Document:

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                                                                    EXHIBIT 10.5
                           ISIS PHARMACEUTICALS, INC.
                          REGISTRATION RIGHTS AGREEMENT

               THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as
of January 14, 2000 by and between ISIS PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda
exempted limited liability company ("EIS").

                                R E C I T A L S:

               A. Pursuant to a Securities Purchase Agreement, dated as of the
date hereof by and between the Company and EIS (the "Purchase Agreement"), EIS
has acquired, or may acquire in the future, (i) certain shares of common stock,
par value $.001 per share, of the Company (the "Common Stock"), (ii) certain
shares of Series B Convertible Exchangeable Preferred Stock, par value $.001 per
share, of the Company (the "Series B Preferred Stock"), (iii) a convertible
promissory note (the "Note"), which Series B Preferred Stock and Note are
convertible into shares of Common Stock, and (iv) warrants to be issued pursuant
to the Purchase Agreement (the "Warrants", together with the Series B Preferred
Stock and the Note, the "Securities") exercisable for shares of Common Stock.

               B. The execution of the Purchase Agreement has occurred on the
date hereof and it is a condition to the closing of the transactions
contemplated thereby that the parties execute and deliver this Agreement.

               C. The parties desire to set forth herein their agreement as to
the terms and subject to the conditions set forth herein related to the granting
of certain registration rights to the Holders (as defined below) relating to the
Common Stock held by such Holders and the Common Stock underlying the
Securities.

                               A G R E E M E N T:

               The parties hereto agree as follows:

               1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:

               "Commission" shall mean the U.S. Securities and Exchange
Commission.

               "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

               "Holders" or "Holders of Registrable Securities" shall mean EIS
and any Person who shall have acquired Registrable Securities from EIS as
permitted herein, either individually

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or jointly, as the case may be, in a transaction pursuant to which registration
rights are transferred pursuant to Section 11 hereof.

               "Person" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.

               "Registrable Securities" means (i) any shares of Common Stock
purchased pursuant to the Purchase Agreement, any shares of Common Stock issued
or issuable upon conversion of shares of Series B Preferred Stock (or issued as
dividends thereon) or the Note, and any shares of Common Stock issued or
issuable upon exercise of any Warrant, and (ii) any Common Stock issued or
issuable in respect of the securities referred to in clause (i) above upon any
stock split, stock dividend, recapitalization or similar event; excluding in all
cases, however, any Registrable Securities sold by a Person in a transaction
(including a transaction pursuant to a registration statement under this
Agreement and a transaction pursuant to Rule 144 promulgated under the
Securities Act) in which registration rights are not transferred pursuant to
Section 11 hereof.

               The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of the
effectiveness of such registration statement.

               "Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2, 3 or 4
hereof, including without limitation, all registration, qualification and filing
fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
and the reasonable fees and disbursements, not to exceed $10,000, of one counsel
for the Holders, such counsel to be selected by Holders holding a majority of
the Registrable Securities included in such registration.

               "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

               "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and the costs of any accountants, attorneys or other experts
retained by the Holders, except as expressly included in Registration Expenses.

               2. Demand Registration.

               (a) Requests for Registration. From and after the date hereof
until the date of filing of the Shelf Registration Statement (as defined
herein), any Holder or Holders who collectively hold Registrable Securities
representing at least 50% of the Registrable Securities then outstanding shall
have the right at any time from time to time, to request one registration

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under the Securities Act of a minimum of 500,000 shares of Common Stock (as
adjusted for any combinations, consolidations, stock distributions, stock
dividends or other recapitalizations with respect to such shares) on Form S-1,
S-2 or S-3 (if available) or any similar registration statement (a "Demand
Registration"), such form to be selected by the Company as appropriate. The
request for the Demand Registration shall specify the approximate number of
Registrable Securities requested to be registered. Within 20 days after receipt
of any such request, the Company will give written notice of such requested
registration to all other Holders of Registrable Securities. The Company shall
include such other Holders' Registrable Securities in such offering if they have
responded affirmatively within 20 days after the receipt of the Company's
notice. The Holders in aggregate will be entitled to request only one Demand
Registration hereunder. A registration will not count as the permitted Demand
Registration until it has become effective (unless such Demand Registration has
not become effective due solely to the fault of the Holders requesting such
registration, including a request by such Holders that such registration be
withdrawn). The Company shall pay all Registration Expenses in connection with
any Demand Registration whether or not such Demand Registration has become
effective and the Holders requesting registration shall pay all Selling Expenses
in connection therewith.

               (b) Priority on Demand Registration. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities requested to
be included in such offering exceeds the number of Registrable Securities which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration such number of
Registrable Securities allocated pro rata among the Holders thereof based upon
the number of Registrable Securities owned by each such Holder. Other than the
securities issued by the Company to Reliance Insurance Company, no securities
other than Registrable Securities hereunder shall be included in such Demand
Registration without the prior written consent of Holders who collectively hold
Registrable Securities representing at least 50% of the Registrable Securities
then outstanding.

               (c) Restrictions on Demand Registration. The Company may postpone
the filing or the effectiveness of a registration statement for a Demand
Registration one time in any 12 month period for up to 90 days if the Company
determines in good faith that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or would require disclosure of any information that the board of
directors of the Company determines in good faith the disclosure of which would
be detrimental to the Company; provided, however, that in such event, the
Holders initially requesting such Demand Registration will be entitled to
withdraw such request and, if such request is withdrawn, such Demand
Registration will not count as the permitted Demand Registration hereunder and
the Company will pay any Registration Expenses in connection with such
registration.

