EXHIBIT 10.40


 


	
  CONFIDENTIAL TREATMENT REQUESTED

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

  



 


C O N F I D E N T I A L


 


PRE-CLINICAL DEVELOPMENT
COLLABORATION AGREEMENT


 


This Pre-Clinical Development Collaboration
Agreement (this “Agreement”) is entered into effective as of March 23, 2007 (the
“Effective Date”) by and between Isis
Pharmaceuticals, Inc., a Delaware corporation (“Isis”) and Korea Institute of Toxicology, a Korean
government-established institute for non-clinical research (“KIT”).


 


WHEREAS, Isis designs and develops drugs and, from time to time,
requires the performance of certain Pre-Clinical Development (as defined
below), including pre-clinical experiments in which a drug is analyzed in vitro and/or administered to animal subjects, the results
of which are intended to be submitted to or held for inspection by a Regulatory
Authority, and KIT has substantial experience and expertise in supporting and
conducting such Pre-Clinical Development;


 


WHEREAS, Isis has amassed significant experience and expertise in the
science of preclinical development studies with oligonucleotide therapeutics, a
rapidly expanding field of scientific inquiry and source of new drugs and Isis
is willing to share that expertise with KIT;


 


WHEREAS, the Parties wish to utilize their respective expertise to
collaborate and conduct Pre-Clinical Development on antisense oligonucleotide drugs (ASOs) created by Isis;


 


NOW, THEREFORE, in consideration of both the foregoing premises and the
terms and conditions set forth below, the Parties hereto agree as follows:


 


1.               DEFINITIONS


 


1.1                 Definitions. When used in this
Agreement or any PCD Program (as defined below), capitalized terms not
otherwise defined in this Agreement or a PCD Program will have the meanings set
forth in Exhibit A, which is attached hereto and made a part hereof.


 


2.               SCOPE OF COLLABORATION AND PCD PROGRAMS


 


2.1.              Scope. The Parties wish to
collaborate for pre-clinical pharmacokinetic and toxicology Studies designed to
meet the safety regulations for filing an IND as well as any additional Studies
required by a Regulatory Authority, Ethics Committee, or institutional review
board as a prerequisite to filing an IND (“Level 1 Development”). In the process of running these Studies it
is anticipated that Isis will provide specific expertise and technical know-how
to aid KIT in performing these and other studies with oligonucleotide
therapeutics agents and biotechnology-derived drug candidates in the future.
Isis has initially selected its [***] drug for inclusion in this Level 1
Development collaboration and may propose additional drugs for inclusion in the
collaboration for Level 1 Development.


 


2.2.              Pre-Clinical Development Plan (“PCD
Plan”). The Parties intend to conduct their collaborative activities in
accordance with the guidelines of the PCD Plan attached hereto as Exhibit B.


 


2.3.              Pre-Clinical Development Program (“PCD
Program”). A PCD Program is an agreement that sets forth the particular
Studies that will be performed by KIT for a specific Study Drug agreed to by both
Isis and KIT in writing. Exhibit C attached to this Agreement contains a
form PCD


 

















 


Program. The PCD Program will include
Protocol(s) which sets forth with specificity how each Study will be performed,
which will be drafted by KIT and agreed to by Isis.


 


3.              PERFORMANCE OF
RESEARCH


 


3.1.      Technology Transfer. Isis will transfer to KIT relevant expertise or
experiences for running pre-clinical toxicology and pharmacokinetics Studies
for oligonucleotides and other biotechnology-derived drug candidates, including
the bioanalytical methods technology that is necessary to successfully perform
the PCD Program(s), which the Parties expect will include:


 


•                  [***];


 


•                  [***];


 


•                  [***];


 


•                  [***];


 


•                   [***];


 


•                  [***];


 


•                  [***];


 


•                  [***]; and


 


•                  [***].


 


KIT
will use certain of these methods, technology and expertise to perform the PCD
Program(s). In addition, KIT will have the right to use the expertise
acquired for running toxicology studies for oligonucleotide therapeutics, and
to adapt Isis’ bioanalytical methods used in PCD Program(s) so that KIT can
[***].


 


3.2.      Performance. KIT and Isis will each
perform its obligations under all PCD Programs in accordance with high
professional standards generally accepted in the industry.


 


3.3.      Compliance with Protocol and Laws. KIT
will perform its obligations under all PCD Programs in compliance with the
Protocol applicable to a Study, all applicable laws, rules and regulations of
the jurisdiction in which a Study is conducted or is to be used, as well as the
requirements of any Regulatory Authority. KIT agrees to comply with all current
applicable Good Laboratory Practice regulations as set forth in 21 C.F.R. Part
58, as amended (including retention/preservation obligations thereunder).


 


3.4. Quality
Control; Personnel.


 


3.4.1.                     Throughout
the term of any PCD Program, KIT will maintain appropriate internal and
external quality control and monitoring measures (including those required by
21 C.F.R. Part 11) to ensure proper performance of Pre-Clinical Development.


 


3.4.2.                     When performing
its obligations under a PCD Program, KIT will use only those of its employees,
consultants and agents (including the Identified Employee) who have


 


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sufficient experience, education, training,
expertise and other qualifications to perform Pre-Clinical Development at the
highest professional level.


 


3.4.3.                     In light of the mutual goal and
understanding between the Parties that the Pre-Clinical Development will be
used for submission(s) to Regulatory Authorities, Ethics Committees, and
institutional review boards, including for registration of INDs for studies in
humans, each Party further represents and agrees that neither it, nor its
respective employees, Affiliates or agents have ever been (i) debarred, or
(ii) convicted of a crime for which a person can be debarred, under
subsection (a) or (b) of 21 U.S.C. § 335a, as amended, and each
Party agrees that it does not now and will not in the future use in any
capacity the services of any person debarred under subsection (a) or (b)
of 21 U.S.C. § 335a, as amended. If during the term of this
Agreement, a Party or any other person performing Pre-Clinical Development
hereunder (i) becomes debarred or disqualified, or (ii) receives notice of an
action or threat of an action with respect to debarment or disqualification,
such Party will immediately notify the other Party.


