**Exhibit****10.78**

** **

Portionsof this document have been redacted pursuant to a confidential treatmentrequest and filed separately with the Securities and Exchange Commission.  Redaction portions are marked with “*****.”

 

**COLLABORATION AND LICENSE AGREEMENT**

 

This Collaboration and License Agreement (the “Agreement”)between ISIS PHARMACEUTICALS, INC. of 2292 Faraday Avenue, Carlsbad, CA 92008,USA (“Isis”) and ERCOLE BIOTECH, INC., of 202 Glenview Place, Chapel Hill, NC27514 (“Ercole”) is entered into and made effective this 16th day of May, 2003(the “Effective Date”).

 

**INTRODUCTION AND OVERVIEW**

 

*Cross License*

 

Isis and Ercole each possess Patents related to RNASplicing.  Each Party wishes to crosslicense its Patents related to RNA Splicing to the other Party in exchange fora license to the other Party’s RNA Splicing Patents.

 

Each Party will choose a fixed pool of exclusive GeneTargets for their research and development efforts and will receive anexclusive license to use the other Party’s RNA Splicing Patents to discover anddevelop Products that modulate such exclusive Gene Targets (either “ErcoleExclusive Products” or “Isis Exclusive Products,” each as further definedbelow). In exchange for these exclusive licenses, each Party will pay royaltiesand milestones on their respective Exclusive Products.

 

Any Gene Target that is not exclusively reserved by aParty will be referred to as a “Nonexclusive Target” (as further definedbelow). Each Party may also use the other Party’s RNA Splicing Patents todiscover or develop Products that modulate a Nonexclusive Target (“NonexclusiveProducts” as further defined below) on a non-exclusive basis (as furtherdescribed below).

 

*Collaboration*

 

The Parties also wish to collaborate in the areas ofdrug discovery, medicinal chemistry and antisense, as further described belowand in the Research Plan.

 

At Ercole’s request and on Ercole’s behalf, Isis willdiscover 2’-MOE modified Splicing Modulators (“MOE Products,” as furtherdefined below) that modulate the Ercole Exclusive Targets. For each MOEProduct, Isis will grant Ercole a non-exclusive license to Isis’ MOE Patents inexchange for an additional royalty.

 

In addition, Isis will grant Ercole an exclusivelicense to use the PNA Patents to discover, research, develop and commercializeErcole Exclusive Products for a license fee and additional royalties andmilestones (as further described below).

 

Isis will collaborate with Ercole to discover SplicingModulators that modulate the Gene Target Bcl-x and will grant Ercole anexclusive license to Isis’ Bcl-x Patents in exchange for an additional royaltyfor each Bcl-x Product.  Bcl-x will countas an Ercole Exclusive Target and Bcl-x Products will be considered ErcoleExclusive Products.

 

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As part of the collaboration, Ercole will, among otherthings, develop the MOE Products and PNA Products, evaluate medicinalchemistries and will test certain Splicing Modulators (as further describedbelow and in the Research Plan).

 

Capitalized terms used in this Agreement have themeanings set forth in Exhibit 1.

 

**AGREEMENT**

 

**ARTICLE 1**COLLABORATIVE RESEARCH PLAN

** **

**1.1****                              ****General; Collaboration Term.**

 

(a)                                  Ercole andIsis will work together under the Research Plan to develop SplicingModulators.  At Ercole’s request, Isiswill discover and design Splicing Modulators to modulate the Ercole ExclusiveTargets as further provided for in the Research Plan.

 

(b)                                 TheCollaboration Term will begin on the Effective Date and will continue for 3years unless earlier terminated due to termination of the Agreement underSections 8.2 or 8.3, or unless terminated or extended upon mutual agreement ofthe Parties.

 

**1.2****                              ****Targets: General.**

 

Ercole and Isis will each select exclusive GeneTargets for their research and development efforts (the “Isis Exclusive Targets”or the “Ercole Exclusive Targets”).  Exhibit 2hereto will contain a list of the initial Isis Exclusive Targets and ErcoleExclusive Targets. Gene Targets may be added to and removed from Exhibit 2in accordance with the terms of this Section and Section 1.3.

 

**1.3****                              ****Targets: Number of, Designation, Approval and Replacement.**

 

(a)                                  Number ofExclusive Targets. As noted above, Exhibit 2 will list the initial Isis ExclusiveTargets and Ercole Exclusive Targets agreed upon by the Parties. Isis will beable to designate twenty (20) Gene Targets as Isis Exclusive Targets at anytime and Ercole will be able to designate twenty (20) Gene Targets as ErcoleExclusive Targets at any time; *provided, however*,that each Party may increase its respective Gene Target limit beyond theinitial twenty (20) Gene Targets by paying the other Party ***** per eachadditional Gene Target.  Promptly afterthe Effective Date the Parties will meet to select their initial ExclusiveTargets.

 

(b)                                 ExclusiveTarget Designation. The Parties will designate their respective Exclusive Targets asfollows:

 

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(i)                                    TargetRequest.  The Party who wishesto designate a new Gene Target as one of its Exclusive Targets (the “RequestingParty”) will provide the other Party (the “Reviewing Party”) with writtennotice (the “Request Notice”) of the Gene Target it wishes to designate as anExclusive Target (the “Proposed Exclusive Target”). The Request Notice willinclude the gene name and the NCBI accession number or nucleic acid sequencefor the Proposed Exclusive Target.

 

(ii)                                 TargetReview.  Within thirty (30)days of receiving the Request Notice, the Reviewing Party will notify theRequesting Party in good faith and in writing regarding (a) whether theProposed Exclusive Target is subject to the Reviewing Party’s own ActiveProgram and (b) the nature of any contractual obligations to a Third Partyin effect at the time of the Request Notice that would preclude the ReviewingParty from granting a license under Section 2 or collaborating with theRequesting Party with respect to the Proposed Exclusive Target (the “ReviewNotice”).

 

(iii)                              TargetRejection due to Active Program. If the Proposed Exclusive Target is subject to the Reviewing Party’s ownActive Program, the Proposed Exclusive Target will be rejected and will notbecome an Exclusive Target of the Requesting Party. Rejected Proposed ExclusiveTargets will remain Nonexclusive Gene Targets. Subject to subsection (iv) below,if the Proposed Exclusive Target is not rejected under this subsection (iii),the Proposed Exclusive Target will become an Exclusive Target of the RequestingParty and will be added to the Requesting Party’s list of Exclusive Targets on Exhibit 2.

 

(iv)                             TargetAcceptance; Limitations. If the Proposed Exclusive Target is subject to contractual limitationsas identified in the Review Notice under Section 1.3(b)(ii), then withinfifteen (15) days of receiving the Review Notice, the Requesting Party mustnotify the Reviewing Party whether or not it accepts the Proposed ExclusiveTarget subject to the contractual limitations set forth in the Review Notice.If the Requesting Party accepts the Proposed Exclusive Target, then theaccepted Proposed Exclusive Target will become an Exclusive Target of theRequesting Party and will be added to the Requesting Party’s list of ExclusiveTargets on Exhibit 2; *provided, however*that, with respect to such accepted Exclusive Target, the licenses grantedunder Section 2 below will be limited as described in the Review Notice.

 

(v)                                TargetRejection = Request. If the Reviewing Party rejects a Proposed Exclusive Target, suchrejection will constitute a Request 

 

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Notice by the Reviewing Party forsuch Proposed Exclusive Target that will then be processed according to this Section 1.3(b).

 

(c)                                  Exclusive TargetRemoval.  After the EffectiveDate, a Party may remove Gene Targets from its list of Exclusive Targets on Exhibit 2,by (i) providing the other Party written notice of its election to do soand (ii) updating the list on Exhibit 2 to remove the Gene Target; *provided, however*, that each Party may only remove up tofive (5) Gene Targets from its list of Exclusive Targets in any six monthperiod. In addition, once a Party removes a Gene Target from its list ofExclusive Targets, such Party cannot attempt to re-designate the removed GeneTarget as an Exclusive Target until two years have passed from the date suchGene Target was removed. Any Exclusive Target removed under this section willbecome a Nonexclusive Target.

 

**1.4****                              ****Collaborative Research Plan.**

 

(a)                                  GeneralOverview.  Upon Ercole’srequest, Isis will identify Splicing Modulators that modulate the splicing ofErcole Exclusive Targets as more specifically described in the Research Plan.The ownership and use of all materials, including Splicing Modulators, and ofall data and information generated as a result of identifying such SplicingModulators or as otherwise provided to Ercole by Isis pursuant to thisAgreement, is governed by the Research Plan. The Parties will collaboratetogether as more specifically described in the Research Plan.

 

**ARTICLE 2**LICENSE GRANTS AND OTHER RIGHTS

** **

**2.1****                              ****License Term.** As used herein, “License Term” means the term beginning on the EffectiveDate and continuing, on a Product-by-Product and country-by-country basis, forthe life of the Patent rights upon which such Product is based on or utilizesin such country.

 

**2.2****                              ****Isis License Grants.** Subject to the limitations set forth in Section 1.3(b)(iv) andtermination provisions set forth in Sections 2.2(b) below, Isis grants Ercolethe following licenses:

 

(a)                                  LicenseGrants.

 

(i)                                    Isis grantsErcole an exclusive worldwide license to the Isis Splicing Patents solely toresearch, develop, make and have made, offer for sale, sell, import and exportErcole Exclusive Products.

 

(ii)                                 Isis grantsErcole a non-exclusive worldwide license to the Isis Splicing Patents solely toresearch, develop, make and have made, offer for sale, sell, import and exportErcole Nonexclusive Products.

 

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(iii)                              Isis grantsErcole a non-exclusive worldwide license to the MOE Patents solely to develop,make and have made, offer for sale, sell, import and export MOE Products.

 

(iv)                             Isis grantsErcole an exclusive worldwide license to the Bcl-x Patents solely to research,develop, make and have made, offer for sale, sell, import and export ErcoleExclusive Products.

 

(v)                                Isis grantsErcole an exclusive worldwide license to the PNA Patents solely to develop,make and have made, offer for sale, sell, import and export PNA Products.

 

(vi)                             Isis grantsErcole an exclusive worldwide license to the Jointly Owned Invention Patents(as defined in Section 4.1) solely to research, develop, make and havemade, offer for sale, sell, import and export Ercole Exclusive Products.

 

(b)                                 Terminationof Licenses.

 

(i)                                    Upon writtennotice to Ercole, Isis may terminate the licenses granted under Subsections(i), (iii), (iv), (v) and (vi) of this Section 2.2(a) withrespect to any Ercole Exclusive Target for which Ercole has discovered aSplicing Modulator (either on its own or with Isis as part of the ResearchPlan) if Isis provides Ercole with written notice that Isis believes suchErcole Exclusive Target is not part of an Active Program and Ercole does notmake such Ercole Exclusive Target part of an Active program within 12 monthsfollowing receipt of such notice.

 

(ii)                                 Upon writtennotice to Ercole, Isis may terminate the licenses granted under Subsections(i), (iii), (iv), (v) and (vi) of this Section 2.2 with respectto any Bcl-x Products if Bcl-x does not continue to be an Ercole ExclusiveTarget.

 

(iii)                              Upon writtennotice to Ercole, Isis may terminate the licenses granted under Subsections(i), (iii), (iv), (v) and (vi) of this Section 2.2 with respectto Bcl-x Products if a Bcl-x Product does not meet the Bcl-x Milestones. For clarification,so long as any Ercole Bcl-x Product meets the Bcl-x Milestones, Isis cannotinvoke this Section 2.2(b)(iii) to terminate the licenses grantedunder subsections (i), (iii), (iv), (v) and (vi) of Section 2.2(a).

 

(iv)                             The licenseto the PNA Patents granted under Section 2.2(v) will terminate withrespect to each Ercole Exclusive Target (including each Ercole ExclusiveProduct that modulates such Ercole Exclusive Target) unless Ercole pays Isis a *****license fee for each such Ercole Exclusive Target before the two-yearanniversary of the date upon which Ercole Initiates Phase I Trials 

 

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(either on its own or with anotherparty) for a compound that modulates such Ercole Exclusive Target.

 

**2.3****                              ****Sublicenses Under Isis Patent Rights and Third Party Patent Rights.**

 

(a)                                 Subject tothe terms and conditions of this Agreement and during the License Term, Ercolewill have the right to grant sublicenses under the licenses from Isis set forthin Section 2.1 to Third Parties as follows:

 

(i)                                    Ercole maygrant a sublicense to a Third Party collaborator under the Bcl-x Patents solelyfor the purpose of enabling such Third Party collaborator to develop andcommercialize a Bcl-x Product.

 

(ii)                                 Ercole maygrant a sublicense to a Third Party collaborator under the MOE Patents solelyfor the purpose of enabling such Third Party to develop and commercialize MOEProducts.

 

(iii)                              Ercole maygrant a sublicense to a Third Party under the Isis Splicing Patents solely forthe purposes of

 

(1)                                 Enablingsuch Third Party to discover, develop and commercialize Ercole ExclusiveProducts; and

 

(2)                                 Enablingsuch Third Party to conduct pre-clinical research (which specifically excludesclinical development or commercialization) on Ercole Nonexclusive Products.

 

(iv)                             Ercole maygrant a sublicense to a Third Party collaborator under the PNA Patents solelyfor the purpose of enabling such Third Party to develop and commercialize PNAProducts.