               (d) Selection of Underwriters. The Holders will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to the Demand Registration, subject to the Company's prior written
approval, which will not be unreasonably withheld or delayed.

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               (e) Other Registration Rights. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, which conflicts with the rights granted
to the Holders hereunder, without the prior written consent of the Holders of at
least 50% of the Registrable Securities.

               3. Shelf Registration Statement.

               (a) The Company will cause, by June 30, 2002 (the "S-3 Filing
Date"), to be prepared and filed, and will use commercially reasonable efforts
to have declared effective with the Commission within 60 days after filing, a
Registration Statement on Form S-3 (or such other form of registration statement
that the Company shall determine and that is reasonably satisfactory to the
Holders) for an offering to be made on a continuous basis pursuant to Rule 415
(or any similar rule that may be adopted by the Commission) under the Securities
Act covering the Registrable Securities (the "Shelf Registration Statement" and
such registration, the "Shelf Registration"); provided, however, that if the
Company shall furnish to the Holders a certificate signed by any executive
officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company it would be seriously detrimental to the Company to
file the Shelf Registration Statement at such time and it is therefore essential
to defer the filing of the Shelf Registration Statement, the Company shall have
the right to defer such filing one time in any 12 month period for a reasonable
period, not to exceed 60 days; provided further that, if the Completion Date (as
defined in the Securities Purchase Agreement) is later than June 30, 2002, the
S-3 Filing Date shall be 90 days after the Completion Date with respect to the
Shares of Common Stock purchased on the Completion Date and the shares of Common
Stock issuable upon exercise of the Warrant granted to any Holder on the
Completion Date. The Shelf Registration Statement may be terminated (and the
Company shall have no obligation to update the Shelf Registration Statement and
may suspend sales thereunder) at such time as all Registrable Securities can be
sold by their Holders within a three-month period without compliance with the
registration requirements of the Securities Act pursuant to Rule 144 (including
Rule 144(k)) promulgated thereunder (the "Termination Date"). The Holders shall
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of distribution of such
securities as shall be required to effect the Shelf Registration Statement. In
that connection, each Holder shall be required to represent that all such
information which is given is both complete and accurate in all material
respects.

               (b) So long as the Shelf Registration Statement is effective, the
Company will furnish to the Purchaser as soon as practicable after available
(but in the case of the Company's Annual Report to Stockholders, within 120 days
after the end of each fiscal year of the Company), (i) one copy of (A) its
Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted auditing standards
certified by a national firm of certified public accountants), (B) if not
included in substance in the Annual Report to Stockholders, its Annual Report on
Form 10-K, (C) if not included in substance in its Quarterly Reports to
Stockholders, its quarterly reports on Form 10-Q during such fiscal year, and
(D) a full copy of the particular Registration Statement covering the
Registrable Securities (the foregoing, in each case, excluding exhibits), (ii)
upon the reasonable

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request of any Holder, all exhibits excluded by the parenthetical in clause (i)
of this paragraph, in the form generally available to the public, and (c) upon
the reasonable request of any Holder, an adequate number of copies of the
prospectuses and supplements to supply to any other party requiring such
prospectuses.

               4. Piggyback Registrations. (a) Right to Piggyback. At any time
that the Company shall propose to register Common Stock under the Securities Act
(other than in a registration on Form S-3 relating to sales of securities to
participants in a Company dividend reinvestment plan, S-4 or S-8 or any
successor form or in connection with an acquisition or exchange offer or an
offering of securities solely to the existing shareholders or employees of the
Company), the Company shall give prompt written notice to all Holders of
Registrable Securities of its intention to effect such a registration and,
subject to Section 4(b) and the other terms of this Agreement, shall include in
such registration all Registrable Securities that are permitted under applicable
securities laws to be included in such registration and with respect to which
the Company has received written requests for inclusion therein by the Holders
within 20 days after the receipt of the Company's notice (each, a "Piggyback
Registration"; together with a Demand Registration and the Shelf Registration, a
"Registration").

               (b) Priority on Piggyback Registrations. If a Piggyback
Registration is an underwritten registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration,
only as may be permitted in the reasonable business judgment of the managing
underwriters for such registration:

                (i) first, up to that number of securities the Company proposes
        to sell;

                (ii) second, up to that number of Registrable Securities
        requested to be included in such registration by the Holders and that
        number of securities requested to be included in such registration by
        any other Person, pro rata among the Holders of such Registrable
        Securities and such other Persons, on the basis of the number of
        Registrable Securities and other securities of the Company requested to
        be included by each such Holder and other Persons; and

                (iii) third, up to that number of other securities requested to
        be included in such registration.

The Holders of any Registrable Securities included in such a registration shall
execute an underwriting agreement and customary accompanying documents in form
and substance satisfactory to the managing underwriters.

               (c) Right to Terminate Registration. If, at any time after giving
written notice of its intention to register any of its securities as set forth
in Section 4(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its

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election, give written notice of such determination to each Holder of
Registrable Securities and thereupon be relieved of its obligation to register
any Registrable Securities in connection with such registration (but not from
its obligation to pay the Registration Expenses in connection therewith as
provided herein).

               (d) Selection of Underwriters. The Company shall have the right
to select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration.

               5. Expenses of Registration. Except as otherwise provided herein,
all Registration Expenses incurred in connection with all registrations pursuant
to Sections 2, 3 and 4 shall be borne by the Company and all Selling Expenses
relating to securities registered on behalf of the Holders of Registrable
Securities shall be borne by such Holders.

