completion of first Phase III Clinical Trial

   

  	
  [***]%

  



 


11

















 


5.6           Other
Terms Applicable to Opt-In Party.


 


(a)           License
Grant.


 


(i)            Regulus will, and
hereby does, grant to the Opt-In Party, subject to and limited by the Third
Party Rights, a worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5),
(x) license under all Regulus IP, and (y) sublicense under all Licensed IP
(within the scope of the license granted to Regulus under such Licensed IP
pursuant to Sections 2.2(a) and 2.2(b)), solely for purposes of
Developing, Manufacturing and Commercializing the relevant Development Project’s
Development Compounds and Development Therapeutics in the Field on the terms
set forth in this Section 5.6. Regulus shall comply with the provisions of
Section 2.4 with respect to the disclosure of information with respect to
the relevant Third Party Rights.


 


(ii)           Subject to Third Party
Rights, the rights granted under Section 5.6(a)(i) to the Opt-In
Party will be exclusive, to the fullest extent possible, under Regulus IP and
under Licensed IP. For the sake of clarity, this means that Regulus IP will be
exclusively licensed by Regulus to the Opt-In Party with respect to the
relevant Development Project, and Regulus’ rights under the Licensed IP will be
exclusively sublicensed by Regulus to the Opt-In Party with respect to the
relevant Development Project, but any non-exclusive licenses grant by the
relevant Licensor to Regulus with respect to Licensed IP shall not be deemed to
have been expanded to exclusive licenses to Regulus.


 


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


 


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


 


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


 


12

















 


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


 


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


 


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


 


(A)          “Cumulative Amount
Owed” means, with respect to a Development Project and a calendar quarter,
the greater of (1) the cumulative Guaranteed Payments as of the end of such
calendar quarter, and (2) the cumulative Sublicense Income Payments as of
the end of such calendar quarter.


 


(B)           “Guaranteed Payments”
means, with respect to a Development Project and a calendar quarter, (1) if
High Terms apply, the payments paid or payable pursuant to Sections 5.4(a) and
5.4(c) with respect to such calendar quarter, and (2) if Low Terms
apply, the payments paid or payable pursuant to Section 5.5(a) and
5.5(c) with respect to such calendar quarter.


 


6.             [Intentionally
Deleted]


 


7.             [Intentionally
Deleted]


 


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


 


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


 


13

















 


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


 


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


 


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


 


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


 


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


 


14

















 


9.             INTELLECTUAL
PROPERTY


 


9.1           Ownership.


 


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


 


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


 


9.2           Prosecution
and Maintenance of Patent Rights.


 


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


 


(b)       Licensor IP.


 


(i)            As among the Parties,
each Licensor will have the initial right to file, prosecute and maintain such
Licensor’s Licensed Patent Rights. Such activities will be at such Licensor’s
expense.


 


(ii)           Subject to any Third
Party Rights, in the event that a Licensor declines to file, prosecute or
maintain such Licensor’s Licensed Patent Rights, elects to allow any such
Patent Rights to lapse, or elects to abandon any such Patent Rights before all
appeals within the respective patent office have been exhausted, then:


 


(A)          Such Licensor will
provide Regulus with reasonable notice of its decision to decline to file,
prosecute or maintain any such Patent Rights or its election to allow any such
Patent Rights to lapse, or its election to abandon any such Patent Rights, so
as to permit Regulus to decide whether to file, prosecute or maintain the same,
and to take any necessary action.


 


(B)           Regulus may assume
control of the filing, prosecution and/or maintenance of such Patent Rights in
the name of such Licensor, at Regulus’ expense.


 


(C)           Such Licensor will, at
Regulus’ expense and reasonable request, assist and cooperate in the filing,
prosecution and maintenance of such Patent Rights.


 


15

















 


(D)          Regulus will provide
such Licensor, sufficiently in advance for such Licensor to comment, with
copies of all patent applications and other material submissions and
correspondence with any patent counsel or patent authorities pertaining to such
Patent Rights.


 


(E)           Regulus will give due
consideration to the comments of such Licensor, but will have the final say in
determining whether or not to incorporate such comments.


 


(F)           Regulus and such
Licensor will promptly provide the other with copies of all material
correspondence received from any patent counsel or patent authorities
pertaining to such Patent Rights.


 


9.3           Enforcement.


 


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


 


(i)            Each Party will
promptly report in writing to the other Parties any such infringement of which
it becomes aware, including, without limitation, receipt of any certification
received under the United States Drug Price Competition and Patent Term
Restoration Act of 1984 (Pub. Law 98-471), as amended (the “Hatch-Waxman Act”),
claiming that any of the Licensed Patent Rights or Regulus Patent Rights is
invalid, unenforceable or that no infringement will arise from the manufacture,
use or sale of such product (a “Paragraph IV Certification”).


 


(ii)           The relevant
Commercializing Party will have the initial right, at such Commercializing
Party’s expense, to initiate a legal action against such Third Party with
respect to such infringement of the Regulus Patent Rights and, if such
Commercializing Party is a Licensor, such Commercializing Party’s Licensed
Patent Rights. At the Commercializing Party’s reasonable request and expense,
the relevant Licensor(s) (if Regulus is the Commercializing Party) or the other
Licensor (if a Licensor is the Commercializing Party) will use Commercially
Reasonable Efforts to initiate a legal action against such Third Party with
respect to an infringement described in clause (y) of this Section 9.3(a) of
such other Licensor(s)’ Licensed Patent Rights. Each other Party will join in
any such 


 


16

















 


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


 


(iii)          Any recoveries resulting
from an action brought under Section 9.3(a)(ii) in connection with an
infringement described in clause (y) of Section 9.3(a) (whether
undertaken by the Commercializing Party or the enforcing Licensor) will be
applied as follows:


 


(A)          First, to reimburse each
Party for all litigation costs in connection with such proceeding paid by such
Party (on a pro rata basis, based on each Party’s respective litigation costs,
to the extent the recovery was less than all such litigation costs); and


 


(B)           The remainder of the
recovery will be retained by the Commercializing Party and [***].


 


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


 


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


 


17

















 


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


 


(b)       Non-Competitive
Infringement.


