Document:

Exhibit
10.1

 

Execution Copy

 

CONFIDENTIAL
TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(B)4, AND 240.24B-2

 

COLLABORATION AND LICENSE AGREEMENT

 

between

 

REGULUS THERAPEUTICS INC.

 

And

 

SANOFI-AVENTIS

 

 

COLLABORATION AND LICENSE AGREEMENT

 

THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is made
and entered into this June 17, 2010 (the “Effective Date”), by and between SANOFI-AVENTIS, a French Corporation (“Sanofi”) having a
place of business at 174, avenue de France, 75013, Paris, France, registered in
the Paris Trade and Company Register under no. 395 030 844, and REGULUS THERAPEUTICS INC., a Delaware
Corporation (“Regulus”)
having a place of business at 1896 Rutherford Road, Carlsbad, California
92008.  Sanofi and Regulus each may be
referred to herein individually as a “Party,” or collectively as the “Parties.”

 

WHEREAS, Regulus possesses certain patent rights,
know-how and technology with respect to therapeutic microRNA Compounds;

 

WHEREAS, Regulus and Sanofi each desire to
collaborate (the “Collaboration”)
to conduct a Research Program to identify one or more Licensed Compounds for a
limited number of Collaboration Targets for Sanofi to advance into human
clinical trials and ultimately Commercialize as Products; and

 

WHEREAS, Sanofi will have exclusive rights to
Licensed Compounds and Products arising from the Research Program and (unless
otherwise specified in the R&D Plan) will be solely responsible for the
clinical development and Commercialization of Products worldwide, in each case
on the terms set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein contained, the Parties do hereby
agree as follows.

 

ARTICLE 1

 

DEFINITIONS

 

The
terms used in this Agreement with initial letters capitalized, whether used in
the singular or the plural, will have the meaning set forth in APPENDIX 1, or if not listed in APPENDIX 1,
the meaning designated in places throughout the Agreement.

 

ARTICLE 2

 

GRANT OF RIGHTS;
EXCLUSIVITY

 

Section 2.1            License
Grants to Sanofi.  Subject to the
terms and conditions of this Agreement, Regulus hereby grants to Sanofi a
worldwide, royalty-bearing, exclusive license, with the right to grant
sublicenses as set forth in Section 2.2 below, under the Regulus Know-How
and Regulus Patents to Research, Develop, make, have made, use, gain Approval,
Commercialize, sell, offer for sale, have sold, export and import Licensed
Compounds and Products in the Product Field.

 

Section 2.2            Sublicenses.  The licenses granted to
Sanofi under Section 2.1 are sublicensable only in connection with a
sublicense of a Licensed Compound or Product to any

 

 

Affiliate of Sanofi or to
any Third Party, in each case to Research Develop, make, have made, use, gain
Approval, Commercialize, sell, offer for sale, have sold, export and import
Licensed Compound or Product in the Product Field in accordance with the terms
of this Agreement.

 

Section 2.3            Exclusivity.

 

2.3.1       During the [***] Research
Term, and at any time thereafter during the Research Term when Sanofi still has
[***], Regulus agrees that it will not work independently of this Agreement for
any Third Party (including the grant of any license to any Third Party) to
discover, research, develop and/or commercialize [***] in the Target Field or
products containing such microRNA Compounds in the Target Field.  For clarity, Regulus may (i) conduct its
own internal research in the Target Field, subject to Section 3.6; and
(ii) work independently of this Agreement for any Third Party (including
the grant of any license to any Third Party) to discover, research, develop
and/or commercialize microRNA Compounds that target or mimic microRNAs that are
not Collaboration Targets so long as such work is [***] outside the Target
Field.

 

2.3.2       During the Research Term if
Sanofi [***] and except as otherwise permitted under Section 3.6.5,
Regulus agrees that it will not work independently of this Agreement for any
Third Party (including the grant of any license to any Third Party) to
discover, research, develop and/or commercialize (i) with respect to
Collaboration Targets that the Parties are approaching with a microRNA
Antagonist, microRNA Compounds that are [***] such Collaboration Target; and
(ii) with respect to Collaboration Targets that the Parties are approaching
with a microRNA Mimic, microRNA Compounds with a [***] as the applicable
Collaboration Target that are [***] such Collaboration Target.

 

2.3.3       After the Research Term and
except as otherwise permitted under Section 3.6.5, on a Collaboration
Target-by-Collaboration Target basis, so long as the exclusive license granted
to Sanofi under Section 2.1 is in effect and subject to the limitations
set forth in Section 2.4 below, Regulus agrees that it will not work
independently of this Agreement for any Third Party (including the grant of any
license to any Third Party) to discover, research, develop and/or commercialize
(i) with respect to Collaboration Targets that are the subject of the
exclusive license under Section 2.1 where the applicable Product contains
a microRNA Antagonist, microRNA Compounds that are [***] such Collaboration
Target; and (ii) with respect to Collaboration Targets that are the
subject of the exclusive license under Section 2.1 where the applicable
Product contains a microRNA Mimic, microRNA Compounds with a [***] as the
applicable Collaboration Target that are [***] such Collaboration Target.

 

2.3.4       During the [***] Research
Term, Sanofi agrees that it will not work independently of this Agreement in
collaboration with any Third Party (including the grant of any license to or
from any Third Party) to discover, research, develop and/or commercialize [***]
in the Target Field; provided, however,
that at anytime, and from time to time, Sanofi may collaborate with
(i) any Third Party (including the grant of any license to or from any
Third Party) to discover, research, develop and/or commercialize any microRNA
Compound for which an [***] a Third Party, independently of Sanofi, or
(ii) any academic or other non-commercial research institution.

 

2

 

2.3.5       During [***], on a
Collaboration Target-by-Collaboration Target basis, so long as the exclusive
license granted to Sanofi under Section 2.1 is in effect, Sanofi agrees
that it will not work independently of this Agreement in collaboration with any
Third Party (including the grant of any license to or from any Third Party) to
discover, research, develop and/or commercialize (i) with respect to
Collaboration Targets that are the subject of the exclusive license under Section 2.1
where the applicable Product contains a microRNA Antagonist, microRNA Compounds
that [***] such Collaboration Target; and (ii) with respect to
Collaboration Targets that are the subject of the exclusive license under Section 2.1
where the applicable Product contains a microRNA Mimic, microRNA Compounds with
a [***] as the applicable Collaboration Target that are [***] such
Collaboration Target.

 

Section 2.4            License
Conditions; Limitations.

 

2.4.1       If Sanofi fails to meet any
of its obligations under Section 3.5.1 and Section 6.2, and such
failure rises to the level of a material breach of this Agreement, then Regulus
will have the termination rights set forth in Section 9.3.

 

2.4.2       If Sanofi fails to meet its
obligations to use Commercially Reasonable Efforts under ARTICLE 5 for a
particular Licensed Compound or Product, Regulus will have the termination
rights set forth in Section 9.4.

 

2.4.3       The license and exclusivity
granted under Section 2.1 and Section 2.3 are subject to and limited
by the (i) Existing Regulus Agreements and (ii) [***], solely to the extent Regulus has, prior to the Effective
Date, [***].

 

2.4.4       Without limiting this Section 2.4,
Regulus’ ability to conduct research and development on [***], and Regulus’
ability to grant Sanofi a license under Section 2.1 to Develop and
Commercialize [***], is limited by, and subject to, the terms of the
[***].  Regulus will use commercially
reasonable efforts (and will [***]) to secure the right to conduct research and
development on [***] under the R&D Plan, and grant Sanofi a license under Section 2.1
to Develop and Commercialize Licensed Compounds that are [***] to the fullest
extent contemplated by this Agreement.

 

2.4.5       Without limiting this Section 2.4,
Regulus’ ability to conduct research and development on microRNA Compounds
[***], and Regulus’ ability to grant Sanofi a license under Section 2.1 to
Develop and Commercialize microRNA Compounds [***] is limited until the date
[***] (the [***] which in no event shall
be later than [***], as in effect on the Effective Date.  Subject to the preceding sentence, Regulus
will secure the right to grant Sanofi a license under Section 2.1 to
Develop and Commercialize Licensed Compounds [***] to the fullest extent
contemplated by this Agreement.  The fact
that Sanofi has been, or will be granted any rights by Regulus [***]shall be
deemed Sanofi Confidential Information [***].

 

2.4.6       Subject to Section 2.3,
Regulus retains the right to grant Permitted Licenses.

 

2.4.7       The [***] granted to Sanofi
under [***] is subject to [***] (including for the avoidance of doubt the [***]
obligation [***] to provide reports in accordance [***], and to keep records as
set forth in Article 10 of [***], provided that
Regulus agrees to directly comply

 

3

 

with the reporting
obligations under the [***] Agreement with respect to progress of research and
development.  To the extent necessary to
comply with the reporting obligations under the [***] Agreement, Sanofi agrees
to provide Regulus with reports of Sanofi’s progress through the JSC for so
long as the JSC in place, and thereafter as reasonably requested by Regulus, in
each case, at intervals and with reasonable lead-times reasonably necessary for
Regulus to comply with the [***].  Based
on the information reported by Sanofi pursuant to the preceding sentence,
Regulus will prepare the necessary reports and submit them to [***].  However, if [***] insists that Sanofi provide
written progress, Sanofi agrees to do so. 
The parties shall cooperate in good faith to facilitate compliance with
the Existing Regulus Agreements. 
Notwithstanding the foregoing, Regulus shall make a good faith effort to
[***] so that the [***] of the [***] the reporting obligations that Sanofi has
to Regulus under this Agreement.

 

ARTICLE 3

 

COLLABORATION

 

Section 3.1            Objective.  The Parties will collaborate
in carrying out a program to discover and preclinically develop Licensed
Compounds (as further provided for in the R&D Plan, the “Research Program”),
for the clinical Development and Commercialization of such Licensed Compounds
by Sanofi as Products.

 

Section 3.2            R&D
Plan.  The Research Program will be
carried out in accordance with a written research and development plan (the “R&D Plan”).  The initial R&D Plan that has been agreed
to by the Parties as of the Effective Date is attached as APPENDIX 8
hereto.  The purpose of the R&D Plan
is to detail the responsibilities and activities of Regulus and Sanofi with
respect to carrying out the Research Program. 
The R&D Plan will include a description of the specific activities
to be performed by the Parties in support of the Research Program and projected
timelines for completion of such activities. 
The R&D Plan, including the definition of Development Candidate, the
Development Candidate selection criteria, and the Target Product Profile, may
be amended with the approval of the JSC (with the Senior Representative of
Sanofi having the final decision in the case of a dispute between the Parties
over such matters, except as set forth in the JSC Charter).  The R&D Plan will be updated and amended
from time to time, but at least annually. 
In addition, at the time a Development Candidate is designated, the JSC
will meet to update the R&D Plan to implement the Manufacturing Technology
transfer under Section 4.3 and to secure supply of API to support
Phase 1 Trials, the cost of which will be [***].  If the Parties cannot agree to updates or
amendments to the R&D Plan, the Parties will first pursue the dispute
resolution provisions of the JSC Charter and thereafter follow the provisions
of Section 13.4.

 

Section 3.3            Research
Term.

 

3.3.1       The Research Program will be
carried out during the period following the Effective Date and ending on the
third anniversary of the Effective Date unless extended pursuant to
Section 3.3.2 (such period, including any extensions pursuant to
Section 3.3.2, the “Research
Term”).

 

4

 

3.3.2       Sanofi will have the option
to extend the Research Term for [***] additional [***] periods, such that the
Research Term may be extended through the [***] Effective Date.  For any extension of the Research Term, the
JSC will amend and restate the R&D Plan as necessary, subject to the
provisions of the JSC Charter.

 

3.3.3       In order to exercise its
option under Section 3.3.2 to extend the Research Term, Sanofi must
provide Regulus a written notice exercising Sanofi’s right to extend the
Research Term at least [***] prior to the scheduled expiration of the Research
Term.  If Sanofi does not timely provide
such written notice, the Research Term will end when scheduled.  In addition, no earlier than the
[***] day prior to the scheduled expiration of the Research Term, Regulus
may request in writing from Sanofi a nonbinding, good faith indication of
whether or not Sanofi intends to extend the Research Term.  In such event, Sanofi will provide such
nonbinding, good faith indication to Regulus at least [***] days prior to
the scheduled expiration of the Research Term.

 

Section 3.4            Joint
Steering Committee.  The Parties
will establish and maintain a joint steering committee (the “JSC”) to oversee the
conduct of the Research Program, including, but not limited to approving any
changes to the R&D Plan.  The JSC
will be established, operated and governed in accordance with the policies and
procedures set forth in APPENDIX 4
attached hereto (the “JSC
Charter”).  The JSC
Charter may be amended with the unanimous approval of the JSC members.  As needed, the JSC will establish
subcommittees and working groups that will report to the JSC to further the
objectives of the Research Program.  The
JSC and any subcommittees and working groups established by the JSC will
automatically dissolve at the end of the Research Term.

 

Section 3.5            Research
Program Staffing; Funding; and Resources. 
Regulus will dedicate Regulus employees during the Research Term to
perform activities in support of and in accordance with the then-current
R&D Plan.

 

3.5.1       Regulus
will invoice Sanofi on or after the Effective Date for, and Sanofi will pay
Regulus, an irrevocable, non-creditable and nonrefundable payment of [***] to
support Regulus’ work under the Research Program for [***] the Research Term. 
Regulus will invoice Sanofi on or after the [***] of the Effective Date
and on or after each subsequent anniversary of the Effective Date during the
Research Term (including any extension under Section 3.3.2) for, and Sanofi will pay Regulus, an
irrevocable, non-creditable and nonrefundable payment of [***] to support
Regulus’ work under the Research Program for such year.  Regulus will invoice Sanofi for
each such payment and Sanofi will pay each such invoice in accordance with Section 6.13.

 

3.5.2       Except for the payments
under Section 3.5.1 above,
Regulus will bear all costs, including costs related to research supplies,
consumables and animals, in performing its obligations under the R&D Plan. 
In accordance with the foregoing, if the JSC determines that any of
Regulus’ obligations under the R&D Plan could be performed better, or
faster by Sanofi, then Sanofi shall have the opportunity to perform such work
subject to [***] on a scope of work and budget, consistent with [***] require
to perform the same; and Regulus will pay Sanofi for such work in accordance
with such budget.  For clarity, Regulus will perform,
and bear all costs of performing, all IND-Enabling Studies to the extent
required by the FDA to support the IND

 

5

 

for the Target Product
Profile that was approved by the JSC prior to the start of such IND-Enabling
Studies.

 

3.5.3       Regulus shall commit the
necessary resources to use commercially reasonable efforts to (a) provide
Sanofi with a [***] microRNA targets in [***] Fibrosis [***] by [***], (b) [***]
no later than [***], and (c) receive [***] for Licensed Compounds during
[***]; in each case consistent with the R&D Plan.

 

Section 3.6            Collaboration
Targets.  Sanofi will
have a license under Section 2.1
for up to four microRNAs (including Mir-21 as of the Effective Date) designated
by Sanofi in accordance with Section 3.6.1
below, for research and development under the R&D Plan (each such
designated microRNA is a “Collaboration
Target”); provided, however,
that in order to be eligible for designation by Sanofi as a Collaboration
Target, a microRNA must be associated with the Target Field, as demonstrated by
any one or more of the following: (1) a publication in a peer-reviewed
journal; (2) a data set generated by Regulus and/or Sanofi as part of the
Research Program; (3) inclusion in Regulus’ internal list(s) of
microRNAs it accepts as being associated with the Target Field (which list(s) will
be shared with Sanofi as described below in this Section); or (4) any
other data set that the JSC unanimously accepts (in each case, “Associated”); and provided, further, that the Parties hereby acknowledge and
agree that Mir-21 is Associated with the field of Fibrosis.  At each JSC meeting (including the initial
meeting to be held promptly following the Effective Date), Regulus will provide
an update to Sanofi regarding all material results of Regulus’ research and
discovery efforts in the Target Field, including the identity of each microRNA
(excluding any microRNA that is encumbered by the [***]) that is the subject of
Regulus’ efforts in the Target Field.  To
this end, the Parties agree to hold an audio or video teleconference meeting of
the JSC within 10 Business Days after the Effective Date and the initial
face-to-face meeting of the JSC within eight (8) weeks after the Effective
Date.  At least one Collaboration Target
must be [***] with the [***] and at least one Collaboration Target must be
[***]with the [***] Fibrosis.  The Collaboration
Targets, including whether they are [***] with the Target Field, and whether
Sanofi’s rights for such Collaboration Target are for a microRNA Antagonist or
a microRNA Mimic will be listed on APPENDIX 6,
which may be updated from time to time by the Parties in accordance with this Section 3.6.  Sanofi may designate up to four Collaboration
Targets at any time during the Research Term; provided,
however, that if Sanofi wishes to designate a Collaboration Target
after the [***], Sanofi must first have extended the Research Term for at least
[***] in accordance with Section 3.3.2. 
During the Research Term, Regulus shall use Commercially Reasonable
Efforts to identify and validate microRNAs as Associated with the Target Field
in accordance with the R&D Plan.

 

3.6.1       Designating Collaboration
Targets.  As of the
Effective Date, Sanofi has designated Mir-21 as a Collaboration Target in
Fibrosis to approach with a microRNA Antagonist.  If during the Research Term there are less
than four Collaboration Targets, Sanofi may designate a new microRNA as a
Collaboration Target by providing Regulus with a written notice (the “Request Notice”) of
the microRNA it wishes to designate as a Collaboration Target (the “Proposed Target”).  The Request Notice will include the microRNA
name and the miRBase Accession Number, whether Sanofi believes the Proposed
Target is Associated with the Target Field, and whether Sanofi wants to
approach such Proposed Target with a microRNA Antagonist or a microRNA
Mimic.  Within 15 Business Days of
receipt of the Request Notice, Regulus will give Sanofi written notice
(i) stating if any of the criteria set forth in clauses (a), (b)

 

6

 

or (c) below applied to
such Proposed Target at the time of Regulus’ receipt of the Request Notice (or
otherwise confirming that such Proposed Target is available); and
(ii) only if none of clauses (a), (b) or (c) below applied
to such Proposed Target at the time of Regulus’ receipt of the Request Notice,
disclosing all relevant Existing Regulus Agreements and Future Regulus
Agreements and the [***] and other potential encumbrances known by Regulus and
related to the Proposed Target (“Target Encumbrances”). 
If, and only if, at the time of Regulus’ receipt of the Request Notice,
the Proposed Target:

 

(a)           is the subject of [***] an
exclusive license granted by Regulus to a Third Party that would prohibit
Regulus from collaborating with Sanofi under this Agreement or from granting a
license under Section 2.1
with respect to the Proposed Target;

 

(b)           is not [***] with the [***];
or

 

(c)           has been approved in
accordance with [***] procedures, consistently applied to [***] research
programs, as an [***] research program [***] with committed resources, as
reflected in the minutes of the proceedings of [***].  For purposes of this paragraph, “[***]” means the [***] responsible for approving the
commitment of resources to an [***]; 

 

then, and only then, in each
case, the Proposed Target will be rejected and will not become a Collaboration
Target.  If the Proposed Target is
rejected, Sanofi can request another microRNA in accordance with the terms of
this Section 3.6.1.  If the Proposed Target is not rejected, the
Proposed Target will become a Collaboration Target upon payment by Sanofi to
Regulus of the applicable target designation milestone under Section 6.3; provided, however, that if the Proposed Target has any
Target Encumbrances (and Regulus has disclosed such Target Encumbrances to
Sanofi), before such Proposed Target can become a Collaboration Target, Sanofi
must agree in writing (within 30 days of receiving from Regulus the
description of such Target Encumbrances and subject to the allocations set
forth in Section 6.8) to assume all applicable Target Encumbrances for
such Proposed Target.  Whenever a
microRNA becomes a Collaboration Target, the JSC will promptly update the
R&D Plan and the Parties will promptly update APPENDIX 6
to add the new Collaboration Target and specify whether the Collaboration
Target is [***], and whether Sanofi’s rights for such Collaboration Target will
be related to a microRNA Antagonist or a microRNA Mimic.  If the Parties have a dispute whether a
Proposed Target is [***], such dispute will be resolved by an Expert Panel in
accordance with Section 13.4.5.  For clarity, Sanofi may designate both a
microRNA Antagonist and a microRNA Mimic for the same microRNA under this Section 3.6.1, but the microRNA
Antagonist and the microRNA Mimic will each count as a separate Collaboration
Target.

 

3.6.2       Right of Substitution.  At any time during the Research Term and
subject to the procedures set forth below, by written notice to Regulus, Sanofi
may substitute a new microRNA for an existing Collaboration Target; provided that:

 

(a)           unless unanimously agreed by
the JSC, Sanofi may not substitute a Collaboration Target during the first
[***] months following the applicable Request Notice for such
Collaboration Target;

 

7

 

(b)           Sanofi may only substitute
Collaboration Targets for which Regulus has not generated a microRNA Compound
satisfying the Development Candidate selection criteria set out in the R&D
Plan, within [***] months of the applicable Request Notice for such
microRNA;

 

(c)           Sanofi may not substitute a
Collaboration Target if Regulus has [***] for a Licensed Compound targeting or
mimicking such Collaboration Target;

 

(d)           Sanofi may not substitute
another microRNA for Mir-21, unless Regulus has not [***] for a Mir-21 Compound
by [***]; and

 

(e)           Sanofi may not make more
than [***] such substitutions under this Section 3.6.2(e) during the
Research Term, provided that if Sanofi extends the Research Term until the
[***] anniversary of the Effective Date pursuant to Section 3.3.2, then
the maximum number of substitutions under this Section 3.6.2 that Sanofi
may make during the Research Term as so extended shall be [***].  Notwithstanding the foregoing, the JSC may
unanimously agree to make a Collaboration Target substitution, in which event
such substitution shall not count toward the applicable maximum number of
substitutions set forth in the preceding sentence.

 

If
Sanofi elects to substitute a Collaboration Target under this
Section 3.6.2, then Sanofi will provide written notice to Regulus, which
written notice shall include a proposed new microRNA for consideration
(including its name, the miRBase accession number for the proposed microRNA,
and whether such microRNA is Associated with [***] Fibrosis) as a new
Collaboration Target.  Regulus shall
approve or reject such proposed substitution microRNA in accordance with the
criteria on which a Proposed Target becomes a Collaboration Target as set forth
in Section 3.6.1.  Any microRNA that
is substituted-out of the Research Program will no longer be considered a
Collaboration Target and Regulus’ obligations under this Agreement with respect
to such substituted-out microRNA (including but not limited to Section 2.3)
will terminate.  For purposes of clarity,
Sanofi will not have to pay an additional target designation milestone under Section 6.3
for a replacement Collaboration Target under this Section 3.6.2.

 

3.6.3       Confidentiality.  The fact that Sanofi has designated a
particular microRNA as a Collaboration Target is Sanofi Confidential
Information.  The fact that Regulus has
rejected a particular microRNA under Section 3.6.1 is Regulus Confidential
Information.

 

3.6.4       End of Research Term.  Upon the expiration of the Research Term,
(a) Regulus will not be obligated to continue to perform work under the
Research Program; (b) Sanofi may not designate any additional (or
substituted) Collaboration Targets under Section 3.6; and (c) subject
to Regulus’ obligations under Section 2.3, Regulus will [***] any data
generated under the R&D Plan for any microRNA that is not a Collaboration
Target, including any microRNA Compound antagonizing or mimicking such
microRNA.