               6. Holdback Agreements.

               (a) The Company agrees, unless the underwriters managing the
registered public offering otherwise agree, (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, for its own account during the
seven days prior to and during the 90-day period beginning on the effective date
of any underwritten Demand Registration (except (A) as part of such underwritten
registration, (B) pursuant to registration statements on Form S-4 or Form S-8 or
any successor form, (C) pursuant to a registration statement then in effect or
(D) as required under any existing contractual obligation of the Company), and
(ii) to cause its officers and directors and to use reasonable efforts to cause
each holder of at least 5% (on a fully-diluted basis) of its outstanding Common
Stock, or any securities convertible into or exchangeable or exercisable for
Common Stock, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such periods (except as part of such underwritten
registration, if otherwise permitted).

               (b) Each Holder agrees, if requested by the managing underwriter
or underwriters in an underwritten offering of securities of the Company, not to
effect any offer, sale, distribution or transfer, including a sale pursuant to
Rule 144 (or any similar provision then effect) under the Securities Act (except
as part of such underwritten registration), during the seven-day period prior
to, and during the 180-day period (or such shorter period as may be agreed to in
writing by the Company and the Holders of at least 50% of the Registrable
Securities) following the effective date of such Registration Statement to the
extent timely notified in writing by the managing underwriter or underwriters.

               7. Registration Procedures. Whenever the Company is under the
obligation to register Registrable Securities hereunder, the Company will use
all reasonable efforts to effect the Registration and the sale of such
Registrable Securities, and pursuant thereto the Company will as expeditiously
as possible:

               (a) subject to Section 2(c) and 3(a) hereof, prepare and file
with the Commission a registration statement on any form for which the Company
qualifies with respect

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to such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will (i) furnish to the counsel selected by the Holders copies of
all such documents proposed to be filed, which documents will be subject to the
prompt review of such counsel, and (ii) notify each Holder of Registrable
Securities covered by such registration of any stop order issued or threatened
in writing by the Commission);

               (b) subject to Section 2(c), 3(b) and 7(e) hereof, prepare and
file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for, in the case of a Demand
Registration, a period equal to the shorter of (i) six months and (ii) the time
by which all securities covered by such registration statement have been sold,
and in the case of the Shelf Registration Statement, a period equal to the
shorter of (x) one year and (y) the date upon which the Termination Date occurs,
and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;

               (c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

               (d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 7(d), or (ii) subject
itself to taxation in any jurisdiction;

               (e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any material fact necessary to make the statements
therein in light of the circumstances under which they were made were not
misleading, and, at the request of any such seller, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading; provided, however, that the Company shall
not be required to amend the registration statement or supplement the Prospectus
for a period of up to six months if the board of directors of the Company
determines in good faith that to do so would reasonably be expected to have a
material adverse effect on any proposal or plan by the Company to engage in any
financing, acquisition or disposition of assets (other than in the ordinary
course of business)

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or any merger, consolidation, tender offer or similar transaction or would
require the disclosure of any information that the board of directors of the
Company determines in good faith the disclosure of which would be detrimental to
the Company, it being understood that the period for which the Company is
obligated to keep the Registration Statement effective shall be extended for a
number of days equal to the number of days the Company delays amendments or
supplements pursuant to this provision. Upon receipt of any notice pursuant to
this Section 7(e), the Holders shall suspend all offers and sales of securities
of the Company and all use of any prospectus until advised by the Company that
offers and sales may resume, and shall keep confidential the fact and content of
any notice given by the Company pursuant to this Section 7(e);

               (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;

               (g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;

               (h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;

               (i) at reasonable times and as reasonably requested make
available for inspection by a representative of the Holders of Registrable
Securities included in the registration statement, any underwriter participating
in any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and use commercially reasonable efforts to cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

               (j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 12(a) of the Securities Act and Rule 158 thereunder;

               (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order; and

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               (l) if the registration is an underwritten offering, use all
reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.

               8. Obligations of Holders. Whenever the Holders of Registrable
Securities sell any Registrable Securities pursuant to a Registration, such
Holders shall be obligated to comply with the applicable provisions of the
Securities Act, including the prospectus delivery requirements thereunder, and
any applicable state securities or blue sky laws.

               9. Indemnification. (a) In connection with any registration
statement for any Registration in which a Holder of Registrable Securities is
participating, the Company agrees to indemnify, to the fullest extent permitted
by applicable law, each such Holder of Registrable Securities, its officers and
directors and each Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities, reasonable and
documented expenses or any amounts paid in settlement of any litigation,
investigation or proceeding commenced or threatened to which each such
indemnified party may become subject under the Securities Act including, without
limitation, reasonable attorneys fees and disbursements (collectively, "Claims")
insofar as such Claim arose out of (i) any untrue or alleged untrue statement of
material fact contained, on the effective date thereof, in any such registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder expressly for
use therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
the underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.

               (b) In connection with any registration statements for any
Registration in which a Holder of Registrable Securities is participating, each
such Holder will furnish to the Company in writing such customary information as
the Company reasonably requests for use in connection with any such registration
statement or prospectus (the "Seller's Information") and, to the fullest extent
permitted by applicable law, will indemnify the Company, its directors and
officers and each Person who controls the Company (within the meaning of the
Securities Act) against any and all Claims to which each such indemnified party
may become subject under the Securities Act insofar as such Claim arose out of
(i) any untrue or alleged untrue statement of material fact contained, on the
effective date thereof, in any such registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that with respect to a Claim arising pursuant to clause (i) or (ii)
above, the material misstatement or omission is contained in such Seller's
Information; provided, further, that the obligation to indemnify will be
individual to

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each Holder and will be limited to the amount of proceeds received by such
Holder from the sale of Registrable Securities pursuant to such registration
statement.