 


3.5.               Destruction. The Parties agree
that Confidential Information will be preserved and retained until mutual
agreement of the Parties to destroy or otherwise dispose of it.


 


3.6.               Inquiries. In furtherance of the
collaborative relationship created by this Agreement, the Parties will promptly
respond to reasonable questions and requests from one another regarding any
Pre-Clinical Development and make available, upon reasonable notice, its
respective employees, consultants and agents to meet with the other Party, its
representatives and/or representatives of any Regulatory Authority.


 


4.               CORESPONDENCE WITH REGULATORY AUTHORITIES


 


4.1.      KIT will notify Isis immediately (and in any
event within 24 hours) in writing or by email (i) if any Regulatory Authority
inspects, requests an inspection, or makes written or oral inquiries regarding
any aspect of a Study and (ii) of any violation or deficiency regarding a Study
noted by any Regulatory Authority.


 


4.2.      KIT will provide Isis as soon as reasonably
practicable (but in any event within 5 days) with a copy of all correspondence
between KIT and any Regulatory Authority regarding any aspect of a Study. KIT
will provide Isis a copy of any proposed response to any Regulatory Authority
that relates to a Study for Isis’ review prior to submission, and KIT agrees to
incorporate Isis’ comments to such response.


 


5.              INSPECTIONS


 


KIT will allow Isis and any Regulatory Authority (including their
respective employees, consultants and agents) to inspect each location at which
Pre-Clinical Development is performed.


 


6.              COMPENSATION;
EXPENSES; INSTRUMENTATION


 


6.1.      Compensation. Subject to Section 12 below,
as consideration for timely performance of Pre-Clinical Development under any
and all PCD Program(s) and in support of the expense of the Identified
Employee, Isis will pay KIT, within fifteen (15) days following execution of
this Agreement, the sum of [***] and thereafter, Isis will make an additional
payment of [***] (the “Isis Funding”). In addition, Isis will reimburse KIT for
certain costs and expenses as set forth in each applicable PCD Program. Other
than Isis Funding and reimbursement by Isis for agreed


 


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upon costs and expenses, KIT will pay any costs required to conduct the
Pre-Clinical Development in accordance with each PCD Program.


 


6.2.      Procedure. KIT will invoice Isis on each
payment date, and such invoice will be due within thirty (30) days of Isis’
receipt of such invoice.


 


6.3.      Currency. Amounts set forth in each PCD
Program and all invoices will be in U.S. dollars and payment by Isis will be
made in U.S. dollars.


 


6.4.      [***]. Isis agrees to provide to KIT, in
consideration for performance of Pre-Clinical Development under this Agreement,
the following [***] in Isis’ possession (“[***]”) for use by KIT in performance
of Pre-Clinical Development:


 


(i) [***]; and


 


(ii) [***].


 


Isis is providing this [***] to KIT, and KIT accepts such [***], in its
“as is” condition. Isis disclaims any and all warranties (whether expressed or
implied) with respect to the [***], including any warranties of fitness for a
particular purpose, merchantability, suitability for use in performance of
Pre-Clinical Development, or non-infringement. KIT agrees to indemnify Isis
from and against any liability arising from use of the [***].


 


Isis will notify KIT when [***] is available for shipment. The [***]
will be shipped by Isis to KIT, EXW (Incoterms 2000), Isis’ premises, to the
destination specified in writing by KIT. All shipping and insurance costs are
the responsibility of KIT.


 


 7.            ROYALTIES; ROYALTY TERM;
MILESTONE PAYMENT.


 


7.1.      Royalties. (a) If [***], then Isis will
pay KIT a royalty of [***]% of the Net Sales of any Product containing such
Study Drug.


 


(b)  Alternate Royalty Rate.
If [***], the royalty rate will be less than [***]% and will be specified in
the PCD Program; provided, however, in such event
the PCD Program must be signed by Isis’ Chief Executive Officer or Chief
Financial Officer. If [***], the Parties will negotiate an appropriate
alternative royalty rate that is less than a [***]% royalty rate and that is
based on [***]. In any case, if [***], Isis will not have an obligation to pay
any royalty to KIT.


 


7.2.      Royalty Term. (a) With respect to
Product(s) that are subject to a bona fide agreement between Isis and a
third-party for the commercialization of such Product(s), Isis’ obligation to
pay royalties to KIT under Section 7.1 above will begin upon [***] and will
continue so long as [***]. In addition, the specific aspects of royalty payment
timing, payment method, currency, records retention, audit rights, and other
material commercial terms customarily applicable to royalties will be handled
by the Parties in the manner set forth in applicable underlying contracts
between Isis and third-parties for Product(s), and the Parties agree to
cooperate in good faith, using the spirit and intent of such underlying contracts,
to address any issues between the Parties relevant to royalties that are not
otherwise dealt with in such contracts.


 


(b)         With respect to Product(s) that Isis is
commercializing on its own and not pursuant to a bona fide commercialization
agreement with a third-party, Isis’ obligation to pay royalties to KIT under
Section 7.1 above, will (on a country-by-country basis) begin upon [***] and
will continue so


 


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long as [***]. The specific aspects of royalty payment timing, payment
method, currency, records retention, audit rights, and other material
commercial terms customarily applicable to royalties will be handled in
accordance with Exhibit D.


 


7.3         Milestone Payment. If [***], then Isis
will pay KIT a milestone payment of $[***]. This $[***] milestone payment to
KIT will be fully creditable toward any future royalties payable by Isis to
KIT.