 

3.6.5       Sanofi Option for other microRNA
Compounds.  Subject to Section 2.3,
3.6.1 and 3.6.2, Regulus may work independently of this Agreement for itself on
a microRNA Compound which targets or mimics a Collaboration Target, which
microRNA Compound Sanofi would otherwise not have a license to Develop or
Commercialize under Section 2.1 (any
such microRNA Compound, an “Optional Compound”).  If at any time during

 

8

 

the Term, Regulus identifies
an Optional Compound as a candidate for initiation of IND-Enabling Studies,
then Sanofi shall have the option (the “Option”) to receive an
exclusive royalty-bearing license to Develop and Commercialize such Optional
Compound, as follows:

 

(a)           Regulus shall notify Sanofi
in writing with the details of such Optional Compound, including but not
limited to any available pre-clinical data and the development costs to-date,
(i) within [***] of the identification of an Optional Compound as a
candidate for initiation of IND-Enabling Studies (the “First Option
Notice”) and (ii) if the Option has not yet been exercised,
between [***] and [***] prior to the filing of an IND for such Optional
Compound (the “Second Option Notice”).

 

(b)           Sanofi may exercise the
Option under either the First Option Notice or the Second Option Notice solely
by written notice to Regulus (each an “Exercise Notice”); provided
that if Sanofi exercises the Option pursuant to the First Option Notice it must
provide Regulus with an Exercise Notice within [***] after Sanofi’s receipt of
the First Option Notice, and if Sanofi exercises the Option pursuant to the
Second Option Notice it must provide Regulus with an Exercise Notice within
[***]  after the filing of the IND for
such Optional Compound (the end of each such [***]  period, a “Second
Option Expiration Date”).

 

(c)           If Sanofi exercises the
Option under the First Option Notice within the applicable time period
specified in Section 3.6.5(b), then Sanofi shall, in accordance with [***]
(i) $[***], (ii) an [***] to [***] specific to such Optional Compound
[***] prior to the date of the First Option Notice, (iii) [***] of any
[***] in [***] of [***] of [***] and in [***] of [***]by such Optional Compound
after Sanofi exercises an Option with respect to such Optional Compound, and
(iv) [***]  on [***] by such
Optional Compound after Sanofi exercises an Option with respect to such
Optional Compound at the [***] in [***] of [***] of Section 6.5 with the
provisions of Sections [***] through [***] applying mutatis
mutandis.

 

(d)           If Sanofi exercises the
Option under the Second Option Notice within the applicable time period
specified in Section 3.6.5(b), then Sanofi shall, in accordance with [***]
(i) [***] (ii) an [***] to [***] specific to such Optional Compound
[***] prior to the date of the First Option Notice, (iii) [***] of any
[***] in [***] of [***] of [***] and in [***] of [***] by such Optional
Compound after Sanofi exercises an Option with respect to such Optional
Compound, and (iv) any [***] on [***] by such Optional Compound after
Sanofi exercises an Option with respect to such Optional Compound at [***] in
[***] of [***] of [***] with the provisions of Sections [***] through [***]
applying mutatis mutandis.

 

(e)           If Sanofi does not exercise
an Option by the applicable Second Option Expiration Date, then (i) the
applicable Option will expire, (ii) Sanofi’s rights (and Regulus’
obligations) under this Section 3.6.5 with respect to the applicable
Optional Compound will terminate, and (iii) notwithstanding Section 2.3,
Regulus may Develop and Commercialize the applicable Optional Compound on its
own or with a Third Party (including granting of a license to a Third Party to
Develop and Commercialize such Optional Compound).

 

Section 3.7            Research
Program Records.  Each Party and
its contractors will maintain complete and accurate records of all work
conducted in the performance of the Research Program and all results, data,
inventions and developments made in the performance of

 

9

 

the Research Program.  Such records will be in sufficient detail and
in good scientific manner appropriate for patent and regulatory purposes.  Upon reasonable prior written notice, Regulus
will provide Sanofi the right to inspect such records, and will provide copies
of all requested records, to the extent reasonably required for the performance
of Sanofi’s rights and obligations under this Agreement.  Upon reasonable prior written notice, and
solely with respect to Discontinued Products, Sanofi will provide Regulus the
right to inspect such records, and will provide copies of all requested
records, to the extent reasonably required for the performance of Regulus’
rights and obligations under this Agreement. 
In each case, each Party will maintain such records and the information
it receives from the other Party in confidence in accordance with
Article 7 hereof and will not use such records or information except to
the extent otherwise permitted by this Agreement.

 

Section 3.8            Disclosure
of Results of Research Program.  The results of
all work performed by the Parties as part of the Research Program will be
promptly disclosed to the other Party in a reasonable manner as such results
are obtained.  In addition, Regulus will
periodically provide Sanofi with written reports of the work performed under
the Research Program and the results achieved by Regulus.  Regulus and Sanofi will provide reports and
analyses at each JSC meeting, and more frequently on reasonable request by the
JSC, detailing the current status of the Research Program.  The results, reports, analyses and other
information regarding the Research Program disclosed by one Party to the other
Party pursuant hereto may be used only in accordance with the rights granted
and other terms and conditions under this Agreement.  Upon reasonable request by Sanofi, Regulus
will provide Sanofi with additional data, results and other information with
respect to the work performed by Regulus in the performance of the Research
Program.  Any reports required, excluding
reports needed for submission to a Regulatory Agency, under this Section 3.8
may take the form of and be recorded in minutes of the JSC that will contain
copies of any slides relating to the results and presented to the JSC. Reports
needed to support regulatory submissions and updates to a Regulatory Agency
will be provided in a timely manner and in a format as agreed upon by the JSC.

 

Section 3.9            Research
Efforts; Resources, Scientific Manner.  Each Party will
use Commercially Reasonable Efforts to perform the Research Program, including
its responsibilities under the R&D Plan.

 

3.9.1       Throughout the Research
Term, Regulus will assign no less than the number of qualified scientists
specified in the R&D Plan to perform the work set forth in the then-applicable
R&D Plan.  The mixture of skills and
levels of such employees will be appropriate to the scientific objectives of
the Research Program.

 

3.9.2       Each Party will maintain
laboratories, offices, administrative support and all other facilities at its
own expense and risk necessary to carry out its responsibilities under the
R&D Plan.  Each Party agrees to make
its employees reasonably available at their respective places of employment to
consult with the other Party on issues arising during the performance of the
Research Program.  Sanofi and Regulus
will cooperate with each other in carrying out the Research Program, and each
Party will contribute its relevant know-how and experience necessary to carry
out the Research Program.

 

10

 

3.9.3       The Research Program will be
conducted by each Party in good scientific manner, and in compliance with all
applicable GCP, GLP and GMP, and applicable legal requirements, to attempt to
achieve efficiently and expeditiously the Objectives of the Research
Program.  Each Party will comply with all
Applicable Laws, in the performance of work under this Agreement.

 

3.9.4       Regulus will not perform any
of its obligations under the R&D Plan through one or more subcontractors or
consultants, without the prior written approval of Sanofi, such approval not to
be unreasonably withheld; except that
Regulus may (i) enter Permitted Licenses; and (ii) engage consultants
and subcontractors in the ordinary course that generally support Regulus’
research and development infrastructure, provided that
(a) each such consultant and subcontractor agrees in writing to assign to
Regulus all Know-How and Patents conceived made or reduced to practice in
performing services for Regulus, and (b) Regulus will solely bear any
costs associated with Regulus’ use of such consultants and subcontractors.  Sanofi will promptly notify Regulus regarding
any Third Party Sanofi uses to conduct research under the R&D Plan or that
Sanofi transfers Compounds or Products to, including identifying such Third
Party.

 

Section 3.10         Materials
Transfer.  In order to
facilitate the Research Program, either Party may provide to the other Party
certain materials for use by the other Party in furtherance of the Research
Program.  All such materials will be used
by the receiving Party in accordance with the terms and conditions of this
Agreement solely for purposes of performing its rights and obligations under
this Agreement, and the receiving Party will not transfer such materials to any
Third Party unless expressly contemplated by this Agreement or upon the written
consent of the supplying Party.

 

Section 3.11         Pharmacovigilance; Safety
Database.  Prior to IND
transfer, designated staff from the respective Headquarter Pharmacovigilance
Department shall be requested by the Joint Steering Committee to establish a
detailed Safety Data Exchange Agreement (“SDEA”) for
the Licensed Products to be in place prior to Sanofi starting any clinical
development.  Notwithstanding the
foregoing, the Parties agree to the following principles:

 

3.11.1     Sanofi  will establish the global safety database
for the Licensed Compounds/Products that will be used for regulatory reporting
and responses to safety queries from Regulatory Authorities.  For that purpose, Regulus will promptly
transfer all safety information regarding the Licensed Compounds or Products,
including, if applicable, adverse events, and drug exposure during pregnancy
data that it has regarding the Licensed Compounds or Products to Sanofi for
entry into the global safety database upon request from Sanofi.  The timelines, format and content of such
transfer shall be agreed in the SDEA.

 

3.11.2     Regulus maintains a database
that includes information regarding the safety and tolerability of its drug
compounds, individually and as a class, including information discovered during
pre-clinical and clinical development (the “Regulus Database”).

 

3.11.3     Safety Monitoring.  In an effort to maximize understanding of the
safety profile and pharmacokinetics of Regulus compounds, after IND Approval,
Sanofi will cooperate with Regulus and forward safety information to Regulus
designated contact persons. This 

 

11

 

includes transmission of
serious adverse events collected from Sanofi sponsored studies in a timely
fashion as agreed in the SDEA.  Vice versa Regulus shall promptly inform Sanofi on any
safety issue or class effect that may come to its attention including those
from other license partners to the extent Regulus is not precluded by written
agreement with the applicable partner from sharing such information with
Sanofi. This includes also non clinical safety information.

 

3.11.4     Studies/Regulatory Documents.  To the extent collected by Sanofi and in the
form in which Sanofi uses/stores such information for its own purposes, Sanofi
will provide Regulus with the results from each of the nonclinical (e.g.,
toxicology, pharmacokinetics, and safety pharmacology studies) and the clinical
studies of each Licensed Compound and Product as soon as practicable following
the date such information is available to Sanofi (but not later than
[***] after Sanofi’s receipt of such information).  The clinical results will include, but will
not be limited to, subject demographics and characteristics, medical history,
prior and concomitant medication usage, adverse event reports and laboratory
test results.  The clinical results will
be accompanied by the clinical study protocol (original and all amendments) and
an annotated case report form (CRF) that identifies the variable names in the
transferred data associated with each of the data fields in the CRF. In
connection with any reported serious adverse event, Sanofi will provide Regulus
all serious adverse event reports (including initial, interim, follow-up,
amended, and final reports) promptly following the time these reports are
submitted to Regulatory Authorities.  In
addition, with respect to each Licensed Compound and Product, Sanofi will
provide Regulus with copies of annual safety updates filed with each IND and
the safety sections of any final clinical study reports within [***] following
the date such information is filed or is available to Sanofi, as
applicable.  Furthermore, Sanofi will
promptly provide Regulus with any supporting data and answer any follow-up
questions reasonably requested by Regulus.

 

3.11.5     Confidentiality.  All such information disclosed by Sanofi to
Regulus will be Sanofi Confidential Information; provided,
however, that Regulus may disclose any such Sanofi Confidential
Information to Regulus’ other partners pursuant to ARTICLE 7 below if such
information is regarding class generic properties of microRNA Compounds, and/or
any Third Party, in each case, so long as Regulus does not disclose the identity
of the Product, or Sanofi.

 

3.11.6     Contacts.  Sanofi will deliver all such information to
Regulus for the Regulus Database to Regulus Therapeutics Inc., 1896 Rutherford
Road, Carlsbad, California 92008, Attention: Chief Medical Officer (or to such
other address/contact designated in writing by Regulus).

 

ARTICLE 4

 

MANUFACTURING

 

Section 4.1            Supply of microRNA Compound for
Research Program.  Regulus agrees
to manufacture and supply all microRNA Compounds for use in support of the
Research Program until the filing of an IND. 
Regulus will bear its own costs for the manufacture of all microRNA
Compound needed for research until the filing of an IND.  For clarity, Regulus will not be required to
manufacture and supply API or drug product for any human clinical trials.

 

12

 

Section 4.2            Clinical and Commercial
Manufacturing and Supply of Licensed Compound and Product.

 

4.2.1       Product
Manufacturing Responsibility.  Except as
otherwise provided in this Agreement, the Parties acknowledge and agree that
Sanofi will be solely responsible for the manufacturing of Licensed Compound
and Product for all clinical trials and commercial supply, including management
of the overall manufacturing strategy and tactics, formulation, internal or
contract manufacturer selection for API and finished Product, associated
audits, stability testing, pricing, relationship with contract manufacturer(s) and
any work proposals or contract negotiations or contracts themselves.

 

4.2.2       Supply of Finished Drug Product.  Except as otherwise
specified in the R&D Plan, the Parties acknowledge and agree that Sanofi
will be solely responsible for the manufacturing, stability testing and supply
of finished drug Product.

 

Section 4.3            Transfer of Manufacturing Technology
and Assistance.  Regulus shall
disclose (and provide copies, as applicable) to either Sanofi or a Third Party
manufacturer designated by Sanofi all Manufacturing Technology that is required
for the manufacture (including the development of the manufacturing process) of
the Licensed Compounds and Products and is reasonably necessary or useful to
enable Sanofi or such Third Party manufacturer (as appropriate) to manufacture
such Products.  The steps, planning and
obligations of the Parties regarding the transfer of the Manufacturing
Technology for each Product (for both the Licensed Compound and the Product)
will be set forth in a “Technology Transfer Master Plan API” to be executed
between the Parties promptly after the JSC decides such transfer is
necessary.  Upon request, Regulus will at
all times use diligent efforts to provide Sanofi-Aventis with any additional
information or on-site support as may be required by Sanofi and its Affiliates
in connection with the transfer of the Manufacturing Technology.  Sanofi shall reimburse Regulus for any
on-site support rendered at the FTE-Day Rate per FTE-day, provided further
Regulus shall in no event be obliged to provide more than [***]  in
total, unless the Parties otherwise agree in writing.  For purposes of this Agreement “Manufacturing Technology” shall
mean the Know-How Controlled by Regulus that is reasonably available and
reasonably necessary for the Manufacture (including formulation, processing,
filling and packaging) of Licensed Compounds and Products.  Sanofi and its Third Party manufacturer may
only use the Manufacturing Technology only in support of its licenses under Section 2.1
of this Agreement and will not use the Manufacturing Technology in connection
with any other compound or product. 
Sanofi will be responsible and liable to Regulus for any practice of the
Manufacturing Technology by Sanofi’s Third Party manufacturer that breaches
this Section 4.3.

 

ARTICLE 5

 

DEVELOPMENT &
COMMERCIALIZATION

 

Section 5.1            Development, Commercialization and
Regulatory Responsibilities.  Other than
Regulus’ responsibilities under the R&D Plan (including but not limited to
preparing and filing the IND for each Licensed Compound and Product), Sanofi
will have sole responsibility, including without limitation sole responsibility
for all funding, resourcing and decision-making, for all Development and
Commercialization with respect to the Licensed 

 

13

 

Compounds and Products after
IND Approval.  Sanofi hereby assumes all
regulatory responsibilities in connection with Licensed Compounds and Products
after IND Approval, including sole responsibility for all Regulatory
Documentation and for obtaining all Approvals. 
Sanofi will comply with all Applicable Laws in connection with the
Development and Commercialization of Licensed Compounds and Products.  Sanofi (by itself or through its Affiliates,
sublicensees, (sub)contractors or agents, as applicable) will achieve
Initiation of first Phase 1 Trial as soon as practicable following IND
Approval for each Licensed Compound and will use Commercially Reasonable
Efforts to Develop and Commercialize at least one Licensed Compound or Product
for each Collaboration Target.  Regulus
will make all IND filings under the Research Plan in Regulus’ name.  Once Sanofi pays Regulus the applicable
milestone payment under Section 6.4.1 for IND Approval, Sanofi will own
all INDs, NDAs, MAAs and other regulatory filings and Approvals for Products,
subject to Regulus reversion rights under ARTICLE 10.

 

Section 5.2            Reports by
Sanofi after the Research Term.  After the
Research Term with respect to any Licensed Compound or Product that Sanofi is
Developing, Sanofi will provide a [***] report to Regulus summarizing Sanofi’s
activities over the past year with respect to the identified Licensed Compound
or Product and an appropriate number of representatives from each Party will
meet at least once every year to review Development activities.  Sanofi will consider Regulus’ input regarding
such activities.  The reports provided by
Sanofi under this Section 5.2 will contain sufficient information to allow
Regulus to reasonably determine whether Sanofi is in compliance with its
obligations to use Commercially Reasonable Efforts under Section 5.1.

 

Section 5.3            Product
Development Plans; Integrated Product Plans. 
For each Product that Sanofi is clinically developing under this
Agreement, Sanofi will prepare a development plan outlining key aspects of the
clinical development of such Product through Approval.  Each development plan will contain
information customarily contained in Sanofi’s development plans for its similar
products at similar stages of development (each a “Product Development Plan”). 
In addition, prior to the launch of a Product, Sanofi will prepare a
global integrated Product plan outlining the key aspects of market launch and
commercialization (the “Integrated
Product Plan” or “IPP”).  Sanofi
will prepare each IPP at the same time and containing information and target
markets as customarily contained in Sanofi’s Commercialization plans for its
similar products at similar stages of development.  Each Product Development Plan and IPP will be
updated annually by Sanofi.  Sanofi will
provide to Regulus a copy of the final draft of the Product Development Plans
and IPPs (original and updates) for each of the U.S., each Major European
Country and Japan, if available.  Such
copies of Product Development Plans and IPPs provided to Regulus may be
redacted to the extent necessary to preserve the confidentiality of Sanofi
confidential information related to products that are not Products.  Sanofi and Regulus will meet on a yearly
basis to discuss the draft of each Product Development Plan and IPP and Sanofi
will consider, in its sole discretion, any proposals and comments made by
Regulus for incorporation in the final Product Development Plan or IPP (as the
case may be).

 

Section 5.4            Class Generic
Claims.  To the extent Sanofi intends
to make any claims in a Product label that are class generic to microRNA
Compounds, Sanofi will provide such 

 

14

 

claims to Regulus in advance
and will consider, in its sole discretion, any proposals and comments made by
Regulus.

 

ARTICLE 6

 

FINANCIAL PROVISIONS

 

Section 6.1            Up-Front
Payment.  In consideration for the
licenses and other rights granted under this Agreement Sanofi will pay Regulus
an irrevocable, non-creditable and nonrefundable technology access fee equal to
$25,000,000 ($[***] of which Regulus is allocating to the access to Mir-21 in
the detailed amounts set forth on APPENDIX 9,
and $[***] of which Regulus is allocating to the rest of the Research Program
in the detailed amounts set forth on APPENDIX 9).  Regulus shall send Sanofi separate invoices
pursuant to Section 6.13 on or after the Effective Date for such $[***]
payment and such $[***] payment, and Sanofi shall pay such amounts no later
than [***] Business Days following receipt of such invoices.

 

Section 6.2            Research Program Funding.  Sanofi will provide Research
Program funding to Regulus as set forth in Section 3.5.1.

 

Section 6.3            Target Designation Milestone.  For each Collaboration
Target (other than Mir-21) designated by Sanofi under Section 3.6, Sanofi
will pay Regulus an irrevocable, non-creditable, and nonrefundable milestone
payment equal to $[***] within 10 Business Days after receipt of invoice
from Regulus following such designation. 
For purposes of clarity, Sanofi will not have to pay an additional
target designation milestone under this Section 6.3 for a replacement
Collaboration Target under Section 3.6.2.

 

Section 6.4            Milestone
Payments by Sanofi.  Sanofi will
give Regulus written notice within [***] Business Days of the first
achievement of each Milestone Event provided in Table 1; provided Regulus will notify Sanofi regarding IND Approval
for each Licensed Compound.  After
receiving such written notice, Regulus shall submit an invoice to Sanofi for
the amount of such milestone payment, and Sanofi will pay Regulus the
applicable milestone payment within [***] days after receipt of an invoice
from Regulus following achievement of the applicable milestone event.

 

6.4.1       Development/Approval Milestones.

 

(a)           For each Collaboration Target (other than
Mir-21), the milestone payments by Sanofi to Regulus under Column 1 of
Table 1 below will be triggered by the first achievement of the specified
milestone events by Sanofi, its sublicensees or their respective Affiliates for
the first Licensed Compound or Product that targets or mimics such Collaboration
Target to achieve the specified milestone event.

 

(b)           The milestone payments under Column 2 of
Table 1 below will be payable as set forth below for the first achievement
of the specified milestone events by Sanofi, its sublicensees or their
Affiliates for the first Mir-21 Compound or Mir-21 Product to achieve the
specified milestone event.

 

15

 

Table 1

 

	
   

  	
   

  	
  Column 1

  	
   

  	
  Column 2

  	
   

  
	
  Milestone Event

  	
   

  	
  Payment for First

  Licensed Compound Per

  Collaboration Target

  	
   

  	
  Payment for First

  Mir-21 Compound

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. IND Approval

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2. [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  3. [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  4. [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  5. [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  6. [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

(c)           In addition, on a Collaboration
Target-by-Collaboration Target basis, after the first achievement of milestone
event [***] in Table 1 above by the first Licensed Compound or
Product associated with a Collaboration Target to achieve such milestone event
for any Indication, if a Licensed Compound or Product for such Collaboration
Target (whether the same or a different Licensed Compound or Product)
subsequently achieves such milestone event(s) for any additional
Indication(s) (each, an “Additional Indication”),
then Sanofi will promptly notify Regulus and will pay Regulus an additional
milestone payment in an amount equal to [***]% of the applicable milestone
payment(s) set forth in Column 1 or Column 2 (as applicable) of
Table 1 above for the achievement of such milestone event(s) by such
Licensed Compound or Product for each Additional Indication (each, an “Additional Indication Milestone Payment”).

 

(d)           If a Licensed Compound or Product for a
Collaboration Target fails in development and is replaced by Sanofi with a
back-up Licensed Compound or Product targeting the same Collaboration Target,
with respect to any milestone payments previously paid with respect to such
failed Licensed Compound or Product, Sanofi will not have to pay the same
milestone with respect to the corresponding back-up Licensed Compound or
Product, and Sanofi will notify Regulus in writing of the selection of the
back-up Licensed Compound or Product. 
All milestone payments due will be payable one time only per Licensed
Compound or Product for each Indication.

 

6.4.2       Sales Milestones.  For each Collaboration Target, the milestone
payments under Table 2 below will be payable by Sanofi to Regulus for the
first achievement of the specified milestone events by Sanofi, its sublicensees
or their Affiliates for (i) the first Licensed Compound or Product that
targets or mimics such Collaboration Target to achieve the specified milestone
event; and (ii) first Mir-21 Compounds or Mir-21 Products to achieve the
specified milestone event.

 

16

 

Table 2

 

	
  Milestone Event

  	
   

  	
  Milestone Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
   

  	
   

  

 

Section 6.5            Royalty
Payments by Sanofi.  Subject to the
other provisions of this Agreement, Sanofi will pay to Regulus royalties on Net
Sales of each Product at the applicable rate(s) set forth under
Column 1 of Table 3 below if such Product is not a Mir-21 Product;
and at the applicable rate(s) set forth under Column 2 of
Table 3 below if such Product is a Mir-21 Product.  The royalty rate payable with respect to each
particular Product will be based on the level of annual worldwide Net Sales of
such Product in a given Calendar Year period by Sanofi, its Affiliates and
sublicensees, with the royalty rate tiered based upon the level of such
worldwide Net Sales in such Calendar Year period of such Product as set forth
in the table below.