               (c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to provide such notice shall
not release the indemnifying party of its obligation under paragraphs (a) and
(b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.

               (d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably withheld). Furthermore, the indemnifying party shall not,
except with the prior written approval of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect of such claim or
litigation without any payment or consideration provided by each such
indemnified party.

               (e) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company
(if any), the underwriters, the sellers of Registrable Securities and any other
sellers participating in the registration statement from the sale of shares
pursuant to the registered offering of securities for which indemnity is sought
but also the relative fault of the Company, the underwriters, the sellers of
Registrable Securities and any other sellers participating in the registration
statement in connection with the statement or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company (if any), the
underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement shall be deemed to be based on the
relative relationship of the total net proceeds from the offering (before
deducting expenses) to the Company (if any), the total underwriting commissions
and fees from the offering (before deducting expenses) to the underwriters and
the total net proceeds from the offering (before deducting expenses) to the
sellers of Registrable Securities and any other sellers participating in the
registration statement. The relative fault of the Company, the underwriters, the
sellers of Registrable Securities and any other sellers participating in the
registration statement shall be determined by reference to,

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among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the sellers of Registrable Securities
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

               (f) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of the Registrable
Securities.

               10. Participation in Underwritten Registrations. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which any prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

               11. Transfer of Registration Rights. The rights granted to any
Holder under this Agreement may be assigned to any permitted transferee of
Registrable Securities, in connection with any transfer or assignment of
Registrable Securities by a Holder; provided, however, that: (a) such transfer
is otherwise effected in accordance with applicable securities laws, (b) if not
already a party hereto, the assignee or transferee agrees in writing prior to
such transfer to be bound by the provisions of this Agreement applicable to the
transferor, (c) such transferee shall own, after giving effect to such transfer,
Registrable Securities representing at least 200,000 shares of Common Stock (as
adjusted for any combinations, consolidations, stock distributions, stock
dividends or other recapitalizations with respect to such shares), and (d) EIS
shall act as agent and representative for such Holder for the giving and
receiving of notices hereunder.

               12. Information by Holder. Each Holder shall furnish to the
Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement and shall promptly notify the
Company of any changes or updates in such information.

               13. Exchange Act Compliance. The Company shall comply with all of
the reporting requirements of the Exchange Act then applicable to it and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Registrable Securities. The Company shall cooperate with each Holder in
supplying such information as may be necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.

                                       11
<PAGE>   12

               14. Termination of Registration Rights. All registration rights
granted under this Agreement shall terminate and be of no further force and
effect, as to any particular Holder, at such time as all Registrable Securities
held by such Holder can be sold within a three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
(including Rule 144(k)) promulgated thereunder.

               15. Miscellaneous.

               (a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
such Registrable Securities.

               (b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement; provided, however, that in no event shall any Holder have the right
to enjoin, delay or interfere with any offering of securities by the Company.

               (c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only with the prior
written consent of the Company and Holders of at least 50% of the Registrable
Securities; provided, however, that without the prior written consent of all the
Holders, no such amendment or waiver shall reduce the foregoing percentage
required to amend or waive any provision of this Agreement.

               (d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto, and
shall inure to the benefit and be enforceable by each Holder of Registrable
Securities from time to time. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
Holders of Registrable Securities are also for the benefit of, and enforceable
by, any permitted transferee of Registrable Securities in accordance with
Section 11 hereof.

               (e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

                                       12
<PAGE>   13

               (f) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.

               (g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

               (h) Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of New York without regard to principles of conflicts of laws, except
that all issues concerning the relative rights of the Company and its
stockholders shall be governed by the Delaware General Corporation Law, without
giving effect to the principles thereof relating to conflicts of laws.

               (i) Notices. All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified airmail,
return receipt requested and postage prepaid or by facsimile transmission (with
receipt confirmed by telephone), addressed as follows:

                      (i) if to the Company, to:

                      Isis Pharmaceuticals, Inc.
                      2292 Faraday Avenue
                      Carlsbad, CA 92008
                      Facsimile:  (760) 931-9639
                        telephone confirmation required at (760) 603-2460
                      Attention:  B. Lynne Parshall

                      with a copy to:

                      Cooley Godward LLP
                      4365 Executive Drive
                      San Diego, CA 92121
                      Facsimile:  (619) 453-3555
                        telephone confirmation required at (619) 550-6000
                      Attention:  Julie Robinson, Esq.

                      (ii) if to EIS, to:

                      Elan International Services, Ltd.
                      Flatts, Smiths Parish
                      Bermuda, FL 04
                      Facsimile:  (441) 292-2224
                        telephone confirmation required at (441) 292-9169
                      Attention:   President

                                       13
<PAGE>   14

                      with a copy to:

                      Brock Silverstein LLC
                      800 Third Avenue, 21st Floor
                      New York, New York 10022
                      Facsimile:  (212) 371-5500
                        telephone confirmation required at (212) 371-2000
                      Attention:  Scott Rosenblatt, Esq.

               (j) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.

                            [Signature page follows]

                                       14
<PAGE>   15

               IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

                                      ISIS PHARMACEUTICALS, INC.

                                      By: ________________________
                                          Name:B. Lynne Parshall
                                          Title:  Executive Vice President

                                      ELAN INTERNATIONAL SERVICES, LTD.