 


8.                MATERIALS


 


8.1.      Ownership. All right title and interest in
to and under any material, compound, or product (including any derivation
thereof) provided by Isis or its employees, consultants and/or agents under
this Agreement or any PCD Program or acquired by KIT in the course of providing
Pre-Clinical Development (“Materials”) will be and remain the property of Isis.


 


8.2.      Obligations. KIT will (a) hold all
Materials in strict confidence and take all reasonable precautions to protect
the Materials, (b) not transfer the Materials or divulge any information
derived therefrom to any third person, including any affiliated entity, (c) not
make any use whatsoever at any time of the Materials (other than to perform
Pre-Clinical Development) and (d) not analyze the composition of matter or
sequence of the Materials. Any employees, consultants and agents of KIT given
access to the Materials must have a legitimate need for access and will be
bound in writing to restrictions no less restrictive than those set forth in
this Section 8.2. KIT will be responsible to Isis for any violations of this
Section 8.2 by such individuals/entities.


 


9.              STUDY INVENTIONS AND
DATA


 


9.1.      Existing Property. All Inventions,
Intellectual Property Rights and other technology owned by a Party as of the
Effective Date will remain the separate property of such Party and no licenses
or other rights (whether by implication, estoppel or otherwise) with respect to
such Inventions, Intellectual Property Rights or other technology are granted
to any other party except as expressly set forth in this Agreement. All
employees, consultants and agents of KIT will be bound in writing to
substantially the same obligations imposed on KIT as set forth in this Section
9.1.


 


9.2.       Ownership.
All right title and interest in to and under (a) any Inventions conceived,
created, discovered or developed (whether directly or indirectly) solely by
either Party or jointly by the Parties from performing under this Agreement or
a PCD Program and (b) any results, information or documents arising, resulting
or generated (whether directly or indirectly) solely by either Party or jointly
by the Parties from performing under this Agreement or a PCD Program
(collectively, the “Program Data”) will be and remain the property of Isis,
except for KIT Methods. KIT and Isis agree that they will each execute and
deliver or cause the execution and delivery of all such documents,
certificates, assignments and other writings, and take such other actions as
may be necessary or desirable or requested by the other Party, to vest in such
Party the ownership rights granted hereunder. All employees, consultants and
agents of KIT will be bound in writing to substantially the same obligations
imposed on KIT as set forth in this Section 9.2. KIT will be responsible to
Isis for any violations of this Section 9.2 by any employees, consultants and
agents of KIT.


 


9.3.      Disclosure. KIT agrees that it will (a)
notify Isis, promptly following conception, creation, discovery, development or
reduction to practice, and in any event upon the request of Isis, of any


 


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Inventions or KIT Methods conceived, created, discovered, developed or
reduced to practice by KIT or any of its employees, consultants or agents
arising or resulting from performing under this Agreement or any PCD Program
and (b) disclose to Isis, on at least an annual basis, or promptly following
Isis’ earlier written request, the progress of all Studies and all Program
Data.


 


9.4         Pre-Clinical Development License. KIT
hereby grants to Isis a non-exclusive, fully paid, royalty-free, license under
KIT’s rights in KIT Methods for Isis’ use.


 


10.            CONFIDENTIAL
INFORMATION; PUBLICATION


 


10.1.        Ownership. All rights to Confidential
Information will be and remain the property of Isis.


 


10.2.        Obligations. KIT will (a) hold the
Confidential Information in strict confidence and take all reasonable
precautions to protect the Confidential Information, (b) not divulge the
Confidential Information to any third person, including any affiliated entity,
without Isis’ written consent, and (c) not make any use of the Confidential Information
(other than to perform Pre-Clinical Development). Any employees, consultants
and agents of KIT given access to any Confidential Information must have a “need
to know” and will be bound in writing to restrictions no less restrictive than
those set forth in this Section 10.2. KIT will be responsible to Isis for any
violations of this Section 10.2 by such individuals/entities.


 


10.3.        Return. After the expiration or earlier
termination of this Agreement, a particular PCD Program, or upon the written
request of Isis, KIT will turn over to Isis all Confidential Information and
all documents or media containing Confidential Information (including all
Program Data).


 


10.4.             Authorized Disclosure. If KIT is
required to disclose Confidential Information to comply with an applicable law,
regulation, legal process, or court order of a government authority, KIT may
disclose such Confidential Information only to the person required to receive
such disclosure; provided, however, that KIT will
(a) to the extent permitted by such law, regulation, process, order or rules,
first have given prompt (but in no event less than five (5) business days)
advance notice to Isis to enable it to seek any available exemptions from or
limitations on such disclosure requirement and will reasonably cooperate in
such efforts by Isis, (b) furnish only the portion of the Confidential
Information which is legally required; (c) use all reasonable efforts to secure
confidential protection of such Confidential Information, and (d) continue to
perform its obligations of confidentiality set out herein.


 


10.5.             Use of Name. Unless required by
law, rule or regulation, neither Isis nor KIT will be permitted to use the name
of the other Party in any news or publicity release or other commercial fashion
without the prior written consent of the other party; provided,
however, that Isis will be permitted to use, and KIT hereby grants
prior approval for Isis to use, the name of KIT in connection with disclosure
of the data and results of a Study. Nothing in this Section 10.5 will be
construed as prohibiting Isis from submitting reports with respect to a Study
to any Ethics Committee or Regulatory Authority. For purposes of clarification,
KIT acknowledges that Isis may be required under federal and state securities
laws to disclose the existence and certain basic terms of this Agreement and
certain PCD Programs.


 


10.6.             Publication.


 


10.6.1. KIT may publish Program Data if (i) KIT
proposes a publication containing Program Data and Isis consents in
writing to such proposed publication, or (ii) Isis notifies KIT that Isis does
not intend to publish certain Program Data and such Program Data is published
by KIT in


 


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accordance with the terms of this Article
10.6. Further, Isis
and KIT agree that publications of Program Data will be produced in accordance
with the Consolidated Standards of Reporting Trials (CONSORT) Guidelines.