 

Table 3

 

	
   

  	
   

  	
  Column 1

  	
   

  	
  Column 2

  	
   

  
	
  Annual Worldwide Net Sales

  	
   

  	
  Royalty Rate

  Product

  	
   

  	
  Royalty Rate Mir-

  21 Product

  	
   

  
	
  For the portion that is less than or equal to
  $[***]

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

For
example, in the instance of a full Calendar Year, if annual Net Sales of a
Mir-21 Product in such Calendar Year worldwide are [***].

 

Section 6.6            Existing Third Party Payment
Obligations.

 

6.6.1       Existing Regulus Agreements.  Sanofi acknowledges that certain of the
Regulus Technology Controlled by Regulus as of the Effective Date were
in-licensed, or otherwise acquired by Regulus, from Third Parties under the
Existing Regulus Agreements, and that Regulus is obligated to pay In-License
Royalties and/or In-License Milestones to the Licensor(s) under such Existing
Regulus Agreements as a result of the Development or Commercialization of
Products by Sanofi or any of its Affiliates or sublicensees to the extent that
such Products are covered by the applicable Third Party Patents.  The Parties acknowledge and agree that
Regulus will be responsible for paying [***]% of the In-License Royalties, In-License
Milestones and Other In-License Payments that become due to the Licensor(s) under
the Existing Regulus Agreements.

 

6.6.2       Existing Sanofi Agreements.  The Parties acknowledge and agree that, if
and to the extent that there are any Existing Sanofi Agreements, Sanofi will be
responsible for paying [***]% of the In-License Royalties, In-License
Milestones and Other In-License Payments that become due to the Licensor(s) under
such Existing Sanofi Agreements, and [***] of such payments will be creditable
against any payment due to Regulus hereunder.

 

17

 

Section 6.7            Future Third Party Agreements.

 

6.7.1       Identification of Necessary Patents.  Subject to Section 6.7.5, if, after the
Effective Date, a Party identifies any Patent that:

 

(a)           is not Controlled by either Party;

 

(b)           covers (i) the [***] thereof (each, a “[***]Invention”), (ii) the
[***] (each, a “[***]Invention”), (iii) a
[***] (each, a “[***]Invention”), or
(iv) [***]that is necessary to [***]to the [***]in order to [***]excluding
[***] (each, a “[***]Invention”); and

 

(c)           such Party believes in good faith is, or is
likely to be, necessary for the Development or Commercialization of a Product;

 

then,
such Party will inform the other Party thereof, and the Parties (via the JSC
for so long as the JSC is in place) shall promptly confer with each other, and
attempt in good faith to reach consensus regarding, as to whether in-licensing
or acquiring other rights to such Patent is, or is likely to be, necessary for
the Development or Commercialization of a Product.  [***] with respect to either or both Parties.  The [***]as well as [***]  The Parties will initially [***]of the [***],
provided that promptly after the [***], the Party whose [***]the other Party an
[***] [***] of the [***](such that the [***] to the [***] the other Party), and
each Party [***]

 

If
the [***]the Party that [***], then such Party shall be [***], provided that
(1) such Party shall be responsible for [***] of the [***], (2) if
such Party is Sanofi, none of such [***] hereunder, and (3) if such Party
is Regulus, then notwithstanding any other provision of this Agreement to the
contrary, such [***].

 

6.7.2       Responsible Party.  If the Parties mutually agree, or [***], that
in-licensing or acquiring other rights to a Patent meeting the criteria set
forth in Section 6.7.1 is necessary for the Development or
Commercialization of a Product (each, a “Necessary Patent”),
the Party that will be responsible for in-licensing or acquiring other rights
to such Necessary Patent (the “Responsible Party”)
will be determined based on whether such Necessary Patent covers a Target
Invention, a Compound Invention, a Method Invention, or a Formulation
Invention, as follows:

 

Mir-21:

[***]

 

Other Collaboration Targets:

[***]

 

\Any
agreement entered into by a Responsible Party pursuant to this
Section 6.7.2 shall be deemed a “Future Regulus Agreement”
if Regulus is the Responsible Party, and a “Future Sanofi Agreement”
if Sanofi is the Responsible Party.

 

18

 

6.7.3       Consultation; Cooperation.  The Responsible Party will consult with the
other Party and consider in good faith the reasonable comments and suggestions
of the other Party regarding the financial terms of any Future Regulus
Agreement or Future Sanofi Agreement (as applicable), and in negotiating such
Future Regulus Agreement or Future Sanofi Agreement with the applicable Licensor(s) shall
use commercially reasonable efforts to minimize any In-License Royalties, In-License
Milestones and Other In-License Payments that (a) are to be borne, in
whole or in part, by the other Party pursuant to Section 6.8, (b) are
creditable against any amounts payable to Regulus hereunder in accordance with
Section 6.10.1 or Section 6.10.4, and/or (c) in the case of
In-License Royalties, are to be considered in [***].  Except as set forth in Section 6.7.2 or Section 6.9,
Regulus will not enter any Future Regulus Agreement that would impose any
additional financial obligations on Sanofi beyond those set forth in this
Agreement without first obtaining Sanofi’s prior written consent.

 

6.7.4       Copy of Agreement.  Upon entering into any Future Regulus Agreement
or Future Sanofi Agreement that includes In-License Royalties, In-License
Milestones and/or Other In-License Payments that (a) are to be borne, in
whole or in part, by the other Party pursuant to Section 6.8,
(b) where Sanofi is the Responsible Party, are creditable against any
amounts payable to Regulus hereunder in accordance with Section 6.10.1 or
Section 6.10.4, and/or (c) in the case of In-License Royalties, are
to be considered in [***], the Responsible Party shall provide to the other
Party a copy of the portion of such agreement which sets forth the relevant
In-License Royalties, In-License Milestones and/or Other In-License
Payments.

 

6.7.5       [***] Responsibility for [***] and [***]
Technology.  In the event
that after the Effective Date, Sanofi identifies any Patent not Controlled by
either Party that covers any [***], in its sole discretion, to be necessary for
the Development or Commercialization of a Product, Sanofi shall have the sole
responsibility for in-licensing or acquiring other rights to such Patent,
including sole responsibility for negotiation and execution of a license or
other agreement with respect thereto. 
Sanofi will be solely responsible for paying [***]% of the In-License
Royalties, In-License Milestones and Other In-License Payments that become
due to the Licensor(s) under such agreement, and [***] such payments,
[***] portion thereof, will be creditable against any of Sanofi’s payment
obligations to Regulus under this Agreement.

 

Section 6.8            Allocation of Payments.

 

6.8.1       In-License Royalties.  In-License Royalties payable to Licensors
under any Future Regulus Agreement or Future Sanofi Agreement shall be
allocated between the Parties based on (a) whether the applicable Third
Party Patents cover a [***] Invention, a [***] Invention, a [***] Invention, or
a [***] Invention, (b) the identity of the Licensor(s), and/or
(c) Indication, as follows:

 

Mir-21:

[***]

Other Collaboration Targets:

[***]

 

6.8.2       In-License Milestones.  In-License Milestones payable to Licensors
under any Future Regulus Agreement or Future Sanofi Agreement shall be
allocated between the Parties based on (a) whether the applicable Third
Party Patents cover a [***] Invention, a [***]

 

19

 

Invention, a [***]
Invention, or a [***] Invention, (b) the identity of the Licensor(s),
and/or (c) Indication, as follows:

 

Mir-21:

[***]

 

Other Collaboration Targets:

[***]

 

6.8.3       Other In-License Payments.  Other In-License Payments payable to Licensors
under any Future Regulus Agreement or Future Sanofi Agreement shall be
allocated between the Parties, or among the Parties and one or more Third
Parties (as applicable) based on (a) whether the applicable Third Party
Patents cover a [***] Invention, a [***] Invention, a [***] Invention, or a
[***] Invention, (b) the identity of the Licensor(s), (c) Indication,
and/or (d) whether the applicable Third Party Patents are licensed to any
Third Party(ies) as follows:

 

Mir-21:

[***]

 

Other Collaboration Targets:

 [***]

 

* [***]

[***]

 

6.8.4       Payment Process.  Sanofi will directly pay to Regulus any
amounts payable under a Future Regulus In-License in connection with a Product
to the extent such amounts are allocated to Sanofi under this Section 6.8.  Sanofi will pay directly the applicable Third
Party any amounts payable under a Future Sanofi In-License in connection with a
Product; provided, to the extent any royalty
payments are allocated to Regulus under this Section 6.8, Sanofi will be
entitled to the royalty reduction as further set forth in Section 6.10.1.

 

Section 6.9            [***] Technology.  After the Effective Date, Regulus may wish to
in-license or acquire rights to Patents from a Third Party, which Patents, if
in-licensed or acquired, would be within the scope of the definition of [***]
Patent (“[***] Patents”), with or
without associated Know-How.  In such
event, Regulus shall [***] Sanofi’s consent, to negotiate and enter into an
in-license or other agreement with the Third Party with respect to such [***] Patents
and related Know-How, if any (collectively, “[***]
Technology”).  In such
event (and to the extent permitted by Regulus’ confidentiality agreement with
the applicable Third Party), Regulus will notify Sanofi regarding the nature of
the [***] Technology and status of negotiations related to the [***] Technology
through the JSC.  Once Regulus and such
Third Party have executed an agreement with respect to such [***] Technology (“[***] Technology Agreement”),
Regulus will offer such [***] Technology to Sanofi (including a description of
the upfront and other ongoing non-royalty, non-milestone payments and, except
as set forth in Section 6.9.2(b), the royalties and milestone payments
paid or potentially payable by Regulus thereunder).

 

20

 

6.9.1       In the case of any such
[***] Technology comprising a [***] Invention, [***] Invention, [***] Invention
or [***] Invention or patent rights claiming any of the foregoing (in each
case, “Section 6.9.1 Technology”),
if Sanofi wishes to include such Section 6.9.1 Technology in the Regulus
Technology licensed to Sanofi under Section 2.1, Sanofi will notify Regulus of
its desire to do so within [***] days after receipt of notice from
Regulus, whereupon such Section 6.9.1 Technology shall be included in the
Regulus Technology licensed to Sanofi under Section 2.1, and the upfront,
royalty, milestone and other ongoing payments paid or potentially payable by
Regulus under such [***] Technology Agreement shall be [***] in accordance with
Section [***] mutatis mutandis.  If Sanofi [***] such notification to Regulus
within such [***]-day period, then notwithstanding any other provision of this
Agreement to the contrary, the applicable Section 6.9.1 Technology will
[***] the Regulus Technology licensed to Sanofi under Section 2.1.

 

6.9.2       In the case of any [***]
Technology other than Section 6.9.1 Technology (“Section 6.9.2
Technology”), if Sanofi wishes to include such
Section 6.9.2 Technology in the Regulus Technology licensed to Sanofi
under Section 2.1, Sanofi will notify Regulus of its desire to do so within
[***] days after receipt of notice from Regulus, whereupon the Parties
will negotiate in good faith regarding:

 

(a)           a fair and commercially reasonable [***]
(and/or among the Parties and any Regulus Third Party sublicensee(s) of such
Section 6.9.2 Technology) of upfront and other ongoing non-royalty,
non-milestone payment obligations (which [***] of such payment
obligations).  As part of this [***],
Regulus will share with Sanofi, in reasonable detail, the assumptions and
methodology Regulus used to create the [***]; and

 

(b)           the royalties and milestone payments to be
[***] with respect to Licensed Compounds and Products, the Development,
manufacture or Commercialization of which is within the scope of Regulus’
in-license or other rights to the applicable Section 6.9.2
Technology.  For the avoidance of doubt,
Regulus will [***] to Sanofi the nature or amount of any of Regulus’ royalty
and milestone payment obligations to such Third Party.

 

If
the Parties [***] to the [***]in Section 6.9.2(a) and the royalties and
milestone payments to be [***] as described in Section 6.9.2(b), then the
applicable Section 6.9.2 Technology will be included in the Regulus
Technology licensed to Sanofi under Section 2.1.  If the Parties [***] to the foregoing, then
notwithstanding any other provision of this Agreement to the contrary, the
applicable Section 6.9.2 Technology will [***] the Regulus Technology
licensed to Sanofi under Section 2.1.  For
purposes of clarification, any payment obligations [***] under this
Section 6.9.2 will be in addition to, and will not be creditable in whole
or in part against, Sanofi’s payment obligations set forth in this Agreement.

 

6.9.3       In the event of a dispute between
the parties as to whether a particular Patent of a Third Party constitutes a
[***] Patent, or whether any particular [***] Technology constitutes
Section 6.9.1 Technology or Section 6.9.2 Technology, such dispute
shall be [***] in accordance with the provisions of Section 6.7.1, mutatis mutandis.

 

21

 

Section 6.10         Royalty Reductions; [***].

 

6.10.1     Reduction for Third Party Royalties.  Subject to Section 6.10.3, Sanofi’s
royalty obligations under Section 6.5 above with respect to a particular
Product in a particular country will be reduced by the applicable percentage
(if any) of the amount of aggregate In-License Royalties paid by Sanofi to
Licensor(s) under Future Sanofi-Agreements on sales of such Product in such
country for which Regulus is responsible, as set forth in Section 6.8; [***].

 

6.10.2     Generic
Competition.  Subject to
Section 6.10.3, if a Generic Product corresponding to a Product is
approved for sale by the applicable Regulatory Authority and then sold in a
particular country and the Percentage Reduction of Net Sales is greater than
[***]% for any given Calendar Quarter in such country, then the royalty rate
set forth in Table 3 of Section 6.5 applicable to such Product and such
country for such Calendar Quarter will be reduced to [***]%; [***].  As used
herein, the “Percentage Reduction of Net Sales”
of a Product in a country for any particular Calendar Quarter means the
quotient (expressed as a percentage) obtained by dividing (A) the difference
obtained by subtracting the [***]such applicable Calendar Quarter from the
[***]by (B) the [***].  In addition,
if (i) there [***] Generic Product sold by a Third Party, and
(ii) [***], then such Generic Product will [***] the royalty reduction
under this Section 6.10.2.

 

6.10.3     [***]

 

6.10.4     [***]

 

6.10.5     No Payments to [***].  For purposes of clarification, and
notwithstanding any other provision of this Agreement, in no event shall the
[***] to which [***] may be entitled under this Section 6.10 result in [***]
being obligated to make any payment to [***].

 

Section 6.11         Royalty
Term.  Royalties payable under
Section 6.5 (subject to and including any applicable reductions under Section
6.10) will be payable on a Product-by-Product and country-by-country basis from
the First Commercial Sale of a Product in a country until the date that is the
[***] of (i) [***] years after the First Commercial Sale of such
Product in such country or (ii) the expiration of the last to expire Valid
Claim within the Regulus Patents which would be infringed by the sale of such
Product in such country by an unauthorized party.  Such period during which royalties are
payable with respect to a Product in a country, including giving effect to any
applicable reductions under Section 6.10, is referred to herein as the “Royalty Term” for
such Product in such country. 
Notwithstanding expiration of the Royalty Term with respect to a
particular Product in a country, [***] with respect to Net Sales of such
Product in such country.

 

Section 6.12         Royalty
Report and Payment.  During the
Royalty Term following the First Commercial Sale of any Product, within [***]
after the end of each Calendar Quarter, Sanofi will provide Regulus with a
royalty report for such Quarter showing, on a Product-by-Product and
country-by-country basis:

 

(a)           the Net Sales of Products sold by Sanofi, its
sublicensees and their respective Affiliates during such Calendar Quarter
reporting period;

 

22

 

(b)           the royalties which will have accrued
hereunder with respect to such Net Sales;

 

(c)           the amount of any applicable [***] taken
against royalties under Section 6.10.1 and the amount of any applicable
[***] accrued against future sales milestone payments under Section 6.10.4;

 

(d)           any adjustment for Generic Products under
Section 6.10.2; and

 

(e)           any other information related to the
calculation of Net Sales of Products reasonably requested by Regulus that
(i) is contained in a report and format that is regularly generated by
Sanofi’s accounting department in its normal course of business and
(ii) is reasonably necessary for Regulus to comply with an Existing
Regulus Agreement or an Additional Regulus Third Party Agreement.

 

Sanofi
will keep, and will require its sublicensees and their respective Affiliates to
keep, complete, true and accurate books of account and records for the purpose
of determining the payments to be made under this Agreement.  Upon reasonable request by Regulus (but no
more frequently than once in any [***]-month period), Sanofi will report to
Regulus the quantity of Product not subject to royalties distributed by Sanofi,
its Affiliates or sublicensees as part of an expanded access program to include
compassionate use, named patients or other similar use or as part of
Phase 4 Trials or as bona fide samples. 
All information disclosed by Sanofi to Regulus under this Section 6.12
will be Sanofi Confidential Information.

 

Section 6.13         Manner of
Payment and Exchange Rate.  Except as otherwise provided
in this Agreement, Regulus shall invoice Sanofi for all milestone, royalty and
other payments hereunder and Sanofi shall pay all such milestone, royalty and
other payments that are due within ten (10) Business Days after the receipt of
the applicable invoice.  All payments to
be made by Sanofi to Regulus hereunder will be made by deposit of U.S. Dollars
by wire transfer in immediately available funds in the requisite amount to such
bank account Regulus may from time to time designate by notice to Sanofi.  For sales that were made in a currency other
than U.S. Dollars, such amounts will be converted into U.S. Dollars using the
average exchange rates as calculated and utilized by Sanofi’s group reporting
system and published accounts for the applicable royalty period.  All invoices to be provided by Regulus to
Sanofi under this Agreement shall include a breakdown of the goods, services
and/or activities for which payment is due, as well is payment instructions and
shall be sent by express courier service to:

 

Sanofi-Aventis

Direction Comptable Holding

174 avenue de France

75013
Paris

France

 

Section 6.14         Audits, including Audits of Royalty
Reports.

 

6.14.1     Audits of Royalty Reports.  Upon the written request of
Regulus and not more than once in each Calendar Year, Sanofi will permit an
independent certified public accounting firm of nationally recognized standing
selected by Regulus and reasonably acceptable 

 

23

 

to Sanofi, at Regulus’
expense to have access during normal business hours to such records of Sanofi
and/or its Affiliates as may be reasonably necessary to verify the accuracy of
the royalty reports hereunder for any Calendar Year ending not more than
36 months prior to the date of such request.  These audit rights (but not any obligation to
pay unpaid royalties for such periods) with respect to any Calendar Year will
terminate 3 years after the end of such Calendar Year.  Regulus will provide Sanofi with a copy of
the accounting firm’s written report within 30 days of completion of such
report.

 

6.14.2     If such accounting firm
concludes that an overpayment or underpayment was made, then the owing Party
will pay the amount due within 30 days of the date Regulus delivers to
Sanofi such accounting firm’s written report so correctly concluding.  Regulus will bear the full cost of such audit
unless such audit correctly discloses that the additional payment payable by
Sanofi for the audited period is more than [***]% of the amount of the
royalties paid for that audited period, in which case Sanofi will pay the
reasonable fees and expenses charged by the accounting firm.

 

6.14.3     Sanofi will use Commercially
Reasonable Efforts to include in each sublicense granted by it to any
sublicensee a provision requiring the sublicensee to maintain records of sales
made pursuant to such license and to grant access to such records by Sanofi’s
independent accountant to the same extent and under substantially similar
obligations as required of Sanofi under this Agreement.  Sanofi will advise Regulus in advance of each
audit of any sublicensee with respect to Product sales.  Sanofi will provide Regulus with a summary of
the results received from the audit and, if Regulus so requests, a copy of the
audit report with respect to Product sales.  Sanofi will pay the reasonable fees and
expenses charged by the accounting firm, except that Regulus will pay for all
additional services requested exclusively by Regulus from Sanofi’s independent
accountant unless the audit discloses that the additional payments payable to
Regulus for the audited period differ by more than [***]% from the amount of
the royalties otherwise paid.

 

6.14.4     All financial information
subject to review under this Section or under any license agreement with a
sublicensee will be Sanofi Confidential Information and will be treated in
accordance with the confidentiality provisions of this Agreement.  As a condition precedent to Regulus’ audit
rights under this Section, Regulus’ accounting firm will enter into a
confidentiality agreement with Sanofi obligating it to treat all such financial
information in confidence pursuant to such confidentiality agreement.  Regulus may provide Third Parties to which
Regulus owes royalties on Products information in such audit report that are
relevant and required to comply with such Third Party’s audit rights under the
applicable license agreement between Regulus and such Third Party, provided that such Third Party agrees in
writing to keep such information confidential under terms no less restrictive
than Regulus’ obligations of confidentiality under this Agreement.

 

Section 6.15         Taxes.

 

6.15.1     Sanofi will make all payments to Regulus under this
Agreement without deduction or withholding for taxes except to the extent that
any such deduction or withholding is required by Applicable Law in effect at
the time of payment.

 

24

 

6.15.2     Sanofi
will promptly pay on behalf of Regulus any tax required to be withheld on
amounts payable under this Agreement to the appropriate governmental authority,
and Sanofi will furnish Regulus with proof of payment of such tax.  Any such tax required to be withheld will be
an expense of and borne by Regulus.

 

6.15.3     Sanofi and Regulus will
cooperate with respect to all documentation required by any taxing authority or reasonably requested by
Sanofi to secure a reduction in the rate of applicable withholding taxes.

 

Section
6.16         Sublicenses.  In the event Sanofi grants
licenses or sublicenses to a sublicensee to sell Products which are subject to
royalties under Section 6.5, such licenses or sublicenses will include an
obligation for the sublicensee to account for and report its sales of Products
on the same basis as if such sales were Net Sales by Sanofi.

 

Section
6.17         [***]

 

Section
6.18         Sanofi
Founding Company License. 
Notwithstanding any other provision in this Agreement, in the event that
Sanofi is granted a license (each such license a “Sanofi
Founding Company License”) pursuant to Section 15.3 of the
Founding Company License Agreement (entitled “Effects of Termination”) from
either of the Founding Companies, then, in addition to, and not in lieu of, any
other or remedies available to Sanofi:

 

6.18.1     [***] amounts payable to
either of the Founding Companies pursuant to proviso “(ii)” of the final
sentence of Section 15.3, [***]; and

 

6.18.2     subject to
Section 6.10.3, any royalty or milestone amounts (including both sales
milestones and development milestones) payable to either of the Founding
Companies under any Sanofi Parent License, to the extent not [***] than were
Regulus’ royalty and milestone payment obligations under the Founding Company
License Agreement, [***] under this Agreement. 
If royalty or milestone amounts payable by Sanofi to either of the
Founding Companies under any Sanofi Parent License [***] Regulus’ royalty or
milestone payment obligations under the Founding Company License Agreement,
Sanofi [***].

 

ARTICLE 7

 

CONFIDENTIALITY; PRESS
RELEASES & PUBLICATIONS

 

Section 7.1            Confidentiality; Exceptions.  Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing, the
Parties agree that, during the Term and for five (5) years thereafter, the
receiving Party (the “Receiving Party”)
and its Affiliates will keep confidential and will not publish or otherwise
disclose or use for any purpose other than as provided for in this Agreement
any Know-How or other confidential and proprietary information and materials,
patentable or otherwise, in any form (written, oral, photographic, electronic,
magnetic, or otherwise) which is disclosed to it by the other Party (the “Disclosing Party”) or its
Affiliates or otherwise received or accessed by a Receiving Party in the course
of performing its obligations or exercising its rights under this Agreement,
including, but not limited to, trade secrets, Know-How, inventions or
discoveries, proprietary information, formulae, processes, techniques and
information relating to the past, present and future marketing, financial, and 

 

25

 

research and development
activities of any product or potential product or useful technology of the
Disclosing Party or its Affiliates and the pricing thereof (collectively, “Confidential Information”), except
to the extent that it can be established by the Receiving Party that such
Confidential Information:

 

7.1.1       was in the lawful knowledge
and possession of the Receiving Party or its Affiliates prior to the time it
was disclosed to, or learned by, the Receiving Party or its Affiliates, or was
otherwise developed independently by the Receiving Party or its Affiliates, as
evidenced by written records kept in the ordinary course of business, or other
documentary proof of actual use by the Receiving Party or its Affiliates;

 

7.1.2       was generally available to
the public or otherwise part of the public domain at the time of its disclosure
to the Receiving Party or its Affiliates;

 

7.1.3       became generally available
to the public or otherwise part of the public domain after its disclosure and
other than through any act or omission of the Receiving Party or its Affiliates
in breach of this Agreement; or

 

7.1.4       was disclosed to the
Receiving Party or its Affiliates, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party
or its Affiliates not to disclose such information to others.