 


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


 


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


 


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


 


9.5           Claimed
Infringement.


 


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


 


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


 


18

















 


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


 


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


 


10.           CONFIDENTIAL
INFORMATION


 


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


 


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


 


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


 


19

















 


11.           INDEMNIFICATION


 


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


 


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


 


20

















 


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


 


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


 


12.           INSURANCE


 


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


 


13.           WARRANTIES


 


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


 


21

















 


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


 


13.2         Additional
Licensor Warranties.


 


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


 


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


 


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


 


22

















 


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


 


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


 


14.           LIMITATION
OF LIABILITY


 


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


 


15.           TERMINATION


 


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


 


15.2         Termination
for Breach.


 


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


 


23

















 


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


 


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


 


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


 


15.3         Effects
of Termination.


 


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


 


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


 


24

















 


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


 


16.           MISCELLANEOUS


 


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


 


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


 


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


 


25

















 


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


 


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


 


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


 


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


 


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


 


26

















 


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


 


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


 


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


 


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


 


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


 


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


 


27

















 


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


 


[Remainder of Page Intentionally
Left Blank]


 


28

















 


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


 


 


	
   

  	
  ALNYLAM
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Barry Greene

  	
   

  
	
   

  	
   

  	
  Name:
  Barry Greene

  
	
   

  	
   

  	
  Title:   Chief
  Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ISIS
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  B. Lynne Parshall

  	
   

  
	
   

  	
   

  	
  Name:
  B. Lynne Parshall

  
	
   

  	
   

  	
  Title:
  EVP & CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REGULUS
  THERAPEUTICS LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Philip T. Chase

  	
   

  
	
   

  	
   

  	
  Name:
  Philip T. Chase

  
	
   

  	
   

  	
  Title:   Authorized
  Person

  
	
   

  	
   

  	
   

  

















 


Exhibit 1


 


Defined Terms


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


1.34         “[***]”
means a [***].


 


3

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


4

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


5

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


1.69         “[***]”
means [***].


 


1.70         “[***]”
means the [***].


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


7

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(ii)                            as
necessary, if embodied in products, to develop and commercialize such products
as contemplated by this Agreement.


 


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


 


8

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9

















 


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


 


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


 


1.100       “Royalty-Bearing
Product” means


 


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


 


(b)         an Opt-In Product that,
on a country-by-country basis, is, or the relevant Opt-In Party reasonably
believes will be, at the time of first commercial sale of such Opt-In Product,
Covered in such country by a Valid Claim of a Patent Right or covered by
Know-How, which Patent Right or Know-How is licensed to the applicable Opt-In
Party hereunder.


 


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


 


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


 


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


 


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


 


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


 


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


 


10

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


11

















 


SCHEDULE A


 


Previous
Agreements


 


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


 


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


 


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


 

















 


Schedule 1.61


 


Initial miRNA Precursor Antagonists


 


[***]


 

















 


Schedule 2.1(A)


Patents and License Agreements Assigned to Regulus by Isis


 


 


Isis
Patent Applications to be Assigned to Regulus


 


	
  IsisDocket

  Number

  	
  Country

  	
  Serial
  Number

  	
  Filing
  

  Date

  	
  Priority
  

  Date

  	
  Title

  



 


[***]


 


Isis
License Agreements to be Assigned to Regulus


 


[***]

















 


Schedule 2.1(B)


Patents and License Agreements Assigned to Regulus by Alnylam


 


Alnylam
Patent Applications to be Assigned to Regulus


 


	
  CaseNumber

  	
  InvTitle

  	
  Country

  	
  CaseType

  	
  AppNumber

  	
  FilDate

  



[***]


 


Alnylam
License Agreements to be Assigned to Regulus


 


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


 


[summary is attached as Exhibit 2]


 


2

















 


Schedule 2.2(A)


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


 


	
   Isis Docket 

   Number

   	
   Country

   	
   Serial 

   Number

   	
   Filing Date

   	
   Priority

   Date

   	
   Title

   	
   Patent 

   Number

   
	
  [***]

   

  



 

















 


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


 


	
   CaseNumber

   	
   InvTitle

   	
   Co.

   	
   AppNumber

   	
   FilDate

   	
   PubNumber

   	
   PubDate

   	
   PatNumber

   	
   IssDate

   
	
   

  [***]

  



 


2

















 


Schedule 2.4(A)


Part 1


Isis’ Existing Out-License Agreements


 


 


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


 


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


 


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


 


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


 


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


 


 


[***].


 

















 


Schedule 2.4(A)


Part 2


Alnylam’s Existing Out-License Agreements


 


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


 


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


 


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


 


[summaries are attached as Exhibit 2]


 


2

















 


Schedule 2.4(B)


Part 1


Isis’ Existing In-License Agreements


 


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


 


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


 


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


 


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


 


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


 


[***].

















 


Schedule 2.4(B)


Part 2


Alnylam’s Existing In-License Agreements


 


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


 


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


 


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


 


[summaries are attached as Exhibit 2]


 


2

















 


Schedule 2.4(C)


Part 1


Isis’ Optional In-Licenses 


 


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


 


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


 


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


 


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


 


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


 


[***]


.

















 


Schedule 2.4(C)


Part 2


Alnylam’s Optional In-Licenses


 


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


 


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


 


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


 


[summaries are attached as Exhibit 2]


 


2

















 


Schedule 5.6(f)


 


Examples regarding Payments Due


 


Example 1:  [***]


Party opts-in at [***]


Party responsible for High Terms


Party
sublicenses product mid Phase IIb at terms below


 


	
  Milestones

  	
   

  	
  “Guaranteed

  Payments”

  Due Under 

  High Terms

  	
   

  	
  Paid
  Before

  Sublicense

  	
   

  	
  Cumulative

  “Guaranteed 

  Payments”

  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense
  

  Income”

  	
   

  	
  “Sublicense
  

  Income 

  Payments” 

  Due ([***]%)

  	
   

  	
  Cumulative
  

  “Sublicense 

  Income 

  Payments” 

  Due

  	
   

  	
  “Cumulative
  

  Amount 

  Owed”