 


10.6.2. A copy of any proposed KIT
publication or presentation materials, including manuscripts, slides,
overheads, outlines, summaries, abstracts or posters will be provided to Isis
for Isis’ written review and comment at least 30 days prior to the scheduled
presentation or publication submission date. If Isis informs KIT within such 30
day time period that postponement of KIT’s publication or presentation is
necessary in order to protect Isis’ patent or other proprietary rights, KIT
will postpone such publication or presentation, but KIT will not be required to
do so for a period of longer than 3 months.


 


10.6.3. Notwithstanding the foregoing, Isis
will have the absolute right to demand deletion of any Confidential Information
(except Program Data) and KIT will delete such information upon written notice
from Isis. However, Isis will not request deletions that will preclude the
meaningful publication of the Program Data in accordance with CONSORT
Guidelines.


 


11.            INDEMNIFICATION


 


11.1             Indemnification by KIT. KIT will
indemnify and hold harmless Isis from any and all liability, loss (including
reasonable attorneys’ fees) or damage it may suffer (including as a result of
claims, demands, costs or judgments against it) that arise or are alleged to
arise out of (a) the negligence or willful misconduct of KIT or any of its
employees, consultants or agents, (b) the failure of KIT or any of its
employees, consultants or agents to comply with Isis’ written instructions, (c)
KIT’s handling, storage or disposal of Materials, or (d)  the
material breach of this Agreement or any PCD Program by KIT or any of its
employees, consultants or agents (including premature cancellation or
termination of Pre-Clinical Development).


 


11.2             Indemnification by Isis. Isis will
indemnify and hold harmless KIT from any and all liability, loss (including
reasonable attorneys’ fees) or damage it may suffer (including as a result of
claims, demands, costs or judgments against it) that arise or are alleged to
arise out of Isis’ clinical or commercial use of Program Data, except to the
extent KIT has an obligation to indemnify Isis under Section 11.1 above.


 


11.3             Conditions. Each Party’s agreement
to indemnify and hold the other harmless is conditioned upon the indemnified
Party (i) providing written notice to the indemnifying Party of any claim,
demand or action arising out of the indemnified activities within thirty (30)
days after the indemnified Party has knowledge of such claim, demand or action,
(ii) permitting the indemnifying Party to assume full responsibility to
investigate, prepare for and defend against any such claim or demand, (iii)
assisting the indemnifying Party, at the indemnifying Party’s reasonable
expense, in the investigation of, preparation of and defense of any such claim
or demand; and (iv) not compromising or settling such claim or demand without
the indemnifying Party’s prior written consent.


 


12.              TERM AND
TERMINATION


 


12.1.          Term. This Agreement will be effective
on the Effective Date and continue in full force and effect until the date that
is three (3) years after the Effective Date. In the event this Agreement
expires or is earlier terminated and the term of any PCD Program(s) extends
beyond the term of this Agreement (and such PCD Program is not also
specifically terminated), this Agreement will continue until expiration or
earlier termination of each such PCD Program.


 


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12.2.          Termination of Study. Any PCD Program
or particular Study under a PCD Program may be terminated by Isis, without
cause, upon 30 days written notice.


 


12.3.          Termination for Cause. Any PCD Program
or particular Study under a PCD Program may be terminated by either Party, upon
30 days written notice to the other Party, in the event of a material breach of
this Agreement or such PCD Program by a Party or any of its employees,
consultants and/or agents and such breach is not cured within such 30 day
notice period. Notwithstanding the foregoing, in the event a Party disputes
that it is in material breach of this Agreement, subject to such 30-day period,
the dispute will be referred to the attention of the President of KIT and an
Executive Vice President of Isis (the “Executive Officers”). The Executive
Officers will meet as soon as reasonably possible thereafter and in good faith
attempt to resolve such dispute and attempt to resolve the underlying breach. If,
within 30 days after such matter is referred to them, the Executive Officers
are unable to resolve such dispute or resolve the underlying breach then, the
dispute regarding whether there has been a material breach of the Agreement
will referred for resolution by arbitration pursuant to Section 13.7 below. If
the arbitrator(s) determines that the Agreement has been materially breached
and the breaching Party fails to cure such breach within 30 days of such
determination, the non-breaching Party will thereafter be entitled to terminate
this Agreement without further delay and pursue any rights and remedies
available to such Party (at law or in equity).


 


12.4.          Return of Program Data. In the event
of termination of a PCD Program or a particular Study under a PCD Program, KIT
will promptly deliver all Program Data, Materials, and other Confidential
Information as further described in the applicable PCD Program.


 


12.5.          Survival. Expiration or termination of
this Agreement or any PCD Program by either party for any reason will not
affect the rights and obligations of the Parties accrued up to such expiration
or the effective time of such termination. In addition, the rights and duties
under Sections 3.1, 3.4, 3.5, 3.6, 4, 5, 7, 8, 9, 10, 11, 12 and 13 will
survive the expiration or termination of this Agreement.


 


13.            GENERAL PROVISIONS


 


13.1.          Notice.  All notices required or
permitted under this Agreement and any PCD Program will be in writing and will
be deemed effectively given: (a) upon personal delivery to the Party to be
notified, (b) when sent by confirmed facsimile or email if sent during the
normal business hours of the recipient (if not sent during such hours, then on
the next business day), (c) 5 days after timely deposit as registered or certified
mail, return receipt requested, postage prepaid or (d) 2 days after timely
deposit with an internationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All notices will be sent to
the appropriate address(es) or number(s) of the Party to be notified as set
forth below, or at such other address(es), number(s) or person(s) as such Party
may designate by advance written notice to the party providing notice:


 


If to KIT:


 


Korea Institute of Toxicology


100 Jangdong


Yuseong, Daejeon


305-343, Korea


Attention: 
Sang Seop Han, DVM, Ph.D.