 

Section 7.2            Authorized Disclosure.  Except as expressly provided
otherwise in this Agreement, a Receiving Party or its Affiliates may use and
disclose to Third Parties Confidential Information of the Disclosing Party as
follows: (i) with respect to any such disclosure of Confidential
Information, under confidentiality provisions no less restrictive than those in
this Agreement, and solely in connection with the performance of its
obligations or exercise of its rights granted or reserved in this Agreement
(including, without limitation, the rights to Develop and Commercialize
Licensed Compounds, Products, and/or Discontinued Products, and to grant
licenses and sublicenses hereunder), provided, that
Confidential Information may be disclosed by a Receiving Party to a
governmental entity or agency without requiring such entity or agency to enter
into a confidentiality agreement with such Receiving Party if such Receiving
Party has used reasonable efforts to impose such requirement without success
and disclosure to such governmental entity or agency is necessary for the
performance of the Receiving Party’s obligations hereunder; (ii) to the
extent such disclosure is reasonably necessary in filing or prosecuting patent,
copyright and trademark applications (subject to Section 8.6 below), complying
with applicable governmental regulations, obtaining Approvals, conducting
clinical trials, marketing Products, or as otherwise required by applicable
law, regulation, rule or legal process (including the rules of the SEC and any
stock exchange); provided, however, that if a
Receiving Party or any of its Affiliates is required by law or regulation to
make any such disclosure of a Disclosing Party’s Confidential Information it
will, except where impracticable for necessary disclosures, for example, but
without limitation, in the event of a medical emergency, give reasonable
advance notice to the Disclosing Party of such disclosure requirement and will
use its reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed; (iii) in communication
with actual or potential lenders, arm’s-length financial investors, merger
partners, acquirers, consultants, or professional advisors on a need-to-know
basis, in each case under confidentiality provisions no less restrictive 

 

26

 

than those of this
Agreement; (iv) to the extent and only to the extent that such disclosure
is required to comply with existing expressly stated contractual obligations
owed to such Party’s or its Affiliates’ licensor with respect to any
intellectual property licensed to the other Party under this Agreement;
(v) to prosecute or defend litigation as permitted by this Agreement; or
(vi) to the extent mutually agreed to in writing by the Parties.

 

Section 7.3            Press Release; Disclosure of
Agreement.  The Parties
agree that the public announcement of the execution of this Agreement will be
made by individual press releases issued by each Party and will not be made in
a joint press release.  Furthermore, each
such press release will be substantially in the form of the press releases
attached as APPENDIX 7.3-A and APPENDIX 7.3-B (the “Initial Press
Releases”).  Except for
the Initial Press Releases, or to the extent required to comply with applicable
law, regulation, rule or legal process or as otherwise permitted in accordance
with this Section 7.3, neither Party nor such Party’s Affiliates will make any
public announcements, press releases or other public disclosures concerning
this Agreement or the terms or the subject matter hereof without the prior
written consent of the other, which will not be unreasonably withheld.  Notwithstanding the foregoing,
(a) except for scientific presentations and publications (which will be
governed by Section 7.5 below) each Party or its Affiliates may, without the
other Party’s approval, make disclosures pertaining solely to Products (as to
Sanofi) or Discontinued Products (as to Regulus), provided, however, that
Sanofi will immediately notify (and provide as much advance notice as possible
to) Regulus of any event materially related to Products (including in such
notice any disclosure of clinical data or results, material regulatory filings
or Approval) so that the Parties may analyze the need for or desirability of
publicly disclosing or reporting such event, any press release or other similar
public communication by Sanofi related to efficacy or safety data and/or
results of a Licensed Product will be submitted to Regulus for review at least
five (5) Business Days (to the extent permitted by law) in advance of such
proposed public disclosure, Regulus will have the right to expeditiously review
and recommend changes to such communication and Sanofi will in good faith
consider any changes that are timely recommended by Regulus and (b) to the
extent information regarding this Agreement, a Licensed Compound or Product has
already been publicly disclosed, either Party (or its Affiliates) may
subsequently disclose the same information to the public without the consent of
the other Party.  Each Party will give
the other Party a reasonable opportunity (to the extent consistent with law) to
review all material filings with the SEC describing the terms of this Agreement
prior to submission of such filings, and will give due consideration to any
reasonable comments by the non-filing Party relating to such filing, including
without limitation the provisions of this Agreement for which confidential
treatment should be sought.

 

Section 7.4            Remedies.  Notwithstanding Section
12.4, each Party will be entitled to seek, in addition to any other right or
remedy it may have, at law or in equity, a temporary injunction, without the
posting of any bond or other security, enjoining or restraining the other Party
from any violation or threatened violation of this Article 7.

 

Section 7.5            Publications.

 

7.5.1       Prior to IND Approval.  Prior to IND Approval (and Sanofi’s payment
to Regulus of the applicable milestone under Section 6.5.1) for a given
Collaboration Target, Regulus may, consistent with its practice with its other
compounds and products, publish and 

 

27

 

present data regarding any
such Collaboration Targets, Licensed Compounds and/or Products; provided, however, that Regulus will provide any such
proposed publication to Sanofi at least 30 days prior to submission for
publication or presentation.  During such
30-day period, Sanofi will have the right to review and comment on any such
publications and Regulus will give due consideration to Sanofi’s requested
changes.  In addition, by written notice
to Regulus delivered within such 30-day period, Sanofi will have the right, in
its discretion, to prohibit Regulus from making such publication or
presentation.  If Sanofi does not provide
such written notice prohibiting publication or presentation by the end of such
30-day period, then Sanofi will be deemed to have consented to such publication
or presentation.  Notwithstanding
the foregoing, Regulus may not publish or present any data or
information that contains any of Sanofi’s Confidential Information without
Sanofi’s prior written consent.

 

7.5.2       After IND Approval.  After IND Approval (where Sanofi has paid
Regulus the applicable milestone payment under Section 6.5.1) for a given
Collaboration Target, and subject to this Section 7.5.2, Sanofi will have
the right to publish summaries of results from any human clinical trials generated
by Sanofi with respect to the Licensed Compounds or Products without obtaining
the consent of Regulus and, except as required under Law, Regulus may not
publish any of such data, without the prior consent of Sanofi.  The Parties acknowledge that scientific lead
time is a key element of the value of the Research Program and Products under
this Agreement and further agree to use commercially reasonable efforts to
control public scientific disclosures of the results of the research and
Development activities under this Agreement (including but not limited to any
such summaries of human clinical trials data and results as required on the
clinical trial registry) to prevent any potential adverse effect of any
premature public disclosure of such results. 
The Parties will establish a procedure for publication review and each
Party will first submit to the other Party an early draft of all such
publications, whether they are to be presented orally or in written form, at
least 45 days prior to submission for publication including, without
limitation, to facilitate the publication of any summaries of human clinical
trials data and results as required on the clinical trial registry of each
respective Party.  Each Party will review
such proposed publication in order to avoid the unauthorized disclosure of a
Party’s Confidential Information and to preserve the patentability of
inventions arising from the Research Program. 
If, as soon as reasonably possible, but no longer than [***] following
receipt of an advance copy of a Party’s proposed publication, the other Party
informs such Party that its proposed publication contains Confidential
Information of the other Party, then such Party will delete such Confidential
Information from its proposed publication. 
In addition, if at any time during such [***] period, the other Party
informs such Party that its proposed publication discloses inventions made by
either Party in the course of the Research Program under this Agreement that
have not yet been protected through the filing of a patent application, or the
public disclosure of such proposed publication could be expected to have a
material adverse effect on any Patents or Know-How solely owned or Controlled
by such other Party, then such Party will either (a) delay such proposed
publication, for up to [***] [***] from the date the other Party informed
such Party of its objection to the proposed publication, to permit the timely
preparation and first filing of patent application(s) on the information
involved or (b) remove the identified disclosures prior to publication.

 

Section 7.6            Acknowledgment.  Unless otherwise agreed upon
in writing by the Parties, each Party will acknowledge in any press release,
public presentation or publication regarding a Collaboration Target, Licensed
Compound and/or Product, the other Party’s role in 

 

28

 

discovering and developing the Collaboration Target, Licensed Compound or
Product, as applicable, and that such Collaboration Targets, Compounds or
Products are under license from Regulus (including, if requested by Regulus,
Regulus’ stock ticker) and otherwise acknowledge the contributions from the
other Party.

 

ARTICLE 8

 

PATENTS

 

The
provisions of this Article 8 (excluding Section 8.1) as they relate to
Regulus Patents that are licensed to Regulus under any Existing Regulus
Agreement are subject in all respects to the terms of such Existing Regulus
Agreement.  In the event of any
inconsistency between Regulus’ obligations under any Existing Regulus Agreement
and the rights conferred on Sanofi by this Article 8 (excluding Section
8.1) with respect to the Regulus Patents that are subject to such Existing
Regulus, the Existing Regulus Agreement shall control, and the provisions of
this Article 8 shall, to the extent inconsistent with the Existing Regulus
Agreement, be of no force or effect.

 

Section 8.1            Ownership of Inventions and Patents.

 

8.1.1       Title to inventions, discoveries, improvements and other
technology, whether or not patentable, conceived, made or reduced to practice
in the performance of the Research Program under this Agreement (collectively,
the “Program Inventions”)
and any Patents claiming such Program Inventions (“Program Patents”), are retained by the
Party that is the employer of the inventor(s) (or, in the case of consultants
and (sub)contractors, the Party for which the consultant or (sub)contractor is
providing its services).  Each Party will
ensure that every employee, consultant, and (sub)contractor employed or
contracted by that Party in the performance of the Research Program has a
written obligation to assign all Know-How and Patents conceived, made or
reduced to practice by each such employee, consultant, and (sub)contractor to
such Party. 
The Parties agree that the United States federal patent law
on inventorship will determine the inventorship of any Program Invention and
the names of the inventors on any Program Patent filings, whether sole or joint
inventions, which arise in connection with activities conducted pursuant to
this Agreement.  Sanofi will own Program
Inventions invented solely by employees, consultants and/or (sub)contractors of
Sanofi (the “Sanofi
Inventions”) and any Patents claiming such Program Inventions
(the “Sanofi Program
Patents”).  Regulus will
own Program Inventions invented solely by employees, consultants and/or
(sub)contractors of Regulus (the “Regulus Inventions”) and any Patents
claiming such Program Inventions (the “Regulus Program Patents”).  Regulus and Sanofi will own jointly such
Program Inventions invented jointly by employees, consultants and/or
(sub)contractors of Regulus and Sanofi (the “Joint Inventions”) and any Patents
claiming such Program Inventions (the “Joint Patents”).  Regulus will promptly disclose to Sanofi any
such Regulus Invention or Joint Invention, and Sanofi will promptly disclose to
Regulus any Sanofi Invention or Joint Invention, arising from or made in the
performance of the Research Program and any patent or patent application
claiming such Program Invention.  It is understood
that except as otherwise provided in this Agreement or as the Parties may
otherwise agree in writing, neither Party will have any obligation to account
to the other Party for profits, or to obtain any approval of the other Party to
license, assign, mortgage or exploit a Joint Invention by reason of joint
ownership

 

29

 

of
any such Joint Invention, and may otherwise undertake all activities a sole
owner might undertake with respect to such inventions without the consent of
and without accounting to the other joint owner, and each Party hereby waives
any right it may have under the laws of any jurisdiction to require such
consent or accounting.

 

8.1.2       CREATE Act.  Notwithstanding
anything to the contrary in this Article 8, neither Party will have the
right to make an election under the Cooperative Research and Technology Enhancement
Act of 2004, 35 U.S.C. § 103(c)(2)-(c)(3) (the “CREATE
Act”) when exercising its rights under this Article 8
without the prior written consent of the other Party, which will not be
unreasonably withheld, conditioned or delayed. 
With respect to any such permitted election, the Parties will use
reasonable efforts to cooperate and coordinate their activities with respect to
any submissions, filings or other activities in support thereof.  The Parties acknowledge and agree that this
Agreement is a “joint research agreement” as defined in the CREATE Act.

 

Section 8.2            Filing,
Prosecution and Maintenance of Patents.  For purposes of this Section 8.2, the terms “prosecute,” “prosecuting” and “prosecution,”
when used in reference to any Patent, shall be deemed to include, without
limitation, the control of any interferences, reissue proceedings, oppositions
and reexaminations with respect to such Patent.

 

8.2.1       Product Specific
Patents.

 

(a)           Before
IND Approval.  On a
Collaboration Target-by-Collaboration Target basis, for Product Specific
Patents filed prior to IND Approval for a Licensed Compound that targets or
mimics (as applicable) a particular Collaboration Target, Regulus will be responsible for the preparation, filing,
prosecution and maintenance of such Product Specific Patents (including Product
Specific Patents that are Joint Patents) directed to such Collaboration Target
or to Licensed Compounds or Products that target or mimic (as applicable) such
Collaboration Target.  Regulus will use
Commercially Reasonable Efforts to prepare, file, prosecute and maintain such
Product Specific Patents in at least the countries listed in APPENDIX 7 (each, a “Listed
Country”), at Regulus’ expense; provided,
however, that if the applicable patent office in any Listed Country,
other than [***] and [***], requires [***] of patent applications [***], Sanofi
shall reimburse Regulus for costs incurred by Regulus for [***] of Product
Specific Patents [***].  If Sanofi
requests in writing that Regulus prepare, file, prosecute and maintain any
Product Specific Patent in any country that is not a Listed Country (each, a “Sanofi Nominated Country”), Regulus
will use Commercially Reasonable Efforts to prepare, file, prosecute and
maintain such Product Specific Patent in such Sanofi Nominated Country, at
Sanofi’s expense, provided, however, that if Sanofi
is not the sole licensee or sublicensee of Regulus under such Product Specific
Patent, Regulus will be responsible for such expenses and Sanofi will reimburse
Regulus for the amount that is equal to the total of such expenses divided by
the number of licensee(s) or sublicense(s) under such product
specific patent (such number to also include Regulus).

 

(b)           After
IND Approval.  On a
Collaboration Target-by-Collaboration Target basis, for Product Specific
Patents filed after IND Approval for a Licensed Compound that targets or mimics
(as applicable) a particular Collaboration Target, Sanofi
will be responsible for the preparation, filing, prosecution and maintenance of
such Product Specific 

 

30

 

Patents
(including Product Specific Patents that are Joint Patents) directed to such
Collaboration Target or to Licensed Compounds or Products that target or mimic
(as applicable) such Collaboration Target, at Sanofi’s expense; provided, however, that if Sanofi is not the sole licensee
or sublicensee of Regulus under such Product Specific Patent, Regulus will be
responsible for such expenses and Sanofi will reimburse Regulus for the amount
that is equal to the total of such expenses divided by the number of licensee(s) or
sublicense(s) under such product specific patent (such number to also
include Regulus).

 

(c)           Disclosure;
Cooperation.  The Party
responsible for preparing, filing, prosecuting and maintaining any Product
Specific Patent (including
any Product Specific Patent that is a Joint Patent) under Section 8.2.1(a) or Section 8.2.1(b) above (the “Lead Party”), or its outside
counsel, will provide the other Party with (i) a reasonably detailed monthly update of the filing,
prosecution and maintenance status for such Product Specific Patent and
(ii) any further information reasonably requested by the other Party from
time to time regarding such Product Specific Patent; provided,
however, that if such Product Specific Patent is licensed to Regulus
by a Third Party, Regulus will not be obligated to make disclosure of
information regarding such Product Specific Patent to the extent that such
disclosure would constitute a breach of Regulus’ confidentiality obligations to
the Third Party licensor.  Regulus will
consider in good faith, and give effect to, all reasonable requests or
recommendations of Sanofi regarding the preparation,
filing, prosecution and maintenance of Product Specific Patents.  Sanofi will consider in good
faith all reasonable requests or recommendations of Regulus regarding the preparation, filing, prosecution and maintenance of Product
Specific Patents.

 

(d)           Election
Not to File, Prosecute, or Maintain Product Specific Patents.  In the event that the Lead Party decides not
to pursue or continue the filing, prosecution or maintenance of any Product
Specific Patent in any country, the Lead Party, or its outside counsel, will
provide the other Party with written notice of such decision at least
60 days in advance of any relevant filing, prosecution or maintenance
deadline, and the other Party will provide the Lead Party with prompt notice as
to whether the other Party desires to assume responsibility and costs for such
filing, prosecution or maintenance of such Product Specific Patent.  The Lead Party will not knowingly permit any
such Product Specific Patent to be abandoned in any Listed Country (or, in the
case of Regulus, any Sanofi Nominated Country for which Sanofi is bearing the
expense of preparation, filing, prosecution and maintenance of Product Specific
Patents), or elect not to file a new patent application claiming priority to a
patent application within the Product Specific Patents either before such
patent application’s issuance or within the time period required for the filing
of an international (i.e., Patent Cooperation Treaty), regional (including
European Patent Office) or national application, without the other Party’s
written consent or without the other Party otherwise first being given an
opportunity to assume full responsibility (at the other Party’s expense) for
the continued prosecution and maintenance of such Product Specific Patents, or
the filing of such new patent application. 
In the event that the other Party assumes responsibility for the
preparation, filing, prosecution or maintenance of any patent or patent
application as set forth above, the other Party will not be liable to the Lead
Party in any way with respect to its handling of, or the results obtained from,
the filing, prosecution, issuance, extension or maintenance of such application
or any resulting patent or any failure by it to so file, prosecute, extend or
maintain.  In the event that Sanofi assumes
responsibility for the preparation, filing, prosecution or maintenance of any
such Product Specific Patent as set forth above, Regulus will assign such
Product Specific Patent to 

 

31

 

Sanofi,
for no additional consideration, and such Product Specific Patent (if later
granted) will be disregarded for the purposes of calculating the Royalty Term
under Section 6.11.

 

8.2.2       Regulus Core Technology Patents Other Than
Joint Patents.  Regulus (or its Third Party licensors of Regulus Core
Technology Patents, as applicable) will be solely responsible for the
preparation, filing, prosecution and maintenance of Regulus Core Technology
Patents (other than Joint Patents that are Regulus Core Technology Patents), at
Regulus’ sole expense.  At Sanofi’s
reasonable request from time to time, Regulus, or its outside counsel, will
promptly provide Sanofi with an update of the filing, prosecution and
maintenance status for each of such Regulus Core Technology Patents, including
without limitation an update of APPENDIX 3.

 

8.2.3       Joint Core Technology
Patents.  This Section 8.2.3 will apply only to:
(i) Regulus Core Technology Patents that are Joint Patents (each, a “Joint Core Technology Patent”); and
(ii) any Joint Invention that is not claimed by any patent application in
a country, provided that if a patent application claiming such Joint Invention
were filed in such country, such patent application would be a Joint Core
Technology Patent (such Joint Invention, a “Joint Core Technology
Invention”).

 

(a)           Regulus First Right
to File, Prosecute and Maintain.  Regulus will have the first
right to prepare, file, prosecute and maintain any new patent application
claiming a Joint Core Technology Invention, at Regulus’ expense.  Regulus
shall consult with Sanofi as to the preparation, filing, prosecution and
maintenance of Joint Core Technology Patents and draft patent applications
claiming Joint Core Technology Inventions reasonably prior to any deadline or
action with any patent office, shall furnish to Sanofi copies of all relevant
documents reasonably in advance of such consultation, and shall consider in
good faith the reasonable comments and suggestions of Sanofi.  Regulus, or its outside counsel, will provide
Sanofi with an update of the filing, prosecution and maintenance status for
each Joint Core Technology Patent on a periodic basis, and will provide to
Sanofi copies of any papers relating to the filing, prosecution and maintenance
of such Joint Core Technology Patents promptly upon their being filed or
received.

 

(b)           Disclosure;
Cooperation.  Regulus or
its outside counsel, will provide Sanofi with (i) a reasonably detailed monthly update of the filing,
prosecution and maintenance status for such Joint Core Technology Patent and
(ii) any further information reasonably requested by Sanofi from time to
time regarding such Joint Core Technology Patent.  Regulus will consider in
good faith all reasonable requests or recommendations of Sanofi regarding the preparation, filing, prosecution and maintenance of Joint
Core Technology Patents.

 

(c)           Election
Not to File, Prosecute, or Maintain Joint Core Technology Patents.  In the event that Regulus decides not to
pursue or continue the filing, prosecution or maintenance of any Joint Core
Technology Patent in any country, Regulus, or its outside counsel, will provide
Sanofi with written notice of such decision at least 60 days in advance of
any relevant filing, prosecution or maintenance deadline, and Sanofi will
provide Regulus with prompt notice as to whether Sanofi desires to assume
responsibility and costs for such filing, prosecution or maintenance of such
Joint Core Technology Patent.  Regulus
will not knowingly permit any such Joint Core Technology Patent to be
abandoned, or elect not to file a 

 

32

 

new patent application
claiming priority to a patent application within the Joint Core Technology
Patents either before such patent application’s issuance or within the time
period required for the filing of an international (i.e., Patent Cooperation
Treaty), regional (including European Patent Office) or national application,
without Sanofi’s written consent or without Sanofi otherwise first being given
an opportunity to assume full responsibility (at Sanofi’s expense) for the
continued prosecution and maintenance of such Joint Core Technology Patent, or
the filing of such new patent application. 
In the event that Sanofi assumes responsibility for the preparation,
filing, prosecution or maintenance of any Joint Core Technology Patent as set
forth above, such Joint Core Technology Patent (if later granted) will be
disregarded for the purposes of calculating the Royalty Term under Section 6.7, provided that Regulus
shall retain its joint ownership interest in such Joint Core Technology Patent.

 

8.2.4       Joint
Patents Other Than Joint Core Technology Patents and Product Specific Patents.  This Section 8.2.4 will apply only to:
(i) Joint Patents that are neither Joint Core Technology Patents nor
Product Specific Patents (each, an “Other Joint Patent”);
and (ii) any Joint Invention that is not claimed by any patent application
in a country, provided that if a patent application claiming such Joint
Invention were filed in such country, such patent application would be neither
a Joint Core Technology Patent nor a Product Specific Patent (such Joint
Invention, an “Other Joint Invention”).

 

(a)           Sanofi
First Right to File, Prosecute and Maintain.  Sanofi will have the first right to prepare,
file, prosecute and maintain any new patent application claiming an Other Joint
Invention, at Sanofi’s expense.  Sanofi
shall consult with Regulus as to the preparation, filing, prosecution and
maintenance of Other Joint Patents and draft patent applications claiming Other
Joint Inventions reasonably prior to any deadline or action with any patent
office, shall furnish to Regulus copies of all relevant documents reasonably in
advance of such consultation, and shall consider in good faith the reasonable
comments and suggestions of Regulus. 
Sanofi, or its outside counsel, will provide Regulus with an update of
the filing, prosecution and maintenance status for each Other Joint Patent on a
periodic basis, and will provide to Regulus copies of any papers relating to
the filing, prosecution and maintenance of such Other Joint Patents promptly
upon their being filed or received.