 

(b)                                 Anysublicense granted by Ercole under this Agreement is subject to and will beconsistent with the terms and conditions of this Agreement. The grant of anysuch sublicense hereunder will not relieve Ercole of its obligations under thisAgreement. Ercole will promptly notify Isis of all sublicenses granted byErcole, as well as sublicensee contact information.

 

(c)                                  In the eventof a material default by any sublicensee under an Ercole sublicense, Ercolewill inform Isis and take commercially reasonable efforts to cause thesublicensee to cure the default or will terminate the Ercole sublicense.

 

**2.4****                              ****Ercole License Grants.** Subject to the limitation set forth in Section 1.3(b)(iv), Ercolegrants Isis the following licenses:

 

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(a)                                  LicenseGrants.

 

(i)                                    Ercolegrants to Isis an exclusive worldwide license to the Ercole Splicing Patentssolely to research, develop, make and have made, offer for sale, sell, importand export Isis Exclusive Products.

 

(ii)                                 Ercolegrants to Isis a nonexclusive worldwide license to the Ercole Splicing Patentssolely to research, develop, make and have made, offer for sale, sell, importand export Isis Nonexclusive Products.

 

(iii)                              Ercolegrants Isis an exclusive worldwide license to the Jointly Owned InventionPatents (as defined in Section 4.1) solely to research, develop, make andhave made, offer for sale, sell, import and export Isis Exclusive Products.

 

(iv)                             Ercolegrants to Isis a worldwide license to any Sponsored Inventions solely toresearch, develop, make and have made, offer for sale, sell, import and exportIsis Products. With respect to Isis Exclusive Products this license will beexclusive and with respect to Isis Nonexclusive Products this license will benonexclusive. Ercole will secure the right to license to Isis any SponsoredInventions on terms that are substantially similar to those set forth in the UNCLicense Agreement.

 

In the event Ercole does not wish to license anySponsored Invention from UNC, then Ercole will provide written notice to Isisincluding UNC’s proposed terms to license such Sponsored Invention and Ercole’sdecision not to license such Sponsored Invention (a “UNC Rejection Notice”).Thereafter, Isis will have 30 days from the date it receives the UNCRejection Notice to notify Ercole that Isis wishes Ercole to secure a licenseto such Sponsored Invention on the terms proposed by UNC (an “Isis UNCAcceptance Notice”). If Isis does not respond to Ercole within such 30 dayperiod, Ercole may waive its right to license such Sponsored Invention. If Isisdoes provide Ercole an Isis UNC Acceptance Notice within such 30 day period,Ercole will use all reasonable efforts to secure a license to such SponsoredInvention on the terms outlined in the UNC Rejection Notice, solely for thebenefit of Isis and its sublicensees (and not for the benefit of Ercole or anyof its Third Party sublicensees) and Isis will be responsible for paying anylicense fees, milestones and royalties arising from such license.

 

**2.5****                              ****Sublicenses Under Ercole Patent Rights and Third Party Patent Rights.**

 

(a)                                  Anysublicense granted by Isis under this Agreement is subject to and will beconsistent with the terms and conditions of this Agreement. The grant of anysuch sublicense hereunder will not relieve Isis of its obligations under thisAgreement.

 

(b)                                 Subject tothe terms and conditions of this Agreement and during the License Term, Isismay grant a sublicense to a Third Party collaborator under the Ercole SplicingPatents solely for the purpose of:

 

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(i)                                    Enablingsuch Third Party to discover, develop and commercialize Isis ExclusiveProducts; and

 

(ii)                                 Enablingsuch Third Party to conduct pre-clinical research (which specifically excludesclinical development or commercialization) on Isis Nonexclusive Products.

 

(c)                                  Anysublicense granted by Isis under this Agreement is subject to and will beconsistent with the terms and conditions of this Agreement. The grant of anysuch sublicense hereunder will not relieve Isis of its obligations under thisAgreement. Isis will promptly notify Ercole of all sublicenses granted by Isis,as well as sublicensee contact information. In the event of a material defaultby any sublicensee under an Isis sublicense, Isis will inform Ercole and takecommercially reasonable efforts to cause the sublicensee to cure the default orIsis will terminate the sublicense.

 

(d)                                 Isisacknowledges that the license grants by Ercole hereunder are subject to theterms and conditions of that certain License Agreement with UNC, as amended,(the “UNC License Agreement”) a copy of which is attached as Appendix 1. Ercoleagrees not to amend such agreement in a manner that would adversely affect therights of Isis hereunder and further agrees to use commercially reasonableefforts not to breach such agreement.

 

**2.6****                              ****Effect of Termination of Isis Licenses.**

 

Upon termination of any license granted to Ercoleunder Section 2.2, Ercole will promptly return to Isis all quantities ofSplicing Modulators that (a) are Covered by the terminated license, (b) wereprovided by Isis under this Agreement, and (c) have not been used. Inaddition, Ercole will promptly provide to Isis all information and materialsrelating to a Jointly Owned Invention under Section 4.1 that was Coveredby the terminated license.

 

In addition, if the license to the Bcl-x Patentsgranted under Section 2.2(a)(iv) is terminated, Ercole will promptlyprovide to Isis all information and materials related to Ercole Bcl-x Productsand will grant Isis a royalty free, perpetual, exclusive license to use suchinformation and materials.

 

Upon the termination of any license granted to Isisunder Section 2.3, Isis will promptly provide to Ercole all informationand materials relating to a Jointly Owned Invention under Section 4.1 thatwas Covered by the terminated license.

 

**2.7****                              ****Right of First Negotiation.**

 

(a)                                 During theterm of this Agreement, Isis will have a right of first negotiation forlicensing of any Ercole MOE Products or any Ercole PNA Products, other thanthose Ercole Products arising specifically from research programs at least 50%of the cost of which was specifically funded by Third Parties.

 

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(b)                                 Under Isis’right of first negotiation, Ercole will provide written notice to Isis ifErcole elects to offer to license to a Third Party (other than a license for adrug candidate arising from research programs at least 50% of the cost of whichwas specifically funded by Third Parties) the right to develop andcommercialize an Ercole MOE Product or an Ercole PNA Product. Such notice willinclude all information possessed and disclosable by Ercole that supports thedevelopment of such Ercole Product and is reasonably necessary for Isis toassess the commercial potential of such Ercole Product. Within 60 days ofreceipt of such notice, Isis will provide written notice to Ercole indicatingwhether it is interested in negotiating with Ercole to obtain the rights todevelop and commercialize such Ercole Product.

 

(c)                                  If Isisfails to respond to Ercole’s notification within 30 days or indicates thatit is not interested in developing and commercializing such Ercole Product withErcole, Ercole will thereafter be free to conclude an agreement with one ormore Third Parties regarding the development and commercialization of suchErcole Product.

 

(d)                                 If Isistimely indicates its interest in obtaining such rights to develop andcommercialize such Ercole Product with Ercole, the Parties will negotiate ingood faith the terms of a separate development and commercialization agreement,which terms will be commercially reasonable, during the period up to120 days following Ercole’s receipt of Isis’ notice. If the Parties areunable to execute such an agreement within such time period, despite good faithnegotiations by each Party, Ercole will be free to develop and commercializesuch Ercole Product with one or more Third Parties, provided that Ercole maynot enter into an agreement with a Third Party to develop and commercializesuch Ercole Product with financial terms that when taken as a whole are lessfavorable than those offered by Isis during the negotiation period.

 

**ARTICLE 3**ROYALTIES AND PAYMENTS

** **

**3.1****                              ****Royalties Payable to Isis by Ercole on Sales of Products by Ercole.**

 

Subject to the terms and conditions of, and during theterm of, this Agreement, Ercole will pay to Isis royalties on sales of Productsby Ercole, its Affiliates or sublicensees, according to the terms set forthbelow.

 

(a)                                  ErcoleExclusive Products. The royalty payable to Isis by Ercole for sales by Ercole, itsAffiliates or sublicensees of any Ercole Exclusive Products that are not PNAProducts or MOE Products is ***** of Net Sales for so long as there are issuedand unexpired claims within the Isis Splicing Patents or any Jointly OwnedInvention Patents that Cover such Ercole 

 

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Exclusive Product. The royalty underthis Section 3.1(a) will also apply to any Ercole NonexclusiveProduct that modulates a Gene Target that was once an Ercole Exclusive Target.

 

(b)                                 MOE Products. Theroyalty payable to Isis by Ercole for sales of any MOE Product by Ercole, itsAffiliates or sublicensees is ***** of Net Sales for so long as there areissued and unexpired claims within the MOE Patents that Cover such MOE Product.Thereafter, the royalty payable to Isis by Ercole for sales of any MOE Productby Ercole, its Affiliates or sublicensees is ***** of Net Sales for so long asthere are issued and unexpired claims within the Isis Splicing Patents or anyJointly Owned Invention Patents that Cover such MOE Product.

 

(c)                                  PNA Products.  The royalty payable to Isis by Ercole forsales of any PNA Products by Ercole, its Affiliates or sublicensees is ***** ofNet Sales for so long as there are issued and unexpired claims within the PNAPatents that Cover such PNA Product. Thereafter, the royalty payable to Isis byErcole for sales of any PNA Products by Ercole, its Affiliates or sublicenseesis ***** of Net Sales for so long as there are issued and unexpired claimswithin the Isis Splicing Patents or any Jointly Owned Invention Patents thatCover such PNA Products.

 

(d)                                 Bcl-XProducts. The royalty payable to Isis by Ercole for sales of anyErcole Bcl-x Product by Ercole, its Affiliates or sublicensees, is as follows:

 

(i)                                    for sales ofany Ercole Bcl-x Product (which is a PNA Product or a MOE Product) by Ercole,its Affiliates or sublicensees is ***** of Net Sales for so long as there areissued and unexpired claims within (x) the Bcl-x Patents or any JointlyOwned Invention Patents that Cover such Bcl-x Product and (y) the MOEPatents or PNA Patents that Cover such Bcl-x Product. Thereafter, the royaltypayable to Isis by Ercole for sales of such Ercole Bcl-x Product (which is a PNAProduct or a MOE Product) by Ercole, its Affiliates or sublicensees is ***** ofNet Sales for so long as there are issued and unexpired claims within the Bcl-xPatents, Isis Splicing Patents or any Jointly Owned Invention Patents thatCover such Bcl-x Product.

 

(ii)                                 for sales ofany Ercole Bcl-x Product (which is not a PNA Product or a MOE Product) byErcole, its Affiliates or sublicensees, is ***** of Net Sales for so long asthere are issued and unexpired claims within the Bcl-x Patents, Isis SplicingPatents or any Jointly Owned Invention Patents that Cover such Bcl-x Product.

 

(e)                                  No Stacking.  For the sake of clarification, the foregoingroyalties are not cumulative. Accordingly, the obligation of Ercole to pay aroyalty 

 

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hereunder with respect to the sale ofany Product by Ercole, its Affiliates or sublicensees will be limited to thesingle, highest applicable royalty under paragraph (a), (b), (c) or (d).

 

**3.2****                              ****Royalties Payable to Ercole by Isis on Sales of Products by Isis.**

 

Subject to the terms and conditions of, and during theterm of, this Agreement, Isis will pay to Ercole royalties on sales of IsisExclusive Products by Isis, its Affiliates or sublicensees, according to theterms set forth below.

 

(a)                                  The royaltypayable to Ercole by Isis for sales of any Isis Exclusive Products by Isis, itsAffiliates or sublicensees is ***** of Net Sales for so long as there areissued and unexpired claims within the Ercole Splicing Patents, any JointlyOwned Invention Patents or any Patent within the Sponsored Inventions (exceptthose Sponsored Inventions accessed by Isis under Section 2.4(a)(iv) asthe result of an Isis UNC Acceptance Notice), that Cover such Isis ExclusiveProduct. The royalty under this Section 3.2(a), will also apply to anyIsis Nonexclusive Product that modulates a Gene Target that was once an IsisExclusive Target.

 

**3.3****                              ****Development Milestones.**

 

(a)                                  ErcoleExclusive Products, MOE Products. Ercole, its Affiliates orsublicensees will pay to Isis the following milestone payments for (i) eachErcole Exclusive Product, including MOE Products, that is not a PNA Product ora Bcl-x Product and (ii) each Ercole Nonexclusive Product that modulates aGene Target that was once an Ercole Exclusive Target, within sixty (60) daysafter achievement of each of the following events in the specifiedjurisdiction, or where no jurisdiction is specified, in the first Major MarketCountry:

 
| **Milestone  Event**               | ** ** | **Milestone Payment** | ** ** |
|------------------------------------|------------|-----------------------|------------|
| Start of IND-Enabling Tox Studies  |       |                  | *****      |   |
| Filing of IND                      |       |                  | *****      |   |
| First Initiation of Phase II Trial |       |                  | *****      |   |
| US NDA Approval                    |       |                  | *****      |   |
| EC Approval                        |       |                  | *****      |   |
| Japanese Approval                  |       |                  | *****      |   |

 

(b)                                 Ercole Bcl-xProducts.  Ercole, itsAffiliates or sublicensees will pay to Isis the following milestone paymentsfor each Bcl-x Product (determined according to whether or not such Bcl-xProduct is also a PNA Product) within sixty (60) days after achievement of eachof the following events in the specified jurisdiction, or where no jurisdictionis specified, in the first Major Market Country:

 

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| **Milestone  Event**                | ** ** | **Milestone Payment if  Not a PNA Product** | ** ** | **Milestone Payment  if a PNA Product** | ** ** |
|-------------------------------------|------------|---------------------------------------------|------------|-----------------------------------------|------------|
| Start of IND-Enabling Tox Studies   |       |                                        | *****      |                                    |       | ***** |   |
| Filing of IND                       |       |                                        | *****      |                                    |       | ***** |   |
| First Initiation of Phase II Trial  |       |                                        | *****      |                                    |       | ***** |   |
| Filing NDA in US (or EC Equivalent) |       | *****                                       |       |                                    | *****      |   |
| US NDA Approval                     |       |                                        | *****      |                                    |       | ***** |   |
| EC Approval                         |       |                                        | *****      |                                    |       | ***** |   |
| Japanese Approval                   |       |                                        | *****      |                                    |       | ***** |   |

 

With respect to Bcl-X Products that are also PNAProducts, once there are no longer any issued and unexpired claims within the PNAPatents that Cover the applicable Bcl-x Product, then the ***** milestonepayment above attributable to filing an IND will be reduced to ***** and the *****payment above attributable to filing an NDA in the US (or EC equivalent) willbe eliminated. Any milestone payments that were triggered prior to suchexpiration will survive such expiration and any milestones paid prior to suchexpiration will not be refundable or creditable.

