Document:

Exhibit 10.5

 

***TEXT OMITTED AND FILED SEPARATELY

WITH THE SECURITIES AND EXCHANGE COMMISSION.

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R. SECTIONS 200.80(B)(4)

AND RULE 406 OF THE SECURITIES ACT OF 1933,

AS AMENDED

 

SERVICES AGREEMENT

 

SERVICES AGREEMENT (this “Services Agreement”) is made as of December 18, 2015 (the “Effective Date”) by and among, ISIS PHARMACEUTICALS, INC., a Delaware corporation, with its principal place of business at 2285 Gazelle Court, Carlsbad, CA 92010 (“Isis”) and AKCEA THERAPEUTICS, INC. a Delaware corporation, with its principal place of business at 55 Cambridge Parkway, Suite 100, Cambridge, MA 02142 (“Akcea”).  All capitalized terms not defined herein will have the meanings set forth in the Development, Commercialization and License Agreement, dated as of the Effective Date, by and between Isis and Akcea (as it may be amended from time to time, the “License Agreement”).  Isis and Akcea each may be referred to herein individually as a “Party,” or collectively as the “Parties.”

 

RECITALS

 

WHEREAS, on December 18, 2015, (i) Isis formed Akcea, a Delaware corporation, as a wholly-owned subsidiary for the initial purpose of serving as the development and commercialization entity for the following lipid-modulating antisense drugs: ISIS-APOCIIIRx (ISIS304801), ISIS-APOCIII-LRx (ISIS678354), ISIS-APO(a)Rx (ISIS494372), ISIS-APO(a)-LRx (ISIS681257), ISIS-ANGPTL3Rx (ISIS563580), or ISIS-ANGPTL3-LRx (ISIS703802)  (the “Lipid Drugs”); and (ii) entered into a Development, Commercialization and License Agreement, to develop, manufacture and commercialize the Lipid Drugs;

 

WHEREAS, Akcea needs certain services related to general and administrative services in support of its business (the “Services”); and

 

WHEREAS, Isis wishes to provide such Services.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Isis and Akcea each agree as follows:

 

1.              Services.

 

1.1       General and Administrative Services.  From time to time, Isis will provide general and administrative support services to Akcea under this Services Agreement of the type described below (collectively, the “G&A Services”):

 

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1.1.1                     Investor Relations Services. Isis will provide Akcea investor relations services regarding matters of fair and accurate disclosure and compliance with Isis’ disclosure policy and applicable Law, including, without limitation, compliance with the Sarbanes-Oxley Act of 2002.  Such services will include drafting; processing for review and issuing press releases; conference call scripts and presentations; managing conference and medical meeting attendance; managing media and public relations activities; and facilitating interactions with investors and analysts.

 

1.1.2                     Pre-Commercial and Competitive Intelligence Services. Isis will provide to Akcea services related to pre-commercial activities and related to competitive intelligence services for all of the Lipid Drugs as appropriate.

 

1.1.3                     Accounting and Payroll Services. Isis will provide bookkeeping and accounting services, including maintaining the books and records of Akcea’s financial operations, preparing financial statements (including quarterly and annual financial statements), billings, accounts payable, stock option accounting services, internal audit support services, financial budgeting and forecasting as needed, review of compliance with financial and accounting procedures and government accounting functions (e.g., preparing budgets and setting rates), in each case in accordance with GAAP, and government regulations as applicable. In addition, Isis will administer Akcea’s employee payroll, including withholding and remitting employee and employer payroll taxes.

 

1.1.4                     Human Resources and Personnel Services.  Isis will provide the following personnel services to Akcea, including maintaining general employee insurance obligations, establishing and managing of an employee benefits program, advising on employee relations and related issues, management of Akcea’s employee equity incentive plans and programs and managing of Akcea’s retirement plans, including the Isis Pharmaceuticals, Inc. 401(k) Retirement Plan.  In addition, Isis will manage for Akcea a corporate human resources program for executive and employee recruiting, hiring and training.

 

1.1.5                     Legal Services.  Isis will provide Akcea with legal services, including legal services from Isis’ General Counsel and other legal counsel with respect to: labor and personnel matters; compliance with applicable securities laws and regulations; compliance with other applicable laws and regulations; litigation management; contract negotiation and preparation; commercial sales agreements; mergers and acquisitions; tax issues; preventive counseling; and all matters relating to corporate governance of Akcea. Notwithstanding the foregoing, if, with the advice of counsel, Akcea reasonably believes an actual or potential conflict of interest is likely to arise between the interests of Isis’ stockholders, and Akcea’s stockholders, Akcea may retain its own counsel at its own expense for such matters.

 

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1.1.6                     Risk Management; Insurance. Isis will provide Akcea centralized insurance purchasing for liability, property, casualty and other normal business insurance and the handling of claims.

 

1.1.7                     Tax Related Services.  Isis will assist Akcea in the preparation of ex-U.S. and U.S. federal, state and local income tax returns, tax research and planning and assistance on tax audits or other tax-related matters.

 

1.1.8                     Corporate Record Keeping Services. Isis will maintain, on behalf of Akcea, corporate records, including minutes of meetings of the board of directors and stockholders of Akcea, supervision of transfer agent and registration functions, maintenance of stock records, including the tracking of stock issuances and stock reservations.

 

1.1.9                     Financial Services. Isis will provide to Akcea the following financial services:  (i) banking services administration, including bank account administration, loan administration, covenant compliance administration, maintenance of cash collection and disbursement systems and arrangement of letters of credit, foreign currency exchanges or conversion calculations and cash transfers; (ii) financial management and information services, including centralized cash management, leasing, customer financing, financial analysis on foreign currency issues, risk assessment and hedging strategies; (iii) investment banking services, including managing Isis’ and Akcea’s relationships with debt rating agencies.  In connection with such services, Isis is authorized to invest the funds deposited by Akcea with Isis in taxable, tax-exempt or tax-preferred instruments of short or longer term duration based upon Isis’ assessment of Akcea’s tax considerations and Akcea’s cash needs and consistent with Isis’ own investment policy and guidelines.  Isis will advise Akcea on a quarterly basis as to the earnings that Akcea may expect on its cash deposits during the following quarter.

 

1.1.10              Credit Services. Isis will assist Akcea in identifying and obtaining cost-effective sources of financing consistent with the needs of Isis and its affiliated companies.

 

1.1.11              COO, CFO and CBO Oversight Services. The Parties acknowledge and agree that Isis’ COO, CFO and CBO do and will supervise the employees performing the Services hereunder, and in consideration for such supervisory services, a portion of the COO’s, CFO’s and CBO’s salary will be allocated to and paid by Akcea using the allocation methodology set forth in APPENDIX A (Allocation Methodologies).