 

(b)           Election
Not to File, Prosecute, or Maintain Other Joint Patents.  In the event that Sanofi decides not to
pursue or continue the filing, prosecution or maintenance of any Other Joint
Patent in any country, Sanofi, or its outside counsel, will provide Regulus
with written notice of such decision at least 60 days in advance of any
relevant filing, prosecution or maintenance deadline, and Regulus will provide
Sanofi with prompt notice as to whether Regulus desires to assume
responsibility and costs for such filing, prosecution or maintenance of such
Other Joint Patent.  Sanofi will not
knowingly permit any such Other Joint Patent to be abandoned, or elect not to
file a new patent application claiming priority to a patent application within
the Other Joint Patents either before such patent application’s issuance or
within the time period required for the filing of an international (i.e.,
Patent Cooperation Treaty), regional (including European Patent Office) or
national application, without Regulus’ written consent or without Regulus
otherwise first being given an opportunity to assume full responsibility (at
Regulus’ expense) for the continued prosecution and maintenance of such Other
Joint Patent, or the filing of such new patent application.  In the event that Regulus assumes
responsibility for the preparation, filing, prosecution or maintenance of any
patent or 

 

33

 

patent application as set
forth above, Regulus will not be liable to Sanofi in any way with respect to
its handling of, or the results obtained from, the filing, prosecution,
issuance, extension or maintenance of such application or any resulting patent
or any failure by it to so file, prosecute, extend or maintain.

 

8.2.5       Cooperation.  Each Party agrees to cooperate fully in the
preparation, filing, prosecution and maintenance of Patents pursuant to this Section 8.2.  Such cooperation includes, but is not limited
to: (a) executing all papers and instruments, or requiring its employees
or contractors, to execute such papers and instruments, so as to enable the
other Party to exercise its rights and perform its obligations under this Section 8.2; and (b) promptly
informing the other Party of any matters coming to such Party’s attention that
may affect the preparation, filing, prosecution or maintenance of any such
patent applications.

 

Section 8.3            Patent Term Extension.  Regulus and Sanofi
will each cooperate with one another and will use Commercially Reasonable
Efforts in obtaining patent term restorations and/or extensions (including
without limitation, any pediatric exclusivity extensions as may be available)
or supplemental protection certificates or their equivalents in any country
with respect to patent rights covering those Products licensed by Sanofi
hereunder.  If elections with respect to
obtaining such patent term extensions or supplemental protection are to be
made, Sanofi will have the right to make such election, provided that (i) such election will
be made in accordance with applicable Law so as to maximize the period of
marketing exclusivity for the Product, and (ii) Sanofi may not elect to
extend a Regulus Core Technology Patent (other than a Joint Core Technology
Patent) under this Section 8.3 without Regulus’ prior written consent.

 

Section 8.4            Enforcement
of Patents

 

8.4.1       Product Specific
Patents.

 

(a)           Enforcement by Sanofi.  In the event that
Regulus or Sanofi becomes aware of a suspected infringement of any Product Specific Patent, or any such Product Specific Patent is challenged
in any action or proceeding (other than any interferences, reissue proceedings,
oppositions or reexaminations, which are addressed above), such Party will
notify the other Party promptly, and following such notification, the Parties
will confer and determine an appropriate course of action in response to such
suspected infringement or action or proceeding. 
Sanofi will have the right, but will not be obligated, to defend any
such action or proceeding or bring an infringement action with respect to such
suspected infringement at its own expense, in its own name and entirely under
its own direction and control, or settle any such action, proceeding or dispute
by license (to the extent such sublicense is permitted under this
Agreement).  Regulus will reasonably
assist Sanofi in any action or proceeding being defended or prosecuted if so
requested, and will lend its name to such actions or proceedings if reasonably
requested by Sanofi or required by Applicable Law.  Sanofi will reimburse Regulus for the
documented out-of-pocket costs Regulus reasonably incurs in providing such
assistance as specifically requested in writing by Sanofi.  In the event Regulus is a required party to
the proceeding or action, Regulus will have the right to be represented by its
own counsel (such selection to be subject to Sanofi’s approval, such approval
not to be unreasonably withheld), and Sanofi will reimburse Regulus for the
documented external costs Regulus reasonably incurs that are reasonably related
to the proceeding or action, including attorneys fees, provided that Sanofi

 

34

 

will
retain overall responsibility for the prosecution of such action or proceeding
in such event.  In the event that Regulus
is not a necessary party to the proceeding or action, Regulus will have the
right to participate and be represented in any such suit by its own counsel at
its own expense, provided that
Sanofi will retain overall responsibility for the prosecution of such action or
proceedings in such event.  Sanofi may
not enter any settlement of any such action or proceeding which restricts the
scope, or adversely affects the enforceability, of a Product Specific Patent,
or which could be reasonably expected to have a material adverse financial
impact on Regulus, without Regulus’ prior written consent, which consent will
not be unreasonably withheld, conditioned or delayed.

 

(b)           Enforcement by Regulus.  If Sanofi elects
not to settle, defend or bring any action for infringement described in
Section 8.4.1(a) and
so notifies Regulus, including following any request by Regulus to do so, then
Regulus may defend or bring such action at its own expense, in its own name, provided however that, Regulus agrees not
to so settle, defend or bring any action for infringement of a Product Specific
Patent Right upon Sanofi’s request based on Sanofi’s good faith reasonable
determination, the basis for which will be provided to Regulus, that it is not
in the best interest of the Parties to so settle, defend or bring such action
for infringement.  In the case where
Regulus proceeds to settle, defend or bring an action for such infringement,
the following will apply: 
(i) Sanofi will reasonably assist Regulus in any action or
proceeding being defended or prosecuted if so requested, and will lend its name
to such actions or proceedings if requested by Regulus or required by
Applicable Law; (ii) Regulus will reimburse Sanofi for the documented
external costs Sanofi reasonably incurs, including attorneys fees, in providing
such assistance as specifically requested in writing by Regulus;
(iii) Sanofi will have the right to participate and be represented in any
such suit by its own counsel at its own expense, provided that Regulus will retain overall responsibility for
the prosecution of such suit or proceedings in such event; and
(iv) Regulus may not enter any settlement of any action or proceeding
defended or brought by Regulus with respect to a Product Specific Patent, which
restricts the scope, or adversely affects the enforceability, of a Product
Specific Patent, or which could be reasonably expected to have a material
adverse financial impact on Sanofi without Sanofi’s prior written consent,
which consent will not be unreasonably withheld, conditioned or delayed.

 

(c)           Withdrawal.  If either Party brings an action or
proceeding under this Section 8.4.1 and subsequently ceases to pursue or
withdraws from such action or proceeding, it will promptly notify the other
Party and the other Party may substitute itself for the withdrawing Party and
pursue such action or proceeding in accordance with the terms of this
Section 8.4.1 (including but not limited to the proviso in the first
sentence of Section 8.4.1(b)).

 

(d)           Damages.  In the event that either Party exercises the
rights conferred above in this Section 8.4.1 and recovers any damages or
other sums in such action, suit or proceeding or in settlement thereof, such
damages or other sums recovered will first be applied to all out-of-pocket
costs and expenses incurred by the Party which initiated such action, suit or
proceeding, including, without limitation, attorneys fees, and second to any
out-of-pocket costs and expenses incurred by the other Party and not previously
reimbursed by the Party which initiated such action, suit or proceeding
according to this Section 8.4.1. 
Any remaining amounts will: (i) if recovered by Sanofi, be divided as
follows: (A) as to ordinary damages based on lost sales or profit, Sanofi
will retain such funds and such funds will be treated as Net Sales and 

 

35

 

royalties will be payable by
Sanofi to Regulus with respect to such Net Sales in accordance with Section 6.5
of this Agreement and (B) as to special or punitive damages, Sanofi will
receive [***]% of the amount of such special or punitive damages and Regulus
will receive [***]% of the amount of such special or punitive damages; or (ii) if recovered by Regulus, [***].

 

8.4.2       Regulus Core
Technology Patents Other Than Joint Core Technology Patents.  Regulus will have
the sole right to enforce Regulus Core Technology Patents (other than Joint
Core Technology Patents) and to defend Regulus Core Technology Patents (other
than Joint Core Technology Patents) against challenge in any action or
proceeding (other than any interferences, reissue proceedings, oppositions or
reexaminations, which are addressed above). 
In the event of suspected infringement of a Regulus Core Technology
Patent (other than a Joint Core Technology Patent) by a Third Party in a
country, wherein (a) the suspected infringing activity competes with a
Product being commercialized by or on behalf of Sanofi in such country, and
(b) no other Patent Controlled by Sanofi (whether by license under this
Agreement or otherwise) is infringed or suspected to be infringed by the
suspected infringing activity, Section [***] to apply to such Product in such country (with the
suspected infringing product [***]), unless Regulus permits Sanofi to enforce the
applicable Regulus Core Technology Patent against such Third Party.

 

8.4.3       Joint Core Technology
Patents.  In the event of suspected infringement of a
Joint Core Technology Patent by a Third Party in a country, wherein the
suspected infringing activity competes with a Product being commercialized by
or on behalf of Sanofi in such country, the Parties’ respective rights and
obligations with respect to enforcement of such Joint Core Technology Patent in
such country (including damages or settlement amounts received as a result
thereof) shall be as set forth in Section 8.4.1, mutatis
mutandis.  In the event of any
other suspected infringement of a Joint Core Technology Patent, the Parties’
respective rights and obligations with respect to enforcement of such Joint
Core Technology Patent in such country will be the reverse of their respective
rights and obligations under Section 8.4.1, mutatis
mutandis; provided, however,
that after reimbursement of costs, any remaining damages or other amounts
recovered will be allocated [***]% to the Party that brought and controlled the
action, and [***]% to the other Party.

 

8.4.4       Other Joint Patents.  In the event of
suspected infringement of an Other Joint Patent by a Third Party in a country,
wherein the suspected infringing activity competes with a Product being
commercialized by or on behalf of Sanofi in such country, the Parties’
respective rights and obligations with respect to enforcement of such Other
Joint Patent in such country shall be as set forth in Section 8.4.1, mutatis mutandis.  In
the event of any other suspected infringement of an Other Joint Patent, the
Parties shall mutually agree in good faith on a case-by-case basis on the
course of action to be taken and the allocation of costs and recovered amounts.

 

8.4.5       Cooperation.  The Party not
enforcing a particular Patent under any of the preceding provisions of this Section 8.4 will provide reasonable assistance to the other Party (at
such other Party’s expense), including providing access to relevant documents
and other evidence, making its employees available at reasonable business
hours, and joining the action to the extent necessary to allow the enforcing
Party to initiate or maintain the action.

 

36

 

Section 8.5            Determination
of Certain Patent Matters.  The Parties, acting in good faith and on the advice of
their respective internal or external patent counsel, agree in good faith on:
(i) the inventorship of Program Inventions under Section 8.1.1,
consistent with U.S. patent laws; (ii) whether any particular Regulus
Patent is a Regulus Core Technology Patent or a Product Specific Patent, taking
into full consideration the definitions of such terms set forth in APPENDIX 1 and the Regulus Patents listed in APPENDIX 2 and APPENDIX 3
hereto; and (iii) whether there exists a Product Specific Patent that is
suspected to be infringed by a suspected infringement under
Section 8.4.1.  If the Parties
cannot agree upon any such matter within 30 days of good faith discussions,
the Parties will refer such matter to independent patent counsel, not engaged
by either Party or any of its Affiliates for any matter in the previous three (3) years
and reasonably acceptable to both Parties. 
The determination of the independent patent counsel with respect to such
matter will be binding on the Parties. 
The costs and expenses of the independent patent counsel will be shared
equally between the Parties.

 

Section 8.6            Data Exclusivity and Orange Book Listings.  With respect to
data exclusivity periods (such as those periods listed in the FDA’s Orange Book
(including without limitation any available pediatric extensions) or periods
under national implementations of Article 11.1(a)(iii) of Directive
2001/EC/83, or similar periods as may be applicable to a biologic, and all
international equivalents), Sanofi will use Commercially Reasonable Efforts
consistent with its obligations under applicable law (including any applicable
consent order) to seek, maintain and enforce all such data exclusivity periods
available for the Products exclusively licensed by Sanofi hereunder.  With respect to filings in the FDA Orange
Book or other similar filings or listings as may be applicable (and foreign
equivalents) for issued patents for a Product, upon reasonable request by
Sanofi, Regulus will provide reasonable cooperation to Sanofi in filing and
maintaining any such listing and filings. 
All listing and filing decisions will be at the sole discretion of
Sanofi; provided, however that Sanofi will not
list Regulus Core Technology Patents in the FDA Orange Book without Regulus’
prior written consent, such consent not to be unreasonably withheld or
delayed.  In no event will Regulus
withhold or delay such consent where the listing of such Regulus Core Technology
Patent is required under applicable law.

 

Section 8.7            Further Actions.  Each Party will,
upon the reasonable request of the other Party, provide such assistance and
execute such documents as are reasonably necessary for such Party to exercise
its rights and/or perform its obligations pursuant to this Article 8; provided however, that neither Party will
be required to take any action pursuant to Article 8 that such Party
reasonably determines in its sole judgment and discretion conflicts with or
violates any applicable court or government order or decree.

 

Section 8.8            Infringement Claims; Oppositions.  Sanofi and Regulus
will promptly inform the other in writing of any written notice to it of
alleged infringement or misappropriation, based on the research, development,
making, using, importing, exporting or selling of a Licensed Compound or
Product, of a Third Party’s intellectual property rights of which it will
become aware.  The Parties will confer on
the handling of such matter.  Regulus
will not acknowledge to a Third Party the validity of any such allegation or
admit liability without the prior written consent of Sanofi, and Sanofi will
not acknowledge to a Third Party the validity of any such allegation or admit
liability without the prior written consent of Regulus.  Sanofi and Regulus will each keep the other
advised of all material developments in the conduct 

 

37

 

of
any proceedings in defending any claim of such alleged infringement or
misappropriation and will cooperate with the other in the conduct of such
defense.  In no event may either Party
settle any such infringement or misappropriation claim in a manner that would
limit the rights of the other Party or impose any obligation on the other Party,
without such other Party’s prior written consent, such consent not to be
unreasonably withheld or delayed.  Sanofi
and Regulus will promptly inform the other in writing of any written notice to
it of actual or threatened opposition related to the Product Specific
Patents.  The Parties will confer on the
handling of such matter and such matters will be handled in accordance with Section 8.2 above.

 

Section 8.9            Records
Regarding Regulus Patents.  Each Party will assign patent counsel
representatives who will be responsible for coordinating activities between the
Parties in accordance with this Article 8. 
Such representatives will use commercially reasonable efforts to
maintain a report listing the Regulus Patents that are subject to the license
granted to Sanofi under Section 2.1.  Such report will
be used to facilitate the identification and tracking of the Regulus Patents
licensed under this Agreement, but will not, unless specifically agreed to in a
separate written agreement signed by authorized representatives of both
Parties, be considered to be a then-current complete and binding list of the
Regulus Patents licensed under this Agreement.

 

Section 8.10         No
Challenge.  As a material inducement for entering into this Agreement,
Sanofi covenants to Regulus that during the term of this Agreement, solely with
respect to claims within the Regulus Patents that are included in the license
granted to Sanofi under Section 2.1, Sanofi, its Affiliates or sublicensees will not
(a) commence or otherwise voluntarily determine to participate in (other
than as may be necessary or reasonably required to respond to a court request
or order or administrative law request or order) any action or proceeding,
challenging or denying the validity of any claim within an issued patent or
patent application within the Regulus Patents, or (b) direct, support or
actively assist any other Person (other than as may be necessary or reasonably
required to respond to a court request or order or administrative law request
or order) in bringing or prosecuting any action or proceeding challenging or
denying the validity of any claim within an issued patent or patent application
within the Regulus Patents.  For purposes
of clarification, any breach of this Section 8.10 will be a material breach of this Agreement and will be
grounds for termination by Regulus of this Agreement under Section 9.3.

 

Section 8.11         Amendments to Third Party Agreements.  Regulus will not amend or agree to amend any
Existing Regulus Agreement, Future Regulus Agreement, or New Core Technology
Agreement for New Core Technology included in the Regulus Technology licensed
to Sanofi under Section 2.1, in any manner that would increase Sanofi’s
payment obligations or reduce the scope of Sanofi’s license under Section 2.1,
without the prior written consent of Sanofi.

 

38

 

ARTICLE 9

 

TERM AND TERMINATION

 

Section 9.1            Term.  The term of this Agreement
(the “Term”)
commences upon the Effective Date and, unless earlier terminated in accordance
with the provisions of this Article 9, will continue until the expiration
of all payment obligations on all Products to Regulus.

 

Section 9.2            Sanofi Right to Terminate.

 

9.2.1       After the expiration of the
Research Term, Sanofi may terminate this Agreement (including its license
rights under this Agreement) in full, or on a Product-by-Product basis,
effective upon 30 days prior written notice.  For purposes of clarification, milestone and
royalty payments will be due on milestones achieved and Products sold during
the period between notice of termination and the effective date of termination.

 

9.2.2       At any time during the
Research Term, but following payment by Sanofi of the technology access fee
under Section 6.1, Sanofi
will be entitled to terminate the license granted under Section 2.1 at any time on a
Product-by-Product basis for any safety, efficacy or regulatory viability
issues, including but not limited to the detection in a test population of
adverse experiences associated with the administration of the Product that are
significant, serious or life threatening to the patient or demonstrate
significant toxicological effect(s) of such Product on one or more body
tissues that are not balanced by a countervailing benefit to the patient.  The safety, efficacy and regulatory viability
of a Product will be determined by Sanofi in view of the risk to benefit
relationship of such Product in the relevant patient population.

 

Section 9.3            Material Breach.

 

(a)           If either Party believes that the other is in
material breach of this Agreement (other than with respect to a breach of
Sanofi’s obligations under Section 5.1, which is
governed by Section 9.4), then the
non-breaching Party may deliver notice of such breach to the other Party.  In such notice the non-breaching Party will
identify the actions or conduct that it wishes such Party to take for an
acceptable and prompt cure of such breach (or will otherwise state its good
faith belief that such breach is incurable); provided
that such identified actions or conduct will not be binding upon the other
Party with respect to the actions that it may need to take to cure such
breach.  If the breach is curable, the
allegedly breaching Party will have [***] days to either cure such breach
(except to the extent such breach involves the failure to make a payment when
due, which breach must be cured within 30 days following such notice) or,
if a cure cannot be reasonably effected within such 120-day period, to deliver
to the non-breaching Party a plan for curing such breach which is reasonably
sufficient to effect a cure within a reasonable period.  If the breaching Party fails to (i) cure
such breach within the [***]-day (or 30-day, as applicable) period or
(ii) use Commercially Reasonable Efforts to carry out the plan and cure
the breach, the non-breaching Party may terminate this Agreement on a
Product-by-Product basis by providing written notice to the breaching Party.

 

(b)           Notwithstanding the foregoing, if the
allegedly breaching Party disputes in good faith the existence, materiality, or
failure to cure of any such breach which is

 

39

 

not a payment breach, and
provides notice to the non-breaching Party (the “Other Party”) of such dispute within
such [***]-day period, the Other Party will not have the right to terminate
this Agreement in accordance with this Section 9.3 unless and
until it has been determined in accordance with Section 12.4 that this
Agreement was materially breached by the allegedly breaching Party and that
Party fails to cure such breach within [***] days following such
determination.  It is understood and
acknowledged that during the pendency of such a dispute, all of the terms and
conditions of this Agreement will remain in effect and the Parties will
continue to perform all of their respective obligations hereunder.

 

(c)           This Section 9.3 will be
subject to and will not limit the provisions of Section 9.4 and Section 9.5.

 

Section 9.4            Termination by Regulus For Failure
of Sanofi to Use Commercially Reasonable Efforts.

 

9.4.1       Subject to Section 9.4.2 and 9.4.3, at any time
after the expiration of the Research Term, Regulus will have the right to
terminate the license granted under Section 2.1 (and the
corresponding exclusivity obligation under Section 2.3) on a
Product-by-Product basis and country-by-country basis, if Sanofi is in breach
of its obligations to use Commercially Reasonable Efforts as set forth in Section 5.1, provided however, that the Agreement will
not so terminate unless (i) Sanofi is given 30 days prior written
notice by Regulus of Regulus’ intent to terminate, stating the reasons and
justification for such termination and recommending steps which Sanofi should
take, and (ii) Sanofi, or its sublicensee, has not used good faith
Commercially Reasonable Efforts during the [***]-day period following such
notice to diligently pursue the Development and/or Commercialization of at
least one Licensed Compound or Product for each Collaboration Target in the
applicable country.  Any such termination
will be limited in force and effect to the country or countries and Products to
which such breach relates.

 

9.4.2       It is understood and
acknowledged that if Sanofi (by itself or through its Affiliates or
sublicensees) uses Commercially Reasonable Efforts to Develop and Commercialize
a Product for each Collaboration Target in each and every Major Market Country,
Sanofi will be deemed to be in compliance with its obligation under Section 5.1 to use Commercially
Reasonable Efforts to Develop and Commercialize a Product for such
Collaboration Target with respect to all countries in the world.

 

9.4.3       If Sanofi disputes in good faith
the existence or materiality of an alleged breach specified in a notice
provided by Regulus pursuant to Section 9.4.1, and
provides notice to Regulus of such dispute within the 30 days following
such notice provided by Regulus, Regulus will not have the right to terminate
this Agreement unless and until the existence of such material breach or
failure by Sanofi has been determined in accordance with Section 12.4 and Sanofi fails to
cure such breach within 30 days following such determination.  It is understood and acknowledged that during
the pendency of such a dispute, all of the terms and conditions of this
Agreement will remain in effect and the Parties will continue to perform all of
their respective obligations hereunder.

 

40

 

Section 9.5            Consequences of Termination.

 

9.5.1       Licenses.  Upon termination of this
Agreement in its entirety by either Party pursuant to this Article 9, the
licenses granted by Regulus to Sanofi hereunder will terminate.

 

9.5.2       Return of
Information and Materials.  Upon
termination of this Agreement in its entirety by either Party pursuant to this
Article 9, the Parties will return (or destroy, as directed by the other
Party) all data, files, records and other materials containing or comprising
the other Party’s Confidential Information. 
Notwithstanding the foregoing, the Parties will be permitted to retain
one copy of such data, files, records, and other materials for archival
purposes, and with respect to Regulus, to practice its rights under Section 10.1.

 

Section 9.6            Accrued Rights; Surviving
Obligations.

 

9.6.1       Accrued
Rights.  Termination or expiration of
this Agreement for any reason will be without prejudice to any rights or
financial compensation that will have accrued to the benefit of a Party prior
to such termination or expiration.  Such
termination or expiration will not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this Agreement.

 

9.6.2       Survival.  Articles 7, 9, 10,
11 and 13; and Section 3.6.4, Section 6.14,
Section 6.17, and Section 12.4
of this Agreement will survive expiration or termination of this
Agreement for any reason.  Furthermore,
Regulus hereby grants to Sanofi a worldwide non-exclusive license, with the
right to grant sublicenses under Section 2.2, to Regulus
Know-How existing now or in the future and disclosed to Sanofi during the Term,
solely for the further manufacture and sale of Licensed Compounds and Products
after the expiration (but not the termination) of the Term.