                                      By: ________________________
                                          Name:Kevin Insley
                                          Title:  President<PAGE>   1
                                                                    EXHIBIT 10.6
                                 HEPASENSE LTD.
                          REGISTRATION RIGHTS AGREEMENT

               THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as
of January 14, 2000, by and among HEPASENSE LTD., a Bermuda exempted limited
liability company (the "Company"), ISIS PHARMACEUTICALS, INC., a Delaware
corporation ("Isis"), and ELAN INTERNATIONAL SERVICES, LTD., a Bermuda exempted
limited liability company ("EIS").

                                R E C I T A L S:

               A. Pursuant to a Subscription, Joint Development and Operating
Agreement, dated as of the date hereof, by and among the Company, Isis, ELAN
CORPORATION, PLC, an Irish public limited company, ELAN PHARMA INTERNATIONAL
LIMITED, a company incorporated under the laws of Ireland ("EPIL"), and EIS (the
"JDOA"), Isis has acquired certain common shares, par value $1.00 per share (the
"Common Shares"), of the Company, and certain non-voting convertible preferred
shares, par value $1.00 per share (the "Preferred Shares"; together with Common
Shares, the "Securities"), of the Company and EIS has acquired certain Preferred
Shares, which Preferred Shares are convertible into Common Shares.

               B. The execution of the JDOA has occurred on the date hereof and
it is a condition to the closing of the transactions contemplated thereby that
the parties execute and deliver this Agreement.

               C. The parties desire to set forth herein their agreement as to
the terms and conditions related to the granting of certain registration rights
to the Holders (as defined below) relating to the Common Shares held by such
Holders and the Common Shares underlying the Securities.

                               A G R E E M E N T:

               The parties hereto agree as follows:

               1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:

               "Commission" shall mean the U.S. Securities and Exchange
Commission.

               "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

               "Holders" or "Holders of Registrable Securities" shall mean Isis,
EIS and any Person who shall have acquired Registrable Securities from either
Isis or EIS as permitted herein, either individually or jointly, as the case may
be, in a transaction pursuant to which registration rights are transferred
pursuant to Section 10 hereof.

<PAGE>   2

               "Person" shall mean an individual, a partnership, a company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental or quasi-governmental entity, or any department,
agency or political subdivision thereof.

               "Registrable Securities" means (i) any Common Shares subscribed
for pursuant to the JDOA (ii) any Common Shares issuable upon conversion of the
Preferred Shares and (iii) any Common Shares issued or issuable in respect of
the securities referred to in clause (i) and (ii) above upon any stock split,
stock dividend, recapitalization or similar event; excluding in all cases,
however, any Registrable Securities sold by a Person in a transaction (including
a transaction pursuant to a registration statement under this Agreement and a
transaction pursuant to Rule 144 promulgated under the Securities Act) in which
registration rights are not transferred pursuant to Section 10 hereof.

               The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of the
effectiveness of such registration statement.

               "Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Sections 2 or 3
hereof, including without limitation, all registration, qualification and filing
fees, exchange listing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits including without limitation reconciliation to US
GAAP incident to or required by any such registration and the reasonable fees
and disbursements, not to exceed $10,000, of one counsel for the Holders, such
counsel to be selected by Holders holding a majority of the Registrable
Securities included in such registration.

               "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

               "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and the costs and fees of any accountants, attorneys or other
experts retained by any Holder or the Holders.

               2. Demand Registrations.

               (a) Requests for Registration. From and after the occurrence of
the initial public offering of the Company's Common Shares under the Securities
Act, any Holder or Holders who collectively hold Registrable Securities
representing at least 33% of the Registrable Securities then outstanding shall
have the right at any time from time to time, to request three registrations
under the Securities Act of all or part of their Registrable Securities on Form
F-1, F-2 or F-3 (or other analogous forms applicable to foreign private issuers
such as the Corporation if available) or any similar registration statement
(each, a "Demand Registration"), such form to be selected by the Company as
appropriate. The request for the Demand Registration shall specify the
approximate number of Registrable Securities requested to be registered, which
must have a

                                       2
<PAGE>   3

minimum expected aggregate offering price to the public of at least $1,000,000.
Within 20 days after receipt of any such request, the Company will give written
notice of such requested registration to all other Holders of Registrable
Securities. The Company shall include such other Holders' Registrable Securities
in such offering if they have responded affirmatively within 20 days after the
receipt of the Company's notice. Each of EIS and Isis shall be permitted at
least one Demand Registration; provided, however, that the Holders in aggregate
will be entitled to request only one Demand Registration hereunder within any
12-month period. A registration will not count as a permitted Demand
Registration until it has become effective (unless such Demand Registration has
not become effective due solely to the fault of the Holders requesting such
registration, including a request by such Holders that such registration be
withdrawn). The Company shall pay all Registration Expenses in connection with
any Demand Registration whether or not such Demand Registration has become
effective.

               (b) Priority on Demand Registrations. If a Demand Registration is
an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering,
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in such offering without adversely affecting the marketability of
the offering, the Company will include in such registration:

                        (i) first, the Registrable Securities requested to be
                included in such registration by the Holders (or, if necessary,
                such Registrable Securities pro rata among the Holders thereof
                based upon the number of Registrable Securities owned by each
                such Holder) together with any securities held by third parties
                holding a similar, previously granted right to be included in
                such registration; and

                        (ii) thereafter, other securities requested to be
                included in such registration, as determined by the Company.