 

1.2       R&D Support Services. Research and development support services under this Services Agreement will be for support of the type described below (collectively, the “R&D Support Services”):

 

1.2.1                     Business Development Services. Isis will provide Akcea business development services pertaining to corporate partnering transactions, including supporting

 

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negotiation of partnering business terms related to such partnering, financial analyses regarding potential partnering transactions, reviewing contract drafts, advising Akcea on terms and/or issues and coordinating due diligence activities in support of such partnering transaction.

 

1.2.2                     Information Technology Services. Isis will provide information technology and telephone services to Akcea, including but not limited to: intercompany network services and database management services between Isis and Akcea; information technology planning services; centralized procurement of hardware and software; support for initial set up of Akcea headquarters; email services; phone services; and mobile device services.  Isis may provide additional information technology services as are mutually agreed between Isis and Akcea.  In addition, Isis will allow Akcea to access, display and use software systems and programs owned by or licensed to Isis, except to the extent that Isis is precluded by its licenses from providing such access, display or use.

 

1.2.3                     Purchasing Services.  Isis will provide services to Akcea related to purchasing, including purchase order management, vendor selection, payment terms and negotiating preferred pricing.

 

1.2.4                     Intellectual Property Support Services. Isis will provide intellectual property support services to Akcea, including but not limited to filing, prosecuting and maintaining the Isis Product-Specific Patents licensed to Akcea, trademarks and copyrights, patent enforcement/defense, patent due diligence to support partnership transactions and advice regarding intellectual property strategy (collectively, the “IP Support Services”).  In the event that a Third Party challenges one of the Isis Core Technology Patents licensed to Akcea under the License Agreement, the Parties will discuss and agree to a percentage of the expense to defend such challenge for which Akcea will reimburse Isis.

 

1.3       Specialty Services. If, from time to time, Akcea wishes Isis to perform specific projects that go beyond the services already specified in this Section 1.1 and 1.2 to perform specific projects, Akcea and Isis will execute a work order that will be governed by the terms of this Services Agreement and will specify the projects Isis will perform for Akcea and the payment Akcea will make to Isis for such project.  The Parties will execute a work order prior to initiating such work (collectively, the “Specialty Services”).  An email from Akcea’s Chief Executive Officer or Chief Operating Officer referencing this Services Agreement and authorizing Isis to perform specific Specialty Services will be considered a work order for purposes of this Section 1.3.  Isis will not be reimbursed for performing work that goes beyond the scope of these services without an agreed and executed work order. An example of a Specialty Service under this section is service related to Akcea’s initial public offering or other financing.

 

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1.4       Development, Regulatory and Manufacturing Services.  Isis will provide services related to Development, Regulatory and Manufacturing in support of the Lipid Drugs pursuant to the terms of the License Agreement.

 

2.              Performance of Services.

 

2.1       Performance. All services described in Article 1 of this Services Agreement are collectively referred to as the “Services.” Isis will provide all Services (i) on an ongoing basis during the Term, as reasonably required or requested by Akcea, (ii) promptly, (iii) in accordance with the terms of this Services Agreement, (iv) in accordance with the standards and practices for the performance of similar services by Isis in the conduct of its own business, and (v) in a manner consistent with Law applicable to Isis and Akcea.

 

2.2       Authority. Consistent with Isis’ signature policy and established procedures and, to the extent of the scope of the Services such Isis employee is performing for Akcea, Isis personnel have the authority to act on Akcea’s behalf.

 

3.              Duration of Services.

 

3.1       Initial Term.  From the Effective Date through the end of 2016, unless extended by mutual agreement of the Parties (the “Initial Term”), Akcea will obtain the Services from Isis under this Services Agreement.

 

3.2       After Initial Term.  After the Initial Term, Akcea will obtain the Services from Isis under this Services Agreement as follows:

 

3.2.1                     For so long as (i) Isis’ independent auditors advise Isis that Isis should consolidate Akcea’s financial statements with Isis’ financial statements or (ii) Akcea is using Isis’ financial systems (the “Consolidation Period”) Akcea will obtain from Isis, and Isis will provide to Akcea, the Services described in Sections 1.1.1 (Investor Relations Services); 1.1.4 (Human Resources and Personnel Services); 1.1.6 (Risk Management; Insurance); 1.1.7 (Tax Related Services); 1.1.8 (Corporate Record Keeping Services); 1.1.9 (Financial Services); 1.1.10 (Credit Services); 1.1.1 (Investor Relations Services); and 1.1.11 (COO/CFO/CBO Oversight); provided, however, that with respect to Human Resources and Personnel Services, if Akcea wishes to provide for its own Human Resources and Personnel Services, to the extent it will not negatively impact Isis’ internal controls and procedures for financial reporting, Isis and Akcea will negotiate in good faith and mutually agree on a reduced scope of Human Resources and Personnel Services provided by Isis hereunder and will make appropriate adjustments to the expense allocation percentage for such Services.

 

3.2.2                     After the Consolidation Period has expired, Isis and Akcea may mutually agree in writing on an appropriate term for providing Services, such term to be set in six-month increments.

 

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3.3       Phase Out of Services Provided by Isis. For those Services Isis is not required to provide to Akcea during the Consolidation Period, Akcea may cease obtaining one or more of the Services provided hereunder by (i) notifying Isis during the annual budgeting process when Akcea plans to attain internal capabilities to perform such service(s) and (ii) providing evidence to Isis that Akcea has acquired the capabilities to perform such service(s).

 

4.              Compensation.

 

4.1       Charge for Services.  Akcea will pay Isis fees for the Services as specified in APPENDIX A (Allocation Methodologies) attached hereto which provides details regarding how to calculate such fees (except Specialty Service fees).  These Allocation Methodologies will, generally, be determined from a good faith estimate by Isis of a percentage of each Isis functional area, detailed in Section 1 of this Agreement, dedicated to providing the Services hereunder. From time to time, the Parties may mutually agree to update APPENDIX A (Allocation Methodologies) as needed. At a minimum, on an annual basis as part of Isis’ annual budgeting process, the Parties will review APPENDIX A (Allocation Methodologies) in good faith to ensure the allocations set forth therein are fair and commercially reasonable.

 

4.2       Specialty Services Fee. Akcea will pay Isis for Specialty Services rendered based upon a good faith estimate of the time burden required of Isis personnel to perform the Specialty Services based upon the statement of work provided by Akcea.  If there is a material change in the statement of work, in scope or budget, Isis will prepare a revised estimate for Akcea’s approval.

 

4.3       Direct Out-of-Pocket Expenses.  Akcea will be responsible for paying and will bear the cost of all out-of-pocket expenses for which Akcea is the primary beneficiary, including but not limited to (i) legal services provided to Akcea by outside counsel; (ii) insurance policies and claims that relate specifically to Akcea; (iii) accounting, auditing and tax related services provided to Akcea by external accountants and tax advisors; (iv) filing fees and other costs (e.g., translation costs) charged by Third Parties in connection with filing, prosecuting and maintaining Akcea’s patents, trademarks and copyrights; and (v) travel costs associated with providing any of the Services contemplated by this Services Agreement (collectively the “Direct Expenses”). Akcea and Isis will use commercially reasonable efforts to have the applicable Third Parties bill Akcea directly for any Direct Expenses.  For any out-of-pocket expenses that benefit both Isis and Akcea but are not Direct Expenses, such expenses will be allocated to Akcea in the same manner as the fees above and depending on whether such expense is in connection with G&A Services, R&D Support Services, IP Support Services, or Specialty Services.