 

Section 9.7            Rights in Bankruptcy.  All rights and licenses
granted under or pursuant to this Agreement by Regulus or Sanofi are, and will
otherwise be deemed to be, for purposes of Section 365(n) of
the U.S. Bankruptcy Code (i.e., Title 11 of the U.S. Code) or analogous
provisions of Applicable Law outside the United States, licenses of rights to “intellectual
property” as defined under Section 101 of the U.S.
Bankruptcy Code or analogous provisions of Applicable Law outside the United
States.  The Parties agree that each
Party, as licensee of such rights under this Agreement, will retain and may
fully exercise all of its rights and elections under the U.S. Bankruptcy Code
or any other provisions of Applicable Law outside the United States that
provide similar protection for ‘intellectual property.’ The Parties further
agree that, in the event of the commencement of a bankruptcy proceeding by or
against a Party under the U.S. Bankruptcy Code or analogous provisions of
Applicable Law outside the United States, the Party that is not subject to such
proceeding will be entitled to a complete duplicate of (or complete access to,
as appropriate) such intellectual property and all embodiments of such
intellectual property, which, if not already in the non subject Party’s
possession, will be promptly delivered to it upon the non subject Party’s
written request therefor.  Any agreements
supplemental hereto will be deemed to be “agreements supplementary to” this
Agreement for purposes of Section 365(n) of
the U.S. Bankruptcy Code.

 

41

 

ARTICLE 10

 

REGULUS REVERSION RIGHT

 

Section 10.1         Regulus
Reversion Rights.  If
(i) Sanofi terminates the Agreement (in full or on a Product-by-Product
basis) under Section 9.2,
(ii) Sanofi makes a substitution under Section 3.6.2, or
(iii) Regulus terminates the Agreement under Section 9.3 or 9.4,
Regulus may continue to Develop and Commercialize any Licensed Compound or
Product that is the subject of such termination or substitution (a “Discontinued Product”).  If Regulus provides a notice in writing to
Sanofi within 90 days of such termination (an “Election Notice”)
that Regulus is exercising its rights under this Section 10.1, subject
to Regulus’ payment obligations in Section 10.2, Sanofi
will, and it hereby does: (x) grant to Regulus a sublicensable, [***]
license or sublicense, as the case may be, to all [***] and [***] by Sanofi as
of the date of the Election Notice solely as they are necessary to make, have
made, use, sell, offer for sale, have sold and import Discontinued Products,
(y) transfer to Regulus, for Regulus’ use with respect to the Development
and Commercialization of the Discontinued Products, [***] and [***] as of the
date of the Election Notice that relate to such Discontinued Products, and
(z) [***] to Regulus [***] with respect to such Discontinued Product
(including but not limited to [***] for Regulus, and [***] Regulus to [***],
any [***] with a [***] related to such Discontinued Product).

 

Section 10.2         Regulus
Payment Obligations for Reversion Rights.  If Regulus provides an Election Notice for
any Discontinued Product which has completed a [***] prior to the applicable
termination under this Agreement, then Regulus shall pay to Sanofi (i) [***] with the provisions of Section 6.6  through Section 6.17 applying mutatis mutandis.  For
purposes of this Agreement, “Licensing Revenues”
will mean any payments that Regulus receives from a Third Party in
consideration of a license to further the Development and Commercialization of
a Discontinued Product, in each case including, but not limited to, upfront
payments, license fees, regulatory or sales milestone payments, royalties
and/or profit sharing payments, but excluding:
(i) [***]

 

ARTICLE 11

 

INDEMNIFICATION, INSURANCE
AND LIMITATION OF LIABILITY

 

Section 11.1         Indemnification
of Regulus.  Sanofi agrees
to defend Regulus, its Affiliates and their respective directors, officers,
stockholders, employees and agents, and their respective successors, heirs and
assigns (collectively, the “Regulus
Indemnitees”), and will indemnify and hold harmless the Regulus
Indemnitees, from and against any liabilities, losses, costs, damages, fees or
expenses payable to a Third Party, and reasonable attorneys’ fees and other
legal expenses with respect thereto (collectively, “Losses”) arising out
of any claim, action, lawsuit or other proceeding by a Third Party
(collectively, “Third
Party Claims”) brought against any Regulus Indemnitee and
resulting from or occurring as a result of: (a) the Development,
manufacture, use, handling, storage, sale or other Commercialization or
disposition of any Licensed Compound or Product in the Territory by Sanofi or
its Affiliates, sublicensees or contractors, (b) any breach by Sanofi of
any of its representations, warranties or covenants pursuant to this Agreement
or (c) the negligence or willful misconduct of Sanofi or any Sanofi
Affiliate or sublicensee in connection with this Agreement; except in any such case to 

 

42

 

the extent such Losses
result from: (i) the negligence or willful misconduct of any Regulus
Indemnitee, (ii) any breach by Regulus of any of its representations,
warranties, covenants or obligations pursuant to this Agreement, or
(iii) any breach of Applicable Law by any Regulus Indemnitee.

 

Section 11.2         Indemnification
of Sanofi.  Regulus agrees
to defend Sanofi, its Affiliates and their respective directors, officers,
stockholders, employees and agents, and their respective successors, heirs and
assigns (collectively, the “Sanofi
Indemnitees”), and will indemnify and hold harmless the Sanofi
Indemnitees, from and against any Losses and Third Party Claims brought against
any Sanofi Indemnitee and resulting from or occurring as a result of:
(a) any activities conducted by a Regulus employee, consultant or
(sub)contractor in the performance of the Research Program (unless such
activities were the subject of a dispute between Regulus’ and Sanofi’s
representatives on the JSC that was finally resolved by Sanofi’s Senior
Representative, as reflected in the minutes of JSC proceedings); (b) any
breach by Regulus of any of its representations, warranties or covenants
pursuant to this Agreement or (c) the negligence or willful misconduct of
any Regulus Indemnitee or any (sub)contractor of Sanofi in connection with this
Agreement; except in any such
case to the extent such Losses result from: (i) the negligence or willful
misconduct of any Sanofi Indemnitee, (ii) any breach by Sanofi of any of
its representations, warranties, covenants or obligations pursuant to this
Agreement, or (iii) any breach of Applicable Law by any Sanofi Indemnitee.

 

Section 11.3         Notice of
Claim.  All indemnification claims
provided for in Sections 11.1 and 11.2 will be made solely by such Party
to this Agreement (the “Indemnified
Party”).  The Indemnified
Party will give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”)
of any Losses or the discovery of any fact upon which the Indemnified Party
intends to base a request for indemnification under Section 11.1 or 11.2,
but in no event will the indemnifying Party be liable for any Losses to the
extent such Losses result from any delay in providing such notice.  Each Indemnification Claim Notice must
contain a description of the claim and the nature and amount of such Loss (to
the extent that the nature and amount of such Loss is known at such time).  The Indemnified Party will furnish promptly to
the indemnifying Party copies of all papers and official documents received in
respect of any Losses and Third Party Claims.

 

Section 11.4         Defense, Settlement, Cooperation and
Expenses.

 

11.4.1     Control of Defense.  At its option, the
indemnifying Party may assume the defense of any Third Party Claim by giving
written notice to the Indemnified Party within 30 calendar days after the
indemnifying Party’s receipt of an Indemnification Claim Notice.  The assumption of the defense of a Third
Party Claim by the indemnifying Party will not be construed as an
acknowledgment that the indemnifying Party is liable to indemnify the
Indemnified Party in respect of the Third Party Claim, nor will it constitute a
waiver by the indemnifying Party of any defenses it may assert against the
Indemnified Party’s claim for indemnification. 
Upon assuming the defense of a Third Party Claim, the indemnifying Party
may appoint as lead counsel in the defense of the Third Party Claim any legal
counsel selected by the indemnifying Party. 
In the event the indemnifying Party assumes the defense of a Third Party
Claim, the Indemnified Party will as soon as is reasonably possible deliver to
the indemnifying Party all original notices and documents (including court
papers) received by the 

 

43

 

Indemnified Party in
connection with the Third Party Claim. 
Should the indemnifying Party assume the defense of a Third Party Claim,
except as provided in Section 11.4.1, the
Indemnified Party will be responsible for the legal costs or expenses
subsequently incurred by such Indemnified Party in connection with the
analysis, defense or settlement of the Third Party Claim.

 

11.4.2     Right to Participate in Defense.  Without limiting Section 11.4.1, any Indemnified
Party will be entitled to participate in, but not control, the defense of such
Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment
will be at the Indemnified Party’s own cost and expense unless (i) the
employment thereof has been specifically authorized by the indemnifying Party
in writing, (ii) the indemnifying Party has failed to assume the defense
and employ counsel in accordance with Section 11.4.1 (in
which case the Indemnified Party will control the defense) or (iii) the interests
of the Indemnified Party and the indemnifying Party with respect to such Third
Party Claim are sufficiently adverse to prohibit the representation by the same
counsel of both Parties under Applicable Law, ethical rules or equitable
principles in which case the indemnifying Party will be responsible for any
such costs and expenses of counsel for the Indemnified Party.

 

11.4.3     Settlement.  With respect to any Third
Party Claims relating solely to the payment of money damages in connection with
a Third Party Claim and that will not admit liability or violation of Law on
the part of the Indemnified Party or result in the Indemnified Party’s becoming
subject to injunctive or other relief or otherwise adversely affecting the
business of the Indemnified Party in any manner (such as granting a license or
admitting the invalidity of a Patent Controlled by an Indemnified Party), and
as to which the indemnifying Party will have acknowledged in writing the
obligation to indemnify the Indemnified Party hereunder, the indemnifying Party
will have the sole right to consent to the entry of any judgment, enter into
any settlement or otherwise dispose of such Loss, on such terms as the
indemnifying Party, in its sole discretion, will deem appropriate.  With respect to all other Losses in
connection with Third Party Claims, where the indemnifying Party has assumed
the defense of the Third Party Claim in accordance with Section 11.4.1, the indemnifying
Party will have authority to consent to the entry of any judgment, enter into
any settlement or otherwise dispose of such Loss provided it obtains the prior
written consent of the Indemnified Party (which consent will not be
unreasonably withheld).  The indemnifying
Party will not be liable for any settlement or other disposition of a Loss by
an Indemnified Party that is reached without the written consent of the
indemnifying Party.  Regardless of
whether the indemnifying Party chooses to defend or prosecute any Third Party
Claim, no Indemnified Party will admit any liability with respect to or settle,
compromise or discharge, any Third Party Claim without the prior written
consent of the indemnifying Party, such consent not to be unreasonably
withheld.

 

11.4.4     Cooperation.  Regardless of whether the
indemnifying Party chooses to defend or prosecute any Third Party Claim, the
Indemnified Party will, and will cause each other Indemnified Party to,
cooperate in the defense or prosecution thereof and will furnish such records,
information and testimony, provide such witnesses and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be reasonably
requested in connection therewith.  Such
cooperation will include access during normal business hours afforded to indemnifying
Party to, and reasonable retention by the Indemnified Party of, records and
information that are reasonably relevant to such Third Party Claim, and making
Indemnified 

 

44

 

Parties and other employees
and agents available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder, and the
indemnifying Party will reimburse the Indemnified Party for all its reasonable
out-of-pocket costs and expenses in connection therewith.

 

11.4.5     Costs and Expenses.  Except as provided above in
this Section 11.4, the costs
and expenses, including attorneys’ fees and expenses, incurred by the
Indemnified Party in connection with any claim will be reimbursed on a Calendar
Quarter basis by the indemnifying Party, without prejudice to the indemnifying
Party’s right to contest the Indemnified Party’s right to indemnification and
subject to refund in the event the indemnifying Party is ultimately held not to
be obligated to indemnify the Indemnified Party.

 

Section 11.5         Insurance.

 

11.5.1     Regulus’
Insurance Obligations. 
Regulus shall maintain, at its cost, reasonable insurance against
liability and other risks associated with its activities contemplated by this
Agreement, including but not limited to its indemnification obligations herein,
in such amounts and on such terms as are customary for prudent practices for
biotech companies of similar size and with similar resources in the
pharmaceutical industry for the activities to be conducted by it under this Agreement
taking into account the scope of development of products, provided, that, at a
minimum, Regulus shall maintain, in force at its sole cost, a general liability
insurance policy providing coverage of at least $[***] per claim and $[***]
annual aggregate.  In addition to the
foregoing, in the event that Regulus plans to Commercialize any Discontinued
Product, then Regulus shall increase its insurance coverage commensurate with
the additional liability and other risks associated with Commercialization activities,
and at a minimum provide that the annual aggregate amount of such coverage is
increased to at least $[***] at least thirty (30) days before Regulus initiates
the First Commercial Sale of any Discontinued Product hereunder.  Regulus shall furnish to Sanofi evidence of
any insurance required under this Section 11.5, upon request.

 

11.5.2     Sanofi’s
Insurance Obligations. 
Sanofi hereby represents and warrants to Regulus that it is self-insured
against liability and other risks associated with its activities and
obligations under this Agreement in such amounts and on such terms as are
customary for prudent practices for large companies in the pharmaceutical
industry for the activities to be conducted by Sanofi under this Agreement.  Sanofi shall maintain such self insurance
throughout the term of this Agreement and shall furnish to Regulus evidence of
such self-insurance, upon request.

 

ARTICLE 12

 

REPRESENTATIONS AND
WARRANTIES

 

Section 12.1         Representations,
Warranties and Covenants.  Each Party
hereby represents and warrants as of both the Effective Date and covenants to
the other Party that:

 

12.1.1     it has the power and
authority and the legal right to enter into this Agreement and perform its
obligations hereunder, and that it has taken all necessary action on its 

 

45

 

part required to authorize
the execution and delivery of this Agreement and the performance of its
obligations hereunder;

 

12.1.2     this Agreement has been duly
executed and delivered on behalf of such Party and constitutes a legal, valid
and binding obligation of such Party and is enforceable against it in
accordance with its terms subject to the effects of bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and
general principles of equity, whether enforceability is considered a proceeding
at law or equity;

 

12.1.3     all necessary consents,
approvals and authorizations of all Regulatory Authorities and other parties
required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder
have been obtained; and

 

12.1.4     the execution and delivery
of this Agreement and the performance of such Party’s obligations hereunder
(i) do not conflict with or violate any requirement of Applicable Law or
any provision of the certificate of incorporation, bylaws or any similar
instrument of such Party, as applicable, in any material way, and (ii) do
not conflict with, violate, or breach or constitute a default or require any
consent not already obtained under, any contractual obligation or court or
administrative order by which such Party is bound.

 

Section 12.2         Regulus
Representations, Warranties, and Covenants.  Regulus  hereby
represents and warrants to Sanofi as of the Effective Date that:

 

12.2.1     Regulus is the owner of, or
otherwise has the right to grant all rights and licenses it purports to grant
to Sanofi with respect to the Regulus Patents under this Agreement for Mir-21
and Licensed Compounds identified by Regulus on or before the Effective Date
that target Mir-21;

 

12.2.2     To the best of its knowledge
and belief, Regulus does not require any additional licenses or other
intellectual property rights in order for Regulus to conduct its obligation
under the R&D Plan with respect to Mir-21 and Licensed Compounds identified
by Regulus on or before the Effective Date that target Mir-21;

 

12.2.3     Regulus has not received any
written claim alleging that any of the Regulus Patents are invalid or
unenforceable;

 

12.2.4     Regulus has not received any
written claim alleging that any of Regulus’ activities relating to Mir-21 and
Licensed Compounds identified by Regulus on or before the Effective Date that
target Mir-21, or any of Regulus’ activities of the type proposed to be
undertaken pursuant to the R&D Plan, infringe any intellectual property
rights of a Third Party;

 

12.2.5     All employees, consultants,
or (sub)contractors of Regulus or Affiliates performing Development activities
hereunder on behalf of Regulus are, and Regulus hereby covenants to Sanofi that
they will be, obligated to assign all right, title and interest in and to any
inventions developed by them, whether or not patentable, to Regulus or
Affiliate, respectively, as the sole owner thereof;

 

46

 

12.2.6     Regulus will, and Regulus
hereby covenants to, as appropriate, hire and maintain sufficient staff and management
to support and conduct all the Research Program hereunder in a timely fashion;

 

12.2.7     If reasonably requested by
Sanofi in writing, Regulus will, and Regulus hereby covenants to, take
reasonable, good faith measures and cooperate with Sanofi to help to facilitate
a good faith negotiation between Sanofi and any Existing Regulus Agreement in
the event that Sanofi desires to pursue the Development or Commercialization of
any Licensed Compound or Product and would require a license directly from any
such Third Party;

 

12.2.8     Regulus will not, and
Regulus hereby covenants to Sanofi not to, withhold from Sanofi any material
information or correspondence, including to or from any Regulatory Authority,
that would be material and relevant to a reasonable assessment of the
scientific, commercial, safety, and regulatory liabilities or commercial value
of the Licensed Compounds;

 

12.2.9     Regulus will, and Regulus
hereby covenants to Sanofi that it will, perform its activities pursuant to
this Agreement in compliance with good laboratory and clinical practices and
cGMP, in each case as applicable under the laws and regulations of the country
and the state and local government wherein such activities are conducted, and
with respect to the care, handling and use in Development activities hereunder
of any non-human animals by or on behalf of Regulus, will at all times comply
(and will ensure compliance by any of its subcontractors) with all applicable
federal, state and local laws, regulations and ordinances and the guiding
principles of the “3R’s”, namely, wherever reasonably possible, reducing the
number of animals used, replacing animals with non-animal methods and refining
the research techniques used for the proper care, handling and use of animals
in pharmaceutical research and development activities; and

 

12.2.10  The licenses granted to
Regulus under the Existing Regulus Agreements are in full force and effect and
Regulus has not received any written notice, and is not aware, of any breach by
any party to the Existing Regulus Agreements.

 

Section 12.3         Sanofi
Covenants.  Sanofi  hereby covenants to Regulus that it will
perform its activities pursuant to this Agreement in compliance with good
laboratory and clinical practices and cGMP, in each case as applicable under
the laws and regulations of the country and the state and local government
wherein such activities are conducted, and with respect to the care, handling
and use in Development activities hereunder of any non-human animals by or on
behalf of Sanofi, will at all times comply (and will ensure compliance by any
of its subcontractors) with all Applicable Laws and the guiding principles of
the “3R’s”, namely, wherever reasonably possible, reducing the number of
animals used, replacing animals with non-animal methods and refining the
research techniques used for the proper care, handling and use of animals in
pharmaceutical research and development activities.

 

Section 12.4         DISCLAIMER
OF WARRANTY.  EXCEPT FOR THE
EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 12, SANOFI AND REGULUS MAKE
NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT
OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND SANOFI AND REGULUS EACH
SPECIFICALLY DISCLAIM ANY WARRANTIES, WHETHER 

 

47

 

WRITTEN OR ORAL, OR EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY
PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.

 

ARTICLE 13

 

MISCELLANEOUS

 

Section 13.1         Assignment;
Sanofi Affiliates.  Except as
expressly set forth in this Agreement, without the prior written consent of the
other Party hereto, neither Party will sell, transfer, assign, delegate, pledge
or otherwise dispose of, whether voluntarily, involuntarily, by operation of
law or otherwise, this Agreement or any of its rights or duties hereunder; provided, however, that:

 

(a)           either Party may assign this Agreement and
its rights and obligations hereunder without the other Party’s consent in
connection with the transfer or sale of all or substantially all of the
business of such Party to which this Agreement relates to a Third Party,
whether by merger, sale of stock, sale of assets or otherwise, provided that in
the event of such a sale or transfer (whether this Agreement is actually
assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse triangular merger)),
intellectual property rights of the acquiring party in such sale or transfer
(if other than one of the Parties to this Agreement) shall not be included in
the technology licensed hereunder or otherwise subject to this Agreement;

 

(b)           Sanofi may, without Regulus’ consent, assign
this Agreement and its rights and obligations hereunder to an Affiliate of
Sanofi, provided that such Affiliate agrees to be bound by the terms and
conditions of this Agreement and that no such assignment to an Affiliate will
relieve Sanofi of its obligations hereunder; and

 

(c)           Regulus may assign or transfer its rights
under Article 6 (but no liabilities) to a Third Party in connection with a
royalty factoring transaction.

 

The
rights and obligations of the Parties under this Agreement shall be binding
upon and inure to the benefit of the successors and permitted assigns of the
Parties, and the name of a Party appearing herein will be deemed to include the
name of such Party’s successors and permitted assigns to the extent necessary
to carry out the intent of this section. 
Any purported assignment or transfer in violation of this Section 13.1 will be void ab initio and of no force or effect.

 

Section 13.2         Severability.  If any provision of this
Agreement is held to be illegal, invalid or unenforceable by a court of
competent jurisdiction, such adjudication will not affect or impair, in whole
or in part, the validity, enforceability, or legality of any remaining portions
of this Agreement.  All remaining
portions will remain in full force and effect as if the original Agreement had
been executed without the invalidated, unenforceable or illegal part.

 

Section 13.3         Governing
Law; Jurisdiction.  This Agreement
will be governed by and construed and enforced in accordance with the laws of
the State of New York, USA without 

 

48

 

reference to any rules of
conflicts of laws.  For clarification,
any dispute relating to the scope, validity, enforceability or infringement of
any Patents will be governed by and construed and enforced in accordance with
the patent laws of the applicable jurisdiction.

 

Section 13.4         Dispute Resolution.

 

13.4.1     Resolution
by Senior Representatives.  The Parties will seek to
settle amicably any and all disputes, controversies or claims arising out of or
in connection with this Agreement.  Any
dispute within the JSC’s decision-making authority will be finally decided as
set forth in APPENDIX 5.  Any dispute between the Parties which is
outside the JSC’s decision-making authority and is not subject to resolution
under Section 6.7.1 or Section 13.4.5 will be promptly presented to
each Party’s respective co-chair of the JSC for resolution, and if the
co-chairs of the JSC are unable to resolve such dispute, such dispute will then
be presented to the Executive VP of R&D of Sanofi and the Executive Vice
President of Regulus (the “Senior
Representatives”), or their respective designees, for
resolution.  Such Senior Representatives,
or their respective designees, will meet in-person or by teleconference as soon
as reasonably possible thereafter, and use their good faith efforts to mutually
agree upon the resolution of the dispute, controversy or claim.  Any dispute within the JSC’s decision-making
authority will not be subject to arbitration.

 

13.4.2     Request for
Arbitration.  If after
negotiating in good faith pursuant to Section 13.4.1, after
good faith discussions undertaken within reasonable promptness, to reach an
amicable agreement within 90 days, then either Party may upon written
notice to the other submit to binding arbitration pursuant to
Section 13.4.3 below.  No statements
made by either Party during such discussions will be used by the other Party or
admissible in arbitration or any other subsequent proceeding for resolving the
dispute.

 

13.4.3     Arbitration.

 

(a)           Any dispute, claim or controversy arising
from or related in any way to this Agreement or the interpretation,
application, breach, termination or validity thereof, including any claim of
inducement of this Agreement by fraud or otherwise, not resolved under the
provisions of Section 13.4.1 will be resolved by final and binding
arbitration conducted in accordance with the terms of this Section 13.4.3.  The arbitration will be held in New York, New
York, USA according to Rules of Arbitration of the International Chamber
of Commerce (“ICC”).  The arbitration will be conducted by a panel
of three (3) arbitrators with significant experience in the pharmaceutical
industry, unless otherwise agreed by the Parties, appointed in accordance with
applicable ICC rules.  Any arbitration
herewith will be conducted in the English language to the maximum extent
possible.  The arbitrators will render a
written decision no later than six (6) months following the selection of
the arbitrators, including a basis for any damages awarded and a statement of
how the damages were calculated.  Any
award will be promptly paid in U.S. dollars free of any tax, deduction or
offset.  Each Party agrees to abide by
the award rendered in any arbitration conducted pursuant to this Section 13.4.3.  With respect to money damages, nothing
contained herein will be construed to permit the arbitrator or any court or any
other forum to award punitive or exemplary damages, except in the case of
breach of Article 7.  By entering
into this agreement to arbitrate, the Parties expressly waive any claim for
punitive or exemplary damages, except in the case of breach of
Article 7.  Each Party will pay its
legal fees

 

49

 

and costs related to the
arbitration (including witness and expert fees).  Judgment on the award so rendered will be
final and may be entered in any court having jurisdiction thereof.