 

(c)                                  Ercole PNAProducts. Ercole, its Affiliates or sublicensees will pay to Isis thefollowing milestone payments for each PNA Product that is not a Bcl-x Productwithin sixty (60) days after achievement of each of the following events in thespecified jurisdiction, or where no jurisdiction is specified, in the firstMajor Market Country:

 
| **Milestone  Event**               | ** ** | **Milestone Payment** | ** ** |
|------------------------------------|------------|-----------------------|------------|
| Start of IND-Enabling Tox Studies  |       |                  | *****      |   |
| Filing of IND                      |       |                  | *****      |   |
| First Initiation of Phase II Trial |       |                  | *****      |   |
| US NDA Approval                    |       |                  | *****      |   |
| EC Approval                        |       |                  | *****      |   |
| Japanese Approval                  |       |                  | *****      |   |

 

With respect to PNA Products, once there are no longerany issued and unexpired claims within the PNA Patents that Cover theapplicable PNA Product, then the ***** milestone payment above attributable tofiling an IND will be reduced to ***** and the ***** payment above attributableto filing an NDA in the US (or EC equivalent) will be eliminated. Any milestonepayments that were triggered prior to such expiration will survive suchexpiration and any milestones paid prior to such expiration will not berefundable or creditable.

 

(d)                                 IsisExclusive Products. Isis, its Affiliates orsublicensees will pay to Ercole the following milestone payments for (i) eachIsis Exclusive Product and (ii) each Isis Nonexclusive Product thatmodulates a Gene Target that was once an Isis Exclusive Target within sixty(60) days after 

 

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achievement of each of the followingevents in the specified jurisdiction, or where no jurisdiction is specified, inthe first Major Market Country:

 
| **Milestone  Event**               | ** ** | **Milestone Payment** | ** ** |
|------------------------------------|------------|-----------------------|------------|
| Start of IND-Enabling Tox Studies  |       |                  | *****      |   |
| Filing of IND                      |       |                  | *****      |   |
| First Initiation of Phase II Trial |       |                  | *****      |   |
| US NDA Approval                    |       |                  | *****      |   |
| EC Approval                        |       |                  | *****      |   |
| Japanese Approval                  |       |                  | *****      |   |

 

**3.4****                              ****Commercial Success Milestones.**

 

In consideration for the collective benefit each Partyis receiving as a result of the synergies created by the collaborative natureof this Agreement, the Parties agree to pay the following milestones:

 

(a)                                  ErcoleProducts. For (i) each Ercole Exclusive Product, including MOEProducts and PNA Products and (ii) each Ercole Nonexclusive Product thatmodulates a Gene Target that was once an Ercole Exclusive Target, Ercole, itsAffiliates or sublicensees will pay to Isis a milestone payment equal to *****if such Ercole Product has Net Sales of ***** or more in any Calendar Year.Such milestone will be payable in quarterly installments of ***** over the *****years following the year in which the milestone was met. Any royalties paid toIsis under Section 3.1 for such Ercole Product will be creditable againstthis commercial success milestone.

 

(b)                                 IsisProducts. For (i) each Isis Exclusive Product and (ii) eachIsis Nonexclusive Product that modulates a Gene Target that was once an IsisExclusive Target, Isis, its Affiliates or sublicensees will pay to Ercole a milestonepayment equal to ***** if such Isis Product has Net Sales of ***** or more inany Calendar Year. Such milestone will be payable in quarterly installments of *****over the ***** years following the year in which the milestone was met. Anyroyalties paid to Ercole under Section 3.2 for such Isis Product will becreditable against this commercial success milestone.

 

**3.5****                              ****Applicability of Milestones.**

 

With respect to Ercole Products, the milestonepayments set forth in Sections 3.3 and 3.4 will only apply to the ErcoleProducts specified in such sections that when discovered, developed,manufactured or commercialized were Covered by a claim within the Isis Patentsor the Jointly Owned Invention Patents. With respect to Isis Products, themilestone payments set forth in Sections 3.3 and 3.4 will only apply to theIsis Products specified in such sections that when 

 

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discovered, developed, manufactured or commercializedwere Covered by a claim within the Ercole Splicing Patents or the Jointly OwnedInvention Patents.

 

**3.6****                              ****Payment of Royalties and Milestones; Reports.**

 

Each Party will make royalty payments to the otherParty for each Product sold during a Calendar Quarter within 60 days ofthe last day of that Calendar Quarter. Each royalty payment will be accompaniedby a written report for that Calendar Quarter showing the calculation of NetSales of the Product sold by such Party, its Affiliates and its Sublicenseesworldwide during the quarterly reporting period and the calculation of theroyalties, and Milestones payable under this Agreement, all on acountry-by-country and Product-by-Product basis.

 

**3.7****                              ****Payment Modalities; Foreign Currency Conversion; Late Payment Charges.**

 

(a)                                  Payments. Allpayments by a Party under this Agreement will be made in United States Dollarsby bank wire transfer in next day available funds to such bank account in theUnited States designated in writing by Ercole or Isis, from time to time.Except as explicitly provided for in Section 3.4, all amounts payable toIsis hereunder are noncreditable and nonrefundable.

 

(b)                                 LatePayments; Collections. In the event that any payment,including royalty or milestone payments, due hereunder is not made when due,the payment will bear interest from the date due at the lesser of (i) 1.5%per month, compounded monthly, or (ii) the highest rate permitted by law; *provided, however*, that in no event will such rate exceedthe maximum legal annual interest rate. If a Party disputes in writing theamount of an invoice presented by the other Party within 30 days ofreceipt of such invoice, the late fees will only apply to the correct amount aslater determined or agreed. The payment of such interest will not limit a Partyfrom exercising any other rights it may have as a consequence of the lateness ofany payment. In addition, each Party agrees to pay all costs of collection,including reasonable attorneys’ fees, incurred by the other Party in enforcingthe payment obligations after a due date has passed under this Agreement.

 

**3.8****                              ****Audits Rights.**

 

(a)                                  Upon thewritten request of Isis or Ercole, as the case may be, and not more than oncein each Calendar Year, Isis or Ercole will permit the other Party’s independentcertified public accountant to have access during normal business hours to itsrecords as may be reasonably necessary to verify the accuracy of the royaltyreports hereunder for the current year and the preceding 2 years prior tothe date of such request. The accounting firm will disclose to the auditingParty only whether the royalty reports are correct or incorrect, the specificdetails concerning any discrepancies, and the corrected amount of Net Sales androyalty payments. No other information will be provided to the auditing Party.

 

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(b)                                 If suchaccounting firm concludes that additional royalties were owed during suchperiod, the delinquent Party will pay the additional royalties within90 days of the date such Party receives the accounting firm’s writtenreport. The fees charged by such accounting firm will be paid by the auditingParty unless the additional royalties, milestones or other payments owed by theaudited Party exceed 5% of the royalties, milestones or other payments paid forthe time period subject to the audit, in which case the audited Party will paythe reasonable fees and expenses charged by the accounting firm.

 

(c)                                  Each Partywill treat all financial information subject to review under this Section 3.7or under any sublicense agreement in accordance with the confidentialityprovisions of Article 5, and will cause its accounting firm to enter intoan acceptable confidentiality agreement obligating such firm to retain all suchfinancial information in confidence pursuant to such confidentiality agreement.

 

**3.9****                              ****Taxes.**

 

If laws, rules or regulations require withholdingof income taxes or other taxes imposed upon payments set forth in this Article 3,each Party will make such withholding payments as required and subtract suchwithholding payments from the payments set forth in this Article 3. EachParty will submit appropriate proof of payment of the withholding taxes to theother Party within a reasonable period of time.

 

**ARTICLE 4**INTELLECTUAL PROPERTY

** **

**4.1****                              ****Ownership of Inventions.**

 

(a)                                  NeitherParty hereto will be deemed by this Agreement to have been granted any licenseor other rights to the other Party’s rights in any inventions, technology,discoveries, or other proprietary property (collectively, “Inventions”)existing as of the Effective Date of this Agreement, except as expresslyprovided herein.

 

(b)                                 Except asprovided otherwise herein, each Party will solely own all Inventions that aremade (as determined by U.S. rules of inventorship) solely by employees ofor consultants to that Party under this Agreement, even if such Invention wasmade under the Research Plan. Such an Invention will be an “Isis Invention” oran “Ercole Invention,” as the case may be, and Patents claiming such Inventionswill be “Isis Invention Patents” or “Ercole Invention Patents,” respectively.

 

(c)                                  Except asprovided otherwise herein, Isis and Ercole will jointly hold title to allInventions, whether or not patentable, that are made (as determined by the U.S.rules of inventorship) jointly by employees of or Consultants 

 

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to Isis and Ercole, as well as toPatents filed thereon. Such Inventions will be “Jointly Owned Inventions,” andPatents claiming such Jointly Owned Inventions will be “Jointly Owned InventionPatents.” Isis and Ercole will promptly provide each other with notice whenevera Jointly Owned Invention is made. The Parties agree and acknowledge that,except insofar as this Agreement provides otherwise, the default rightsconferred on joint owners under US patent law, including the right of eachParty to independently practice, license and use a Joint Patent, will apply inrelation to the Jointly Owned Invention Patents throughout the world as thoughUS patent law applied worldwide.

 

(d)                                 The Partiesagree that an Invention created by Ercole using a Splicing Modulator providedto Ercole by Isis will also be a Jointly Owned Invention. Similarly, theParties understand that the discovery of a method of treating human disease byinhibiting a particular gene product using a Splicing Modulator provided toErcole by Isis, where Isis’ Splicing Modulator data are used to support theclaims of the Patent, will be a Jointly Owned Invention.

 

(e)                                  The Partiesagree, upon reasonable request, to execute any documents reasonably necessaryto effect and perfect each other’s ownership of any Invention.

 

**4.2****                              ****Filing, Prosecution, Maintenance, Enforcement and Defense of JointlyOwned Invention Patents.**

 

(a)                                  JointlyOwned Invention Patents Covering Products.

 

(i)                                    With respectto Jointly Owned Invention Patents that either claim a method of using aProduct or claim the composition of matter of a Product (“Product JOIPs”), theParty who is developing and commercializing such Product (either on its own orwith a Third Party) (the “Controlling Party”) will have the sole and exclusiveright, in its sole discretion and at its expense, to file, prosecute, maintain,enforce and defend such Product JOIPs. Nothing in this paragraph will be deemedto alter or supercede the provision of this agreement governing the filing,prosecuting, maintaining, enforcing and defending the Ercole Splicing Patentsor the Isis Patents.

 

(ii)                                 Each Partywill promptly advise the Controlling Party if it becomes aware of any suspectedor actual infringement of such Product JOIPs.

 

(iii)                              TheControlling Party will be entitled to all damages and monetary awards recoveredas a result of enforcing its respective Product JOIPs.

 

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(b)                                 JointlyOwned Invention Patents Not Covering Products.

 

(i)                                    Except asprovided otherwise herein, Isis will have the sole and exclusive right to file,prosecute, maintain, enforce and defend Jointly Owned Invention Patents thatare not Product JOIPs (“Nonproduct JOIPs”), regardless of inventorship. Isiswill consider Ercole’s input with respect to the prosecution, maintenance,enforcement and defense of any such Patents. As used herein, Patent prosecutionincludes, without limitation, the handling of interference proceedings,oppositions, reexaminations and reissues. In the case of defense of suchNonproduct JOIPs, Isis will not admit the invalidity or unenforceability of anyNonproduct JOIP, grant a license to the allegedly infringing Third Party or enterinto any settlement agreement without Ercole’s prior written consent, suchconsent not to be unreasonably withheld.