 

4.4       Payment Terms.  Isis will invoice Akcea on a Quarterly basis for all amounts due related to the provision of Services under this Services Agreement.  Invoices will contain such detail as Akcea may reasonably require and will be payable in U.S. Dollars. All undisputed payments will be made by Akcea within 30 days of its receipt of an invoice.

 

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Isis will provide Akcea with W-9s or other forms as may be reasonably requested by Akcea in order to process such payments.

 

5.              Personnel. Isis will assign employees (“Isis Personnel”) in sufficient numbers, and with the proper skill, training and experience, to provide the Services.  Isis will be solely responsible for paying its Isis Personnel and providing any employee benefits that they are owed.  Before providing Services, all Isis Personnel must have agreed in writing to (i) confidentiality obligations consistent with the terms of this Services Agreement, and (ii) assign all right, title and interest in any intellectual property created by such Isis Personnel, in performance of the Services, to Isis. The Parties intend for there to be additional Isis Personnel who are not 100% dedicated to the provision of Services who will instead provide Services as needed.

 

6.              Covenants of Akcea.

 

6.1       Cooperation. Akcea will fully cooperate with Isis to permit Isis to perform Isis’ duties and obligations under this Services Agreement in a timely manner.  Akcea will direct its officers, directors, employees, and agents (“Representatives”) to (i) properly and timely respond to requests by Isis for information, and (ii) if requested by Isis, meet with or consult with the Service Provider and its professional advisors regarding any matter related to the Services. Akcea will also promptly provide Isis with copies of any agreements, instruments or documents in possession of Akcea as are reasonably requested by Isis, and promptly provide Isis with any notices or other communications that Akcea may receive that may have any effect on Isis’ performance of the Services.

 

6.2       Accuracy of Information. Akcea will be responsible for the completeness and accuracy of all information furnished to Isis by Akcea and Representatives of Akcea in connection with Isis’ performance of the Services.  Isis may rely upon such information in its performance of Services under this Agreement.

 

6.3       Policies and Procedures.  During the Consolidation Period, Akcea and its employees will comply with the policies and procedures of Isis that Isis, in Isis’ good faith reasonable judgment, determines that Akcea should comply with to ensure that Isis can satisfy its reporting obligations as a public company with a class of securities registered under the Securities Exchange Act.  These policies include, but are not limited to (i) Isis’ Code of Ethics, (ii) Isis’ Disclosure Policies and Procedures, (iii) Isis’ Signature Policy, (iv) Isis’ Publication Clearance Policy, (v) Isis’ Policies and Procedures Manual, and (vi) Isis’ Internal Control Procedures as set forth in the Investor Rights Agreement entered into between Isis and Akcea on the Effective Date (the “Investor Rights Agreement”).

 

7.              Financial Records; Audit Right.  Isis will maintain accurate financial records relating to its provision of the Services hereunder for a period of three (3) years, or longer as required by applicable Law.  The terms set forth in APPENDIX B will govern each Party’s rights and obligations with respect to the auditing of such financial records.

 

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8.              Confidential Information.  The terms regarding confidentiality and non-use set forth in the Investor Rights Agreement and ARTICLE 8 of the License Agreement will govern each Party’s rights and obligations concerning disclosure, non-use, and/or publication of the terms of this Services Agreement and/or any information exchanged or arising under this Services Agreement.

 

9.              Indemnification; Insurance.  The terms of ARTICLE 11 of the License Agreement will govern each Party’s indemnification and insurance obligations, respectively, with respect to this Services Agreement.

 

10.       Taxes. Notwithstanding anything to the contrary in this Services Agreement, until the Consolidation Period ends, Isis will retain all Akcea-generated tax attributes generated by Akcea’s activities.  After the termination of the Consolidation Period and Akcea files its own taxes as a separate entity, Akcea will retain such Akcea-generated tax attributes.

 

11.       Disclaimer; Limitation of Liability.

 

11.1                                                Disclaimer.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTION 2 ABOVE, NO PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF PATENT CLAIMS, WHETHER ISSUED OR PENDING.

 

11.2                                                Limitation of Liability.

 

11.2.1              Akcea acknowledges that Isis is not in the business of providing Services and that Services are being provided pursuant to this Agreement as an accommodation to Akcea.  Akcea’s sole and exclusive remedy and Isis’ sole and exclusive liability for any breach of Section 1 or Section 2, and for any damages of Akcea suffered or incurred directly or indirectly in connection with the provision of Services (whether any claim related to such damages arises in contract, in tort, by statute or otherwise), will be the re-performance by Isis of Services at such Isis’ expense.

 

11.2.2              UNLESS RESULTING FROM A PARTY’S WILLFUL MISCONDUCT OR FROM A PARTY’S WILLFUL BREACH OF SECTION 9, NO PARTY HEREBY WILL BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS SERVICES AGREEMENT OR THE EXERCISE OF RIGHTS HEREUNDER, OR FOR LOSS OF PROFITS, LOSS OF DATA, LOSS OF REVENUE, OR LOSS OF USE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS SERVICES AGREEMENT, WHETHER BASED UPON WARRANTY, CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.

 

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12.       Termination.  This Services Agreement will commence as of the Effective Date and will continue as long as Isis is providing Akcea Services hereunder.

 

12.1                                                Termination of License Agreement.  This Services Agreement will automatically terminate upon the termination or expiration of the License Agreement or the Investor Rights Agreement.

 

12.2                                                Termination for Breach by Isis.  If, after the Consolidation Period has ended, Isis breaches any material term of this Services Agreement, and such material breach is not cured by Isis within sixty (60) days of notice therefor (or cannot be cured), Akcea may terminate this Services Agreement.

 

12.3                                                Termination for Breach by Akcea.  If Akcea breaches any material term of this Services Agreement, and such material breach is not cured by Akcea within sixty (60) days of notice therefor (or cannot be cured), then Isis may stop performing Services hereunder until such breach is cured.

 

12.4                                                Effect of Termination or Expiration.  Upon termination or expiration of this Services Agreement, neither Isis nor Akcea will have any further obligations under this Services Agreement, except that (unless otherwise agreed by the Parties or as set forth in the Investor Rights Agreement or the License Agreement):

 

12.4.1              Isis will terminate all its Services in progress in an orderly manner as soon as practical and in accordance with a schedule agreed to by the Parties;

 

12.4.2              Isis will deliver to Akcea or, at Akcea’s option, dispose of, any materials in its possession or control and all Work Product (as defined in Section 7 above) developed through termination or expiration;

 

12.4.3              Akcea will pay Isis any monies due and owing, up to the time of termination or expiration, for Services properly performed and all expenses actually incurred;

 

12.4.4              Isis will promptly return to Akcea all Confidential Information and copies thereof provided to Isis under this Services Agreement, except for one (1) copy which Isis may retain solely to monitor Isis’ surviving obligations; and

 

12.4.5              the provisions set forth in Sections 7 through 11, this 12.4 and 13 will survive any such termination or expiration in accordance with its terms.