  	
   

  	
  Payments
  

  Payable By 

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of Phase IIa

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  


















 


 


Example
2:  [***]


Party opts-in at [***]


Party responsible for Low Terms


Party
sublicenses product after IND at terms below


 


	
  Milestones

  	
   

  	
  “Guaranteed
  

  Payments”

  Due Under

  Low Terms

  	
   

  	
  Paid
  Before

  Sublicense

  	
   

  	
  Cumulative

  “Guaranteed 

  Payments”

  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense
  

  Income”

  	
   

  	
  “Sublicense
  

  Income 

  Payments” 

  Due ([***]%)

  	
   

  	
  Cumulative
  

  “Sublicense 

  Income 

  Payments” 

  Due

  	
   

  	
  “Cumulative
  

  Amount 

  Owed”

  	
   

  	
  Payments
  

  Payable By 

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Upfront sublicense

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of Phase IIa

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  P3 end

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Japan approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


2

















 


Example 3:  [***]


Party opts-in at [***]


Party responsible for High Terms


Party
sublicenses product mid Phase III at terms below


 


	
  Milestones

  	
   

  	
  “Guaranteed 

  Payments”

  Due Under

  High Terms

  	
   

  	
  Paid
  Before

  Sublicense

  	
   

  	
  Cumulative

  “Guaranteed 

  Payments”

  Payable

  	
   

  	
  Sublicense

  Milestones

  	
   

  	
  “Sublicense
  

  Income”

  	
   

  	
  “Sublicense
  

  Income 

  Payments” 

  Due ([***]%)

  	
   

  	
  Cumulative
  

  “Sublicense 

  Income 

  Payments” 

  Due

  	
   

  	
  “Cumulative
  

  Amount 

  Owed”

  	
   

  	
  Payments
  

  Payable By 

  Opt-in Party

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upfont

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  IND filing

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Completion of Phase IIa

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Phase III start

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU filing

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  FDA approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  EU approval

  	
   

  	
  [***]

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  Total

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  



 


3
















 


Exhibit 2


 


Alnylam Agreement Summaries


 


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


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


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


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


 


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


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


 


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


 


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


 


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


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


 


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


 


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


 


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


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


 


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


 


This In-License
Summary, Out-License Summary and summary of assigned contracts and
Optional In-Licenses highlights certain obligations of, or restrictions on,
Alnylam and/or its 


 

















 


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


 


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


 


2

















 


ROCKEFELLER (Stoffel)


 


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


Brief Summary of Technology Covered by License:


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


 


Scope of License (Section 1.1)


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


 


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


 


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


 


Certain Sublicense Terms
(Section 1.5)


•                  Alnylam will
prohibit the sublicensee from further sublicensing and require the sublicensee
to comply with the terms and conditions of the Stoffel Agreement.


 


•                  Within thirty (30) days after Alnylam
enters into a sublicense agreement, Alnylam will deliver to Rockefeller a copy
of the sublicense agreement which may be redacted with respect to content that
is not relevant to Alnylam’s obligations under the Stoffel Agreement.


 


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


 


Diligence (Section 2)


•                  By end of the
year 2007, Alnylam (or sublicensees) will select the method of delivery.


 


•                  By the end of
the year 2008, Alnylam (or sublicensees) will optimize the lead compound.


 


•                  By the end of
the year 2010, Alnylam (or sublicensees) will conclude preclinical development


 


3

















 


Payment Obligations (Sections 3 and 4)


•              The following milestones are
payable:


 


	
  •           First
  issuance in the U.S. of a patent under the Rockefeller Patent Rights covering
  a Licensed Product

  	
  •              $[***]

  
	
  •           First
  dosing of a subject in a Phase II clinical trial for the first Licensed
  Product

  	
  •              $[***]

  
	
  •           Approval
  by the U.S. FDA of a New Drug Application for the first Licensed Product 

  	
  •              $[***]

  



•


 


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


 


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


 


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


 


Books and Records (Sections 4.3 and 4.4)


•              Sub-licensees are required to keep
complete and accurate books and records to verify Net Sales, and all of the
royalties, fees, and other payments payable under the Stoffel Agreement. The
records for each quarter will be maintained for at least three (3) years after
submission of the applicable report required under the Stoffel Agreement.


 


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


 


Non-Use of Name (Section 5.4)


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


 


4

















 


Termination (Section 6.2)


•              Alnylam may terminate for
convenience


 


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


 


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


 


Prosecution and Enforcement (Section 7)


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


 


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


 


Definitions


 


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


 


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


 


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


 


5

















 


TEKMIRA


 


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


Brief Summary of Technology Covered by License:


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


 


Limitations on Scope of License (Sections 6.1 and 6.4)


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


 


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


 


•              Any license granted by Alnylam to
a Third Party under Alnylam Core Patent Rights, Alnylam Lipidoid Patent Rights,
Alnylam Collaboration IP and Alnylam’s interest in Joint Collaboration IP would
be subject to an exclusive, worldwide license granted to Tekmira to Develop,
Manufacture and Commercialize RNAi Products directed to up to three (3) Targets
(each such Target, an “Inex Development Target,” and such RNAi Products,
the “Inex Development Products”) which Tekmira may select (as described
below) in the Alnylam Field. During the Selection Term, Tekmira has the right
to nominate a Target, subject to (a) Alnylam’s contractual obligation to a
Third Party that would be breached by the inclusion of such Target as an Inex
Development Target under the Tekmira Agreement, and (b) Alnylam’s determination
after good faith review of its ongoing or planned scientific and/or business
activities that such Target is a Target of interest to Alnylam. If neither of
these criteria apply, the Target is deemed to have been successfully nominated
as an “Inex Development Target” and Alnylam is obligated to use
Commercially Reasonable Efforts consistent with the terms of the Novartis
Agreement to obtain Novartis’ consent to such selection. If an Inex Development
Target is not available for 


 


6

















 


license, then Tekmira may nominate an additional Target, until an
aggregate of 3 Inex Development Targets have been identified and approved for
selection. If all 3 Inex Development Targets have not been approved for
selection by the expiration of the Selection Term, the Selection Term will be
extended until the earlier of (i) the date on which an aggregate of 3 such Inex
Development Targets have been identified and approved for selection, and (ii)
January 8, 2014.