President


 


and a copy to each individual designated in a PCD Program as to receive
notice.


 


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If to Isis:


 


1896 Rutherford Road

Carlsbad, CA  92008

Fax: 760-268-5035

Attn: Executive Vice President & CFO


 


with a copy to:


 


1896 Rutherford Road

Carlsbad, CA 92008

Fax: 760-268-4922

Attn: Vice President, Legal


 


and a copy to each individual designated in a PCD Program as to receive
notice.


 


13.2.          Independent Contractor. KIT will perform Pre-Clinical Development as an
independent contractor and will have complete and exclusive control over KIT’s
employees, consultants and agents. Notwithstanding the collaborative
relationship created by this Agreement, nothing herein will preclude Isis from
seeking and/or entering into a separate relationship with a third-party for the
provision of pre-clinical research of a same or similar nature as the
Pre-Clinical Development.


 


13.3.          Entire
Agreement. This
Agreement (including the PCD Plan and any PCD Programs) constitutes the entire
understanding between the Parties with respect to the subject matter covered
hereby and supersedes any prior negotiations, representations, agreements and
understandings regarding such subject matter. In the event there is a conflict
between the terms and conditions of this Agreement, and the terms and
conditions of any PCD Program, the terms and conditions of this Agreement will
govern and control (unless expressly stated otherwise in the PCD Program).


 


13.4.          Modifications; Waivers. Neither
this Agreement nor any PCD Program may be amended, supplemented or otherwise
modified except by an instrument in writing signed by each of the Parties. The
failure of any Party to insist upon strict performance of any provision of this
Agreement or any PCD Program or to exercise any right hereunder or thereunder
will not constitute a waiver of that provision of or right under this Agreement
or such PCD Program or of any other provision of or right under this Agreement
or such PCD Program.


 


13.5.          Severability. If any provision of this Agreement or
any PCD Program is declared invalid, illegal or unenforceable, such provision
will be severed and all remaining provisions will continue in full force and
effect.


 


13.6.          Governing
Law. This Agreement
and each PCD Program will be construed and enforced in accordance with the laws
of England, without regard to its choice of law principles.


 


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13.7.        Dispute Resolution.


 


13.7.1. Any dispute that arises under this Agreement will be first
referred to the Executive Officers for resolution as set forth in Section 12.3
above. In the event that the Executive Officers fail to resolve the dispute,
the Parties agree to refer the dispute to arbitration.


 


13.7.2. Arbitration Proceedings.
If the Parties pursue arbitration proceedings under Section 12.3 or 13.7.1
above, the dispute will be finally settled under the Rules of Conciliation and
Arbitration of the International Chamber of Commerce by one or more arbitrators
appointed in accordance with the rules. Such arbitration will be carried out in
Geneva, Switzerland. The language to be used in the arbitration proceeding
shall be English.. Either Party may apply to the arbitrator(s) or to a court
for interim injunctive relief until the arbitration decision is rendered or the
dispute, controversy or claim is otherwise resolved.


 


13.7.3. Costs and Expenses. Each Party will bear its own costs
and expenses and attorneys’ fees and an equal share of the arbitrator’s fees
and any administrative fees of arbitration. Notwithstanding the foregoing, if a
Party has been found to be in material breach of this Agreement, the breaching
Party will be responsible for all the costs and expenses of the arbitrator and
any administrative fees of arbitration.


 


13.7.4. Confidentiality. Except
to the extent required by law, neither a Party nor the arbitrator may disclose
the existence, content, or results of a arbitration without the prior written
consent of both Parties, and provided that the foregoing will not prevent a
Party from confidentially disclosing the existence, content and results of the
arbitration in confidence to its directors, professional advisors, and existing
or potential investors or acquirers, and others on a need to know basis or as
required by law or regulation.


 


13.8.                Due Authorization;
Authority; Conflicts. The
persons executing this Agreement represent and warrant that they have full
power and authority to enter into this Agreement on behalf of the entities they
purport to represent. Each Party represents and warrants to the other Party as
of the Effective Date and the effective date of each PCD Program that this
Agreement and such PCD Program has been duly authorized, executed and delivered
and that the performance of its obligations under this Agreement and such PCD
Program does not conflict with any order, law or regulation or any agreement or
understanding by which such party or its assets or property are bound and that
no such agreement or understanding would prevent it from fulfilling its obligations under this
Agreement or such PCD Program and that, during the term of this Agreement and
such PCD Program, it will not enter into any agreement that would materially
impair its ability to fulfill its obligations under this Agreement or such PCD
Program.


 


13.9.                Assignment. KIT
will have no right to assign, subcontract, transfer, or otherwise dispose of
its rights under this Agreement or any PCD Program or to assign the burdens
hereof or thereof without the prior written consent of Isis. Subject to the
foregoing, this Agreement and any PCD Program will inure to the benefit of and
be binding upon the Parties’ successors and assigns.


 


13.10.          Conflicts.
In the event of a conflict between this Agreement and any PCD Program, the
terms of this Agreement will govern and control, unless such PCD Program
specifically references the conflicting provision in this Agreement and states
that such provision of this Agreement is superseded by the relevant provision
of such PCD Program.


 


13.11.          Remedies. Isis’ rights and remedies
hereunder (including those set forth in Section 12) are cumulative and not
exclusive of any rights or remedies that are otherwise available under law.


 


10

















 


13.12.          Attorneys’
Fees. Subject to Section 13.7 above, if any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement or any
PCD Program, the prevailing Party will be entitled to reasonable attorneys’
fees, costs and disbursements, in addition to any other relief to which such
Party may be entitled. In addition, if any action is properly instituted to
collect on any amount due under any PCD Program, the Party against whom the
collection is instituted will pay the reasonable costs and expenses incurred in
connection with such action.