 

13.       Miscellaneous.

 

13.1                                                Assignment.  Neither this Services Agreement nor any of the rights or obligations hereunder may be assigned by a Party without the prior written consent of the other Party, except as set forth in Section 13.1 of the License Agreement.  Any assignment not in

 

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accordance with the foregoing will be void.  This Services Agreement will be binding upon, and will inure to the benefit of, all permitted successors and assigns.

 

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

 

13.3                                                Notices.  Except where otherwise specifically provided in this Services Agreement, all notices, requests, consents, approvals and statements will be in writing and will be deemed to have been properly given by (i) personal delivery, (ii) electronic facsimile transmission, (iii) electronic mail, or by (iv) nationally recognized overnight courier service, addressed in each case, to the intended recipient as set forth below:

 

	
To Akcea:
    	
 
    	
Akcea Therapeutics Inc.
   55 Cambridge Parkway, Suite 100
   Cambridge, MA 02142
   Attention: Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Akcea Therapeutics Inc.
   55 Cambridge Parkway, Suite 100
   Cambridge, MA 02142
   Attention: Chief Operating Officer
    
	
 
    	
 
    	
 
    
	
To Isis:
    	
 
    	
Isis Pharmaceuticals, Inc.
   2855 Gazelle Court
   Carlsbad, California 92010
   Attention: Chief Operating Officer
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Isis Pharmaceuticals, Inc.
   2855 Gazelle Court
   Carlsbad, California 92010
   Attn: General Counsel (fax) 760-268-4922
    

 

Such notice, request, demand, claim or other communication will be deemed to have been duly given on (a) the date of personal delivery, (b) the date actually received if by facsimile or electronic mail; or (c) on the next Business Day after delivery to a nationally

 

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recognized overnight courier service, as the case may be. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Party notice in the manner herein set forth.

 

13.4                                                Relationship of the Parties.  It is expressly agreed that the Parties will be independent contractors hereunder and that the relationship among the Parties under this Services Agreement will not constitute a partnership, joint venture or agency.  No Party will have the authority under this Services Agreement to make any statements, representations or commitments of any kind, or to take any action, which will be binding on any other Party, without the prior consent of such other Party.

 

13.5                                                Governing Law.  This Services Agreement will in all respects be governed by and construed in accordance with the substantive laws of the State of Delaware, without regard to its choice of law rules.

 

13.6                                                Dispute Resolution.  Any dispute arising under this Services Agreement will be resolved in accordance with the terms of Section 13.4 of the License Agreement.

 

13.7                                                Severability.  If one or more provisions of this Services Agreement are held by a proper court or arbitral tribunal to be unenforceable under applicable law, the unenforceable portions of such provisions, or such provisions in their entirety, to the extent necessary and permitted by law, will be severed herefrom, and the balance of this Services Agreement will be enforceable in accordance with its terms.

 

13.8                                                Entire Agreement.  This Services Agreement, the Investor Rights Agreement and the License Agreement constitute the entire agreement among the Parties with respect to the subject matter herein and supersede all previous agreements whether written or oral, with respect to such subject matter. Unless otherwise expressly indicated, references herein to sections, subsections, paragraphs and the like are to such items within this Services Agreement.  The Parties acknowledge that this Services Agreement is being executed and delivered concurrently with the execution and delivery by the Parties and/or their Affiliates of the Investor Rights Agreement and the License Agreement.  In the event of any conflict, discrepancy, or inconsistency between this Services Agreement and either the License Agreement or the Investor Rights Agreement, the terms of the License Agreement or the Investor Rights Agreement, as the case may be, will control.

 

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

 

13.10                                         No Implied Waivers.  The waiver by a Party of a breach or default of any provision of this Services Agreement by any other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of a Party to exercise or avail itself of any right, power or privilege

 

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that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

 

13.11                                         Counterparts.  This Services Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument, and will become effective when there exist copies hereof which, when taken together, bear the authorized signatures of each of the Parties hereto.  Only one such counterpart signed by the Party against whom enforceability is sought needs to be produced to evidence the existence of this Services Agreement.

 

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

 

	
 
    	
AKCEA   THERAPEUTICS INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paula Soteropoulos
    
	
 
    	
Print   Name:
    	
Paula Soteropoulos
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ISIS   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ B. Lynne Parshall
    
	
 
    	
Print   Name:
    	
B. Lynne Parshall
    
	
 
    	
Title:
    	
Chief Operating Officer
    
				

 

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APPENDIX A

 

ALLOCATION METHODOLOGY

 

Akcea Support Services Assumptions

 

1)             G&A

a)             CEO

i)                Assumes no costs allocated to Akcea

b)             COO

i)                % of effort — 5%

ii)            Akcea pre-commercialization expenses and [***] consulting excluded from allocations.

c)              CBO

i)                % of effort- 6%.

(1)         % of effort calculated using weighted average of salaries of individuals within this department based on time spent on Akcea activities

(2)         CB0-3%

(3)         Patient Advocacy- 5%

(4)         [***] (25%) & [***] (5%)- 20%- Competitive and Market Analysis

d)             Corporate Communications

i)                % of effort- 10%

ii)            Costs associated with press releases, presentation development, website maintenance and update included within allocation cost base

iii)        Initial website design is not included

iv)         Cost associated with the Isis annual report, annual meeting, IR conference calls & webcasts, Thomson Reuters service and media consulting and investor targeting, [***], excluded from the allocation cost base ($[***]k)

e)              Finance

i)                % of effort- 10%

(1)         % of effort based on estimated number of FTE’s across all finance functions

(2)         Payroll- 0.2  FTE

(3)         General accounting 0.3 FTE

(4)         Tax, insurance and stock based comp- 0.1 FTE

(5)         Treasury services and other misc- 0.1 FTE

(6)         Controller- 0.15  FTE

(7)         FP&A- 0.5 FTE

(8)         CFO- 0.1 FTE

(9)         Costs associated with PCAOB, filing fees for 10K & Q’s, convertible debt, tax studies and tax returns excluded from the allocation cost base ($162k)

f)               Human Resources

i)                % of effort- 3%

ii)            Based on overall headcount- assumed average 10 Akcea headcount for 2015

iii)        10 / 415 = 2.4% X 7 employees= 0.17 FTE

iv)         Rounded to 0.2 FTE as will require slightly more effort as Akcea headcount are all new hires rather than just ongoing support

v)             Costs associated with Isis board and executive compensation (Barney & Barney), employee events and certain office supplies excluded from allocation cost base ($390k)