               (c) Restrictions on Demand Registration. The Company may postpone
for up to 90 days in any 12-month period, the filing or the effectiveness of a
registration statement for a Demand Registration if the Company determines in
good faith that such Demand Registration would reasonably be expected to have a
material adverse effect on any proposal or plan by the Company to engage in any
financing, acquisition or disposition of assets (other than in the ordinary
course of business) or any merger, consolidation, tender offer or similar
transaction or would require disclosure of any information that the board of
directors of the Company determines in good faith the disclosure of which would
be detrimental to the Company; provided, that in such event, the Holders
initially requesting such Demand Registration will be entitled to withdraw such
request and, if such request is withdrawn, such Demand Registration will not
count as a permitted Demand Registration hereunder and the Company will pay any
Registration Expenses in connection with such registration.

                                       3
<PAGE>   4

               (d) Selection of Underwriters. The Holders will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to the Demand Registration, subject to the Company's prior written
approval, which will not be unreasonably withheld or delayed.

               (e) Other Registration Rights. Except as provided in this
Agreement, so long as any Holder owns any Registrable Securities, the Company
will not grant to any Persons the right to request the Company to register any
equity securities of the Company, or any securities convertible or exchangeable
into or exercisable for such securities, pari passu with or which conflicts with
the rights granted to the Holders hereunder, without the prior written consent
of the Holders of at least 50% of the Registrable Securities; provided, however,
that the Company may grant rights to other Persons to demand and piggyback
registrations so long as the Holders of Registrable Securities are entitled to
participate in any such registrations with such Persons pro rata on the basis of
the number of shares owned by each such Holder.

               3. Piggyback Registrations.

               (a) Right to Piggyback. At any time the Company shall propose to
register Common Shares under the Securities Act (other than in a registration
statement on Form S-3 relating to sales of securities to participants in a
Company dividend reinvestment plan, or Form S-4 or S-8 or any successor form or
in connection with an acquisition or exchange offer or an offering of securities
solely to the existing shareholders or employees of the Company) (each, a
"Piggyback Registration", together with a Demand Registration, a
"Registration"), the Company will give prompt written notice to all Holders of
Registrable Securities of its intention to effect such a registration and,
subject to Section 3(b) and the other terms of this Agreement, will include in
such registration all Registrable Securities which are permitted under
applicable securities laws to be included in the form of registration statement
selected by the Company and with respect to which the Company has received
written requests for inclusion therein within 20 days after the receipt of the
Company's notice.

               (b) Priority on Piggyback Registrations. If a Piggyback
Registration is to be an underwritten offering, and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration:

                        (i) first, the securities the Company proposes to sell;

                        (ii) the Registrable Securities requested to be included
                in such registration by the Holders and any securities requested
                to be included in such registration by any other Person having
                equal priority to registration with the Holders, pro rata among
                the Holders of such Registrable Securities and such other
                Persons, on the basis of the number of shares owned by each of
                such Holders; and

                                       4
<PAGE>   5

                        (iii) thereafter, other securities requested to be
                included in such registration.

               The Holders of any Registrable Securities included in such an
underwritten offering must execute an underwriting agreement, in customary form
and in form and substance satisfactory to the managing underwriters.

               (c) Right to Terminate Registration. If, at any time after giving
written notice of its intention to register any of its securities as set forth
in Section 3(a) and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register such securities, the Company may, at its election, give
written notice of such determination to each Holder of Registrable Securities
and thereupon be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from its obligation to
pay the Registration Expenses in connection therewith as provided herein).

               (d) Selection of Underwriters. The Company will have the right to
select the investment banker(s) and manager(s) to administer an offering
pursuant to a Piggyback Registration.

               4. Expenses of Registration. Except as otherwise provided herein
or as may otherwise be prohibited by applicable law, all Registration Expenses
incurred in connection with Registrations pursuant to Sections 2 and 3 shall be
borne by the Company and all Selling Expenses relating to securities registered
on behalf of the Holders of Registrable Securities shall be borne by such
Holders; provided that, and notwithstanding anything herein contained to the
contrary, the Company shall not have any obligation pursuant to the provisions
hereof unless and until the Company is able to satisfy (after taking into
account such obligations) the requirements of Section 39A (2A) of the Bermuda
Companies Act of 1981 (or any successor legislation).

               5. Holdback Agreements.

               (a) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 180-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registration
statements on Form S-4 or Form S-8 or any successor form), unless the
underwriters managing the registered public offering otherwise agree, and (ii)
to cause its officers and directors and to use reasonable efforts to cause each
holder of at least 5% (on a fully-diluted basis) of its outstanding Common
Shares, or any securities convertible into or exchangeable or exercisable for
Common Shares, purchased from the Company at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such periods (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.

                                       5
<PAGE>   6

               (b) Each Holder agrees, if requested by the managing underwriter
or underwriters in an underwritten offering of securities of the Company, not to
effect any offer, sale, distribution or transfer, including a sale pursuant to
Rule 144 (or any similar provision then effect) under the Securities Act (except
as part of such underwritten registration), during the seven-day period prior
to, and during the 180-day period (or such shorter period as may be agreed to in
writing by the Company and the Holders of at least 50% of the Registrable
Securities) following the effective date of such Registration Statement to the
extent timely notified in writing by the managing underwriter or underwriters;
provided, that each of the Persons described in Section 5(a)(ii) shall also have
agreed to such restriction on sale.