 

(b)           EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL
OF ANY ISSUE BY JURY. EACH PARTY HERETO WAIVES ANY CLAIM FOR ATTORNEYS’ FEES
AND COSTS AND PREJUDGMENT INTEREST FROM THE OTHER.

 

(c)           EXCEPT FOR LOSSES COVERED BY THE INDEMNITIES
PROVIDED UNDER ARTICLE 11, AND ANY BREACH OF THE CONFIDENTIALITY
RESTRICTIONS UNDER ARTICLE 7, EACH PARTY HERETO WAIVES (1) ANY CLAIM
TO PUNITIVE, EXEMPLARY OR MULTIPLIED DAMAGES FROM THE OTHER; AND (2) ANY
CLAIM OF CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES FROM THE OTHER.

 

13.4.4     Disputes
Regarding Material Breach.  If the Parties
are in dispute as to whether one Party is in material breach of this Agreement,
then the arbitrator will first determine if material breach has in fact
occurred, and if so, will grant the defaulting Party the cure period provided
pursuant to Section 9.3 (or 9.2, as
applicable).  If the material breach is
not cured within the time period provided pursuant to Section 9.3 (or 9.2, as applicable),
the arbitration will continue and the arbitrator will, as part of the same
arbitration, award actual direct damages to the non-defaulting Party.

 

13.4.5     Certain Matters Subject to Expert Panel.  If, at any time during the Research Term, the
parties disagree whether a Proposed Target under Section 3.6.1 is
Associated with the Target Field, the Parties will submit such matter to a
panel of three (3) experts who are experienced in the field of
biopharmaceuticals (an “Expert Panel”).  All members of the Expert Panel must be
mutually agreed by the Parties in good faith and as promptly as possible and
must be free of any conflicts of interest with respect to either or both
Parties.  The Expert Panel will promptly
hold a hearing to review the matter, at which they will consider briefs
submitted by each Party at least 15 days before the hearing, as well as
reasonable presentations that each Party may present.  The determination of the relevant Expert
Panel as to such dispute will be binding on both Parties.  The Parties will share equally in the costs
of the Expert Panel, and each Party will bear its own costs associated with
preparing for and presenting to the Expert Panel.  The Parties may also elect by mutual
agreement to use an Expert Panel (or other panels of key opinion leaders) for
guidance on other issues that may arise during the Research Term.

 

13.4.6     Court Actions.  Nothing contained in this Agreement shall
deny either Party the right to seek injunctive or other equitable relief from a
court of competent jurisdiction in the context of a bona fide
emergency or prospective irreparable harm, and such an action may be filed and
maintained notwithstanding any ongoing dispute resolution discussions or
arbitration proceeding.  In addition,
either Party may bring an action in any court of competent jurisdiction to
resolve disputes pertaining to the validity, construction, scope,
enforceability, infringement or other violations of patents or other
proprietary or intellectual property rights, and no such claim shall be subject
to arbitration pursuant to Section 13.4.3.

 

Section 13.5         Notices.  Except as otherwise provided
for in this Agreement, all notices or other communications that are required or
permitted hereunder will be in the English 

 

50

 

Language and in writing and
delivered personally with acknowledgement of receipt, sent by facsimile (and
promptly confirmed by personal delivery, registered or certified mail or
overnight courier as provided herein), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:

 

If
to Sanofi, to:

 

Sanofi-Aventis

174, avenue de France

75013 Paris, France

Attention: General Counsel

Facsimile
No.:  +33 11.4.1 53 77 43 03

 

If
to Regulus, to:

 

Regulus
Therapeutics Inc.

1896
Rutherford Road

Carlsbad,
California 92008

USA

Attention:
Executive Vice President

Facsimile:
+1 (760) 268-6868

 

With
a copy to:

 

Attention:
General Counsel

Facsimile:
+1 (760) 268-4922

 

With
a copy to:

 

Attention:
Thomas Coll

Cooley
LLP

4401
Eastgate Mall

San
Diego, CA 92121

USA

Facsimile:
+1 (858) 550-6420

 

or
to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith.  Any such communication will be deemed to have
been given (i) when delivered, if personally delivered or sent by
facsimile on a Business Day, (ii) on the Business Day after dispatch, if
sent by nationally-recognized overnight courier, and (iii) on the third
Business Day following the date of mailing, if sent by mail.  It is understood and agreed that this Section 13.5 is not intended to
govern the day-to-day business communications necessary between the Parties in
performing their duties, in due course, under the terms of this Agreement.

 

Section 13.6         Entire
Agreement; Modifications.  This Agreement (including the attached
Appendices and the R&D Plan), together with the Technology Alliance
Agreement and the Stock Purchase Agreement, sets forth and constitutes the
entire agreement and understanding 

 

51

 

between the Parties with
respect to the subject matter hereof and thereof, and all prior agreements,
understanding, promises and representations, whether written or oral, with
respect thereto are superseded hereby. 
Each Party confirms that it is not relying on any representations or
warranties of the other Party except as specifically set forth herein.  No amendment, modification, release or
discharge will be binding upon the Parties unless in writing and duly executed
by authorized representatives of both Parties.

 

Section 13.7         Headings.  The headings of Articles and
Sections of this Agreement are for ease of reference only and will not
affect the meaning or interpretation of this Agreement in any way.

 

Section 13.8         Relationship
of the Parties.  It is expressly
agreed that the Parties will be independent contractors of one another and that
the relationship between the Parties will not constitute a partnership, joint
venture or agency.

 

Section 13.9         Waiver.  Any term or condition of
this Agreement may be waived at any time by the Party that is entitled to the
benefit thereof, but no such waiver will be effective unless set forth in a
written instrument duly executed by or on behalf of the Party waiving such term
or condition.  Any such waiver will not
be deemed a waiver of any other right or breach hereunder.

 

Section 13.10       Counterparts.  This 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.

 

Section 13.11       No Benefit
to Third Parties.  The
representations, warranties, covenants and agreements set forth in this
Agreement are for the sole benefit of the Parties hereto and their successors
and permitted assigns, and they will not be construed as conferring any rights
on any other parties.

 

Section 13.12       Further
Assurances.  Each Party will
duly execute and deliver, or cause to be duly executed and delivered, such
further instruments and do and cause to be done such further acts and things,
including the filing of such assignments, agreements, documents and
instruments, as may be necessary to carry out the provisions and purposes of
this Agreement.

 

Section 13.13       Force
Majeure.  Neither Party will be
charged with any liability for delay in performance of an obligation under this
Agreement to the extent such delay is due to a cause beyond the reasonable
control of the affected Party, such as war, riots, labor disturbances, fire,
explosion, earthquake, and compliance in good faith with any governmental Law,
regulation or order.  The Party affected
will give prompt written notice to the other Party of any material delay due to
such causes.

 

Section 13.14       Interpretation.

 

13.14.1  Each of the Parties
acknowledges and agrees that this Agreement has been diligently reviewed by and
negotiated by and between them, that in such negotiations each of them has been
represented by competent counsel and that the final agreement contained herein,
including the language whereby it has been expressed, represents the joint
efforts of the Parties hereto and their counsel.  Accordingly, in the event an ambiguity or a
question of intent or 

 

52

 

interpretation arises, this
Agreement will be construed as if drafted jointly by the Parties and no
presumption or burden of proof will arise favoring or disfavoring any Party by
virtue of the authorship of any provisions of this Agreement.  This Agreement has been prepared in the
English language and the English language shall control its interpretation.

 

13.14.2  The definitions of the terms
herein will apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun will include the corresponding masculine, feminine and
neuter forms.  The words “include”, “includes”
and “including” will be deemed to be followed by the phrase “without limitation”.  The word “will” will be construed to have the
same meaning and effect as the word “will”. 
The word “any” will mean “any and all” unless otherwise clearly indicated
by context.

 

13.14.3  Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument
or other document herein will be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein or therein), (ii) any reference to any
Applicable Laws herein will be construed as referring to such Applicable Laws as
from time to time enacted, repealed or amended, (iii) any reference herein
to any person will be construed to include the person’s successors and assigns,
(iv) the words “herein”, “hereof” and “hereunder”, and words of similar
import, will be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, and (v) all references herein to
Articles, Sections or Appendices, unless otherwise specifically provided,
will be construed to refer to Articles, Sections and Appendices of this
Agreement.

 

13.14.4  References to sections of
the Code of Federal Regulations and to the United States Code will mean the
cited sections, as these may be amended from time to time.

 

[SIGNATURE PAGE FOLLOWS]

 

53

 

IN WITNESS WHEREOF, the Parties hereto have
caused this Agreement to be executed by their duly authorized representatives
as of the date first above written.

 

 

	
  REGULUS THERAPEUTICS INC.:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Kleanthis G. Xanthopoulos

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  President
  and CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SANOFI-AVENTIS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Philippe GOUPIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  VP
  Corporate Licenses

  	
   

  	
   

  

 

SIGNATURE PAGE -COLLABORATION AND LICENSE AGREEMENT

 

 

List of Appendices

 

	
  Appendix 1:

  	
  Definitions

  
	
   

  	
   

  
	
  Appendix 2:

  	
  Product
  Specific Patents

  
	
   

  	
   

  
	
  Appendix 3:

  	
  Regulus
  Core Technology Patents

  
	
   

  	
   

  
	
  Appendix 4:

  	
  Charter
  of JSC

  
	
   

  	
   

  
	
  Appendix 5:

  	
  Existing
  Regulus Agreements

  
	
   

  	
   

  
	
  Appendix 6:

  	
  Collaboration
  Targets

  
	
   

  	
   

  
	
  Appendix 7:

  	
  Listed
  Countries

  
	
   

  	
   

  
	
  Appendix
  7.3A

  	
  Regulus
  Initial Press Release

  
	
   

  	
   

  
	
  Appendix
  7.3B

  	
  Sanofi
  Initial Press Release

  
	
   

  	
   

  
	
  Appendix 8:

  	
  R&D
  Plan

  
	
   

  	
   

  
	
  Appendix 9:

  	
  Regulus
  Detailed Allocation of Upfront Payments

  

 

 

APPENDIX 1

 

DEFINITIONS

 

“Additional Indication” has the meaning set forth
in Section 6.4.1(c).

 

“Additional Indication Milestone Payment” has the
meaning set forth in Section 6.4.1(c).

 

“Affiliate” means any Person, whether de jure or de facto, which directly or indirectly through
one (1) or more intermediaries controls, is controlled by or is under
common control with another Person.  A
Person will be deemed to “control” another Person if it (a) owns, directly
or indirectly, beneficially or legally, at least 50% of the outstanding voting
securities or capital stock (or such lesser percentage which is the maximum
allowed to be owned by a Person in a particular jurisdiction) of such other
Person, or has other comparable ownership interest with respect to any Person
other than a corporation; or (b) has the power, whether pursuant to
contract, ownership of securities or otherwise, to direct the management and
policies of the Person.  Notwithstanding
the above, neither of the Founding Companies of Regulus will be deemed an
Affiliate of Regulus for the purposes of this Agreement under any
circumstances.

 

“Agreement” means this Collaboration
and License Agreement, together with all Appendices attached hereto, and the
R&D Plan, as the same may be amended or supplemented from time to time in
accordance with the terms of this Agreement.

 

“API” means, with
respect to a Product, the bulk active pharmaceutical ingredient for a Licensed
Compound manufactured in accordance with GMP for such Product.

 

“Applicable Law” or “Law” means all applicable laws, statutes,
rules, regulations and other pronouncements having the effect of law of any
federal, national, multinational, state, provincial, county, city or other
political subdivision, agency or other body, domestic or foreign, including but
not limited to any applicable rules, regulations, guidelines, or other
requirements of the Regulatory Authorities that may be in effect from time to
time, but excluding patent laws.

 

“Approval” means, with respect to any
Product in any regulatory jurisdiction, approval from the applicable Regulatory
Authority sufficient for the manufacture, distribution, use and sale of the
Product in such jurisdiction in accordance with Applicable Laws.  In jurisdictions where the applicable
Regulatory Authority sets the pricing authorizations necessary for a Product,
Approval will not be deemed to have occurred if the final approval to market
and sell the Product is being withheld because Sanofi (or its Affiliates or
sublicensee) and the Regulatory Authority have not yet determined pricing; provided, however, that the First Commercial Sale in such
jurisdiction will be considered Approval in such jurisdiction.

 

“Associated” has the meaning provided in Section 3.6.

 

“Business Day” means a day on which
banking institutions in New York, New York, United States and Paris, France are
both open for business.

 

 

“Calendar Quarter” means the respective
periods of three consecutive calendar months ending on March 31, June 30,
September 30 and December 31.

 

“Combination Product” means a Product that
includes at least one additional active ingredient (whether coformulated or
copackaged) which is not a Licensed Compound.

 

“Commercialize”, “Commercializing” and “Commercialization”
means activities directed to manufacturing, obtaining pricing and reimbursement
approvals, for, marketing, promoting, distributing, importing or selling a Product,
including, without limitation, conducting pre-and post-Approval activities,
including studies reasonably required to increase the market potential of the
Product and studies to provide improved formulation and Product delivery.

 

“Collaboration Target” has the meaning set forth
in Section 3.6.

 

“Commercially Reasonable Efforts” means, with
respect to a Licensed Compound and Product, the carrying out of discovery,
research, Development or Commercialization activities using the efforts that
the applicable Party would reasonably devote to a compound or product of
similar market potential at a similar stage in development or product life
resulting from its own research efforts, taking into account product profile,
the competitive landscape and other relevant scientific, technical and
commercial factors.

 

“Confidential Information” has
the meaning set forth in Section 7.1.

 

“Control”
means, with respect to any Know-How, Patent or other intellectual property
right, possession by a Party (including its Affiliates) of the right (whether
by ownership, license or otherwise) to grant to the other Party ownership, a
license, sublicense and/or other right to practice under such Know How, Patent
or other intellectual property right as provided for herein without violating
the terms of any agreement or other arrangement with any Third Party.  Notwithstanding anything to the contrary
under this Agreement, with respect to any Third Party acquirer that later
becomes an Affiliate of Regulus after the Effective Date, no intellectual
property of such Third Party acquirer will be included in the licenses granted
hereunder by virtue of such Third Party acquirer becoming an Affiliate of
Regulus.

 

“Cover”, “Covered”
or “Covering” means, with respect
to a Patent, that, but for rights granted to a Person under such Patent, the
practice by such Person of an invention claimed in such Patent would infringe a
Valid Claim included in such Patent, or in the case of a Patent that is a
patent application, would infringe a Valid Claim in such patent application if
it were to issue as a patent.

 

“Development” means non-clinical (such
as, but not limited to, IND-enabling toxicology and production of GMP
quality Product) and clinical development activities reasonably related to the
development and submission of information to a Regulatory Authority, including,
without limitation, chemical synthesis, toxicology, pharmacology, test method
development and stability testing, manufacturing process development,
formulation development, delivery system development, quality assurance and
quality control development, manufacturing, statistical analysis, and clinical
studies.  When used as a verb, “Develop” means to engage in Development.

 

 

“Development Candidate” has the
meaning provided in the R&D Plan.

 

“Disclosing Party” has the meaning set forth
in Section 7.1.

 

“Discontinued Product” has the meaning set forth
in Section 10.1.

 

“Dollars” or “$” means the lawful currency of the United
States.

 

“Effective Date” has the meaning set forth
in the opening paragraph of this Agreement.

 

“Election Notice” has the meaning set forth
in Section 10.1.

 

“EMEA” means the European Regulatory Authority
known as the European Medicines Agency and any successor agency thereto.

 

“EU” means the European Union, as its membership
may be altered from time to time, and any successor thereto, and which, as of
the Effective Date, consists of Austria, Belgium, Czech Republic, Denmark,
Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal,
Slovakia, Slovenia, Spain, Sweden and the United Kingdom, and that certain
portion of Cyprus included in such organization.

 

“Existing Regulus Agreement” means any of the agreements
listed on APPENDIX 5.

 

“Existing Sanofi Agreement” means any agreement to
which Sanofi is a party as of the Effective Date under which Sanofi has
in-licensed or acquired rights to Patents from a Third Party.

 

“FDA” means the United States Food and Drug
Administration and any successor agency thereto.

 

“Fibrosis” means [***].

 

“First Commercial Sale” means the first sale of a
Product by Sanofi, its Affiliates or a sublicensee to a Third Party in a
particular country after Approval of such Product has been obtained in such
country.

 

“Founding Company” means
individually, either Isis Pharmaceuticals, Inc. or Alnylam Pharmaceuticals, Inc.;
and collectively, both Isis Pharmaceuticals, Inc. and Alnylam
Pharmaceuticals, Inc.

 

“Founding Company License Agreement” means the Amended and Restated License and Collaboration Agreement among
Regulus and the Founding Companies dated January 1, 2009, as amended as of
the Effective Date.

 

“FTE-Day Rate”
means US $[***] per FTE-day, subject to adjustment on an annual basis as
of January 1 of each year beginning in 2011 by a factor which reflects
changes in the Consumer Price Index for San Diego, California as reported as of
January 1 by the U.S. 

 

 

Department of Labor’s Bureau of Labor Statistics in
each applicable year during the Research Term when compared to the comparable
statistic for January 1 of the preceding year.  The FTE-Day Rate shall be inclusive of all
allocated overhead costs, administrative expenses and other expenses for the
employee(s) providing services under this Agreement, excluding [***] costs
(which Sanofi will either pay directly or reimburse to Regulus within
30 days of invoice).

 

“Future Regulus Agreement” has the meaning provided in
Section 6.7.2.

 

“Future Sanofi Agreement” has the meaning provided in
Section 6.7.2.

 

“[***]” means [***].

 

“[***] Agreement”
means the License Agreement among [***] and [***] dated [***].

 

“Generic Product(s)” means a Third Party’s
product(s) or Third Parties’ product(s) that has the same or
substantially the same active pharmaceutical ingredient as a Product and
receives Approval through a regulatory approval process in which either:
(i) the applicant for, or sponsor of such Approval; or (ii) the
Regulatory Authority that granted such Approval, relied, in whole or in part,
upon [***] submitted by, or on behalf of, Sanofi (or its Affiliate or
sublicensee), to any Regulatory Authority, to support the Approval of a
Product.

 

“Good Clinical Practice” or “GCP” will
mean the then current standards for clinical trials for pharmaceuticals, as set
forth in the United States Code of Federal Regulations, ICH guidelines and
applicable regulations, laws or rules as promulgated thereunder, as
amended from time to time, and such standards of good clinical practice as are
required by the European Union and other organizations and governmental
agencies in countries in which a Licensed Product is intended to be sold to the
extent such standards are not less stringent than United States GCP.

 

“Good Laboratory Practice” or “GLP” will
mean the then current standards for laboratory activities for pharmaceuticals,
as set forth in the FDA’s GLP regulations and/or ICH guidelines and applicable
regulations.

 

“Good Manufacturing Practice(s)” or “GMP” will
mean the regulatory requirements for current good manufacturing practices
promulgated in the United States Code of Federal Regulations including those rules promulgated
by the United States Food and Drug Administration under the U.S. Food, Drug and
Cosmetic Act, 21 C.F.R. § 210 et seq., and ICH Guidelines and applicable
regulations, as the same may be amended from time to time.

 

“[***]” means the
[***] and [***] Agreement dated [***], between [***] and [***] as amended.

 

“[***]

 

“IND” means an Investigational New Drug
Application (as defined in the Food, Drug and Cosmetic Act, as amended) filed
with the FDA or its foreign counterparts.

 

“IND Approval” means the acceptance (or
deemed acceptance) of the filing of an IND by the applicable Regulatory
Authority.  For purposes of clarity,
acceptance (or deemed

 

 

acceptance)
of the filing of the foreign equivalent of an IND by the applicable Regulatory
Authority in such country will be an IND Approval.

 

“IND-Enabling Studies” means the pharmacokinetic
and toxicology studies required to meet the regulations for filing an IND.

 

“Indemnified Party” has the meaning set forth
in Section 11.3.

 

“Indemnification Claim Notice” has the
meaning set forth in Section 11.3.

 

“Indication” means mean any
human or animal disease or condition, or sign or symptom of a human or animal
disease or condition.

 

“Initiation of Phase 1 Trial” means the
dosing of the first human subject in a Phase 1 Trial.

 

“Initiation of Phase 2 Trial” means the
dosing of the first human subject in the first Phase 2 Trial.

 

“Initiation of Phase 3 Trial” means the
dosing of the first human subject in a Phase 3 Trial.  In the case where a Phase 2b/3 Trial
precedes any Phase 3 Trial for a given Product, the first dosing of such
Product in a human subject following the review of interim data and decision to
extend the period of such Phase 2b/3 Trial in order to provide sufficient
evidence of safety and efficacy to be included as a Phase 3 Trial in
filings with Regulatory Authorities will be deemed to be the “start of
Phase 3 Trial” for such Product.

 

“In-License Milestones” means, with respect to a
particular Third Party Agreement, all milestone payments that become payable by
a Party to the Licensor(s) under such Third Party Agreement with respect
to the applicable Third Party Patents as a result of the achievement of
Development, regulatory and/or Commercialization events by a Product.  For clarity, “In-License Milestones” shall
not include any upfront payments under Third Party Agreements.

 

“In-License Royalties” means, with respect to a
particular Third Party Agreement, all royalties on sales of Products by Sanofi,
its Affiliates and its sublicensees that become payable by a Party to the
Licensor(s) under such Third Party Agreement with respect to the
applicable Third Party Patents.

 

“Integrated Product Plan” or “IPP” has the
meaning set forth in Section 5.3.

 

“Intellectual Property Panel” has the
meaning set forth in Section 6.7.1.

 

“Joint Invention” has the meaning
set forth in Section 8.1.

 

“Joint Patent” means any Patent that
claims, and only to the extent that it claims, a Joint Invention(s).

 

“JSC Charter” has the meaning set forth
in Section 3.4.

 

 

“JSC” has the meaning set forth
in Section 3.4.

 

“Know-How” means technical information
and materials, including without limitation, technology, software, instrumentation,
devices, data, biological materials, assays, constructs, compounds, inventions,
practices, methods, knowledge, know-how, trade secrets, skill and experience.

 

“Licensed Compound” means either (i) with
respect to any Collaboration Target identified on APPENDIX 6
as approached via a microRNA Antagonist, any microRNA Antagonist that modulates
the expression of such Collaboration Target where its primary mechanism of
action is [***], or (ii) with respect to any Collaboration Target
identified on APPENDIX 6 as approached via
a microRNA Mimic, a microRNA Mimic with a substantially similar base
composition as such Collaboration Target and which is [***] such Collaboration
Target; in each case that is identified by Regulus as of the Effective Date or
in the performance of the Research Program. 
For purposes of clarity, so long as Mir-21 remains a Collaboration
Target, a Mir-21 Compound will be a Licensed Compound under this Agreement.

 

“Licensing Revenues” has the meaning set forth
in Section 10.2.

 

“Licensor” means, with respect to a particular Third Party
Agreement, any Third Party that is a party to such Third Party Agreement.

 

“Losses” has the meaning set forth
in Section 11.1.

 

“Major European Country” means  France, Germany, Italy, Spain or the
United Kingdom.