 

***Confidential Treatment Requested

 

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g)             Legal

i)                % of effort -10%

ii)            Work includes clinical trial support & initial forming of company

iii)        Costs associated with proxy advisors and proxy printing excluded from allocation cost base ($27k)

h)             Occupancy Costs

i)                % of effort- 8%

ii)            Based on FTE’s to support Akcea vs overall G&A headcount

iii)        Cost base based on Gazelle Ct costs, including property taxes and insurances, with allocation to G&A based on square footage occupied

iv)         Added 30% to office/cube space to allow for allocation of common space

v)             Costs specifically related to Labs excluded from occupancy cost base (Nitrogen supplies, lab equipment  service contracts, specialized  lab janitorial  services)

2)             R&D Support

a)             R&D Allocations

i)                % of effort- 5%

ii)            Based on FTE’s to support Akcea vs overall R&D Support headcount

iii)        Cost base includes D&O insurance

iv)         Costs excluded relate to equity adjustments and promotions because they pertain to 2014, amortization of non-Akcea related license fees, property taxes and property insurance (allocated as part of occupancy cost) ($4.2M)

b)             Information technology

i)                %of effort- 2%

ii)            Includes support services and help desk support only

iii)        Costs excluded from allocation cost base relate to Carlsbad phone and internet services ($165k)

c)              Alliance Management

i)                Assumes no costs allocated to Akcea

d)             Business  Development

i)                %of effort- 3%

ii)            % of effort includes work on initial partner discussions, term sheets, agreement negotiations, due diligence, presentations, CDA’s

iii)        Costs for data rooms, consulting and in-licensing excluded from allocation cost base ($137k)

e)              Graphics

i)                Assumes no costs allocated to Akcea

f)               Purchasing

i)                % of effort- 5%

ii)            Work performed includes contract negotiations, set up purchasing contracts, clinical ops purchasing involvement

iii)        All shipping and receiving costs excluded from allocation cost base ($239k)

g)             Facilities

i)                Assumes no costs allocated to Akcea

h)             Patents

i)                % of effort- 10%

ii)            Excluded costs include patent write-off’s and patent amortization for non-lipid drugs ($1.9M)

 

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i)                Health & Safety

i)                Assumes no cost allocation to Akcea

j)                MBO Accrual- Other R&D

i)                Costs excluded as relate to other departments

k)             Occupancy Costs

i)                %of effort- 4%

ii)            Based on FTE’s to support Akcea vs overall R&D Support headcount

iii)        Cost base based on Gazelle Ct costs, including property taxes and insurances, with allocation to R&D Support  based on square footage  occupied

iv)         Added 30% to office/cube space to allow for allocation of common space

v)             Costs specifically related to Labs excluded from occupancy cost base (Nitrogen supplies, lab equipment service contracts, specialized  lab janitorial  services)

 

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APPENDIX B

Audit Rights and Procedures

 

During the Agreement Term and for a period of 36 months thereafter, at the request and expense of Akcea, Isis will permit an independent certified public accountant of nationally recognized standing appointed by Isis and agreed to by Akcea (such agreement not to be unreasonably withheld), at reasonable times and upon reasonable notice, but not more than once per Calendar Year, to examine such records as are necessary to verify the calculation and reporting out-of-pocket expenses and the correctness of any invoice submitted to Akcea for payment for Services under this Agreement. As a condition to examining any records of Isis, such auditor will sign a nondisclosure agreement reasonably acceptable to Isis. Any records of Isis examined by such accountant will be deemed Isis’ Confidential Information. Upon completion of the audit, the accounting firm will provide both Parties with a written report disclosing whether the amounts invoiced by Isis for payment by Akcea are correct or incorrect and the specific details concerning any discrepancies (“Audit Report”). If the Audit Report shows that Isis’ invoices under this Agreement were more than the amount that should have been invoiced, then Isis will reimburse Akcea the difference between such amounts to eliminate any discrepancy revealed by said inspection within 30 days of receiving the Audit Report, with interest calculated under Section 7. If the Audit Report shows that Isis’ invoiced amounts under this Agreement were less than the amount that should have been invoiced, then Akcea will reimburse Isis equal to the difference between the amounts which should have been invoiced and the actual invoiced amount. Akcea will pay for such audit, except that if Isis is found to have incorrectly invoiced Akcea by more than 5% of the amount that should have been invoiced, Isis will reimburse Akcea’s reasonable costs of the audit.

 

17Exhibit 10.6

 

SENIOR UNSECURED LINE OF CREDIT AGREEMENT

 

THIS SENIOR UNSECURED LINE OF CREDIT AGREEMENT (this “Agreement”) is entered into as of January 18, 2017 (the “Execution Date”), by and between Akcea Therapeutics, Inc., a Delaware corporation (“Akcea”) and Ionis Pharmaceuticals, Inc., a Delaware corporation (“Ionis”).  Each of Akcea and Ionis are sometimes referred to herein as a “Party” and collectively as the “Parties”.

 

RECITALS

 

1.                                      Akcea has requested that Ionis extend to Akcea a line of credit for Akcea’s benefit.

 

2.                                      Ionis has agreed to extend such line of credit to Akcea on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained in this Agreement, the Parties, intending to be fully bound, agree as follows:

 

ARTICLE I. DEFINITIONS

 

Capitalized terms used in this Agreement have the meanings specified therefor on Schedule 1.

 

ARTICLE II. CREDIT FACILITY

 

Section 2.01                             Credit Facility.  Ionis agrees, subject to the terms and conditions set forth in this Agreement and relying on the representations and warranties set forth herein, to make Advances to Akcea during the period from the Execution Date until the earliest of (a) the date Ionis converts the Note to Stock pursuant to Section 2.04, (b) the date Ionis terminates the Credit Facility following the occurrence of an Event of Default, and (c) January 26, 2019, in an aggregate principal amount outstanding plus all accrued and unpaid interest thereon at any time not to exceed $150,000,000 (the “Commitment”). Akcea will execute and deliver to Ionis a Convertible Senior Promissory Note in the maximum amount of the Commitment (the “Note”), prepared in substantially the form attached to this Agreement as Exhibit A and dated as of the Execution Date. The Note will evidence Akcea’s unconditional obligation to repay Ionis for the Total Outstanding Amount as provided herein, either in cash or through conversion of the Note to Stock pursuant to Section 2.04.  Each Advance under the Commitment will be deemed evidenced by the Note, which is deemed by this reference to be incorporated herein and made a part hereof.

 

Section 2.02                             Making Advances.  Upon fulfilment of the conditions set forth in Article V, Ionis may make an Advance under this Agreement to Akcea as follows:

 

(a)                                 By the 15th day of each month, Akcea may request by written notice that Ionis make an Advance to Akcea in an amount equal to Akcea’s good faith estimate of its cash needs for the immediately succeeding month in accordance with Akcea’s budget as approved by Ionis.