 

(ii)                                 In the eventErcole proposes the filing of a Nonproduct JOIP pursuant to subsection (i) andIsis does not wish to file and prosecute such Nonproduct JOIP, Ercole will havethe right to file, prosecute, maintain, enforce and defend such Nonproduct JOIPat Ercole’s own expense. Ercole will consider Isis’ input with respect to theprosecution, maintenance, enforcement and defense of any such Nonproduct JOIPs.In the event that Isis elects not to participate in the prosecution ormaintenance of any such Nonproduct JOIP, Isis shall so notify Ercole of suchdetermination. Thereafter, Isis shall have no responsibility for any costsrelating thereto, shall not share in any recovery relating to the enforcementthereof and shall retain solely a royalty-free, nonexclusive license withoutthe right to sublicense to practice such Nonproduct JOIP for its own researchand development activities.

 

(iii)                              Ercole willreimburse Isis for 50% of the reasonable materials and out of pocket expensesincurred in connection with filing, prosecuting, maintaining, enforcing anddefending the Nonproduct JOIPs. As used herein, materials and out-of-pocketexpenses means costs, including without limitation costs of Isis’ internallabor, travel, supplies, outside services, and consultants. The foregoingexpenses will be passed through to Ercole at cost. Isis will invoice Ercole onan annual basis and Ercole will submit payment to Isis consistent with theprovisions of Article 3 herein. In the event that Ercole elects not toparticipate in the prosecution or maintenance of any Nonproduct JOIP, Ercoleshall so notify Isis of such determination. Thereafter, Ercole shall have noresponsibility for any costs relating thereto, shall not share in any recoveryrelating to the enforcement thereof and shall retain solely a royalty-free,nonexclusive license without the right to sublicense 

 

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to practice such Nonproduct JOIP forits own research and development activities.

 

(iv)                              Isis willpromptly advise Ercole if Isis becomes aware of any suspected or actualinfringement of such Nonproduct JOIPs by any person. Similarly, Ercole willpromptly advise Isis if Ercole becomes aware of any suspected or actualinfringement of a Nonproduct JOIP by any person.

 

(v)                                 If Isisfails to initiate proceedings against any actual or suspected infringement ofthe Nonproduct JOIPs or to defend any claim of infringement against the Partiespertaining to such rights within 60 days of receipt of a notice fromErcole asking Isis to do so, Ercole will be entitled to initiate thoseproceedings at Ercole’s expense; *provided, however*,that Ercole will not admit the invalidity or unenforceability of any NonproductJOIP, grant a license to the allegedly infringing Third Party or enter into anysettlement agreement without Isis’ prior written consent, which consent willnot be unreasonably withheld.

 

(vi)                              Ercole andIsis will negotiate in good faith an appropriate allocation of any amountsrecovered in enforcing the Nonproduct JOIPs, which will, in any event, providefirst for the full reimbursement of the reasonable costs incurred by each Partywith respect to the prosecution and enforcement of such Nonproduct JOIPs.

 

**4.3****                              ****Filing, Prosecution, Maintenance, Enforcement and Defense of PatentsOwned or Controlled by Isis.**

 

(a)                                  Isis Patents.

 

(i)                                    Isis willhave the sole and exclusive right, in its sole discretion and at its expense,to file, prosecute, maintain, enforce and defend any Patents within the IsisPatent Rights and the Isis Invention Patents.

 

(ii)                                 Ercole willpromptly advise Isis if Ercole becomes aware of any suspected or actualinfringement of the Isis Patent Rights and the Isis Invention Patents by anyperson.

 

(iii)                             Isis will beentitled to all damages and monetary awards recovered as a result of enforcingthe Isis Patent Rights and the Isis Invention Patents; *provided,however*, that with respect to damages or monetary awards recoveredas a result of enforcing the Isis Patent Rights or the Isis Invention Patentsin connection with the infringement of a Patent claiming the composition ofmatter of an Ercole Product, then the Parties will negotiate in good faith anappropriate allocation of any amounts recovered, taking into 

 

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consideration the reasonable costsincurred by each Party with respect to the enforcement of such Patents and theroyalties and milestones Isis would have otherwise received had the infringingparty obtained a sublicense from Ercole.

 

(b)                                 Bcl-xPatents.

 

(i)                                     Except asotherwise provided herein, Isis will have the sole and exclusive right, in itssole discretion, to file, prosecute and maintain any Patents within the Bcl-xPatents. So long as the license to the Bc1-x Patents granted to Ercole under Section 2.2(a)(iv) isstill effective and except as otherwise provided herein, Ercole will have thesole and exclusive right, in its sole discretion to enforce and defend thePatents within the Bcl-x Patents. Isis will consider Ercole’s input withrespect to the prosecution and maintenance of the Bcl-x Patents.

 

(ii)                                  Ercole willreimburse Isis for 100% of Isis’ reasonable materials and out of pocketexpenses incurred after the Effective Date in connection with filing,prosecuting and maintaining the Bcl-x Patents. As used herein, materials andout-of-pocket expenses means costs, including without limitation costs of Isis’internal labor, travel, supplies, outside services, and consultants. Theforegoing expenses will be passed through to Ercole at cost. Isis will invoiceErcole on a quarterly basis and Ercole will submit payment to Isis consistentwith the provisions of Article 3 herein.

 

(iii)                              So long asthe license to the Bcl-x Patents granted to Ercole under Section 2.2(a)(iv) isstill effective, with respect to the Bcl-x Patents, Isis will promptly adviseErcole if Isis becomes aware of any suspected or actual infringement of suchBcl-x Patents by any person. Similarly, Ercole will promptly advise Isis ifErcole becomes aware of any suspected or actual infringement of the Bcl-xPatents by any person. Notwithstanding the foregoing, Ercole may elect not toreimburse Isis for any costs associated with filing, prosecuting andmaintaining, the Bcl-x Patents in any country, in which case Ercole will forfeitits license and its right to share any recovery related to the Bcl-x Patents inthat country.

 

(iv)                              If Ercolefails to initiate proceedings against any actual or suspected infringement ofthe Bcl-x Patents exclusively licensed to Ercole hereunder or to defend anyclaim of infringement against the Parties pertaining to such rights within60 days of receipt of a notice from Isis asking Ercole to do so, Isis willbe entitled to initiate those proceedings at Isis’ expense.

 

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(v)                                 Ercole andIsis will negotiate in good faith an appropriate allocation of any amountsrecovered in enforcing the Bcl-x Patents, which will, in any event, providefirst for the full reimbursement of the reasonable costs incurred by each Partywith respect to the prosecution and enforcement of such Bcl-x Patents.

 

**4.4****                              ****Filing, Prosecution, Maintenance, Enforcement and Defense of PatentsOwned or Controlled by Ercole.**

 

(a)                                  Except asprovided otherwise herein, Ercole will have the sole and exclusive right andresponsibility at its own expense, to file, prosecute, maintain, enforce anddefend the Ercole Splicing Patents and the Ercole Invention Patents. Ercolewill consider Isis’ input with respect to the prosecution, maintenance,enforcement and defense of the Ercole Splicing Patents.

 

(b)                                 So long asthe license to the Ercole Splicing Patents granted to Isis under Section 2.3is still effective, if Ercole fails to initiate proceedings against any actualor suspected infringement of the Ercole Splicing Patents exclusively licensedto Isis hereunder or to defend any claim of infringement against the Partiespertaining to such rights within 60 days of receipt of a notice from Isisasking Ercole to do so, Isis will, subject to the terms of the licenseagreement with the Third Party that licensed such patents to Ercole, beentitled to initiate those proceedings at Isis’ expense; *provided,however*, that Isis will not admit the invalidity or unenforceabilityof any Ercole Splicing Patent, grant a license to the allegedly infringingThird Party or enter into any settlement agreement without Ercole’s priorwritten consent, which consent shall not be unreasonably withheld.

 

(c)                                  With respectto the Ercole Splicing Patents, Isis will promptly advise Ercole if Isisbecomes aware of any suspected or actual infringement of such Ercole SplicingPatents by any person. Similarly, Ercole will promptly advise Isis if Ercolebecomes aware of any suspected or actual infringement of the Ercole SplicingPatents by any person.

 

(d)                                 If Ercolefails to initiate proceedings against any actual or suspected infringement ofthe Ercole Splicing Patents or to defend any claim of infringement against theParties pertaining to such rights, Isis will be entitled to initiate thoseproceedings.

 

(e)                                 Ercole andIsis will negotiate in good faith an appropriate allocation of costs, expensesand amounts recovered arising from enforcing the Ercole Splicing Patents, whichwill, in any event, provide first for the full reimbursement of the reasonablecosts incurred by each Party with respect to the prosecution and enforcement ofsuch Jointly Owned Invention Patents.

 

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**ARTICLE 5**CONFIDENTIALITY

** **

**5.1****                              ****Nondisclosure Obligation.**

 

All Confidential Information disclosed by one Party tothe other Party hereunder will be maintained in confidence by the receivingParty and will not be disclosed to a Third Party or Affiliate or used for anypurpose except as set forth below.

 

**5.2****                              ****Permitted Disclosures.**

 

Except as otherwise provided herein, a Party maydisclose Confidential Information received from the other Party:

 

(a)                                  togovernmental or other regulatory agencies in order to obtain Patents orapproval to conduct clinical trials, or to gain Marketing Approval; providedthat such disclosure may be made only to the extent reasonably necessary to obtainsuch patents or approvals;

 

(b)                                 toAffiliates, sublicensees, agents, consultants, and/or other Third Parties forthe development, manufacturing and/or marketing of the Product (or for suchParties to determine their interest in performing such activities) inaccordance with this Agreement on the condition that such Affiliates,sublicensees and Third Parties agree to be bound by the confidentialityobligations contained in this Agreement; or

 

(c)                                  if suchdisclosure is required by law or court order. Either Party may disclose (i) acopy of this Agreement on a confidential basis to prospective investors and (ii) amutually agreed upon redacted copy of this Agreement on a confidential basis toprospective collaborators; *provided, however*,that a Party can never disclose the other Party’s Exclusive Targets without theexpress prior written consent of such Party.

 

**ARTICLE 6**PUBLICATION AND PUBLICITY

** **

**6.1****                              ****Publication.**

 

(a)                                 The Partiesagree that it is customary in the industry to publish results obtained from clinicaltrials and other studies of a Product, and that each Party may publish suchinformation obtained by such Party in the performance of the Research Plan,subject to the provisions of this Section.

 

(b)                                 Except asprovided otherwise herein, the Parties will be entitled to publish or presenton the results of the Research Plan hereunder and any Product, 

 

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provided that the Party seeking topublish will deliver to the other Party for its review a copy of any proposedpublication, poster or an abstract of any oral presentation at scientificmeetings involving any Product hereunder, or the Confidential Information ofthe other Party, at least 45 days prior to submission of scientificpublications or abstracts of oral presentations. The reviewing Party will havethe absolute right to request that any of its Confidential Information bedeleted from such publication or presentation, and the disclosing Party willcomply with that request. If the disclosing Party does not receive any feedbackfrom the reviewing Party within that 45-day period, the disclosing Party willbe free to proceed with the publication or presentation, except Ercole cannotpublish on matters relating to any Isis Splicing Patents, Isis MOE Patents, PNAPatents or any other Compound or Product developed by Isis during the term ofthis Agreement without the prior written approval of Isis, which may be givenat Isis’ sole discretion and Isis cannot publish on matters relating to anycompound or Product developed by Ercole during the term of this Agreementwithout the prior written approval of Ercole, which may be given at Ercole’ssole discretion.

 

**6.2****                              ****Publicity.**

 

(a)                                 Except asotherwise provided herein or required by law, neither Party will originate anypublication, news release or other public announcement, written or oral,whether in the public press, or stockholders’ reports, or otherwise, relatingto this Agreement, and neither Party will use the name, trademark, trade name,logo or likeness of the other Party or its employees in any publicity, newsrelease or disclosure relating to this Agreement, or its subject matter,without the prior express written permission of the other Party.

 

(b)                                 Ercole willinform Isis of any press releases relating to a Product permitted hereunder orrequired to be made by law in advance of general release to the public.

 

**ARTICLE 7**INDEMNIFICATION

** **

**7.1****                              ****Indemnification by Ercole.**

 

Ercole will indemnify, defend and hold Isis and itsagents, employees, officers and directors (the “Isis Indemnitees”) harmlessfrom and against any and all liability, damage, loss, cost or expense(including reasonable attorneys’ fees) arising out of Third Party claims orsuits related to (a) Ercole’s performance of its obligations under thisAgreement; (b) breach by Ercole of its representations and warranties setforth in Article 9; (c) patent infringement allegations or claimsasserted by a Third Party against Isis arising out of Isis’ performance ofactivities for Ercole pursuant to this Agreement; (d) Ercole’s choice ofErcole Exclusive Targets pursuant to Article 

 

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1; or (e) the manufacture, use, importation orcommercialization (including marketing) of Ercole Products; *provided, however*, that Ercole’s obligations pursuant tothis Section 7.1 will not apply to the extent such claims or suits resultfrom (y) the gross negligence or willful misconduct of any of the IsisIndemnitees or (z) a breach by Isis of its representations and warrantiesset forth in Section 9.1.

 

**7.2****                              ****Indemnification by Isis.**

 

Isis will indemnify, defend and hold Ercole and itsAffiliates and each of their respective agents, employees, officers anddirectors (the “Ercole Indemnitees”) harmless from and against any and allliability, damage, loss, cost or expense (including reasonable attorney’s fees)arising out of Third Party claims or suits related to (a) Isis’performance of its obligations under this Agreement; (b) breach by Isis ofits representations and warranties set forth in Article 9; (c) Isis’choice of Isis Exclusive Targets pursuant to Article I; or (d) themanufacture, use, importation or commercialization (including marketing) ofIsis Products; provided however, that Isis’ obligations pursuant to this Section 7.2will not apply to the extent that such claims or suits result from (x) Ercole’schoice of Ercole Exclusive Targets pursuant to Article 1, (y) thegross negligence or willful misconduct of any of the Ercole Indemnitees or (z) abreach by Ercole of its representations and warranties set forth in Article 9.