 


14.                        FORCE MAJEURE


 


14.1.                The Parties are not liable for the
failure to perform their obligations under the present Agreement, if such
failure is caused by acts of God such as fire, flood, or earthquake, provided
that these circumstances have directly affected the performances of the present
Agreement. In this case, the time obligation of performances can be extended
for a period to compensate for the duration of such circumstances.


 


14.2.                The Party which cannot perform its
obligations under the present Agreement shall notify the other Party by email
or fax no later than fifteen days after the beginning of such causes.


 


14.3.                If these circumstances last longer than
six months, either Party shall be entitled to terminate the entire Agreement.


 


IN WITNESS WHEREOF, the Parties have executed
this Agreement in duplicate originals effective as of the Effective Date.


 


	
  ISIS PHARMACEUTICALS, INC. 

  	
   

  	
  KOREA INSTITUTE OF TOXICOLOGY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stanley T. Crooke, MD, PhD

  	
   

  	
  By:

  	
  /s/ Sang Seop Han

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  Stanley T. Crooke, MD, PhD

  	
   

  	
  Name:

  	
  Sang Seop Han

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman & CEO

  	
   

  	
  Title:

  	
  President

  
									



 


11
















 


Exhibit A


 


“Affiliates” means, with respect to the Party specified, any individual
or entity that directly or indirectly controls, is controlled by or is under
common control with such Party.


 


“C.F.R.” means the U.S. Code of Federal Regulations.


 


“Confidential Information” means Program Data, bioanalytical methods,
the existence of this Agreement and its terms, and all information disclosed
(whether orally, electronically, or in writing) to KIT by Isis and/or Isis’
employees, consultants or agents or acquired by KIT in the course of providing
Pre-Clinical Development (whether before or after the Effective Date); provided, however, that “Confidential Information” will not
include any information KIT can document by written records (a) is or (through
no improper action or inaction by the KIT or any of its employees, consultants
or agents) becomes generally available or known to the public, (b) was known to
KIT on a non-confidential basis prior to receipt from Isis or (c) was
rightfully disclosed to KIT by a third party having no obligation of
confidentiality.


 


“Ethics Committee” means any board, committee or other group designated
to review biomedical research involving humans or animals as subjects and
monitoring or having authority over a Study.


 


“Identified Employee” means an English-speaking KIT employee proposed
by KIT and approved by Isis to perform Pre-Clinical Development in accordance
with one or more PCD Programs.


 


“IND” means an investigational new drug application, as defined in 21
C.F.R. 312 or any successor regulation or any equivalent application or filing
outside the United States to seek such regulatory approval from a Regulatory
Authority in such jurisdiction.


 


“Inventions” means any and all ideas, concepts, inventions,
discoveries, techniques, processes, machines, manufactures, methods,
developments, improvements, designs, systems, specifications, schematics,
drawings, information, protocols, devices (including prototypes), works of
authorship, formulae, algorithms, computer programs, trade secrets, technology,
know-how, evaluations, studies, analytical results, assays, data,
specifications, technical information, and samples, whether or not patentable.


 


“Intellectual Property Rights” means all intellectual property rights
worldwide arising under statutory or common law or by contract and whether or
not perfected, now existing or hereafter filed, issued, or acquired including
all (i) United States and foreign patent applications containing one or more
claims, (ii) United States provisional applications, (iii) non-provisional,
continuation, continuation-in-part, and divisional applications that claim the
priority of any patent rights described in (i) or (ii) above, and (iv) United
States and foreign patents issuing on patent rights described in (i) and (iii)
above and reissues, reexaminations, and extensions thereof; rights relating to
the protection of trade secrets and confidential information; and any right
analogous to those set forth herein and any other proprietary rights relating
to intangible property.


 


“KIT Methods” means (i) any methods, techniques, or procedures related
to the conduct of toxicological studies that are conceived, created, discovered
or developed by KIT in performance of the Pre-Clinical Development, and (ii)
any improvements or modifications made by KIT to Isis’ bioanalytical methods as
contemplated by Section 3.1 above.


 


“Level 1 Development” has the meaning set forth in Section 2.1 above.


 


 “Level 1 Development Studies”
include all of the following:


 

















 


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


•                  [***]


 


“NDA” means a new drug application submitted to the United States Food
and Drug Administration, or any successor application or procedure, or any
equivalent application or filing outside the United States to seek regulatory
approval from a Regulatory Authority in such jurisdiction.


 


“Net Sales” means the definition of “Net Sales” (or similar term) set
forth in a bona fide separate written agreement between Isis and a third-party
related to the commercialization of the applicable Product(s) for which
royalties are being calculated under this Agreement. In the event no such
agreement exists between Isis and a third-party net sales has the meaning set
forth in Exhibit D.


 


“Party” means either Isis or KIT, as the case may be, and “Parties”
means both Isis and KIT.


 


“PCD Plan” has the meaning set forth in Section 2.2 above.


 


“PCD Program” has the meaning set forth in Section 2.3 above.


 


“Pre-Clinical Development” means Level 1 Development performed under a
PCD Program.


 


“Product(s)” means an Isis drug product (containing a Study Drug)
approved for marketing by a Regulatory Authority, where data resulting from
Pre-Clinical Development was a part of the applicable IND or NDA submission for
such drug product.


 


“Program” means a development project involving the conduct of one or
more Studies.


 


“Program Data” has the meaning set forth in Section 9.2 above.


 


“Protocol” means a written document drafted by KIT that sets forth the
specific manner in which a particular Study will be performed.


 


“Regulatory Authority” means any public or private entity or agency
monitoring or having authority over a Study (and includes the U.S. Food and
Drug Administration).


 


“Study” or “Studies” means experiment(s) or investigation(s) performed
by KIT pursuant to a Protocol.


 


“U.S.” means the United States of America.


 


“U.S.C.” means the United States Code.