 

 

(b)                                 Ionis will make such Advance to Akcea within ten days of receipt of such written notice to an account mutually agreed to by the Parties.

 

(c)                                  Each Advance will bear interest at a rate of 4.0% per annum compounded monthly (computed on the basis of the actual number of days elapsed over a year of 365 days).  Any interest so compounded will be capitalized as principal on the date it is so compounded and will be added to the principal amount of the Advance outstanding hereunder and deemed evidenced by the Note.

 

(d)                                 The Parties agree that the first Advance made by Ionis to Akcea under this Agreement will be in an amount equal to the intercompany balance outstanding between Ionis and Akcea as of December 31, 2016 plus Akcea’s good faith estimate of its cash needs for the month of January 2017.

 

Section 2.03                             Prepayment.  Akcea may not prepay all or any part of the Credit Facility.

 

Section 2.04                             Conversion.

 

(a)                                 At any time Ionis will have the right to require Akcea to convert the Note evidencing the Total Outstanding Amount (as a whole, and not in part) at such time into a number of shares of Series A Preferred Stock equal to the Total Outstanding Amount at such time, divided by a price per share of $7.36 (subject to the same adjustments to the original issue price for the Series A Preferred Stock as set forth in Akcea’s Amended and Restated Certificate of Incorporation).  Such conversion will occur within 5 days of Ionis’ written request. The shares of Series A Preferred Stock Ionis acquires from such conversion will be subject to the same terms and conditions as set forth in that certain Investor Rights Agreement dated December 18, 2015 by and between Ionis and Akcea, with respect to Shares (as defined in such Investor Rights Agreement).

 

(b)                                 If Akcea completes an IPO, then Akcea will automatically, without any further action by Ionis, convert the Note evidencing the Total Outstanding Amount at such time into a number of shares of Common Stock equal to the Total Outstanding Amount at such time, divided by the IPO price per share of Common Stock.

 

(c)                                  No fractional shares will be issued upon conversion of the Note into shares of Stock pursuant to this Section 2.04.  If any fractional share of Stock would be delivered upon conversion, Akcea, in lieu of delivering such fractional share, will pay to Ionis in cash the value of such fractional share.

 

Section 2.05                             Repayment.  If the Total Outstanding Amount is not previously (a) converted pursuant to Section 2.04, or (b) paid by Akcea in accordance with Article VII pursuant to the occurrence of an Event of Default, then Akcea will pay to Ionis on January 26, 2019 the Total Outstanding Amount on such date in cash by wire transfer to a bank account designated by Ionis.

 

Section 2.6                                    Taxes.  In addition to all other amounts due hereunder, Akcea will pay or reimburse Ionis for any present or future taxes, charges or levies, other than income taxes, that

 

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arise from any payment made hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or any other Loan Document.

 

ARTICLE III. AKCEA REPRESENTATIONS AND WARRANTIES

 

Section 3.01                             Representations and Warranties.  Akcea represents and warrants to Ionis as follows:

 

(a)                                 Organization and Powers.  Akcea: (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) has all requisite corporate power and authority to own its property and assets and to carry on its business as now conducted and as proposed to be conducted; and (iii) has the corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Loan Documents and to borrow hereunder.

 

(b)                                 Authorization.  Akcea’s execution, delivery and performance of this Agreement and the other Loan Documents, any borrowing under the Credit Facility, any conversion of the Note, and the payment of the Total Outstanding Amount: (i) have been duly authorized by all requisite corporate action, and (ii) will not (A) violate (1) any provision of any law, statute, rule or regulation applicable to Akcea or Akcea’s certificate of incorporation or bylaws; or (2) any order of any Governmental Authority; (B) be in conflict with, result in a breach of, or constitute (alone or with notice or lapse of time or both) a default under, any indenture, agreement or other instrument; or (C) result in the creation or imposition of any lien upon any of Akcea’s property or assets.

 

(c)                                  Enforceability.  Each of this Agreement and the other Loan Documents constitutes a legal, valid and binding obligation of Akcea, enforceable in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

(d)                                 Governmental Approvals.  No action, consent or approval of, registration or filing with, or other action by, any Governmental Authority is required in connection with Akcea’s execution, delivery and performance of this Agreement and the other Loan Documents, any borrowing under the Credit Facility, the conversion of the Note, and the payment of the Total Outstanding Amount, other than such filings which may be properly made upon or following conversion of the Note.

 

(e)                                  Financial Statements.  Akcea’s financial statements for the fiscal year ended 2015, and a more recently ended fiscal year, if available, fairly present Akcea’s financial condition and results of operations for the periods ended on such dates, all in accordance with GAAP.

 

(f)                                   Event of Default.  There is no event which constitutes an Event of Default.

 

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ARTICLE IV. IONIS REPRESENTATIONS AND WARRANTIES

 

Section 4.01                             Representations and Warranties.  Ionis represents and warrants to Akcea as follows:

 

(a)                                 Organization and Powers.  Ionis: (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; and (ii) has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Loan Documents.

 

(b)                                 Authorization.  Ionis’ execution, delivery and performance of this Agreement and the other Loan Documents, the making of any Advance under the Credit Facility, and the conversion of the Note: (i) have been duly authorized by all requisite corporate action, and (ii) will not (A) violate (1) any provision of any law, statute, rule or regulation applicable to Ionis or Ionis’ certificate of incorporation or bylaws; or (2) any order of any Governmental Authority;  (B) be in conflict with, result in a breach of, or constitute (alone or with notice or lapse of time or both) a default under any such indenture, agreement or other instrument; or (C) result in the creation or imposition of any lien under any of Ionis’ property or assets except in each case where such violation, conflict or lien would not materially impede Ionis’ ability to fully perform its obligations under this Agreement or the other Loan Documents.

 

(c)                                  Enforceability.  Each of this Agreement and the other Loan Documents constitutes a legal, valid and binding obligation of Ionis, enforceable in accordance with its terms (subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general principles of equity, regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

(d)                                 Governmental Approvals.  No action, consent or approval of, registration or filing with, or other action by, any Governmental Authority is required in connection with Ionis’ execution, delivery and performance of this Agreement and the other Loan Documents, the making of any Advance under the Credit Facility, and the conversion of the Note, other than such filings which may be properly made upon or following conversion of the Note.

 

ARTICLE V. CONDITIONS OF LENDING

 

Section 5.01                             Conditions Precedent to Each Advance. Ionis’ obligation to incur the Commitment and to make each Advance will be subject to the satisfaction of the following conditions precedent before or concurrently with the making of such Advance:

 

(a)                                 The following statements will be true (and acceptance by Akcea of the proceeds of such Advance will constitute a representation and warranty by Akcea that on the date of any Advance such statements are true):

 

i.                                          The representations and warranties of Akcea set forth in Article III are correct on and as of the date of any Advance, before and after giving effect to such Advance and to the application of the proceeds therefrom, as though made on and as of such date, and

 

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ii.                                             No event has occurred and is continuing, or would result from such Advance or from the application of the proceeds therefrom, that constitutes an Event of Default; and

 

(b)                                 Ionis will have received such approvals and documents as Ionis may reasonably request.