 

**7.3****                              ****Notification of Claims; Conditions to Indemnification Obligations.**

 

As a condition to a Party’s right to receiveindemnification under this Article 9, it will (i) promptly notify theother Party as soon as it becomes aware of a claim or action for whichindemnification may be sought pursuant hereto, (ii) cooperate with theindemnifying Party in the defense of such claim or suit, and (iii) permitthe indemnifying Party to control the defense of such claim or suit, includingwithout limitation the right to select defense counsel. In no event, however,may the indemnifying Party compromise or settle any claim or suit in a mannerwhich admits fault or negligence on the part of the indemnified Party withoutthe prior written consent of the indemnified Party. The indemnifying Party willhave no liability under this Article 7 with respect to claims or suitssettled or compromised without its prior written consent.

 

**ARTICLE 8**TERM AND TERMINATION OF AGREEMENT

** **

**8.1****                              ****Term and Termination of Agreement.**

 

This Agreement will be effective as of the EffectiveDate and unless terminated earlier pursuant to Sections 8.2 or 8.3 below, theterm of this Agreement will continue in effect until expiration of the LicenseTerm.

 

**8.2****                              ****Termination upon Material Breach.**

 

This Agreement may be terminated upon written noticeby either Party to the other at any time during the term of this Agreement ifthe other Party is in material breach of its obligations hereunder and has notcured such breach within 90 days after written notice requesting cure ofthe breach; *provided, however*, that (a) in theevent of a good faith dispute with respect to the 

 

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existence of such a material breach, the 90-day cureperiod will be stayed until such time as the dispute is resolved pursuant to Section 12.6hereof, (b) so long as the breaching Party takes substantial steps to curethe breach promptly after receiving notice of the breach from the nonbreachingParty and thereafter diligently prosecutes the cure to completion as soon as ispracticable, the non-breaching Party may not terminate this Agreement, and (c) anylicense granted under this Agreement may not be terminated for a materialbreach under this Section 8.2 (except for an uncured failure to pay theundisputed portion of milestones or royalties under Section 3) to theextent such license is necessary to research, develop, make and have made,offer for sale, sell, import and export a Product, so long as such Product (i) remainspart of an Active Program and satisfies the Bcl-x Milestones, if applicable,and (ii) has at least reached the Initiation of Phase I Trial stage ofdevelopment.

 

**8.3****                              ****Termination upon Bankruptcy; Rights in Bankruptcy.**

 

This Agreement may be terminated with written noticeby either Party at any time during the term of this Agreement upon the filingor institution of bankruptcy, reorganization, liquidation or receivershipproceedings by the other Party or upon an assignment of a substantial portionof the assets for the benefit of creditors by the other Party; *provided, however*, in the case of any involuntary bankruptcyproceeding such right to terminate will only become effective if the partyconsents to the involuntary bankruptcy or such proceeding is not dismissedwithin 90 days of the filing thereof.

 

All rights and licenses granted under or pursuant tothis Agreement by Isis or Ercole are, and will otherwise be deemed to be, forpurposes of Section 365(n) of the U.S. Bankruptcy Code, licenses ofright to “intellectual property” as defined under Section 101 of the U.S.Bankruptcy Code. The Parties agree that the Parties, as licensees of suchrights under this Agreement, will retain and may fully exercise all of theirrights and elections under the U.S. Bankruptcy Code. The Parties further agreethat, in the event of the commencement of a bankruptcy proceeding-by or againsteither Party under the U.S. Bankruptcy Code, the Party hereto which is not aParty to such proceeding will be entitled to a complete duplicate of (orcomplete access to, as appropriate) any such intellectual property and allembodiments of such intellectual property, and same, if not already in theirpossession, will be promptly delivered to them (i) upon any suchcommencement of a bankruptcy proceeding upon their written request therefor,unless the Party subject to such proceeding elects to continue to perform allof its obligations under this Agreement, or (ii) if not delivered under (i) above,following the rejection of this Agreement by or on behalf of the Party subjectto such proceeding upon written request therefor by the non-subject Party.

 

**8.4****                              ****Accrued Rights and Surviving Obligations.**

 

Expiration or termination of the Agreement will notrelieve the Parties of any obligation accruing prior to such expiration ortermination, including, but not limited to, obligations to pay royalties and/ormilestones under Section 3. Sections 3.6, 4.1, and 9.3, and Articles 5, 6,7, 8, 10, 11, 12 and Exhibit 1 will survive expiration or termination ofthe Agreement. Provisions concerning reporting requirements will continue ineffect in accordance with any applicable timetables set forth herein. Anyexpiration or early termination of this Agreement will be without prejudice tothe rights of either Party against the other accrued or accruing under thisAgreement prior to termination, including the obligation to pay royalties forProducts sold prior to such termination.

 

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The rights of any sublicensee under any permittedsublicense granted pursuant to Section 2.3 or 2.4 will survive thetermination of this Agreement.

 

**ARTICLE 9**REPRESENTATIONS AND WARRANTIES; DISCLAIMER

** **

**9.1****                              ****Representations and Warranties of the Parties.**

 

Each Party represents and warrants to the other Partythat, as of the date of this Agreement:

 

(a)                                  Such Partyis duly organized and validly existing under the laws of the state of itsincorporation and has full corporate power and authority to enter into thisAgreement and to carry out the provisions hereof;

 

(b)                                 Such Partyhas taken all corporate action necessary to authorize the execution anddelivery of this Agreement and the performance of its obligations under thisAgreement;

 

(c)                                  ThisAgreement is a legal and valid obligation of such Party, binding upon suchParty and enforceable against such Party in accordance with the terms of thisAgreement. The execution, delivery and performance of this Agreement by suchParty does not conflict with any agreement, instrument or understanding, oralor written, to which such Party is a Party or by which such Party may be bound,and does not violate any law or regulation of any court, governmental body oradministrative or other agency having authority over such Party. All consents,approvals and authorizations from all governmental authorities or other ThirdParties required to be obtained by such Party in connection with this Agreementhave been obtained;

 

(d)                                 Such Partyhas the full and exclusive right, power and authority to enter into thisAgreement, to perform its obligations under this Agreement (including theResearch Plan) and to grant the licenses granted hereunder;

 

(e)                                  There are noagreements between such Party and any Third Parties which would preclude orotherwise limit such Party’s ability to conduct its tasks and obligations underthe Research Plan or otherwise fulfill its obligations under this Agreement;and

 

(f)                                    Allindividuals who will perform any activities on such Party’s behalf inconnection with the Research Plan have assigned to such Party or its Affiliatesthe whole of their rights in any intellectual property conceived or reduced topractice by them as a result of either program.

 

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**9.2****                              ****Representations and Warranties of Ercole.**

 

By adding an Ercole Exclusive Target to Exhibit 2,Ercole warrants and represents that, to the best of its knowledge, the ErcoleExclusive Targets listed on Exhibit 2 are not encumbered by any ThirdParty rights including, without limitation, intellectual property rights, thatwould interfere with Isis’ ability to carry out the activities contemplated bythe Parties hereunder. By adding an Ercole Exclusive Target to Exhibit 2,Ercole further warrants and represents that, to the best of its knowledge, ifIsis makes an Splicing Modulator to any of the Ercole Exclusive Targets, itwill not constitute an infringement of any Third Party rights and that Ercolewill indemnify Isis, as set forth in Section 7.1 herein, should asubsequent determination be made that Third Party rights were infringed.

 

**9.3****                              ****Disclaimers.**

 

THE SPLICING MODULATORS BEING PROVIDED TO ERCOLEHEREUNDER ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY,EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OFMERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THATTHE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHERPROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

THE PARTIES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESSOR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, UNLESSOTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.

 

**ARTICLE 10**NOTICE

** **

**10.1****                       ****Notice.**

 

All notices which are required or permitted hereunderwill be in writing and sufficient if delivered personally, sent by facsimile(and promptly confirmed by personal delivery, registered or certified mail orovernight courier), sent by nationally-recognized overnight courier or sent byregistered or certified mail, postage prepaid, return receipt requested,addressed as follows:

 
| if to Isis, to: | Isis Pharmaceuticals, Inc.            |
|-----------------|--------------------------------------------|
|            | Carlsbad Research Center                   |
|            | 2292 Faraday Avenue                        |
|            | Carlsbad, CA   92008                  |
|            | Attention:   Executive Vice President |
|            | Fax No.:  +1  (760) 931-9639          |
|            |                                       |
| with a copy to: | Attention: General Counsel                 |
|            | Fax No.:  +1  (760) 268-4922          |

 

----

 
| if to Ercole, to: | 107 Weslyn Trace Drive                 |
|-------------------|----------------------------------------|
|              | Durham, NC 27703                       |
|              | Attention:   President            |
|              |                                   |
|              |                                   |
|              |                                   |
|              |                                   |
| with a copy to:   | Hutchison and Mason PLLC               |
|              | 3110 Edwards Mill road, Suite 100 |
|              | Raleigh, NC 27612                      |
|              | Attn:  William  N. Wofford        |
|              | Fax No: 1 (919) 829 9696               |

 

or to such other address as the Party to whom noticeis to be given may have furnished to the other Party in writing in accordanceherewith. Any such notice will be deemed to have been given when delivered ifpersonally delivered or sent by facsimile on a business day, on the businessday after dispatch if sent by nationally-recognized overnight courier and onthe third business day following the date of mailing if sent by mail.

 

**ARTICLE 11**RECORDS

** **

**11.1****                       ****Records.**

 

Each Party will maintain records, in sufficient detailand in good scientific manner, which will fully and properly reflect all workdone and results achieved in the performance of its responsibilities under theResearch Plan hereunder. Each Party will have the right, during normal businesshours and upon reasonable prior notice, to inspect and copy those records ofthe other Party referred to herein that are necessary or useful to theinspecting Party for the purposes of making any required filings withRegulatory Authorities in order to obtain manufacturing approvals and/orMarketing Approvals. Each Party will maintain such records and the informationdisclosed therein in confidence in accordance with Article 5.

 

**ARTICLE 12**MISCELLANEOUS PROVISIONS

** **

**12.1****                       ****Relationship of the Parties.**

 

It is expressly agreed that Isis and Ercole will beindependent contractors and that the relationship between the two Parties willnot constitute a partnership, joint venture or agency. Neither Isis nor Ercolewill have the authority to make any statements, representations or commitmentsof any kind, or to take any action, which will be binding on the other, withoutthe prior consent of the other Party.

 

----

 

**12.2****                       ****Successors and Assigns.**

 

Neither this Agreement nor any interest hereunder maybe assigned or otherwise transferred, nor, except as expressly providedhereunder, may any right or obligations hereunder be assigned or transferred byeither Party without the prior written consent of the other Party; *provided, however*, that either Party may, without suchconsent, assign the Agreement and its rights and obligations hereunder to anAffiliate or in connection with the transfer or sale of all or substantiallyall of its business to which this Agreement relates (whether by sale of stock,sale of assets or merger). Any permitted assignee will assume all obligationsof its assignor under the Agreement, except that no intellectual property ofany Third Party acquirer of Ercole or Isis will be included in the licensesgranted hereunder. This Agreement will be binding upon the successors andpermitted assigns of the Parties. Any attempted assignment not in accordancewith this Section 12.2 will be void.

 

**12.3****                       ****Entire Agreement; Amendments.**

 

This Agreement, the Loan Agreement and WarrantAgreement contain the entire understanding of the Parties with respect to thelicense, development and commercialization of Products hereunder. All expressor implied agreements and understandings, either oral or written, heretoforemade by the Parties on the same subject matter are expressly superseded by thisAgreement. The Agreement may be amended, or any term hereof modified, only by awritten instrument duly executed by both Parties hereto.

 

**12.4****                       ****Force Majeure.**

 

Neither Party will be held liable or responsible tothe other Party nor be deemed to have defaulted under or breached the Agreementfor failure or delay in fulfilling or performing any term of the Agreement whensuch failure or delay is caused by or results from causes beyond the reasonablecontrol of the affected Party including, without limitation, embargoes, acts ofwar (whether war be declared or not), insurrections, riots, civil commotions,strikes, lockouts or other labor disturbances, or acts of God. The affectedParty will notify the other Party of such force majeure circumstances as soonas reasonably practical and will make every reasonable effort to mitigate theeffects of such force majeure circumstances.

 

**12.5****                       ****Applicable Law.**

 

The Agreement will be governed by and construed inaccordance with the laws of the State of Delaware without reference to any rules ofconflict of laws.

 

**12.6****                       ****Dispute Resolution.**

 

(a)                                  The Partiesrecognize that disputes may from time to time arise between the Parties duringthe term of this Agreement. In the event of such a dispute, either Party, bywritten notice to the other Party, may have such dispute referred to theParties’ respective executive officers designated below or their successors,for attempted resolution by good faith negotiations within 30 days aftersuch notice is received. Said designated officers are as follows:

 

----

 
| For Isis:   | Vice  President |
|-------------|-----------------|
| For Ercole: | COO             |

 

If thedispute is not resolved as provided above, the Executive Vice President of Isisand the COO of Ercole will meet for attempted resolution by good faithnegotiations within 15 days after the expiration of the preceding 30 dayperiod.