               6. Registration Procedures. Whenever the Holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use all reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of distribution thereof, and pursuant thereto the Company will
as expeditiously as possible:

               (a) subject to Section 2(c) hereof, prepare and file with the
Commission a registration statement on any form for which the Company qualifies
with respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to the counsel selected by the Holders
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel, and (ii) notify each Holder of
Registrable Securities covered by such registration of any stop order issued or
threatened by the Commission);

               (b) subject to Section 2(c) hereof, prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period equal to the shorter of (i) six
months and (ii) the time by which all securities covered by such registration
statement have been sold, and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;

               (c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;

               (d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to

                                       6
<PAGE>   7

do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 6(d) or (ii) subject itself to taxation in any
jurisdiction;

               (e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; provided, however, that the Company
shall not be required to amend the registration statement or supplement the
Prospectus for a period of up to six months if the board of directors of the
Company determines in good faith that to do so would reasonably be expected to
have a material adverse effect on any proposal or plan by the Company to engage
in any financing, acquisition or disposition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer or
similar transaction or would require the disclosure of any information that the
board of directors of the Company determines in good faith the disclosure of
which would be detrimental to the Company, it being understood that the period
for which the Company is obligated to keep the Registration Statement effective
shall be extended for a number of days equal to the number of days the Company
delays amendments or supplements pursuant to this provision. Upon receipt of any
notice pursuant to this Section 6(e), the Holders shall suspend all offers and
sales of securities of the Company and all use of any prospectus until advised
by the Company that offers and sales may resume, and shall keep confidential the
fact and content of any notice given by the Company pursuant to this Section
6(e);

               (f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;

               (g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;

               (h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the Holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities;

               (i) make available for inspection by a representative of the
Holders of Registrable Securities included in the registration statement, any
underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;

                                       7
<PAGE>   8

               (j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;

               (k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Shares included in such registration statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order; and

               (l) if the registration is an underwritten offering, use all
reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.

               7. Obligations of Holders. Whenever the Holders of Registrable
Securities sell any Registrable Securities pursuant to a Registration, such
Holders shall be obligated to comply with the applicable provisions of the
Securities Act, including the prospectus delivery requirements thereunder, and
any applicable state securities or blue sky laws.

               8. Indemnification. (a) The Company agrees to indemnify, to the
fullest extent permitted by applicable law, each Holder of Registrable
Securities, its officers and directors and each Person who controls such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities, expenses or any amounts paid in settlement of any litigation,
investigation or proceeding commenced or threatened, including, without
limitation, attorneys fees and disbursements (collectively, "Claims") to which
each such indemnified party may become subject under the Securities Act insofar
as such Claim arose out of (i) any untrue or alleged untrue statement of
material fact contained, on the effective date thereof, in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (ii) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained in
any information furnished in writing to the Company by such Holder expressly for
use therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such Holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
the underwriters, their officers and directors and each Person who controls the
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the Holders of Registrable
Securities.

               (b) In connection with any registration statements in which a
Holder of Registrable Securities is participating, each such Holder will furnish
to the Company in writing such customary information as the Company reasonably
requests for use in connection with any

                                       8
<PAGE>   9

such registration statement or prospectus (the "Seller's Information") and, to
the fullest extent permitted by applicable law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any and all Claims to which each such
indemnified party may become subject under the Securities Act insofar as such
Claim arose out of (i) any untrue or alleged untrue statement of material fact
contained, on the effective date thereof, in any registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto regarding Seller's Information or (ii) any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein regarding Seller's Information not misleading;
provided that with respect to a Claim arising pursuant to clause (i) or (ii)
above, the material misstatement or omission is contained in such Seller's
Information; provided, further, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of proceeds received
by such Holder from the sale of Registrable Securities pursuant to such
registration statement.

               (c) Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (but the failure to provide such notice shall
not release the indemnifying party of its obligation under paragraphs (a) and
(b), unless and then only to the extent that, the indemnifying party has been
prejudiced by such failure to provide such notice) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.

               (d) The indemnifying party shall not be liable to indemnify an
indemnified party for any settlement, or consent to judgment of any such action
effected without the indemnifying party's written consent (but such consent will
not be unreasonably withheld). Furthermore, the indemnifying party shall not,
except with the prior written approval of each indemnified party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release from all liability in respect of such claim or
litigation without any payment or consideration provided by each such
indemnified party.

               (e) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under clauses (a) and (b) above in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the Company,
the underwriters, the sellers of Registrable Securities and any other sellers
participating in the registration statement from the sale of shares pursuant to
the registered offering of securities for which indemnity is sought but

                                       9
<PAGE>   10

also the relative fault of the Company, the underwriters, the sellers of
Registrable Securities and any other sellers participating in the registration
statement in connection with the statement or omission which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the underwriters,
the sellers of Registrable Securities and any other sellers participating in the
registration statement shall be deemed to be based on the relative relationship
of the total net proceeds from the offering (before deducting expenses) to the
Company, the total underwriting commissions and fees from the offering (before
deducting expenses) to the underwriters and the total net proceeds from the
offering (before deducting expenses) to the sellers of Registrable Securities
and any other sellers participating in the registration statement. The relative
fault of the Company, the underwriters, the sellers of Registrable Securities
and any other sellers participating in the registration statement shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by the sellers
of Registrable Securities and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

               (f) The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling person
of such indemnified party and will survive the transfer of the Registrable
Securities.