 


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


 


Restrictions on Sublicensing by Alnylam (Sections 6.2 and 6.4)


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


 


•              Each license and/or sublicense
granted by Alnylam under the Tekmira Agreement to develop, manufacture and
commercialize Alnylam Royalty Products must be subject and subordinate to the
terms and conditions of the Tekmira Agreement and must contain terms and
conditions consistent with those in the Tekmira Agreement, including, without
limitation, the requirements of Section 6.4 of the Tekmira Agreement (see
below). Commercializing Sublicensees are also required to: (i) submit
applicable sales or other reports consistent with those required under the
Tekmira Agreement; (ii) comply with an audit requirement similar to the
requirement set forth in Section 7.6 of the Tekmira Agreement; and (iii) comply
with the confidentiality and non-use provisions of Article 8 of the Tekmira
Agreement with respect to both Parties’ Confidential Information. If Alnylam
becomes aware of a material breach of any sublicense by a Third Party
Sublicensee, Alnylam is required to promptly notify Tekmira of the particulars
of same and take all Commercially Reasonable Efforts to enforce the terms of
such sublicense.


 


7

















 


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


 


Diligence and Annual Reports (Section 6.7)


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


 


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


 


Financial Obligations (Sections 7.2-7.4 and 6.1.3)


Milestone Payments:


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


 


	
  Milestone Event

  	
  Payment

  
	
   

  	
   

  
	
  Initiation of
  first Phase I Study 

  	
  $  [***]

  
	
   

  	
   

  
	
  Initiation of
  first Phase II Study

  	
  $[***]

  
	
   

  	
   

  
	
  Acceptance by a
  Regulatory Authority in a Major Market of the first NDA for filing

  	
  $[***]

  
	
   

  	
   

  
	
  First NDA Regulatory Approval in a Major Market

  	
  $[***]

  
	
   

  	
   

  
	
  Aggregate worldwide cumulative Net Sales equals or
  exceeds $[***]

  	
  $[***]

  



 


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


 


8

















 


	
  Milestone Event

  	
  Payment

  
	
   

  	
   

  
	
  Approval of the
  first IND filed by Alnylam

  	
  $  [***]

  
	
   

  	
   

  
	
  Positive safety
  data from the first Phase I Study to be completed 

  	
  $  [***]

  
	
   

  	
   

  
	
  First Commercial
  Sale 

  	
  $[***]

  



 


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


 


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


 


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


 


Royalty Payments:


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


 




	
  Aggregate
  Calendar Year Net Sales of the

  Alnylam Royalty Product

  	
  Royalty

  (as a percentage of Net Sales)

  
	
   

  	
   

  
	
  on
  the first $[***] - $[***]

  	
  [***]%

  
	
  On
  the subsequent $[***] - $[***]

  	
  [***]%

  
	
  Greater
  than $[***]

  	
  [***]%

  






 


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


 




	
  Aggregate
  Calendar Year Net Sales of the

  Alnylam Royalty Product

  	
  Royalty

  (as a percentage of Net Sales)

  
	
   

  	
   

  
	
  on
  the first $[***] - $[***]

  	
  [***]%

  
	
  On
  the subsequent $[***] - $[***]

  	
  [***]%

  
	
  Greater
  than $[***]

  	
  [***]%

  






 


9

















 


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


 


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


 


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


•              Commencing upon the First
Commercial Sale of an Alnylam Royalty Product, Alnylam is required to provide
to Tekmira a quarterly written report showing the quantity of Alnylam Royalty
Products sold in each country (as measured in saleable units of product), the
gross sales of such Alnylam Royalty Product in each country, total deductions
for such Alnylam Royalty Product for each country included in the calculation
of Net Sales, the Net Sales in each country of such Alnylam Royalty Product
subject to royalty payments and the royalties payable with respect to such
Alnylam Royalty Product. Quarterly reports are due no later than the 25th day
following the close of each Calendar Quarter. Royalties shown to have accrued
by each royalty report are due and payable on the date such royalty report is
due.


 


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


 


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


 


Prosecution and Enforcement (Sections 10.2, 10.3 and 10.4)


•              Alnylam is solely responsible, at
Alnylam’s discretion, for filing, prosecuting, conducting ex parte
and inter partes proceedings (including the
defense of any interference or opposition 


 


10

















 


proceedings) and maintaining all Patent Rights comprising Alnylam RNAi
Technology, Alnylam IOC Technology or Alnylam Collaboration IP, in Alnylam’s
name.


 


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


 


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


 


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


 


•              If Tekmira elects not to seek or
continue to seek or maintain patent protection on any Inex Technology or Inex
Collaboration IP, which is subject to Alnylam’s licensed rights under the
Tekmira Agreement, then subject to the provisions of the UBC Sublicense
Documents, Alnylam will have rights (but not the obligation), at its expense,
to prosecute and maintain in any country patent protection on such Inex
Technology in the name of Tekmira or Inex Collaboration IP in the name of UBC.


 


•              Each Party agrees: (a) to make its
employees, agents and consultants reasonably available to the other Party (or to
the other Party’s authorized attorneys, agents or representatives), to the
extent reasonably necessary to enable such Party to undertake patent
prosecution; (b) to provide the other Party with copies of all material
correspondence pertaining to prosecution with the patent offices; (c) to
cooperate, if necessary and appropriate, with the other Party in gaining patent
term extensions wherever applicable to Patent Rights; and (d) to endeavor in
good faith to coordinate its efforts with the other Party to minimize or avoid
interference with the prosecution and maintenance of the other Party’s patent
applications.


 


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


 


•              Subject to the provisions of any
Inex In-License and the provisions of the UBC Sublicense Documents, in respect
of the Alnylam Royalty Products in the Alnylam Field, Alnylam will have the
sole and exclusive right to initiate an infringement or other appropriate suit
anywhere in the world against any Third Party who at any time has infringed, or
is suspected 


 


11

















 


of infringing, any Patent Rights, or of using without proper
authorization, any Know-How, comprising any Inex Technology or Collaboration IP
that is licensed to Alnylam under the Tekmira Agreement.