 

(b)                                 In the eventthe designated executive officers are not able to resolve such dispute aftersuch 30-day period, each Party may pursue its rights and remedies in law orequity in any court of competent jurisdiction.

 

**12.7****                       ****No Consequential Damages.**

 

IN NO EVENT WILL EITHER PARTY OR ANY OF ITS RESPECTIVEAFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL,INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY,TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO,LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRDPARTIES FOR SUCH OR OTHER DAMAGES.

 

**12.8****                       ****Captions.**

 

The captions to the several Articles and Sectionshereof are not a part of the Agreement, but are merely a convenience to assistin locating and reading the several Articles and Sections hereof.

 

**12.9****                       ****Waiver.**

 

The waiver by either Party hereto of any righthereunder, or the failure to perform, or a breach by the other Party will notbe deemed a waiver of any other right hereunder or of any other breach orfailure by said other Party whether of a similar nature or otherwise.

 

**12.10****                ****Compliance With Law.**

 

Nothing in this Agreement will be deemed to permit aParty to export, re-export or otherwise transfer any Product sold under thisAgreement without compliance with applicable laws.

 

**12.11****                ****Severability.**

 

In the event any one or more of the provisionscontained in this Agreement should be held invalid, illegal or unenforceable inany respect, the validity, legality and enforceability of the remainingprovisions contained herein will not in any way be affected or impairedthereby, unless the absence of the invalidated provision(s) adverselyaffect the substantive rights of the Parties. The Parties will in such aninstance use their best efforts to replace the invalid, illegal orunenforceable provision(s) with valid, legal and enforceable provision(s) which,insofar as practical, maintains the balance of the rights and obligations ofthe Parties under this Agreement.

 

----

 

**12.12****                ****Waiver of Rule of Construction.**

 

Each Party has had the opportunity to consult with counselin connection with the review, drafting and negotiation of this Agreement.Accordingly, the rule of construction that any ambiguity in this Agreementwill be construed against the drafting Party will not apply.

 

**12.13****                ****Counterparts.**

 

This Agreement may be executed in two or morecounterparts, each of which will be deemed an original, but all of whichtogether will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Parties have executed thisAgreement as of the Effective Date.

 
| ERCOLE  BIOTECH, INC.      |                     | ISIS  PHARMACEUTICALS, INC.              |
|----------------------------|--------------------------|------------------------------------------|
|                       |                     |                                     |
|                       |                     |                                     |
| By:                        | /s/  Athanasios Maroglou |                                     | By: | /s/  B. Lynne Parshall |
| Name:  Athanasios Maroglou |                     | Name:  B. Lynne Parshall                 |
| Title:  President          |                     | Title:  Executive Vice President and CFO |
|                            |                          |                                          |  |  |

 

----

 

**EXHIBIT 1**

 

**DEFINITIONS**

 

1.1                              “Active Program” means with respect to aGene Target, an Ercole Exclusive Target or an Isis Exclusive Target, anyreasonable (as defined below) ongoing research, development, orcommercialization (including research, development or commercializationactivities conducted by a Third Party pursuant to a valid sublicense under thisAgreement), of a Product directed to such Gene Target.

 

For purposes ofclarification, research, development and commercialization efforts with respectto an Ercole Exclusive Target or an Isis Exclusive Target or Product shall bedeemed reasonable if the applicable Party’s research and development effortswith respect to such Gene Target or Product are reasonably comparable withother projects in such Party’s portfolio at a similar stage of development andof similar market potential. Reasonable research, development andcommercialization efforts should include preclinical studies, human clinicalstudies and development aimed at obtaining regulatory approval for marketing aProduct that modulates such Gene Target.

 

1.2                              “Affiliate” with respect to either Partymeans any person, organization, corporation or other business entity(collectively, “Person”) controlling, controlled by, or under common controlwith such Party. For purposes of this definition, “control” refers to thepossession, directly or indirectly, of the power to direct the management orpolicies of a Person, whether through the ownership of voting securities, bycontract or otherwise, of a Person.

 

1.3                              “Bcl-x” means the Gene Target bcl-x, alsoknown as _BCL2-like 1, BCL2L1, Locus Link ID = 598, Prototype Genebank Accesionnumber NM_001191, Ensembl Gene ID ENSG BCL2L.

 

1.4                              “Bcl-x Milestones” means, with respect toan Ercole Bcl-x Product that modulates Bel- x, (i) completing IND-EnablingStudies by Ercole for such Product within 18 months of Ercole’s receipt of aSplicing Modulator from Isis that modulated Bcl-x; (ii) filing an IND forsuch Product within 6 months of completing the IND-Enabling Studies; (iii) InitiatingPhase I Trial for such Product within 12 months from filing the IND for suchProduct; (iv) Initiation of Phase II Trials within 36 months from thefiling of the IND for such Product; (v) Initiation of Phase III Studiesnot later than 3 years after the Initiation of Phase II Studies; (vi) filingof an NDA not later than 18 months after the successful completion of a PhaseIII Study; and (vii) the use of commercially reasonable efforts by Ercoleto bring each Ercole Bcl-x Product to market and to maximize the commercialvalue of each such Product worldwide.

 

If Ercole will notbe able to meet a Bcl-x Milestone set forth above for circumstances beyondErcole’s control but has proceeded in good faith in its development efforts,Ercole will be granted a 12-month extension on any of the milestones identifiedabove, provided that Ercole (i) gives Isis at least 3 months’ priorwritten notice that it is unlikely to achieve the relevant milestone on thedate specified above, and (ii) demonstrates to Isis that it has madesubstantial progress in the development of the relevant Bcl-x Product and 

 

----

 

reasonablyanticipates that it will achieve the relevant milestone within 12 months of theoriginal deadline noted above.

 

1.5                              “Bcl-x Patents” means the Patents listedin Exhibit 7.

 

1.6                              “Bcl-x Product” means an Ercole ExclusiveProduct that modulates Bcl-x.

 

1.7                              “Calendar Quarter” means the respectiveperiods of 3 consecutive calendar months ending on March 31, June 30,September 30 and December 31.

 

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

 

1.9                              “Collaboration Term” means the term ofthe Research Plan as set forth in Section 1.1.

 

1.10                       “Confidential Information” meansinformation which is (a) of a confidential and proprietary nature; and (b) notreadily available to that Party’s competitors and which, if known by acompetitor of that Party, might lessen any competitive advantage of that Partyor give such competitor a competitive advantage.

 

For the purposesof this Agreement, “Confidential Information” includes, without limitation, (a) informationthat is proprietary or confidential or which is treated by that Party asconfidential and which relates either directly or indirectly to the business ofthat Party regardless of the form in which that information is constituted, andwhich is not lawfully in the public domain; and (b) any confidentialinformation in relation to Patents, technology, know-how, or any improvementsowned or controlled by a Party hereto.

 

“Confidential Information” will not include any information that thereceiving Party can establish by written records:

 

(i)                                    was known by it prior to the receipt ofConfidential Information from the disclosing Party;

 

(ii)                                 was disclosed to the receiving Party by aThird Party having the right to do so;

 

(iii)                              was, or subsequently became, in the public domainthrough no fault of the receiving Party, its officers, directors, employees oragents;

 

(iv)                             was concurrently or subsequently developedby personnel of the receiving Party without having had access to the disclosingParty’s Confidential Information;

 

(v)                                was disclosed with the prior writtenconsent of the disclosing Party; or

 

(vi)                             was disclosed by the receiving Partypursuant to any judicial or governmental request, requirement or order.

 

1.11                       “Covered by a “Patent” means any process,method, organism or part thereof, composition of matter, biological compound orpart thereof which when made, 

 

----

 

used, practiced orsold would, but for the applicable license granted pursuant to this Agreementconstitute an infringement of any valid claim, or claims, in the referencedPatent.

 

1.12                       “EC Approval” means approval of a Productfor marketing in the European Union by the European Commission (“EC”) or, if aParty seeks approval through mutual recognition therein, by the Ministry ofHealth of the United Kingdom, France, Germany, Italy or Spain (each a “MajorEuropean Country”), without the requirement for price having been approved. Ifa Product can be sold in a Major European Country without EC or Ministry ofHealth approval, EC Approval will be deemed to have been obtained on the firstsale of a Product in a Major European Country.

 

1.13                       “Ercole Exclusive Product” means aSplicing Modulator that modulates an Ercole Exclusive Target. An ErcoleExclusive Product can either be discovered and developed by Ercole ordiscovered and developed by Isis on Ercole’s behalf under the Research Plan. Inorder for a Product to remain an Ercole Exclusive Product, Ercole must performon its own (or with Isis under the Research Plan) and not with a Third Party atleast 50% of the work to discover and develop the Ercole Exclusive Productduring the period from the point in time at which the Ercole Exclusive Targethas been designated through the completion of IND-Enabling Studies.

 

1.14                       “Ercole Exclusive Target” has the meaningset forth in Section 1.2.

 

1.15                       “Ercole Invention” has the meaning setforth in Section 4.1(b).

 

1.16                       “Ercole Invention Patent” has the meaningset forth in Section 4.1(b).

 

1.17                       “Ercole Nonexclusive Product” means aSplicing Modulator discovered and developed by Ercole that modulates aNonexclusive Target.

 

1.18                       “Ercole Product” means an ErcoleExclusive Product and an Ercole Nonexclusive Product.

 

1.19                       “Ercole Splicing Patents” means thePatents listed in Exhibit 4.

 

1.20                       “Gene Target” means a transcriptionalunit of a gene, and any protein product of such transcriptional unit, includingall splice variants.

 

1.21                       “Gene Walk” has the meaning set forth inthe Research Plan.

 

1.22                       “IND” means an Investigational New DrugApplication or similar application or submission for approval to conduct humanclinical investigations filed with or submitted to a Regulatory Authority inconformity with applicable Regulatory Authority regulations.

 

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1.23                        “IND-Enabling Studies” means, at aminimum, the pharmacokinetic and toxicology studies required to meet the safetyregulations for filing an IND, as well as any additional studies required by aRegulatory Authority as a prerequisite to filing an IND.

 

1.24                        “Initiation of Phase I Trial” means thedosing of the first patient in the first human clinical trial conducted onnormal volunteers and designed to evaluate safety of a product.

 

1.25                        “Initiation of Phase II Trial” means thedosing of the first patient in the first human clinical trial conducted inpatients and designed to indicate a statistically significant level of efficacyfor a Product in the desired indication, as well as to obtain some indication ofthe dosage regimen required.

 

1.26                        “Initiation of Phase III Trial” means thedosing of the first patient in the first human clinical trial conducted inpatients and designed to establish Product safety and efficacy and required toobtain clinical registration of a product with health regulatory authoritiessuch as the FDA (a “Phase III Trial”).

 

1.27                        “Invention” has the meaning set forth in Section 4.1herein.

 

1.28                        “Isis Exclusive Product” means a SplicingModulator discovered and developed by Isis that modulates an Isis ExclusiveTarget. In order for a Product to remain an Isis Exclusive Product, Isis mustperform on its own and not with a Third Party at least 50% of the work todiscover and develop the Isis Exclusive Product during the period from the pointin time at which the Isis Exclusive Target has been selected through thecompletion of IND-Enabling Studies.

 

1.29                        “Isis Exclusive Target” has the meaningset forth in Section 1.2.

 

1.30                        “Isis Invention” has the meaning setforth in Section 4.1(b).

 

1.31                        “Isis Invention Patent” has the meaningset forth in Section 4.1(b).

 

1.32                        “Isis Patent Rights” means all rights inPatents owned by Isis that are within the Isis Splicing Patents, the MOEPatents, the PNA Patents and the Bcl-x Patents.

 

1.33                        “Isis Nonexclusive Product” means aSplicing Modulator discovered and developed by Isis that modulates aNonexclusive Target.

 

1.34                        “Isis Product” means an Isis ExclusiveProduct and an Isis Nonexclusive Product.

 

1.35                        “Isis Splicing Patents” means the Patentslisted in Exhibit 5.

 

1.36                        “Jointly Owned Invention” has the meaningset forth in Section 4.1(c).

 

1.37                        “Jointly Owned Invention Patent” has themeaning set forth in Section 4.1(c).

 

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1.38                        “Japanese Approval” means the approval ofa Product for marketing in Japan by the Japanese Ministry of Health and Welfare(or any future equivalent process), together with any other approval necessaryto make and sell Product commercially in Japan without the requirement forprice having been approved. If a Product can be sold in Japan without Ministryof Health and Welfare approval, Japanese Approval will be deemed to have beenobtained on the first sale of a Product in Japan.

 

1.39                        “License Term” has the meaning set forthin Section 2.1.

 

1.40                        “Major Market” means any one of thefollowing countries: the United States, Japan, the United Kingdom, France,Germany, Italy or Spain.

 

1.41                        “Marketing Approval” means the act of aRegulatory Authority necessary for the marketing and sale of the Product in acountry or regulatory jurisdiction, including, without limitation, the approvalof the NDA by the FDA, EC Approval, and Japanese Approval.

 

1.42                        “MOE Patents” means the Patents listed inExhibit 6.