 

ARTICLE VI.  AKCEA COVENANTS

 

Section 6.01                             Affirmative Covenants. Akcea covenants and agrees with Ionis that so long as this Agreement will remain in effect or any amount owed hereunder will be unpaid, Akcea will:

 

(a)                                 Compliance with Law. Comply in all material respects, with all applicable laws, rules, regulations and orders.

 

(b)                                 Conduct Business in the Ordinary Course.  Conduct its business in the ordinary course consistent with historical practices.

 

(c)                                  Keeping of Books.  Keep proper books of record and account, in which full and correct entries will be made of all financial transactions and Akcea’s assets and business in accordance with GAAP.

 

(d)                                 Further Assurances.  Take any action reasonably requested by Ionis to carry out the intent of this Agreement and the other Loan Documents.

 

Section 6.02                             Negative Covenants. Akcea covenants and agrees with Ionis that so long as this Agreement will remain in effect or any amount owed hereunder will be unpaid, Akcea will not:

 

(a)                                 Change in Nature of Business.  Make any material change in the nature of its business to a business other than development and commercialization of therapeutics.

 

(b)                                 Indebtedness.  Create, incur, assume, suffer to exist, guarantee, or otherwise become or remain, directly or indirectly, liable with respect to any Indebtedness, unless incurred in the ordinary course of business or Ionis otherwise consents in writing.

 

ARTICLE VII. EVENTS OF DEFAULT

 

Section 7.01                             Events of Default.  If any of the following events (each an “Event of Default”) will occur and be continuing:

 

(a)                                 Akcea will fail to pay any principal of or interest on any Advance when the same becomes due and payable; or Akcea will fail to make any other payment of fees or other amounts payable under this Agreement or any other Loan Document when the same becomes due and payable;

 

5

 

(b)                                 Any representation or warranty made by Akcea herein or in connection with this Agreement or any other Loan Document, will prove to have been incorrect or misleading in any material respect when made or as of the date of any Advance;

 

(c)                                  Akcea will fail to perform or observe any covenant or other agreement contained in this Agreement or any other Loan Document, and such failure will continue for a period of 30 days after the earlier of (i) the date on which such failure will first become known to any officer of Akcea, or (ii) the date on which written notice thereof is given to Akcea by Ionis;

 

(d)                                 Akcea will commence an Insolvency Proceeding; or

 

(e)                                  An Insolvency Proceeding will be commenced against Akcea and (i) Akcea consents to the institution of such Insolvency Proceeding, (ii) the petition commencing the Insolvency Proceeding is not timely controverted, (iii) the petition commencing the Insolvency Proceeding is not dismissed within 60 calendar days of filing, (iv) an interim trustee is appointed to take possession of or to operate all or a substantial portion of Akcea’s assets or business, or (v) an order for relief will have been issued or entered therein;

 

then, to the extent permitted by applicable law, Ionis may (x) declare its obligation to make Advances to be terminated, (y) declare the Total Outstanding Amount be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by Akcea (where in such event Akcea will immediately pay the Total Outstanding Amount to Ionis), and (z) take any or all other remedial action permitted by applicable law.

 

ARTICLE VIII. SENIORITY

 

The Parties acknowledge and agree that the obligations evidenced by this Agreement and the other Loan Documents are hereby made expressly senior obligations of Akcea and will not be subject or subordinate in right of payment to the prior payment of any other obligations of Akcea, whether now existing or hereafter created or incurred.

 

ARTICLE IX.  MISCELLANEOUS

 

Section 9.01                             Notices. Except as otherwise expressly provided herein, notices and other communications provided for herein will be in writing and will be delivered by hand or overnight courier service or sent by email, as follows:

 

(a)                                 If to Ionis:                                                                                      2855 Gazelle Court

Carlsbad, California 92010

Attention: Chief Financial Officer

 

(b)                              If to Akcea:                              55 Cambridge Parkway

Cambridge, MA 02142

Attention: Chief Executive Officer

 

6

 

All notices and other communications given to any Party hereto in accordance with the provisions of this Agreement will be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or on the date sent if sent by email to such Party as provided in this Section or in accordance with the latest unrevoked direction from such Party given in accordance with this Section.

 

Section 9.02                             Survival of Agreement.  All covenants, agreements, representations and warranties made by Akcea herein and any other Loan Document will be considered to have been relied upon by Ionis and will survive the execution and delivery of this Agreement and the other Loan Documents, and the making of any Advance, regardless of any investigation made by Ionis or knowledge of Ionis, and will continue in full force and effect as long as the principal or any accrued interest on any Advance or any fee or other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitment has not been terminated or expired.

 

Section 9.03                             Costs and Expenses.  Akcea further agrees to pay on demand all of Ionis’ fees, costs and expenses (including reasonable attorney fees and expenses), if any, in connection with the enforcement of this Agreement and the other Loan Documents.  Ionis’ rights under this Section are in addition to other rights and remedies that Ionis may have.

 

Section 9.04                             Successors and Assigns.

 

(a)                                 Neither Party will assign or delegate any of its rights and duties hereunder without the prior written consent of the other Party, and any attempt so to assign or delegate will be void.

 

(b)                                 Subject to Section 9.04(a), whenever in this Agreement one of the Parties is referred to, such reference will be deemed to include the successors and assigns of such Party, and all covenants, promises and agreements by or on behalf of a Party that are contained in this Agreement will bind and inure to the benefit of its successors and assigns.

 

Section 9.05                             Applicable Law.  All questions concerning the construction, validity and interpretation of this Agreement will be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws.

 

Section 9.06                             Waivers; Amendment.

 

(a)                                 No failure or delay of Ionis in exercising any power or right hereunder will operate as a waiver thereof, nor will any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. Ionis’ rights and remedies hereunder are cumulative and are not exclusive of any rights or remedies which it would otherwise have. No waiver of any provision of this Agreement or consent to any departure therefrom will in any event be effective unless the same will be permitted by Section 9.06(b) below, and then such waiver or consent will be effective only in the specific instance and for the purpose for which given.

 

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(b)                                 Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by Akcea and Ionis.

 

Section 9.07                             Severability.  In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby. The Parties will endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic, and legal, effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

 

Section 9.08                             Counterparts.  This Agreement and any other Loan Document may be executed in two or more counterparts, each of which will constitute an original but all of which when taken together will constitute but one contract.  Delivery of an executed counterpart of a signature page to this Agreement or any other Loan Document by facsimile or other electronic means will be effective as delivery of an original executed counterpart of this Agreement or such other Loan Document, as applicable.