               9. Participation in Underwritten Registrations. No Holder may
participate in any registration hereunder which is underwritten unless such
Holder (a) agrees to sell such Holder's securities on the basis provided in any
underwriting arrangements approved by the Holder or Holders entitled hereunder
to approve such arrangements, (b) as expeditiously as possible notifies the
Company of the occurrence of any event as a result of which any prospectus
contains an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and (c) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

               10. Transfer of Registration Rights. The rights granted to any
Holder under this Agreement may be assigned to any permitted transferee of
Registrable Securities, in connection with any transfer or assignment of
Registrable Securities by a Holder; provided, however, that: (a) such transfer
is otherwise effected in accordance with applicable securities laws, (b) if not
already a party hereto, the assignee or transferee agrees in writing prior to
such transfer to be bound by the provisions of this Agreement applicable to the
transferor, (c) such transferee shall own Registrable Securities representing at
least 3,000 Common Shares (as adjusted for any combinations, consolidations,
stock distributions, stock dividends or other recapitalizations with respect to
such shares), and (d) Isis or EIS, as applicable, shall act as agent and
representative for such Holder for the giving and receiving of notices
hereunder.

               11. Information by Holder. Each Holder shall furnish to the
Company such written information regarding such Holder and any distribution
proposed by such Holder as the Company may reasonably request in writing and as
shall be reasonably required in connection

                                       10
<PAGE>   11

with any registration, qualification or compliance referred to in this Agreement
and shall promptly notify the Company of any changes in such information.

               12. Exchange Act Compliance. The Company shall comply with all of
the reporting requirements of the Exchange Act then applicable to it and shall
comply with all other public information reporting requirements of the
Commission which are conditions to the availability of Rule 144 for the sale of
the Registrable Securities. The Company shall cooperate with each Holder in
supplying such information as may be necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of Rule 144.

               13. Termination of Registration Rights. All registration rights
granted under this Agreement shall terminate and be of no further force and
effect, as to any particular Holder, at such time as all Registrable Securities
held by such Holder can be sold within a three-month period without compliance
with the registration requirements of the Securities Act pursuant to Rule 144
(including Rule 144(k)) promulgated thereunder or have been resold pursuant to a
registration statement hereunder.

               14. Miscellaneous.

               (a) No Inconsistent Agreements. The Company will not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the Holders of Registrable Securities in
this Agreement without the prior written consent of a majority in interest of
such Registrable Securities.

               (b) Remedies. Any Person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement; provided, however, that in no event shall any Holder have the right
to enjoin, delay or interfere with any offering of securities by the Company.

               (c) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only with the prior
written consent of the Company and Holders of at least 50% of the Registrable
Securities; provided, however, that without the prior written consent of all the
Holders, no such amendment or waiver shall reduce the foregoing percentage
required to amend or waive any provision of this Agreement.

               (d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto, and
shall inure to the benefit and be enforceable by each Holder of Registrable
Securities from time to time. In addition, whether or not any express

                                       11
<PAGE>   12

assignment has been made, the provisions of this Agreement which are for the
benefit of Holders of Registrable Securities are also for the benefit of, and
enforceable by, any permitted transferee of Registrable Securities, in
accordance with Section 10 hereof.

               (e) Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.

               (f) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute
one and the same Agreement.

               (g) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.

               (h) Governing Law. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of New York without regard to principles of conflicts of laws.

               (i) Notices. All notices, demands and requests of any kind to be
delivered to any party in connection with this Agreement shall be in writing and
shall be deemed to have been duly given if personally delivered or if sent by
nationally-recognized overnight courier or by registered or certified airmail,
return receipt requested and postage prepaid or by facsimile transmission (with
receipt confirmed by telephone), addressed as follows:

                      (i) if to the Company, to:

                      HepaSense Ltd.
                      c/o Conyers Dill & Pearman
                      Clarendon House
                      Church Street, P.O. Box HM 666
                      Hamilton HM CX, Bermuda
                      Attention:  David J. Doyle
                      Facsimile:  (441) 292-4720

                      with a copy to each of Isis, EIS and their respective
                      counsel at the addresses indicated below

                                       12
<PAGE>   13

                      (ii) if to Isis, to:

                      Isis Pharmaceuticals, Inc.
                      2292 Faraday Avenue
                      Carlsbad, CA 92008
                      Facsimile:  (760) 931-9639
                        telephone confirmation required at (760) 603-2460
                      Attention:  B. Lynne Parshall

                      with a copy to:

                      Cooley Godward LLP
                      4365 Executive Drive
                      San Diego, CA 92121
                      Facsimile:  (619) 453-3555
                        telephone confirmation required at (619) 550-6000
                      Attention:  Julie Robinson, Esq.

                      (iii) if to EIS, to:

                      Elan International Services, Ltd.
                      Flatts, Smiths Parish
                      Bermuda, FL 04
                      Facsimile:  (441) 292-2224
                        telephone confirmation required at (441) 292-9169
                      Attention:  President

                      with a copy to:

                      Brock Silverstein LLC
                      800 Third Avenue, 21st Floor
                      New York, New York 10022
                      Facsimile:  (212) 371-5500
                        telephone confirmation required at (212) 371-2000
                      Attention:  Scott Rosenblatt, Esq.

               (j) Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof.

                            [Signature page follows]

                                       13
<PAGE>   14

               IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

                                        HEPASENSE LTD.

                                        By: ___________________________
                                            Name:
                                            Title:

                                        ISIS PHARMACEUTICALS, INC.

                                        By: ___________________________
                                            Name:  B. Lynne Parshall
                                            Title:  Executive Vice President

                                        ELAN INTERNATIONAL SERVICES, LTD.

                                        By: ___________________________
                                            Name:  Kevin Insley
                                            Title:  President

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