 


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


 


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


 


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


 


Termination for Patent Challenge (Section 11.5)


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


 


12

















 


enforceability of such Inex Patent; or (b) documentation is provided to
Tekmira to confirm Sublicensee’s withdrawal of its filing, submission, or other
process commenced in any court or other governmental agency of competent
jurisdiction to challenge the validity or enforceability of any such Inex
Patent.


 


Definitions


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


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


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


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


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


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


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


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


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


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


 


 


13

















 


and/or Commercializes an
Alnylam Royalty Product for commercial supply to one or more Funding
Authorities.


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


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


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


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


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


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


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


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


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


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


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


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


 


14

















 


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


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


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


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


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


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


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


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


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


“Small Interfering RNA”
or “siRNA” means a double-stranded ribonucleic acid (RNA) composition
designed to act primarily through an RNA Interference Mechanism that consists
of either (a) two separate oligomers of native or chemically modified RNA that
are hybridized to one another along a substantial portion of their lengths, or
(b) a single oligomer of native or chemically modified RNA that is hybridized
to itself by self-complementary base-pairing along a substantial portion of its
length to form a hairpin.


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


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


 


15

















 


basis) license to
Develop, Manufacture and Commercialize Inex Royalty Products in the Alnylam
Field in the case of Inex Development Product, and in the Inex IOC Field in the
case of IOC Products.


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


 


16

















 


ROCHE


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


Brief Description of Technology Covered by License


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


 


Limitations on Scope of License


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


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


 


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


 


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


 


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


 


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


 


Prosecution and Enforcement


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


 


•              Alnylam is also obligated to
assume control of the defense of any aspects of any third party infringement
claim that involves the validity, scope and/or enforceability of such licensed
IP. Roche has the right to control the defense of any other third party
infringement claim or 


 


17

















 


aspect thereof related to the licensed IP. Alnylam must keep Roche
advised of status and consider Roche’s recommendations.


 


Definitions


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


 


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


 


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


 


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


 


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


 


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


 


18

















 


NOVARTIS


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


Brief Description of Technology Covered by License


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


 


Scope of Rights


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


 


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


 


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


 


•              Exclusivity:  Alnylam and its Affiliates may not, either
alone or directly or indirectly in conjunction with a Third Party, conduct
Discovery of any RNAi Compound or RNAi Products directed to a Selected Target,
or Discovery, Development, Commercialization or Manufacture of Discovered RNAi
Compounds, Collaboration Products, or RNAi Compounds or RNAi Products directed
to Selected Targets. Alnylam and its Affiliates may not grant to any Third
Party any rights under Alnylam Intellectual Property to engage in any of the
foregoing activities. (Section 2.6(a))


 


•              ROFO:  If Alnylam or any of its Affiliates seek,
directly or indirectly in conjunction with a Third Party (with limited
exceptions), or to license a Third Party (with limited exceptions) the right,
to Discover, Develop, Commercialize or Manufacture any RNAi Compounds or RNAi
Products directed at a Target(s), Alnylam must first provide written notice to
Novartis. Novartis 


 


19

















 


has a period of time to accept or reject the opportunity. If Novartis
rejects an opportunity for a program for which no IND has been filed in the US
or Major Market Countries, or Novartis and Alnylam are unable to come to terms
on a post-IND program, Alnylam may, within a specified period of time, enter an
agreement with a Third Party, which can be no more favorable overall to such
Third Party than those offered to Novartis under Section 2.6(c)(i). (Sections
2.6(b) and (c))


 


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


 


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


 


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


 


IP Ownership, Prosecution and Enforcement (Section 6)


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


 


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


 


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


 


•              Alnylam has the right to protect
the Alnylam Intellectual Property, and Alnylam will consult with Novartis
regarding the status of any such action and will provide Novartis with copies
of all material documents relating to such action. Notwithstanding the
foregoing, Novartis has the sole and exclusive right to initiate a suit under
Alnylam Intellectual Property to protect a Discovered RNAi Compound, a Licensed
Product or IP created solely by Novartis or 


 


20

















 


jointly by Novartis and Alnylam in the Research Collaboration; Alnylam
must provide reasonable assistance at Novartis’ request. Recoveries will be
shared in a specified manner.


 


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


 


Definitions


 


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


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


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


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


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


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


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


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


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


 


21

















 


ROCKEFELLER (Tuschl)


 


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


Brief Summary of Technology Covered by License:


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


 


Scope of License (Section 1.1)


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


 


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


 


Certain Sublicense Terms (Section 1.5)


•                  Alnylam will only have the right to
grant sublicenses if such sublicense (a) is granted in conjunction with a
license or sublicense of Alnylam’s rights under proprietary intellectual
property that is in addition to the Rockefeller Patent Rights, and (b) is
granted in connection with a bona fide collaboration with one or more third
parties established by written agreement that is for purposes of research
and/or development of products under a jointly prepared research plan.


 


•                  Alnylam will prohibit the sublicensee
from further sublicensing and require the sublicensee to comply with the terms
and conditions of the Tuschl Agreement (other than Alnylam’s payment and
reporting obligations).


 


•                  Within thirty
(30) days after Alnylam enters into a sublicense agreement, Alnylam will
deliver to Rockefeller a copy of the sublicense agreement which may be redacted
except with respect to terms, including financial terms that re not relevant to
Alnylam’s obligations under the Tuschl Agreement.


 


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


 


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


 


22

















 


Diligence (Section 2)


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


 


Payment Obligations (Sections 3 and 4)


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


 


	
    Receipt of
  IND approval.

  	
  $[***]

  
	
    Dosing of
  first patient in Phase II Clinical Trials.

  	
  $[***]

  
	
    Dosing of
  first patient in Phase III Clinical Trials.

  	
  $[***]

  
	
    Receipt of
  NDA approval.

  	
  $[***]

  



•


 


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


 


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


 


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


 


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


 


Books and Records (Sections 4.3 and 4.4)


•              Sub-licensees are required to keep
complete and accurate books and records to verify Sales, Net Sales, and all of
the royalties, fees, and other payments payable under the Tuschl Agreement. The
records for each quarter will be maintained for at least 3 years after
submission of the applicable report required under the Tuschl Agreement.