 

1.43                        “MOE Chemistry” means adding one or moremethoxy-ethoxy groups to the sugar moiety of one or more nucleosides in aSplicing Modulator.

 

1.44                        “MOE Product” means an Ercole ExclusiveProduct that is discovered and developed by Isis for Ercole pursuant to thisAgreement that incorporates the MOE Chemistry.

 

1.45                        “NDA” means New Drug Application orsimilar application or submission for approval to market and sell a newpharmaceutical product filed with or submitted to a Regulatory Authority inconformity with applicable Regulatory Authority regulations.

 

1.46                        “Net Sales” means, with respect to aProduct, the gross amount received by Ercole or Isis, as appropriate, or bytheir Affiliates or sublicensees, to unrelated Third Parties for the Product,less:

 

(a)                                 Trade, quantity and cash discountsallowed;

 

(b)                                 Commissions, discounts, refunds, rebates,chargebacks, retroactive price adjustments, and any other allowances whicheffectively reduce the net selling price;

 

(c)                                  Credits for actual Product returns;

 

(d)                                 Any tax imposed on the production, sale,delivery or use of the Product, including, without limitation, sales, use,excise or value added taxes;

 

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(e)                                  Allowance for distribution expenses atlevels customary in the industry; and

 

(f)                                   Any other similar and customarydeductions.

 

“Net Sales” excludes:

 

(i)                                     The transfer of reasonable and customaryquantities of free samples of Product(s) and the transfer of Product(s) asclinical trial materials, other than for subsequent resale;

 

(ii)                                  Sales or transfers of Product(s) amongErcole or Isis and their respective Affiliates, unless the receiving Party isthe consumer or user of the Product;

 

(iii)                               Use by Ercole or Isis or their respective Affiliatesor sublicensees of Product for any use connected with the securing ofregulatory approval or validating of a manufacturing process or the obtainingof other necessary Marketing Approvals for Product (unless such Product issubsequently sold); and

 

(iv)                              Royalties received by a Party or itsAffiliates from any Third Party with respect to Products.

 

Notwithstandingthe foregoing, if (i) a Party enters an arms-length license agreement witha Third Party with respect to a Product and (ii) the definition of NetSales is different in such license agreement than as described above, then, theParties will use the definition described in the third party license for thecalculation of royalties hereunder. The Parties acknowledge that the “net sales”definition under the licenses to which Isis obtained the rights to certain ofthe MOE Patents and certain of the PNA Patents is different than the Net Salesdefinition above.

 

1.47                        “Nonexclusive Target” means a Gene Targetthat is not an Isis Exclusive Target or an Ercole Exclusive Target.

 

1.48                        “Party” means either Ercole or Isis, asthe case may be and “Parties” means both Ercole and Isis.

 

1.49                        “Patent” or “Patents” means (a) patentapplications (including provisional applications); (b) any patents issuingfrom such patent applications; (c) any continuations-in-part, but only tothe extent that they Cover the same invention claimed in the foregoing, (d) allpatents and patent applications worldwide based on, corresponding to, orclaiming the priority date(s) of any of the foregoing; (e) anyreissues, substitutions, confirmations, registrations, validations,re-examinations, additions, continuations, continued prosecution applications,requests for continued examination, or divisions of or to any of the foregoing;and 

 

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(f) termextension or other governmental action which provide exclusive rights to aProduct beyond the original patent expiration date.

 

1.50                        “PNA Patents” means the Patents listed inExhibit 8.

 

1.51                        “PNA Product” means an Ercole ExclusiveProduct, which when made, used, practiced or sold would, but for the licensegranted under Section 2.2(b)(v), infringe a claim in the PNA Patents.

 

1.52                        “Product” means an Ercole Product or anIsis Product.

 

1.53                        “Regulatory Authority” means anyapplicable government regulatory authority involved in granting approvals forthe marketing and/or pricing of a Product worldwide including, withoutlimitation, the United States Food and Drug Administration (“FDA”) and anysuccessor government authority having substantially the same function, andforeign equivalents thereof.

 

1.54                        “Research Plan” is the Research Planattached hereto as Exhibit 3.

 

1.55                        “Splicing Modulator” means anoligonucleotide or analog thereof that selectively modulates RNA Splicing orpolyadenylation by a non-Rnase dependent mechanism at the nucleic acid level byspecifically binding to the sequence of a selected messenger or viralribonucleic acid (RNA) by base-pairing, thus causing a selective pattern ofgene expression.

 

1.56                        “Sponsored Invention” means any inventionor other discovery made by UNC and/or any of its employees or Affiliates (orany Third Party under contract with UNC) pursuant to a research orcollaboration agreement sponsored by Ercole, and any Patents that may issuethereon.

 

1.57                        “Third Party” means any Party other thanIsis or Ercole and their respective Affiliates.

 

1.58                        “Third Party Intellectual Property” meansany intellectual property owned by a Third Party.

 

1.59                        “UNC” means the University of NorthCarolina at Chapel Hill.

 

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**Exhibit 2**

 

**Isis and Ercole Exclusive Targets**

 

**Isis Exclusive Targets**

 

 

**Ercole Exclusive Targets**

 

Bcl-x

 

----

 

 

**Exhibit 3**

 

**Research Plan**

** **

*****

 

----

 

**Exhibit 4**

 

**Ercole Splicing Patents**

 

US Patent No. 5,976,879 entitled “AntisenseOligonucleotides which combat aberrant splicing and methods of using the same.”

 

US Patent No. 5,627,274 entitled “AntisenseOligonucleotides which combat aberrant splicing and methods of using the same.”

 

US Patent No. 5,665,593 entitled “AntisenseOligonucleotides which combat aberrant splicing and methods of using the same.”

 

US Patent No. 5,916,808 entitled “AntisenseOligonucleotides which combat aberrant splicing and methods of using the same.”

 

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**Exhibit 5**

 

**Isis Splicing Patents**

 

US Patent No. 6,210,892 entitled “Alteration ofCellular Behavior by Antisense Modulation of mRNA Processing.”

 

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**Exhibit 6**

 

**MOE Patents**

 

US Patent No. 5,969,116 entitled “Nucleosides andOligonucleotides having 2’ ether groups.”

 

US Patent No. 5,914,396 entitled “2’-O-ModifiedNucleosides and Phosphoramidites.”

 

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**Exhibit 7**

 

**Bcl-x Patents**

 
| **Docket  No.** | ** ** | **Title**                                 | ** ** | **Country**    | ** ** | **Filing Date** | ** ** | **Status**                   |
|-----------------|------------|-------------------------------------------|------------|----------------|------------|-----------------|------------|------------------------------|
| ISPH-0324       |       | Antisense  Modulation of Bcl-X Expression |       | United  States |       | 10/7/1998       |       | ISSUED  6,172,216  1/9/2001  |
| ISPH-0368       |       | Antisense  Modulation Of Bcl-X Expression |       | United  States |       | 6/2/1999        |       | ISSUED  6,214,986  4/10/2001 |
| ISPH-0410       |       | Antisense  Modulation of Bcl-X Expression |       | PCT            |       | 9/28/1999       |       | Entered  National  Phase     |
| ISPH-0552       |       | Antisense  Modulation of Bcl-X Expression |       | Australia      |       | 9/28/1999       |       | Pending                      |
| ISPH-0553       |       | Antisense  Modulation of Bcl-X Expression |       | Canada         |       | 9/28/1999       |       | Pending                      |
| ISPH-0554       |       | Antisense  Modulation of Bcl-X Expression |       | EPO            |       | 9/28/1999       |       | Pending                      |
| ISPH-0555       |       | Antisense  Modulation of Bcl-X Expression |       | Japan          |       | 9/28/1999       |       | Pending                      |
| ISPH-0556       |       | Antisense  Modulation of Bcl-X Expression |       | United  States |       | 4/3/2001        |       | Pending                      |
| ISPH-0719       |       | Antisense  Modulation of Bcl-X Expression |       | United  States |       | 11/21/2002      |       | Pending                      |

 

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**Exhibit 8**

 

**PNA Patents**

 
| **Docket  No.** | ** ** | **Title**                                                                                   | ** ** | **Inventor**                                       | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|---------------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
| ISIS-0516       |       | PEPTIDE  NUCLEIC ACIDS (PNA)                                                                |       | Buchardt  Egholm  Neilson  Berg                    |       | PCT         |       | 5/22/1992        |       | Entered  National  Phase  11/24/1993 |
| ISIS-0540       |       | PEPTIDE  NUCLEIC ACIDS, COMPOSITIONS THEREOF AND PROCESSES FOR USING THE SAME (as  amended) |       | Buchardt  Egholm  Neilson  Berg                    |       | US          |       | 11/22/1993       |       | ISSUED  5/28/2002  6,395,474         |
| ISIS-1017       |       | NOVEL  PEPTIDE NUCLEIC ACIDS                                                                |       | Neilson  Buchardt  Egholm  Berg                    |       | US          |       | 4/26/1993        |       | ISSUED  7/23/1996  5,539,082         |
| ISIS-1052       |       | CLEAVING  DOUBLE - STRANDED DNA WITH PEPTIDE NUCLEIC ACIDS                                  |       | Ecker  Buchardt  Egholm  Nielsen  Berg  Mollegaard |       | US          |       | 07/02/1993       |       | ISSUED  06/24/1997  5,641,625        |
| ISIS-1108       |       | DOUBLE-STRANDED  PEPTIDE NUCLEIC ACIDS                                                      |       | Norden  Wittung  Buchardt  Egholm  Nielsen  Berg   |       | US          |       | 07/02/1993       |       | ISSUED  05/08/2001  6,228,982        |
| ISIS-1122       |       | PEPTIDE  NUCLEIC ACID COMBINATORIAL LIBRARIES AND IMPROVED METHODS OF SYNTHESIS             |       | Cook  Kiely  Sprankle                              |       | US          |       | 02/23/1994       |       | ISSUED  07/23/1996  5,539,083        |
| ISIS-1158       |       | PEPTIDE  NUCLEIC ACID CONJUGATES                                                            |       | Nielsen  Buchardt  Hoist  Lohse  Egholm  Manoharan |       | US          |       | 10/06/1994       |       | Pending                              |

 

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| **Docket  No.** | ** ** | **Title**                                                      | ** ** | **Inventor**                                                            | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|----------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
|            |       |                                                           |       | Kiely  Griffith  Sprankle                                               |       |        |       |             |       |                                 |
| ISIS-1236       |       | PNA-DNA-PNA  CHIMERIC MACROMOLEULES                            |       | Cook                                                                    |       | US          |       | 11/24/1993       |       | ISSUED  12/23/1997  5,700,922        |
| ISIS-1422       |       | NOVEL  PEPTIDE NUCLEIC ACIDS                                   |       | Buchardt  Egholm  Neilson  Berg                                         |       | PCT         |       | 4/25/1994        |       | Entered  National  Phase  10/26/1995 |
| ISIS-1504       |       | DOUBLE-STRANDED  PEPTIDE NUCLEIC ACIDS                         |       | Buchardt  Egholm  Nielsen  Berg  Norden  Wittung                        |       | PCT         |       | 07/01/1994       |       | Entered  National  Phase  12/11/1995 |
| ISIS-1524       |       | HIGHER  ORDER STRUCTURE AND BINDING OF PEPTIDE NUCLEIC ACIDS   |       | Ecker  Buchardt  Egholm  Nielsen  Berg  Mollegaard                      |       | PCT         |       | 06/28/1994       |       | Entered  National  Phase  01/02/1996 |
| ISIS-1577       |       | NOVEL  PEPTIDE NUCLEIC ACIDS                                   |       | Egholm  Nielsen  Buchardt  Dueholm  Christensen  Coull  Kiely  Griffith |       | US          |       | 7/15/1994        |       | ISSUED  9/17/2002                    |
| ISIS-1714       |       | CHIRAL  PEPTIDE NUCLEIC ACID MONOMERS AND OLIGOMERS            |       | Nielsen  Buchardt  Lagriffoul                                           |       | US          |       | 12/28/1994       |       | ISSUED  11/02/1999  5,977,296        |
| ISIS-1746       |       | PNA-DNA-PNA  CHIMERIC MACROMOLEULES                            |       | Cook                                                                    |       | PCT         |       | 11/23/1994       |       | Entered  National  Phase  5/24/1996  |
| ISIS-1936       |       | PNA  COMBINATORIAL LIBRARIES AND IMPROVED METHODS OF SYNTHESIS |       | Cook  Kiely  Sprankle                                                   |       | PCT         |       | 02/22/1995       |       | Entered  National  Phase  08/13/1996 |

 