 

















 


Exhibit B


 


PCD PLAN


 


Background


 


Isis designs
and develops drugs and would like to collaborate in the performance of certain
pre-clinical research experiments in which its drugs are analyzed in vitro and/or administered to animal subjects, the results
of which are intended to be submitted to or held for inspection by a Regulatory
Authority. KIT has substantial experience and expertise in supporting and
conducting Pre-Clinical Development, and therefore, the Parties wish to
collaborate in order to utilize their respective expertise. This PCD Plan
embodies the particular guiding principles by which the Parties will
collaborate under the Agreement and perform Pre-Clinical Development under PCD
Programs.


 


Isis’
Responsibilities


 


Isis’
responsibilities under this collaboration with KIT are to:


 


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


 


KIT
Responsibilities


 


KIT’s
responsibilities are to conduct, in collaboration with Isis, certain of the
following Level 1 Development Studies as specified by Isis in the applicable
PCD Program:


 


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


• [***]


 

















 


Implementation


 


PCD Program. Isis
will work closely with KIT to formulate a PCD Program for the conduct of all
Studies, enabling KIT to produce a responsive Protocol(s) for each Study. Protocol(s)
will be finalized and agreed upon in writing by both Parties and attached to
the PCD Program as a part thereof.


 


For
identification purposes, each PCD Program will be assigned a unique number and
reference the underlying Studies by each Protocol title or other reasonable
means. It is contemplated that one PCD Program will be entered into for each
Study Drug and that each PCD Program will, among other things, set forth in
detail:


 


(a)                                   the
specific Pre-Clinical Development to be performed and the form and substance of
deliverables to be provided by KIT under the PCD Program with respect to each
Study (which Pre-Clinical Development and deliverables will be defined in a
reasonably objective manner such that their respective occurrences are readily
verifiable);


 


(b)                                  the
period during or by which the Pre-Clinical Development will be performed or such
deliverable will be provided;


 


(c)                                   the
location or locations at which the Pre-Clinical Development will be performed;


 


(d)                                  the
price to be paid by Isis for performance of the Pre-Clinical Development
(including the effect of failure to meet any specified timeline or to provide
adequate Pre-Clinical Development), which expenses/fees incurred by KIT are
reimbursable by Isis, if any, and when such payment and/or reimbursement, if
any, will be due (which points will be defined in a reasonably objective manner
such that their respective occurrences are readily verifiable); and


 


(e)                                   additional
representations and collaboration obligations of the Parties and requirements
imposed on the Parties applicable to providing such Pre-Clinical Development.


 


Changes. KIT and Isis acknowledge that, from
time to time after execution of a PCD Program, changes/additions to the PCD
Program may be requested (including with respect to the items covered in items
(a) through (e) above) (each, a “Change Order”). Any Change Order will be
negotiated in good faith. In the event KIT reasonably determines that a Change
Order is reasonably likely, KIT will promptly notify Isis.


 


Compliance.
In connection with any PCD Program, KIT will inform Isis of obligations and
requirements (both affirmative and negative) imposed upon or with which Isis
must comply in connection with such Program (including any shipping, labeling
or import/export requirements associated with each Study).


 

















 


Exhibit C


 


Form of PCD Program


 


PCD PROGRAM # [   ]


 


 


	
  DRUG
  NAME:

  	
   

  	
  ISIS [          ]

  
	
  PROTOCOL
  NO(S):

  	
   

  	
  [                  ]

  
	
  DATE:

  	
   

  	
  [                  ]

  



 


This
PCD Program [     ] (“PCD Program”) is made and entered
into as of [          ] by
and between Isis Pharmaceuticals, Inc. (“Isis”),
and Korea Institute of Toxicology (“KIT”).


 


WHEREAS,
Isis and KIT have entered into that certain Pre-Clinical Development
Collaboration Agreement dated March 23, 2007 (the “Agreement”); and


 


WHEREAS,
pursuant to the Agreement, KIT and Isis have agreed that KIT will conduct
certain Pre-Clinical Development in accordance with PCD Program(s), and Isis
and KIT now desire to enter into this PCD Program.


 


WHEREAS,
KIT and Isis specifically desire that KIT conduct certain Level 1 Development
with respect to
[                   
                           ]
(the “Program”) involving one or more Studies of the drug, ISIS
[         ] (“Study Drug”) as set
out in the Protocol(s) to be agreed upon by the Parties.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the Parties
hereby agree as follows:


 


1.       Defined Terms.  When used
in this PCD Program, capitalized terms not otherwise defined in this PCD
Program will have the meanings ascribed to them in the Agreement.


 


2. Protocol.
The Studies will be
conducted as detailed in each Protocol (which KIT will produce) which, when
finalized and agreed to by the Parties, will be incorporated herein by
reference and will be considered an integral part of this PCD Program.


 


3. Scope
of Pre-Clinical Development; Deliverables. KIT will perform the following Studies in
accordance with the attached Study Protocol(s), the Agreement, and the PCD
Plan:


 


•                  [NOTE:  INSERT HERE ALL STUDIES TO BE PERFORMED BY
KIT FOR THIS PCD PROGRAM]


 


KIT
also agrees to prepare written reports in a form and with substance sufficient
to support Isis’ IND and/or NDA registration to a Regulatory Authority, and
provide such reports (including all Program Data) to Isis within 30 days
following the completion of each Study.


 


4. Royalty
Rate. The royalty
rate payable to KIT, in accordance with and subject to the terms of the
Agreement, [***] is [***]%.


 

















 


5. Time-line.
The Pre-Clinical
Development under this PCD Program will be performed in accordance with the
timeline agreed upon by both Parties in each Protocol.


 


6. Budget
and Payment Schedule. Isis agrees to provide Isis Funding in support of the Pre-Clinical
Development under this PCD Program, in accordance with Section 6.1 of the
Agreement. Other than Isis Funding and reimbursement by Isis for agreed
upon costs and expenses set forth in this PCD Program, KIT will pay any costs
required to conduct the Pre-Clinical Development under this PCD Program.