 


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


 


Non-Use of Name (Section 5.4)


 


23

















 


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


 


Termination (Section 6.2)


•              Alnylam may terminate for
convenience


 


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


 


Prosecution and Enforcement (Section 7)


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


 


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


 


•              Alnylam must inform Rockefeller
promptly after learning of infringement of the Rockefeller Patent Rights. Alnylam
and Rockefeller will consult each other concerning response to infringement. Rockefeller
may enforce any infringement of the Rockefeller Patent Rights at Rockefeller’s
expense and retain the recoveries. If Rockefeller requests Alnylam to join such
enforcement litigation and Alnylam elects to do so, the recoveries will be
shared between Company and Rockefeller in proportion with their respective
shares of the aggregate litigation expenditures. Alnylam has step-in
enforcement rights. Alnylam must not settle or compromise any such litigation
in a manner that imposes any obligations or restrictions on Rockefeller or
grants any rights to the Rockefeller Patent Rights without Rockefeller’s prior
written permission. Step-in recoveries, after Alnylam’s expenses are
reimbursed, are treated as Net Sales subject to royalties.


 


Definitions


 


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


 


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


 


24

















 


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


 


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


 


25

















 


STANFORD (Sarnow/miR-122)


 


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


 


Brief Summary of Technology Covered by License:


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


 


Scope of License
(Section 3):


 


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


 


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


 


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


 


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


 


Sublicensing Rights (Section 4):


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


 


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


 


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


 


26

















 


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


 


•              Any sublicense:


 


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


 


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


 


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


 


•              is subject to this Agreement.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Diligence:


 


27

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Payment Obligations
(Section 7):


 


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


 


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


 


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


 


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


 


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


 


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


 


28

















 


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

  	
  $[***]

  
	
    Dosing of
  first subject in first Phase III Clinical Trial

  	
  $[***]

  
	
    NDA
  approval in U.S. or a foreign equivalent

  	
  $[***]

  



•


 


•


 


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


 


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


 


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


 


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


 


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


 


Non-Use of Names (Section
12.2):


 


•              The Licensees will not identify
Stanford in any promotional statement, or otherwise use the name of any
Stanford faculty member, employee, or student, or any trademark, service mark,
trade name, or symbol of Stanford or its affiliated hospitals and clinics,
including the Stanford name, unless Stanford has given its prior written
consent or as required by law, rule or regulation. Permission may be withheld
at Stanford’s sole discretion.


 


Prosecution and
Enforcement (Section 13):


 


•              Subject to Stanford’s approval,
Isis will coordinate and be responsible for preparing, filing, prosecuting and
maintaining the Licensed Patents in Stanford’s name. The parties shall 


 


29

















 


work together to develop a prosecution strategy and decide in which
countries the Licensed Patents will be filed.


 


•              Isis will


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


•              If one and only one Licensee
decides to abandon ongoing prosecution and/or maintenance of any of the
Licensed Patents, on a country-by-country and Licensed Patent-by-Licensed
Patent basis, the continuing Licensee will pay 100% of the ongoing expenses for
such Licensed Patent. Stanford shall have the right to continue payment for
such Licensed Patent in its own discretion and at its own expense if both
Licensees decide to abandon ongoing prosecution and/or maintenance of the
Licensed Patents. If Stanford decides to maintain such Licensed Patent, the
license with respect to such Licensed Patent in such country under this
Agreement shall terminate with respect to the ceasing Licensee(s). Cessation of
payment by one Licensee as to a Licensed Patent will not affect the rights of
the other Licensee with respect to such Licensed Patent. If Isis is the
Licensee wishing to cease payment of a Licensed Patent, the responsibility for
the prosecution of such Licensed Patent will transfer to Stanford.


 


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


 


30

















 


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


 


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


 


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


 


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


 


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


 


Term and Termination
(Section 14, 18.1):


 


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


 


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


 


31

















 


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


 


Assignment (Section 15):


 


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


 


Definitions:


 


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


(A)
diagnostics;  and


(B)
commercialization of reagents.


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


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


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


 


32
















 


GARCHING (Co-Exclusive)


 


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


 


Brief Summary of Technology Covered by License:


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


 


Scope of License (Section 2.1):


 


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


 


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


 


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


 


Sublicensing (Section 2.2):


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


 


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


 


•                                          Each
sublicense granted under this Agreement shall be subject and subordinate to,
and consistent with, the terms and conditions of this Agreement. Alnylam or
ISIS, as applicable, shall be liable that any subsequent sublicenses granted by
the Sublicensees are subject and subordinate to, and consistent with, the terms
and conditions of this Agreement. In the event of a material default by any
sublicensee under an Isis or Alnylam sublicense, the applicable party will
inform GI and take commercially reasonable efforts to cause the sublicensee to
cure the default or will terminate the sublicense. (Section 4.6)


 


33

















 


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


 


Diligence (Section 4):


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


 


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


 


Financial Obligations (Section 5):


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


 


	
  Milestone Event

  	
  Milestone
  Payment 

  
	
  First Initiation of
  Phase I Clinical Study

  	
  $[***]

  
	
  First Initiation of
  Phase II Clinical Study

  	
   $[***]

  
	
  First Initiation of
  Phase III Clinical Study

  	
   $[***]

  
	
  Regulatory Approval in
  USA, Japan or Europe

  	
   $[***]

  



 


Each of the above milestone payment is due from the
Party that is engaged in the development and commercialization of such Licensed
Product.


For each Licensed Product, milestone payments will
only be due the first time such Licensed Product achieves such milestone. A
Licensed Product will be considered the same Licensed Product as long as it has
not been modified in such a way (unless as the result of stabilizing,
formulation or delivery technology) that would require the filing of a
different IND for such Licensed Product.