 

Section 9.09                             Headings.  Article and Section headings used herein are for convenience only, and do not constitute a part of this Agreement.

 

Section 9.10                             Right of Setoff.  If a failure of Akcea to pay any amounts due and payable pursuant to this Agreement or any other Loan Document, will have occurred and be continuing, Ionis is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all monetary obligations at any time owing by Ionis to Akcea now or hereafter existing against the Total Outstanding Amount or any amounts due and payable pursuant to this Agreement or any other Loan Document.  Ionis agrees to promptly notify Akcea after such setoff and application, but the failure to give such notice will not affect the validity of such setoff and application. Ionis’ rights under this Section are in addition to other rights and remedies (including other rights of setoff) which it may have.

 

Section 9.11                             Terms Generally.  The definitions in Schedule 1 will apply equally to both the singular and plural forms of the terms defined. The words “include”, “includes” and “including” will be deemed to be followed by the phrase “without limitation”.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

 

	
 
    	
AKCEA THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paula Soteropoulos
    
	
 
    	
Name: Paula   Soteropoulos
    
	
 
    	
Title: President   & CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
IONIS   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Elizabeth L. Hougen
    
	
 
    	
Name: Elizabeth   L. Hougen
    
	
 
    	
Title: CFO
    

 

9

 

SCHEDULE 1

 

As used in the Agreement, the following terms shall have the following definitions:

 

“Advance” means an advance made pursuant to the Credit Facility by Ionis to Akcea under Article II.

 

“Bankruptcy Code” means title 11 of the United States Code, as in effect from time to time.

 

“Commitment” has the meaning assigned to such term in Section 2.01.

 

“Common Stock” means the shares of common stock issued by Akcea from time to time.

 

“Credit Facility” means the line of credit facility extended by Ionis to Akcea hereunder.

 

“Event of Default” has the meaning assigned to such term in Article VII.

 

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States.

 

“Governmental Authority” means any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

 

“Indebtedness” as to Akcea means (i) all obligations of Akcea for borrowed money, (ii) all obligations of Akcea evidenced by bonds, debentures, notes, or other similar instruments and all reimbursement or other obligations in respect of letters of credit, bankers acceptances, or other financial products, (iii) all obligations or liabilities of others secured by a lien on any asset of Akcea, irrespective of whether such obligation or liability is assumed, (iv) all obligations of Akcea to pay the deferred purchase price of assets, and (v) any obligation of Akcea guaranteeing or intended to guarantee any obligation of any other person or entity that constitutes Indebtedness.

 

“Insolvency Proceeding” means any proceeding commenced by or against any person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

 

“IPO” means the initial registered public offering of equity securities of Akcea pursuant to Form S-1 of the Securities and Exchange Commission.

 

“Loan Document” means this Agreement, the Note and any other document entered into in connection herewith, in each case as amended, supplemented, or otherwise modified from time to time.

 

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“Note” has the meaning assigned to such term in Section 2.01.

 

“Series A Preferred Stock” means the shares of Series A Preferred Stock issued by Akcea from time to time pursuant to Akcea’s Amended and Restated Certificate of Incorporation.

 

“Stock” means Common Stock and/or Series A Preferred Stock.

 

“Total Outstanding Amount” means, at any time, the aggregate outstanding principal amount of all Advances at such time together with all accrued and unpaid interest, fees, costs and expenses at such time.

 

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EXHIBIT A

 

THIS CONVERTIBLE SENIOR PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

CONVERTIBLE SENIOR PROMISSORY NOTE

 

$150,000,000                                                                                                                                       January 18, 2017

 

FOR VALUE RECEIVED, AKCEA THERAPEUTICS, INC., a Delaware corporation (“Akcea”), promises to pay to IONIS PHARMACEUTICALS, INC., a Delaware corporation (“Ionis”), in immediately available funds, the Total Outstanding Amount in the manner set forth in the Credit Agreement (as defined below).

 

This Convertible Senior Promissory Note (this “Note”) is the promissory note referred to in and is executed and delivered in connection with that certain Senior Line of Credit Agreement dated as of even date herewith and executed by Akcea in favor of Ionis (as the same may from time to time be amended, modified or supplemented or restated, the “Credit Agreement”). The terms and conditions of the Credit Agreement are hereby incorporated herein by this reference. All capitalized terms used herein and not otherwise defined herein will have the respective meanings given to them in the Credit Agreement.

 

1.             Credit Facility. Advances made under the Credit Agreement will be disbursed as provided in the Credit Agreement. At the time of any borrowing by Akcea under the Credit Agreement or capitalization of any interest on the Advances, Ionis will make or cause to be made an appropriate notation on Exhibit A attached hereto reflecting the amount of such borrowing or capitalization. The outstanding amount of this Note set forth on such Exhibit A will be prima facie evidence of the principal amount thereof outstanding, but the failure to record, or any error in so recording, will not limit or otherwise affect the obligations of Akcea to make payment of principal or interest on this Note or to convert the same when due.  Any payment hereunder will be in lawful money of the United States of America and will be applied first to accrued and unpaid interest, and thereafter to principal.

 

2.             Conversion. This Note is convertible into Shares under certain circumstances in accordance with Section 2.04 of the Credit Agreement.

 

3.             Event of Default. Upon the occurrence of an Event of Default, Ionis will have the option to declare all unpaid principal, accrued interest and other amounts owing hereunder to

 

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become immediately due, payable and collectible by Ionis pursuant to applicable law, all as provided in the Credit Agreement.  Upon the occurrence of an Event of Default, Akcea will pay all reasonable attorneys’ fees and court costs incurred in enforcing and collecting this Note.

 

4.             Repayment. If this Note is not previously (a) converted in accordance with the terms of Section 2.04 of the Credit Agreement, or (b) paid in accordance with Article VII of the Credit Agreement pursuant to the occurrence of an Event of Default, then the Total Outstanding Amount on January 26, 2019 will become fully due and payable on such date.

 

5.             Seniority. The indebtedness evidenced by this Note are hereby made expressly senior obligations of Akcea and will not be subject or subordinate in right of payment to the prior payment of any other obligation of Akcea, as set forth in Article VIII of the Credit Agreement.

 

6.             Waiver. Akcea waives presentment and demand for payment, notice of dishonor, protest and notice of protest of this Note, and will pay all costs of collection when incurred, including, without limitation, reasonable attorneys’ fees, costs and other expenses.

 

7.             Governing Law. This Note will be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

[Remainder of page left intentionally blank.  Signature pages to follow.]

 

13

 

IN WITNESS WHEREOF, Akcea has caused this Note to be executed as an instrument under seal by its duly authorized officer as of the date first set forth above.

 

 

	
 
    	
AKCEA   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

14

 

EXHIBIT A

 

	
DATE
    	
 
    	
ADVANCES
    	
 
    	
ACCRUED INTEREST
    	
 
    	
TOTAL
    OUTSTANDING
   AMOUNT
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00268-of-00352.parquet"}]]