 


7. Costs
and Expenses. Isis
will pay [***] shipping costs related to shipment of Study Drug, and will
reimburse KIT for [***] of the actual cost of the [***] (or $[***] per [***],
whichever is [***]) within thirty (30) days of the first dose of Study Drug in
the monkeys pursuant to the Protocol(s), and Isis’ receipt of an invoice. When
invoicing Isis under this PCD Program for payment and reimbursement, KIT agrees
to provide Isis with copies of all documentation related to such reimbursable
costs and expenses.


 


8. Study Drug. Isis agrees to provide KIT with sufficient
Study Drug for the purpose of KIT’s performance of Pre-Clinical Development
under this PCD Program, and Study Drug will be considered Materials in
accordance with the Agreement.


 


9. Changes and Modifications.  Any changes requested in this PCD Program
after Isis agrees to and signs this PCD Program will require a written Change Order in accordance with the
Agreement. When written approval of the Change Order is received from Isis the
change will be made.


 


10. Term and Termination; Transition Process.
(a) The term of this
PCD Program will commence upon execution of this PCD Program by KIT and Isis
and will continue until completion of the Pre-Clinical Development hereunder, provided, however, either party may terminate this PCD
Program in accordance with Article 12, Term and Termination, of the Agreement.


 


(b) If this PCD Program is
so terminated, or KIT is otherwise unable or unwilling to complete the
Pre-Clinical Development under this PCD Program (which KIT understands will
significantly harm Isis), KIT agrees to (i) promptly notify Isis that
performance of the Pre-Clinical Development has or will cease, (ii) work
cooperatively with Isis to properly wind down and conclude all Study activities
in a manner that is designed to preserve the integrity of the Program Data,
(iii) transfer to Isis all Program Data in KIT’s possession and any other
information Isis deems necessary or useful to enable continuation of the
Studies, and (iv) agree with Isis on an [***] other than the [***] previously
agreed to by the Parties, that fairly and equitably compensates KIT based upon
the [***] actually completed by KIT under this PCD Program.


 


11. Incorporation by Reference; Conflict.  The provisions of the Agreement are hereby
expressly incorporated by reference into and made a part of this PCD Program. In
the event of a conflict between the terms and conditions of this PCD Program
and those of the Agreement, the terms of the Agreement will take precedence and
control.


 

















 


IN WITNESS WHEREOF, the
parties have hereunto signed this PCD Program effective as of the day and year
first written above.


 


	
  Signed
  For And On Behalf Of

  	
   

  	
  Signed
  For And On Behalf Of

  
	
   

  	
   

  	
   

  
	
  Korea
  Institute of Toxicology 

  	
   

  	
  Isis
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  
									



 

















 


Exhibit D


 


Royalty Provisions Applicable to Section 7.2
(b) of the Agreement


 


With respect to Product(s) that Isis is commercializing on its own and
not pursuant to a bona fide commercialization agreement with a third-party,
Isis’ obligation to pay royalties to KIT on Net Sales of Isis Product(s) under
Section 7.1 of the Agreement, will (on a country-by-country basis) begin upon
the first commercial sale of such Product(s) by Isis and will continue so long
as there is a valid claim on an issued patent owned by Isis that covers the use
or sale of such Product in such country. The specific aspects of royalty
payment timing, payment method, currency, records retention, audit rights, and
other material commercial terms customarily applicable to royalties will be
handled in the following manner:


 


Timing of Royalty Payments.  Any royalties
due pursuant to Section 7.2(b) will be paid within 45 days of the end of each
calendar quarter and will be calculated in respect of the Net Sales occurring
in such calendar quarter.


 


Currency; Payment Method.  Any royalties
due to KIT will be paid in U.S. dollars, by wire transfer in immediately
available funds to an account designated by KIT.


 


Records Retention. Isis will maintain
complete and accurate books, records and accounts that fairly reflect Net Sales
with respect to each Product, in each case in sufficient detail to confirm the
accuracy of any payments required hereunder and in accordance with GAAP, which
books, records and accounts will be retained by Isis for a period of 5 years
after the end of the period to which such books, records and accounts pertain.


 


Audit Rights. KIT will have the right to have
an independent certified public accounting firm of nationally recognized
standing, reasonably acceptable to Isis, have access during normal business hours,
and upon reasonable prior written
notice, to Isis’ records as may be reasonably necessary to verify the accuracy
of Net Sales for any calendar quarter or calendar year ending not more than 24
months prior to the date of such request; provided, however,
that KIT will not have the right to conduct more than one such audit in any
calendar year. KIT will bear the cost of such audit unless the audit reveals an
underpayment of more than 5% from the reported results, in which case Isis will
bear the cost of the audit.


 


Net Sales.  For purposes of this Exhibit
D, “Net Sales” means the gross receipts
received by Isis for the sale of a Product to a third party by Isis, less
deductions for (i) prompt payment or other trade and quantity discounts
actually granted, (ii) amounts paid or credited for returns or allowances,
(iii) the amount of any sales tax or other taxes assessed directly on the sale
of such Product which is not refunded, (iv) charge back payments or rebates
granted to managed health care organizations or federal, state and local
governments, their agencies, purchasers and reimbursers, and (v) transportation
and delivery charges, including insurance premiums actually incurred.


 


Notwithstanding the
foregoing, amounts received by Isis or its Affiliates or sublicensees for the
sale of Products among Isis, its Affiliates or sublicensees whether for their
internal use or for resale or other disposition with not be included in the
computation of Net Sales hereunder. For purposes of this Exhibit D, a
distributor will not be deemed a sublicensee and sales by Isis, its Affiliates
or sublicensees to a distributor will not be subject to royalties.