•                                          Royalties
(Section 5.3):


 


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


 


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


 


•                                          Between
$[***] US Dollars and $[***] US Dollars     [***]%


 


•                                          Between
$[***] US Dollars and $[***] US Dollars     [***]%


 


34

















 


•                                          Greater
than $[***] US Dollars                                                [***]%


 


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


 


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


 


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


 


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


 


•                                          Sublicense
Revenues (Section 5.5):


 


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


 


•                                          Subject
to Section 5.5(d), in the event that Alnylam or ISIS grant a sublicense to a
Third Party pursuant to Section 2.2 (a) in connection with a Drug Discovery
Collaboration or Development Collaboration, Alnylam or ISIS, as applicable,
shall pay to GI the following percentages of their respective Sublicense
Consideration received, due within 30 days after receipt:


 


	
  •                                          Sublicense
  granted

  	
   

  	
  Percentage due to GI

  
	
   

  	
   

  	
   

  
	
  •                                          Up
  to, but not including, filing of an IND:

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •                                          After
  filing of an IND

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •                                          After
  initiation of Phase II Clinical Study

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •                                          After
  initiation of Phase III Clinical Study

  	
   

  	
  [***]%

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  •                                          After
  filing of a NDA

  	
   

  	
  [***]%

  



 


35

















 


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


 


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


 


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


 


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


 


Prosecution and Enforcement (Section 6):


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


 


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


 


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


 


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


 


•                                          Enforcement
(Section 6.3):


 


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


 


36

















 


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


 


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


 


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


 


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


 


Term and Termination (Section 9):


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


 


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


 


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


 


•                                          If
any license granted to Alnylam or ISIS under this Agreement is terminated, any
sublicense under such license granted prior to termination of said license
shall remain in full 


 


37

















 


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


 


Non-Use of Names (Section 4.5):


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


 


Assignment (Section 10.4):


•                                          Neither
this Agreement no any rights or obligations may be assigned or otherwise
transferred by Alnylam or ISIS to a Third Party without the prior written
consent of GI. Notwithstanding the foregoing, Alnylam and ISIS each may assign
this Agreement to a Third Party in connection with the merger, consolidation,
or sale of all or substantially all of their assets or that portion of their
business to which this Agreement relates; provided, however, that this
Agreement shall immediately terminate if the proposed Third Party assignee
fails to agree in writing to be bound by the terms and conditions of this
Agreement on or before the effective date of assignment. After the effective
date of assignment, the Third Party assignee shall provide GI, upon GI’s
request, with written reports in reasonable detail on the actual and intended
future activities of the Third Party assignee to develop and commercialize
Licensed Products. If the Third Party assignee does not maintain a program to
develop and commercialize Licensed Products that is substantially similar or
greater in scope to the program of Alnylam or ISIS after the effective date of
assignment, then GI has the right to limit the scope of the co-exclusive
license granted under this Agreement to such Licensed Products actually covered
by the program of the Third Party assignee.


 


Definitions:


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


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


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


“Field” means use of Licensed Products


 


38

















 


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


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


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


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


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


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


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


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


 


39

















 


MIT


 


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


Brief Summary of
Technology Covered by License:


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


 


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


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


 


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


 


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


 


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


 


Restrictions on Sublicensing by Alnylam (Sections 2.1 and 2.3)


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


 


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


 


40

















 


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


 


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


 


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


 


Diligence and Reporting (Sections 3.1 and 3.2)


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


•                                          If
Alnylam anticipates a failure to meet an obligation set forth in Section
3.1(c), (d), (e), (f) or (g) above will occur, Alnylam will promptly advise
MIT, and representatives of each party 


 


41

















 


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


 


Financial Obligations (Section 4.1)


License Maintenance Fees:


 


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


 




	
  Each January 1st for 2008 and 2009

  	
  $[***]

  
	
  Each January 1st for 2010 and 2011

  	
  $[***]

  
	
  Each January 1st for 2012 and 2013

  	
  $[***]

  
	
  Each January 1st for 2014 and 2015

  	
  $[***]

  
	
  Each January 1st of every year
  thereafter

  	
  $[***]

  






 


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


 


Royalty Payments:


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


 


•                                          If
Alnylam or an Affiliate is legally required to pay royalties to one or more
third parties in order to obtain a license or similar right necessary to
practice the Patent Rights, Alnylam will be entitled to credit up to [***]% of
the amounts payable to such third parties against the royalties due to MIT for
the same reporting period; provided, however, that (i) in no event will the
running royalties due to MIT, when aggregated with any other offsets and credits
allowed under the MIT Agreement, be less than [***]% of Net Sales in any
reporting period, and (ii) royalties due to third parties with respect to [***]
patents (see Appendix B to MIT Agreement) will not qualify for purposes
of the foregoing offset against royalties.


 


Milestone Payments:


•                                          Alnylam
will pay MIT the amounts set forth below upon achievement by Alnylam or any of
its Affiliates or Sublicensees of certain milestone events as set forth below. Payments
will be due in respect of the achievement of such milestone events for each
first Licensed Product containing an miRNA Therapeutic(s) and/or an siRNA
Therapeutic(s) towards a specific Target or a specific combination of Targets;
provided, however, that if in the course of development a given Licensed
Product is discontinued and replaced with a different Licensed Product for the
same therapeutic indication containing an miRNA Therapeutic(s) and/or an siRNA
Therapeutic(s) towards at least one Target that was also a Target of the
discontinued Licensed 


 


42

















 


Product, milestone payments already paid for the discontinued Licensed
Product will not be due for achievement of the same milestone event(s) by the
substituted Licensed Product. 


