Exhibit
10.1


 


November 30, 2007


 


Kleanthis
Xanthopoulos


6305
El Camino Del Teatro


La
Jolla, CA  92037


 


Dear
Kleanthis,


 


It
is my pleasure to extend to you an offer to join Regulus Therapeutics, a joint
venture between Isis Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, as President
and CEO reporting to me. In this position, you will receive an annualized
salary of $400,000 and be eligible for an incentive bonus targeted at 30% of
your base salary (established by your Isis Senior Vice President Level). You
will also receive $25,000 annually as a consultant to Alnylam. In addition, you
will receive a one-time signing bonus of $200,000 ($100,000 to be paid by
Regulus and $100,000 to be paid by Alnylam) payable your first week of employment.


 


As additional incentive,
the management of Isis Pharmaceuticals and Alnylam Pharmaceuticals will each grant you an option to purchase 60,000 shares of common
stock. The exercise price for the Isis options will be the fair market value on
your first day of employment. Isis’ options will be non-qualified options and vest
over a four-year period and contain the other terms described in Isis’ Stock
Option Plan. Alnylam’s stock options will be non-qualified options and will be
subject to the standard terms and conditions of the 2004 Alnylam Stock Option
Plan, and the exercise price will be equal to the closing price of the common
stock on your first day of employment at Isis. These options will vest over
four years at the rate of 25% after twelve months of full-time active employment
and then an additional 6.25% for each additional quarter of full-time active
employment until after four full years when the option is fully vested.


 


Vesting of both Isis and Alnylam options will terminate December 31,
2009 (one year after Regulus becomes a C Corporation) as long as you continue
to be an employee of Isis or Regulus.


 


Provided you are still an
employee of Isis or Regulus on January 1, 2009, you will receive an option to
purchase 5% ownership in Regulus based on a mutually agreed upon valuation at
that time, exercisable at a price reflecting such valuation. If we cannot mutually agree on a valuation we will engage a mutually
acceptable outside expert to do so.


 


Additionally, you will be provided the opportunity to enter into a
severance agreement having the following terms: 
18 months of salary continuation in “change of
control” (e.g. Regulus is bought
by Isis, Alnylam or a 3rd party) resulting in
loss of job, elimination of the job or


 

















 


constructive termination. The severance agreement will also provide for
18 months of salary continuation if Isis or Alnylam is bought and you suffer a
job loss, elimination of the job or constructive termination. The severance
agreement will also provide for 18 months of salary continuation
if fired for no cause. The
severance agreement will contain a customary provision releasing Isis, Alnylam
and Regulus from liability. Pending approval of the Isis, Alnylam and Regulus
Boards of Directors, we will provide that your options immediately vest, if one
of the above mentioned salary continuation events occur.


 


While you are an employee of Isis you will have the opportunity to
participate in Isis’ employee benefits program, which includes medical, dental,
life insurance and our 401(k) Retirement Plan and your vacation will begin
accruing at the rate of three (3) weeks per year based on your anniversary date.
If you have any questions, please feel free to contact Shannon Devers at (760)
603-3848.


 


On your first day of employment, please complete and
bring with you the enclosed Employee Confidential Information and Inventions
Agreement. You will also need to bring identification as listed on the back of
the enclosed I-9 form, which is required as proof of eligibility-to-work.


 


If you accept this offer and the terms herein, please sign below and
return the original as soon as possible. You may retain the enclosed signed
copy for your records. We are anticipating a start date of Monday, December 3,
2007.


 


Sincerely,


 


	
  /s/
  Stanley T. Crooke

  	
   

  
	
   

  
	
  Stanley
  T. Crooke

  
	
  Chairman
  and CEO

  
	
  Isis
  Pharmaceuticals, Inc.

  
	
   

  
	
   

  
	
  Accepted
  and agreed:

  
	
   

  
	
  /s/
  Kleanthis Xanthopoulos, PhD

  	
   

  
	
  Kleanthis
  Xanthopoulos, PhD