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| **Docket  No.** | ** ** | **Title**                                                                               | ** ** | **Inventor**                                                            | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|-----------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
| ISIS-1958       |       | PNA  COMBINATORIAL LIBRARIES AND IMPROVED METHODS OF SYNTHESIS                          |       | Cook  Kiely  Sprankle                                                   |       | U.S.        |       | 08/13/1996       |       | ISSUED  11/03/1998  5,831,014        |
| ISIS-1993       |       | PEPTIDE  NUCLEIC ACIDS AND SYNTHETIC PROCEDURES THEREFOR                                |       | Buchardt  Egholm  Nielsen  Berg                                         |       | US          |       | 6/5/1995         |       | Pending                              |
| ISPS-1999       |       | PEPTIDE  NUCLEIC ACIDS (PNA)                                                            |       | Buchardt  Egholm  Neilson  Berg                                         |       | US          |       | 6/6/1995         |       | Pending                              |
| ISIS-2017       |       | PEPTIDE  NUCLEIC ACID COMBINATORIAL LIBRARIES AND IMPROVED METHODS OF SYNTHESIS         |       | Cook  Kiely  Sprankle                                                   |       | U.S.        |       | 06/06/1995       |       | Pending                              |
| ISIS-2018       |       | COMPLEXES  OF TWO PEPTIDE NUCLEIC ACID STRANDS AND ONE NUCLEIC ACID STRAND (as amended) |       | Ecker  Buchardt  Egholm  Nielsen  Berg  Mollegaard                      |       | US          |       | 06/07/1995       |       | ISSUED  11/16/1999  5,986,053        |
| ISIS-2020       |       | LINKED  PEPTIDE NUCLEIC ACIDS                                                           |       | Egholm  Kiely  Griffith  Coull  Nielsen  Buchardt  Christensen  Dueholm |       | PCT         |       | 07/13/1995       |       | Entered  National  Phase  01/15/1997 |
| ISIS-2041       |       | LINKED  PEPTIDE NUCLEIC ACIDS                                                           |       | Egholm  Kiely  Griffith  Coull  Nielsen  Buchardt  Christensen          |       | US          |       | 04/23/1997       |       | ISSUED  8/27/2002  6,441,130         |

 

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| **Docket  No.** | ** ** | **Title**                                                                                     | ** ** | **Inventor**                                                                  | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|-----------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
|            |       |                                                                                          |       | Dueholm                                                                       |       |        |       |             |       |                                 |
| ISIS-2091       |       | PEPTIDE  NUCLEIC ACID CONJUGATES                                                              |       | Nielsen  Buchardt  Hoist  Lohse  Egholm  Manoharan  Kiely  Griffith  Sprankle |       | PCT         |       | 10/06/1995       |       | Entered  National  Phase  04/06/1997 |
| ISIS-2112       |       | PEPTIDE  NUCLEIC ACID CONJUGATES                                                              |       | Nielsen  Buchardt  Hoist  Lohse  Egholm  Manoharan  Kiely  Griffith  Sprankle |       | US          |       | 4/4/1997         |       | Pending                              |
| ISIS-2113       |       | NOVEL  PEPTIDE NUCLEIC ACIDS                                                                  |       | Nielsen  Buchardt  Berg  Egholm                                               |       | US          |       | 02/01/1996       |       | ISSUED  6/30/1998  5,773,571         |
| ISIS-2141       |       | PEPTIDE  NUCLEIC ACID COMBINATORIAL LIBRARIES                                                 |       | Cook  Kiely  Sprankle                                                         |       | U.S.        |       | 01/17/1996       |       | ISSUED  01/26/1999  5,864,010        |
| ISIS-2169       |       | SUBSTITUTED  NUCLEIC ACID MIMICS FOR TRIPLEX AVOIDANCE                                        |       | Christensen  Hansen  Nielsen                                                  |       | US          |       | 03/08/1996       |       | Pending                              |
| ISIS-2270       |       | PEPTIDE  NUCLEIC ACIDS HAVING AMINO ACID SIDE CHAINS                                          |       | Nielsen  Buchardt  Berg  Egholm                                               |       | US          |       | 07/24/1996       |       | ISSUED  02/17/1998  5,719,262        |
| ISIS-2271       |       | PEPTIDE  NUCLEIC ACIDS HAVING ENHANCED BINDING AFFINITY, SEQUENCE SPECIFICITY AND  SOLUBILITY |       | Nielsen  Buchardt  Berg  Egholm                                               |       | US          |       | 07/24/1996       |       | ISSUED  02/03/1998  5,714,331        |

 

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| **Docket  No.** | ** ** | **Title**                                                                                     | ** ** | **Inventor**                                             | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|-----------------------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
| ISIS-2272       |       | PEPTIDE  NUCLEIC ACIDS HAVING 2, 6-DIAMINOPURINE NUCLEOBASES                                  |       | Nielsen  Buchardt  Berg  Egholm                          |       | US          |       | 07/24/1996       |       | ISSUED  07/02/2002  6,414,112        |
| ISIS-2273       |       | PEPTIDE  NUCLEIC ACIDS HAVING ENHANCED BINDING AFFINITY AND SEQUENCE SPECIFICITY              |       | Nielsen  Buchardt  Berg  Egholm  Nielsen  Haaima  Eldrup |       | US          |       | 07/24/1996       |       | ISSUED  06/16/1998  5,766,855        |
| ISIS-2418       |       | PEPTIDE  NUCLEIC ACID MONOMERS AND OLIGOMERS (as amended)                                     |       | Nielsen  Haaima  Eldrup                                  |       | US          |       | 05/23/1997       |       | Pending                              |
| ISIS-2425       |       | SUBSTITUTED  NUCLEIC ACID MIMICS                                                              |       | Christensen  Hansen  Nielsen                             |       | PCT         |       | 03/07/1997       |       | Entered  National  Phase  10/02/1998 |
| ISIS-2447       |       | SUBSTITUTED  NUCLEIC ACID MIMICS                                                              |       | Christensen  Hansen  Nielsen                             |       | US          |       | 01/27/1999       |       | Pending                              |
| ISIS-2451       |       | CHIRAL  PEPTIDE NUCLEIC ACIDS AND METHODS FOR PREPARING SAME                                  |       | Teng                                                     |       | US          |       | 4/11/1997        |       | ISSUED  1/18/2000  6,015,887         |
| ISIS-2455       |       | PEPTIDE  NUCLEIC ACIDS HAVING AMINO ACID SIDE CHAINS                                          |       | Nielsen  Buchardt  Berg  Egholm                          |       | US          |       | 05/01/1997       |       | ISSUED  07/28/1998  5,786,461        |
| ISIS-2456       |       | PEPTIDE  NUCLEIC ACIDS HAVING ENHANCED BINDING AFFINITY, SEQUENCE SPECIFICITY AND  SOLUBILITY |       | Nielsen  Buchardt  Berg  Egholm                          |       | US          |       | 05/01/1997       |       | ISSUED  04/07/1998  5,736,336        |
| ISIS-2508       |       | PNA-DNA-PNA  CHIMERIC MACROMOLEULES                                                           |       | Cook                                                     |       | US          |       | 6/17/1997        |       | Pending                              |
| ISIS-2513       |       | PEPTIDE  NUCLEIC ACIDS HAVING                                                                 |       | Nielsen  Buchardt                                        |       | PCT         |       | 07/24/1997       |       | Entered  Nat’l  Phase           |

 

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| **Docket  No.** | ** ** | **Title**                                                         | ** ** | **Inventor**                    | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                           |
|-----------------|------------|-------------------------------------------------------------------|------------|---------------------------------|------------|-------------|------------|------------------|------------|--------------------------------------|
|            |       | ENHANCED  BINDING AFFINITY, SEQUENCE SPECIFICALLY AND SOLUBILITY  |       | Berg  Egholm                    |       |        |       |             |       | 01/20/1999                           |
| ISIS-2535       |       | PEPTIDE  NUCLEIC ACIDS HAVING 2, 6-DIAMINOPURINE NUCLEOBASES      |       | Nielsen  Buchardt  Egholm  Berg |       | US          |       | 03/10/1999       |       | Pending                              |
| ISIS-2918       |       | CHIRAL  PEPTIDE NUCLEIC ACIDS AND METHODS FOR PREPARING SAME      |       | Teng                            |       | PCT         |       | 4/8/1998         |       | Entered  National  Phase  10/11/1999 |
| ISIS-3018       |       | PEPTIDE  NUCLEIC ACID MONOMERS AND OLIGOMERS                      |       | Nielsen  Haaima  Eldrup         |       | PCT         |       | 05/22/1998       |       | Entered  National  Phase  11/23/1999 |
| ISIS-3044       |       | PEPTIDE  NUCLEIC ACID MONOMERS AND OLIGOMERS                      |       | Nielsen  Haaima  Eldrup         |       | US          |       | 05/22/1998       |       | Pending                              |
| ISIS-3045       |       | CONJUGATED  PEPTIDE NUCLEIC ACIDS HAVING ENHANCED CELLULAR UPTAKE |       | Nielsen  Knudsen                |       | WO          |       | 05/28/1998       |       | Entered  National  Phase  11/28/1999 |
| ISIS-3070       |       | CONJUGATED  PEPTIDE NUCLEIC ACIDS HAVING ENHANCED CELLULAR UPTAKE |       | Nielsen                         |       | US          |       | 02/15/2000       |       | Under  Final  Rejection  10/17/2002  |
| ISIS-3102       |       | PNA-DNA-PNA  CHIMERIC MACROMOLEULES                               |       | Cook                            |       | US          |       | 7/1/1998         |       | ISSUED  8/21/2001  6,277,603         |
| ISIS-3135       |       | NOVEL  PEPTIDE NUCLEIC ACIDS                                      |       | Nielsen  Buchardt  Egholm  Berg |       | US          |       | 06/29/1998       |       | Pending                              |
| ISIS-3155       |       | PNA  COMBINATORIAL LIBRARIES AND                                  |       | Cook  Kiely  Sprankle           |       | U.S.        |       | 08/07/1998       |       | ISSUED  03/20/2001  6,204,326        |

 

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| **Docket  No.** | ** ** | **Title**                                                          | ** ** | **Inventor**                                       | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**                    |
|-----------------|------------|--------------------------------------------------------------------|------------|----------------------------------------------------|------------|-------------|------------|------------------|------------|-------------------------------|
|            |       | IMPROVED  METHODS OF SYNTHESIS                                     |       |                                               |       |        |       |             |       |                          |
| ISIS-3292       |       | PEPTIDE  NUCLEIC ACIDS HAVING ANTIBACTERIAL ACTIVITY               |       | Nielsen  Good                                      |       | US          |       | 07/06/2000       |       | Pending                       |
| ISIS-3303       |       | PEPTIDE  NUCLEIC ACID INCORPORATING A CHIRAL BACKBONE              |       | Nielsen  Lagriffoul  Buchardt                      |       | US          |       | 12/10/1998       |       | ISSUED  03/13/2001  6,201,103 |
| ISIS-3314       |       | HISTIDINE-CONTAINING  PEPTIDE NUCLEIC ACIDS                        |       | Nielsen  Buchardt  Berg  Egholm                    |       | US          |       | 01/04/1999       |       | ISSUED  08/22/2000  6,107,470 |
| ISIS-3809       |       | PEPTIDE  NUCLEIC ACIDS HAVING 2, 6-DIAMINOPURINE NUCLEOBASES       |       | Buchardt  Nielsen  Egholm  Berg                    |       | US          |       | 06/21/1999       |       | Pending                       |
| ISIS  4181      |       | CONJUGATED  PEPTIDE NUCLEIC ACIDS HAVING ENHANCED CELLULAR UPTAKE  |       | Nielsen  Knudsen                                   |       | US          |       | 09/23/1999       |       | ISSUED  02/26/2002  6,350,853 |
| ISIS-4290       |       | HIGHER  ORDER STRUCTURE AND BINDING OF PEPTIDE NUCLEIC ACIDS       |       | Ecker  Buchardt  Egholm  Nielsen  Berg  Mollegaard |       | US          |       | 11/16/1999       |       | Pending                       |
| ISIS-4399       |       | MODULATION  OF CELLULAR TRANSCRIPTION FACTOR ACTIVITY (as amended) |       | Norden  Wittung  Buchardt  Egholm  Nielsen  Berg   |       | US          |       | 07/06/2000       |       | Pending                       |
| ISIS-4800       |       | PEPTIDE  NUCLEIC ACIDS HAVING 2, 6-DIAMINOPURINE NUCLEOBASES       |       | Nielsen  Buchardt  Berg  Egholm                    |       | US          |       | 09/18/2001       |       | Published  10/10/2002         |
| ISIS-4801       |       | MODIFIED  PEPTIDE NUCLEIC                                          |       | Manoharan,  Rajeev                                 |       | U.S.        |       | 05/24/2002       |       | Pending                       |

 

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| **Docket  No.** | ** ** | **Title**                                                         | ** ** | **Inventor**                                                            | ** ** | **Country** | ** ** | **Filing  Date** | ** ** | **Status**            |
|-----------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------|------------|------------------|------------|-----------------------|
|            |       | ACIDS                                                             |       |                                                                    |       |        |       |             |       |                  |
| ISIS-4946       |       | CONJUGATED  PEPTIDE NUCLEIC ACIDS HAVING ENHANCED CELLULAR UPTAKE |       | Nielsen  Knudsen                                                        |       | US          |       | 11/19/2001       |       | Published  12/12/2002 |
| ISIS-5042       |       | LINKED  PEPTIDE NUCLEIC ACIDS                                     |       | Egholm  Nielsen  Buchardt  Dueholm  Christensen  Coull  Kiely  Griffith |       | US          |       | 07/01/2002       |       | Pending               |
| ISIS-5064       |       | PEPTIDE  NUCLEIC ACIDS (PNA)                                      |       | Buchardt  Egholm  Nielsen  Berg                                         |       | US          |       | 05/23/2002       |       | Pending               |
| ISIS-5065       |       | MODIFIED  PEPTIDE NUCLEIC ACIDS                                   |       | Manoharan,  Rajeev                                                      |       | PCT         |       | 05/24/2002       |       | Pending               |

 

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