 


	
  Milestone Event

   

  	
  Payment

  
	
  Filing of an Investigational New Drug Application
  (or equivalent)

   

  	
  $[***]

  
	
  Dosing of first patient in a Phase 2 clinical trial
  (or equivalent)

   

  	
  $[***]

  
	
  Dosing of first patient in a Phase 3 clinical trial
  (or equivalent)

   

  	
  $[***]

  
	
  First Commercial Sale 

   

  	
  $[***]

  



 


 


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


 


	
  Milestone Event

   

  	
  Payment

  
	
  Filing of Investigational New Drug Application (or
  equivalent)

   

  	
  $[***]

  
	
  Dosing of first patient in a Phase 2 clinical trial
  (or equivalent)

   

  	
  $[***]

  
	
  Dosing of first patient in a Phase 3 clinical trial
  (or equivalent)

   

  	
  $[***]

  
	
  First Commercial Sale 

   

  	
  $[***]

  



 


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


 


Sublicense Income:


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


 


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


 


43

















 


the patent rights listed in Appendix B, then any sharing of
Sublicense Income will fall under clause (b) below); and


 


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


 


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


 


Reports (Sections 5.1 and 5.2)


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


44

















 


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


 


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


 


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


 


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


 


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


 


Recordkeeping and Audit Rights (Section 5.4)


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


 


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


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


 


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


 


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


 


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


 


•                                          So
long as Alnylam remains the exclusive licensee of the Patent Rights in the
Field, Alnylam will have the sole right to sublicense any alleged infringer in
the Field for future use of the Patent Rights in accordance with Alnylam’s
rights under and the terms and conditions of this 


 


45

















 


Agreement. Any upfront fees as part of such sublicense will be shared
equally between Alnylam and MIT; other revenues to Alnylam pursuant to such
sublicense will be treated as set forth in Article 4 of the MIT Agreement.


 


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


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


 


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


 


Certain Termination Rights (Sections 12.1, 12.2 and 12.4)


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


 


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


 


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


 


Definitions


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


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


“Field” means therapeutic use in humans.


“Immunomodulatory Nucleic Acid” means a nucleic acid molecule
that (i) stimulates or blocks immune system functions, and (ii) the nucleotide
sequence of which does not specifically target 


 


46

















 


and modulate gene
expression. Immunomodulatory Nucleic Acid specifically excludes siRNA, miRNA
and nucleic acids that function through an RNA interference mechanism.


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


“Library Product”
means any product that, in whole or in part: (i) absent the license granted
hereunder, would infringe one or more Valid Claims of the Patent Rights; or
(ii) is manufactured by using a Licensed Process or that, when used,
practices a Licensed Process.


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


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


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


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


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


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


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


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


“RNAi Product”
means a product containing one or more siRNA Therapeutics and/or miRNA
Therapeutics towards one or more Targets. For the avoidance of doubt, RNAi
Product specifically includes siRNA Therapeutics and miRNA Therapeutics in
association with other molecules which are not therapeutically or
pharmaceutically active, but which function to 


 


47

















 


improve delivery to cells, including, without limitation, siRNA and
miRNA Therapeutics which are covalently linked to, or otherwise associated
with, lipids, carbohydrates, peptides, proteins, aptamers and Small Molecules.


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


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


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


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


o                 royalties
on Net Sales;


 


o                 minimum
royalty upfront payments only to the extent such payments equal actual
royalties due to Alnylam;


 


o                 fair
market value of equity investments in Alnylam or an Affiliate by a Sublicensee;


 


o                 reimbursement
of out of pocket patent expenses for the Patent Rights;


 


o                 Research
Support Payments;


 


o                 loan
proceeds paid to Alnylam by a Sublicensee in an arms length, full recourse debt
financing; and


 


o                 any
amounts received under an indemnification obligation.


 


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


 


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


 


48

















 


genome will be regarded as a single gene, and that the DNA sequence
encoding a specific miRNA precursor will also be regarded as a single gene.


 


49

















 


TEKMIRA/UBC


 


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


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


Limitations on Scope of License (Sections 3.1 and 3.3)


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


 


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


 


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


 


Restrictions on Sublicensing by Alnylam (Sections 3.2 and 4.2)


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


 


•                                          Alnylam
may grant sublicenses to third parties with respect to the Technology only upon
written notice to Tekmira and the University, and provided  that
the Sublicensee agrees (i) to perform the terms of the UBC Sublicense Agreement
as if such Sublicensee were Alnylam under the UBC Sublicense Agreement; (ii) to
represent that Sublicensee is not, as of the effective date of the relevant
sublicense agreement, engaged in a dispute with the University; and (iii) to be
subject to a written sublicense agreement that contains terms consistent with “the
terms of this Agreement” described in Section 4.2(c) of the UBC Sublicense
Agreement (see below) and that provides that the University is a third party
beneficiary of, and has the right to enforce directly against the sublicensee,
the terms in such sublicense agreement that are consistent with the terms
listed in Section 4.2(c)(ii) of the UBC Sublicense Agreement.


 


•                                          Section
4.2(c)(ii) of the UBC Sublicense Agreement states that the “terms of this
Agreement” means (i) the terms set forth in the UBC Sublicense Agreement; (ii)
terms in such 


 


50

















 


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


 


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


 


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


 


Financial Obligations (Section 5.0)


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


 


Prosecution and Enforcement (Section 7.7)


•                                          Tekmira will have the right, with
reasonable input from Alnylam, to identify any process, use or products arising
out of the Technology that may be patentable and will take all reasonable steps
to apply for a patent in the name of the University, provided that Tekmira pays
all costs of applying for, registering, and maintaining the patent in those
jurisdictions in which Tekmira determines that a Patent is required.


 


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


 


•                                          Should Tekmira:


 


51

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Diligence and Reporting (Section 10.2)


 


52

















 


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


 


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


 


Certain Termination Rights (Section 16.1)


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


 


Definitions


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


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


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


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


“Improvements” means, generally (i) any and all patents and any
and all patent applications that claim priority to Patents; and (ii) any and
all inventions arising therefrom. Notwithstanding anything to the contrary in
the University License Agreement, ownership of all Improvements (A) that fall
within clause (i) above will be assigned to the University; and (B) that fall
within clause (ii) above will follow inventorship as determined by U.S. patent
law, except that the University will own all Improvements made by its
employees, whether alone or jointly with Tekmira, under the 1999 CRA or 2007
CRA.


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


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


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


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


“Technology” means the Patent(s) and any and all knowledge,
know-how and/or technique or techniques invented, developed and/or acquired,
being invented, developed and/or acquired by the University solely or jointly
with Tekmira relating to the Patent(s), including, without 


 


53

















 


limitation, all research, data, specifications, instructions, manuals,
papers or other materials of any nature whatsoever, whether written or
otherwise, relating to same.


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


 


54