 

“Major Market Country” means Canada, France, Germany, Italy,
Japan, Spain, the United Kingdom, and the United States.

 

“Manufacturing Technology” has the meaning set forth in
Section 4.3.

 

“microRNA”
means a structurally defined functional RNA molecule usually between 21 and 25
nucleotides in length, which is derived from genetically-encoded non-coding RNA
which is predicted to be processed into a hairpin RNA structure that is a
substrate for the double-stranded RNA-specific ribonuclease Drosha and
subsequently is predicted to serve as a substrate for the enzyme Dicer, a
member of the RNase III enzyme family; including, without limitation, those
microRNAs exemplified in miRBase (http://microrna.sanger.ac.uk/).  To the extent that [***] for purposes of this
Agreement; provided, however, that nothing
contained herein will require any Party hereto to [***].

 

“microRNA Antagonist”
means a single-stranded oligonucleotide (or a single stranded analog thereof)
that is designed to interfere with or inhibit a particular microRNA. For
purposes of clarity, the definition of “microRNA Antagonist” excludes
oligonucleotides that function predominantly through the RNAi mechanism of
action or the RNase H mechanism of action.

 

“microRNA Compound”
means a compound consisting of (a) a microRNA Antagonist, or (b) a
microRNA Mimic.

 

 

“microRNA Mimic”
means a double-stranded or single-stranded oligonucleotide or analog thereof
with a substantially similar base composition as a particular microRNA and
which is designed to mimic the activity of such microRNA.

 

“Mir-21” means the microRNA having
(i) miRBase ID: hsa-miR-21; (ii) the miRBase Accession Number
MIMAT0000076, and (iii) the sequence UAGCUUAUCAGACUGAUGUUGA.

 

“Mir-21 Compound” means any microRNA
Antagonist that modulates the expression of Mir-21 whose primary mechanism of
action is through [***] to Mir-21 and that is specifically identified by
Regulus as of the Effective Date or in the performance of the Research Program.

 

“Mir-21 Product” means any pharmaceutical product
containing a Mir-21 Compound (alone or with other active ingredients), in all
forms, presentations, formulations and dosage forms.

 

“NDA” means a New Drug Application
filed with the FDA after completion of clinical trials to obtain marketing
approval for the applicable Product in the United States.

 

“NDA Filing” means the acceptance by the
FDA of the filing of an NDA for the applicable Product, or the acceptance of
the foreign equivalent of an NDA by the applicable Regulatory Authority.

 

“Necessary Patent” has the meaning provided in
Section 6.7.1.

 

“Net Sales” means, with respect to a
Product, the gross invoice price of all units of such Products sold by Sanofi,
its Affiliates and/or their sublicensees to any Third Party, less the following
items: (a) trade discounts, credits or allowances, (b) credits or
allowances additionally granted upon returns, rejections or recalls,
(c) freight, shipping and insurance charges, (d) taxes, duties or
other governmental tariffs (other than income taxes), (e) government-mandated
rebates, and (f) a reasonable reserve for bad debts.  “Net Sales” under the following circumstances
will mean the fair market value of such Product: (i) Products which are
used by Sanofi, its Affiliates or sublicensees for any commercial purpose
without charge or provision of invoice, (ii) Products which are sold or
disposed of in whole or in part for non cash consideration, or
(iii) Products which are provided to a Third Party by Sanofi, its
Affiliates or sublicensees without charge or provision of invoice and used by
such Third Party except in the cases of Products used to conduct clinical
trials, reasonable amounts of Products used as marketing samples and Product
provided without charge for compassionate or similar uses.

 

Net
Sales will not include any transfer between or among Sanofi and any of its
Affiliates or sublicensees for resale.

 

In
the event a Product is sold as part of a Combination Product, the Net Sales
from the Combination Product, for the purposes of determining royalty payments,
will be determined by multiplying the Net Sales (as determined without
reference to this paragraph) of the Combination Product, by the fraction,
A/(A+B), where A is the average sale price of the Product when sold separately
in finished form and B is the average sale price of the other therapeutically
active pharmaceutical compound(s) included in the Combination Product when
sold separately in 

 

 

finished
form, each during the applicable royalty period or, if sales of all compounds
did not occur in such period, then in the most recent royalty reporting period
in which sales of all occurred.  In the
event that such average sale price cannot be determined for both the Product
and all other therapeutically active pharmaceutical compounds included in the
Combination Product, Net Sales for the purposes of determining royalty payments
will be calculated as above, but the average sales price in the above equation
will be replaced by a good faith estimate of the fair market value of the
compound(s) for which no such price exists.

 

“New Core Patents” has
the meaning set forth in Section 6.9.

 

“New Core Technology” has
the meaning set forth in Section 6.9.

 

“New Core Technology Agreement” has the meaning set forth in Section 6.9.

 

“Objective” means the objective of the
R&D Plan set forth in Section 3.1.

 

“Other In-License Payments” means, with respect to a
particular Third Party Agreement, all payments (excluding
In-License Royalties and In-License Milestones) that become payable by a Party
to the applicable Licensor(s) under such Third Party Agreement with
respect to the applicable Third Party Patents.

 

“Other Licensor” means any Licensor that is not a Founding
Company.

 

“Other Party” has the meaning set forth
in Section 9.3.

 

“Party(ies)” has the meaning set forth in
the opening paragraph of this Agreement.

 

“Patents” means (a) patents and
patent applications in any country or jurisdiction, (b) all priority
applications, divisionals, continuations, and continuations-in-part of any of
the foregoing, and (c) all patents issuing on any of the foregoing patent
applications, together with all registrations, reissues, renewals,
re-examinations, confirmations, supplementary protection certificates, and
extensions of any of (a), (b) or (c).

 

“Permitted License” means a license granted
by Regulus to a Third Party (i) under the Regulus Core Technology Patents
(but not under the Product Specific Patents) to [***] (or [***] to [***])
solely to conduct Research, or (ii) under the Regulus Core Technology
Patents (but not under the Product Specific Patents) to enable such Third Party
to [***] or [***] microRNA Compounds, where such Third Party is [***] and is
not [***] or [***]

 

“Person” means any individual, firm,
corporation, partnership, limited liability company, trust, business trust,
joint venture company, governmental authority, association or other entity.

 

“Phase 1 Trial” means the initial clinical
testing of a Product in humans (first-in-humans study) with the intention of
gaining a preliminary assessment of the safety of such Product.

 

“Phase 2 Trial” means a human clinical
trial of a Product, the principal purpose of which is a determination of
preliminary short-term safety and efficacy in the target patient 

 

 

population,
as described in 21 C.F.R. 312.21(b) for the United States, or a similar
clinical study prescribed by the Regulatory Authorities in a foreign country.

 

“Phase 2b/3 Trial” means a human clinical
trial of a Product, the principal purpose of which is a further determination
of efficacy and safety, in the target population, at the intended clinical dose
or doses or range of doses, on a sufficient number of subjects and for a
sufficient period of time to confirm the optimal manner of use of the Product
(dose and dose regimen) prior to initiation of the pivotal Phase 3 Trials,
and which itself provides sufficient evidence of safety and efficacy to be
included as a Phase 3 Trial in filings with Regulatory Authorities.

 

“Phase 3 Trial” means a human clinical
trial of a Product on a sufficient number of subjects that is designed to
establish that a pharmaceutical product is safe and efficacious for its
intended use, and to determine warnings, precautions and adverse reactions that
are associated with such pharmaceutical product in the dosage range to be
prescribed, which trial is intended to support Approval of a Product, as
described in 21 C.F.R. 312.21(c) for the United States, or a similar
clinical study prescribed by the Regulatory Authorities in a foreign country.

 

“Phase 4 Trial” means a human clinical
trial for a Product commenced after receipt of Approval in the country for
which such trial is being conducted and that is conducted within the parameters
of the Approval for the Product. 
Phase 4 Trials may include, without limitation, epidemiological
studies, modeling and pharmacoeconomic studies, investigator sponsored clinical
trials of Product and post-marketing surveillance studies.

 

“Product” means any pharmaceutical
product containing a Licensed Compound (alone or with other active
ingredients), in all forms, presentations, formulations and dosage forms.

 

“Product Development Plan” has the
meaning set forth in Section 5.3.

 

“Product Field”  means
(a) the treatment and/or prophylaxis of any Indication and (b) to the
extent that Regulus Controls [***] the applicable Collaboration Target as [***]
for [***] to the corresponding Product in the treatment and/or prophylaxis of
an approved Indication for the Product.

 

“Product Specific Patents” means all
Patents (including all claims and the entire scope of claims therein)
Controlled by Regulus or its Affiliates on the Effective Date and/or at any
time thereafter, in each case claiming (a) a Collaboration Target gene
sequence or a portion thereof, (b) the specific compositions of matter of
Licensed Compounds or Products, or (c) methods of using Licensed Compounds
or Products as therapeutics; provided however,
that:

 

(1)           unless the Parties otherwise agree in
writing, Patents that include claims that are directed to subject matter and
have a scope that is applicable to microRNA Compounds in general, and not
directed solely to [***] or [***] or to the [***] thereof, will be considered
to be [***] Patents; and

 

(2)           unless the Parties otherwise agree in
writing, Patents that include claims that are directed to the identification or
isolation of microRNAs that are not [***], or to the production, composition,
or use of [***] that are not [***] or [***], will be considered to be [***]
Patents.

 

 

For
clarification, any Regulus Program Patent or any Joint Patent satisfying the definition
above, will be considered a Product Specific Patent.  The Product Specific Patents as of the
Effective Date are listed in APPENDIX 2
attached hereto.

 

“Program Inventions” has the meaning set forth
in Section 8.1.

 

“Program Patents” has the meaning set forth
in Section 8.1.

 

“Proposed Target” has the meaning set forth
in Section 3.6.1.

 

“R&D Plan” has the meaning set forth
in Section 3.2.

 

“Receiving Party” has the meaning set forth
in Section 7.1.

 

“Regulatory Authority” means any governmental authority,
including without limitation FDA, EMEA or Koseisho (i.e., the Japanese Ministry
of Health, Labour and Welfare, or any successor agency thereto), that has
responsibility for granting any licenses or approvals or granting pricing
and/or reimbursement approvals necessary for the marketing and sale of a
Product in any country.

 

“Regulatory Documentation” means all
applications, registrations, licenses, authorizations and approvals (including
all Approvals), all correspondence submitted to or received from Regulatory
Authorities (including minutes and official contact reports relating to any
communications with any Regulatory Authority), all supporting documents and all
clinical studies and tests, including the manufacturing batch records, relating
to the Product, and all data contained in any of the foregoing, including all
regulatory drug lists, advertising and promotion documents, adverse event files
and complaint files.

 

“Regulus Confidential Information” means any
Confidential Information for which Regulus is the Disclosing Party.

 

“Regulus Core Technology Patents” means, subject
to 6.8.3, Patents Controlled by Regulus or its Affiliates on the Effective Date
and/or at any time thereafter, in each case that are useful or necessary for
the Development and Commercialization of Licensed Compound and Products.  Regulus Core Technology Patents will exclude
the Product Specific Patents.  A
representative list of the Regulus Core Technology Patents as of the Effective
Date is listed in APPENDIX 3
hereto.  For clarification, any Regulus
Program Patent or any Joint Patent satisfying the definition above will be
considered a Regulus Core Technology Patent.

 

“Regulus Database” has the meaning set forth
in Section 3.11.

 

“Regulus Inventions” has the
meaning set forth in Section 8.1.

 

“Regulus Know-How” means all
Know-How Controlled by Regulus or its Affiliates as of the Effective Date
and/or at any time thereafter that is useful for the Research, discovery,
Development, Approval, manufacturing and Commercialization of microRNA
Compounds.

 

 

“Regulus Patents” means the
Regulus Core Technology Patents and the Product Specific Patents (including
patents licensed to Regulus under an Existing Regulus Agreement, or under a
Future Regulus Agreement in accordance with Section 6.7).

 

“Regulus Program Patent” has the
meaning set forth in Section 8.1.

 

“Regulus Technology” means
collectively, the Regulus Know-How and the Regulus Patents.

 

“Requested Target” has the meaning set forth
in Section 3.6.2.

 

“Research” means pre-clinical research
including gene function, gene expression and target validation research using
cells and animals, which may include small pilot toxicology studies but
excludes IND-Enabling Studies, clinical development and commercialization.

 

“Research Program” has the meaning set forth in
Section 3.1.

 

“Research Results” means all data, information,
trade secrets, inventions and Know-How which are discovered, made, reduced to
practice, identified or developed in whole or in part by Regulus in the course
of the performance of the Research Program and Development Program.

 

“Research Term” has the meaning set forth
in Section 3.3.1.

 

“Royalty Term” has the meaning set forth in
Section 6.11.

 

“Sanofi Confidential Information” means any
Confidential Information for which Sanofi is the Disclosing Party.

 

“Sanofi Indemnitees” has the meaning set forth
in Section 11.2.

 

“Sanofi Inventions” has the meaning set forth
in Section 8.1.

 

“Sanofi Product Specific Patent” means any
Patents (including all claims and the entire scope of claims therein)
Controlled by Sanofi or its Affiliates on the Effective Date and/or at any time
thereafter, in each case claiming (a) the sequence or a portion thereof
corresponding to the Mir-21 or Collaboration Target gene sequence or a portion
thereof, (b) the specific composition of matter of a Product,
(c) methods of using a Licensed Compound or Product as a therapeutic or
(d) methods of using a Licensed Compound as a therapeutic).

 

“Sanofi Program Patents” has the
meaning set forth in Section 8.1.

 

“Senior Representatives” has the meaning
set forth in Section 13.4.1.

 

“Stock Purchase Agreement” means that
certain letter agreement between the Parties dated as of the Effective Date
pursuant to which Sanofi is purchasing shares of Regulus’ Series B preferred
stock.

 

“Target Encumbrances” has the meaning set forth
in Section 3.6.1.

 

 

“Target Field” means (a) the treatment
and/or prophylaxis of any or all Indications in Fibrosis [***] and (b) to
the extent that Regulus Controls [***] the applicable Collaboration Target as
[***] for [***] to the corresponding Licensed Compound in the treatment and/or
prophylaxis of an Indication in Fibrosis [***].

 

“Target Product Profile” means, with respect to each
Collaboration Target, the description, as established by the JSC, of the
commercially relevant range of acceptable product performance of a
Collaboration Compound against key product characteristics (including but not
limited to efficacy, safety, quality, side effects, tolerability, route of
administration, contraindications and clinical endpoints), and which shall be
used by the Parties to guide and shape the progression of and development
decisions for such Licensed Compound to achieve IND approval.

 

“Technology Alliance Agreement” means the Non-Exclusive Technology Alliance and Option Agreement between
the Parties dated as of the Effective Date.

 

“Term” has the meaning set forth in
Section 9.1.

 

“Territory” means all countries and
jurisdictions throughout the world.

 

“Third Party” means any Person other than
Regulus or Sanofi or their respective Affiliates.

 

“Third Party Agreement” means an Existing Regulus
Agreement, Future Regulus Agreement, Existing Sanofi Agreement or Future Sanofi
Agreement, as applicable.

 

“Third Party Claims” has the meaning set forth
in Section 11.1.

 

“Third Party Patents” means, with respect to a
particular Third Party Agreement, all Necessary Patents that a Party
in-licenses or acquires from the Licensor(s) under such Third Party
Agreement.

 

“[***] Patents” means
all Patents licensed under the [***] Agreement.

 

“Valid Claim” means a claim of any
issued, unexpired patent that has not been revoked or held unenforceable or
invalid by a decision of a court or governmental agency of competent
jurisdiction from which no appeal can be taken, or with respect to which an
appeal is not taken within the time allowed for appeal, and that has not been
disclaimed or admitted to be invalid or unenforceable through reissue,
disclaimer or otherwise.

 

“[***]” means [***].

 

“[***] Agreement” means the [***] Agreement
by and between the [***], commissioned by [***], and Regulus dated [***].

 

 

APPENDIX 2

 

PRODUCT-SPECIFIC PATENTS

 

[***]

 

 

APPENDIX 3

 

REGULUS CORE TECHNOLOGY PATENTS

 

[***]

 

 

APPENDIX 4

 

CHARTER OF THE JOINT STEERING COMMITTEE

 

Purpose

 

The
Joint Research Committee is established by Regulus and Sanofi to oversee the
Research Program under the Agreement.

 

Responsibilities

 

1.             The JSC will, using the
R&D Plan initially agreed to on the Effective Date, as a basis, continue to
develop and refine the R&D Plan, as needed, and will conduct a
comprehensive review of the R&D Plan on at least an annual basis.

 

2.             The JSC will be responsible
for the overall planning and execution of the Research Program and the approval
and oversight of the R&D Plan.  The
JSC will (i) evaluate the data generated by the Parties in the course of
carrying out the R&D Plan, (ii) discuss and resolve any overarching
issues or significant changes in the R&D Plan, (iii) recommend project
prioritization within the R&D Plan, (iv) make project progression
decisions and resource allocation decisions in accordance with the R&D
Plan, (v) make revisions to the R&D Plan as necessary and (vi) consistent
with Article 7 of the Agreement, review and approve all public
communications and disclosures, including but not limited to data presented at
external meetings and journals on the joint Research Results.  Except for amendments to the R&D Plan (as
adopted in accordance with this charter and the Agreement), in no event will
the JSC have the power or authority to amend any provision of the Agreement.

 

3.             The JSC will have the power
to delegate its authority and duties to sub-committees as it deems appropriate.

 

Composition

 

4.             The JSC will initially have
six members, and will at all times have an equal number of members designated
by each Party.  Each Party may replace
its appointed JSC representatives at any time upon written notice to the other
Party.  The size and composition of the
JSC provided herein may not be changed without the consent of both Regulus and
Sanofi.

 

5.             Each JSC member will have
the requisite background, experience and training to carry out the duties and
obligations of the JSC.

 

6.             Each Party will designate one
of its representatives as co-chairperson of the JSC. Each of the
co-chairpersons will be responsible, on an alternating basis with the Sanofi
co-chairperson having responsibility with respect to the initial meeting, for
scheduling meetings, preparing and circulating an agenda in advance of each
meeting, and preparing the minutes of each meeting.

 

1

 

Decisions

 

7.             Each Party’s JSC members
will collectively have three votes, regardless of the number of its JSC members
participating in any meeting.  No votes
will be taken unless there is at least one JSC member representing each of
Regulus and Sanofi participating in such meeting.  Each Party may allocate its three votes among
its attending JSC members in any manner, at such Party’s discretion.  If only one JSC member is attending on behalf
of a given Party, such JSC member may cast all the votes allocated to such
Party.  Unless otherwise specified
herein, all actions taken by the JSC as a committee will be by majority
vote.  If the JSC members reach a
deadlock on any vote, then the deadlock will be resolved in accordance with
Paragraph 8 below.  Notwithstanding
anything to the contrary, no decision by the JSC will require the other Party
to: (i) breach any written agreement that such other Party may have with a
Third Party (except where such agreement is entered into in breach of any
representation, warranty, covenant or obligation of such Party under to this
Agreement); (ii) perform any activities that are outside the scope of the
Objective; or (iii) violate any Applicable Law or principles of scientific
integrity.

 

8.             If the JSC is unable to
decide by a majority vote on any issue within the scope of its authority and
duties, then the JSC will promptly raise such issue to each Parties
co-chairperson on the JSC, and such co-chairs will have 10 days to
mutually agree on how to resolve such issue. 
If the co-chairs are unable to resolve such issue within the 10 day
period, then such issue will be brought to each Party’s Senior Representatives,
or their designees.  The Senior
Representatives will have 10 days to mutually agree on how to resolve such
issue.  If the Senior Representatives are
unable to resolve such issue within the 10-day period, then, subject to the express
limitations set forth in the Agreement and in Paragraph 9 below, such issue
will be finally resolved by the Senior Representative of Sanofi, and such
resolution will be binding on Sanofi and Regulus.

 

9.             Notwithstanding anything to
the contrary, Sanofi will not have the final decision with respect to any
dispute involving any of the following: (i) moving the performance of the
Research Program [***]; (ii) changing (a) the R&D Plan to [***]
(e.g., [***]), or (b)  the [***] after [***] have begun, all of which
changes in the aggregate would cumulatively increase Regulus’ fully burdened
costs of performing R&D Plan activities for a given Collaboration Target by
more than a total of $[***], unless [***] in costs in excess of $[***] for such
Collaboration Target; and (iii) whether to drop or replace a Collaboration
Target during the first [***] months following the applicable Request
Notice for such Collaboration Target.

 

Operations; Meetings

 

10.           During the Research Term the
JSC will initially meet once per month, unless and until the JSC determines
that such meetings should occur once per Calendar Quarter (in either case, each
a “Scheduled Meeting”).  Scheduled Meetings may be held in person or
by audio or video teleconference when appropriate, but at a minimum, once each
year in person (which in-person meeting will be held on an alternating basis in
New York, NY and in Carlsbad, CA).  In
addition, any two members of the JSC may jointly call for an ad hoc meeting of the JSC by
teleconference at any time, by giving the other members of the JSC advance
written notice of at least two 

Business
Days (each, an “Ad Hoc
Meeting”).  An Ad Hoc
Meeting may be called to address any time-sensitive matter.

 

2

 

11.           Meetings of the JSC will be
effective only if at least one JSC representative of each Party is present or
participating.  Each Party will be
responsible for all of its own expenses of participating in the JSC meetings.  The Parties will endeavor to schedule
meetings of the JSC with at least 30 days advance notice.

 

12.           Each Party may bring
additional employees to each meeting as non-voting observers.

 

13.           The co-chair responsible for
each meeting (the “Responsible
Chair”) will, in consultation with other members of the JSC,
develop and set the JSC’s agenda for each Scheduled Meeting.  The Responsible Chair will include on such
agenda each item requested within a reasonable time in advance of such
Scheduled Meeting by a JSC member.  The
agenda and information concerning the business to be conducted at each
Scheduled Meeting will be communicated in writing to the members of the JSC
within a reasonable time in advance of such Scheduled Meeting to permit
meaningful review.  No agenda is required
for an Ad Hoc Meeting.

 

14.           The Responsible Chair, or
such person as the Responsible Chair may designate, will prepare, and
distribute to all JSC members, draft committee minutes within 2 weeks following
each Scheduled Meeting or Ad Hoc Meeting and such minutes will be finalized by
the JSC promptly thereafter.  As part of
the agenda of the first Scheduled Meeting, the JSC members will agree upon a
standard procedure for review and approval of such draft committee minutes by
the JSC.

 

3

 

APPENDIX 5

 

EXISTING REGULUS AGREEMENTS

 

[***]

 

 

APPENDIX 6

 

COLLABORATION TARGETS

 

[***]

 

 

APPENDIX 7

 

LISTED COUNTRIES

 

	
  Patent
  Country

  Code

  	
   

  	
  Patent Filing Country or Jurisdiction

  
	
  [***]

  	
   

  	
  [***]

  

 

 

Appendix 7.3A

 

Regulus Initial Press Release

 

sanofi-aventis
and Regulus Therapeutics Form Major Strategic Alliance on microRNA
Therapeutics

 

-
Largest microRNA therapeutics alliance to date, valued at potentially over $750
million including a $25 million upfront, a $10 million future equity investment
subject to mutual agreement on company valuation, and a three-year option worth
$50 million for a broader technology alliance -

 

-
Focused on developing microRNA-based medicines toward four targets -

 

-
Structured as multi-year collaboration intended to advance several
investigational new drugs into clinical development -

 

Carlsbad,
CA., June XX, 2010 — Regulus Therapeutics Inc. and sanofi-aventis
(EURONEXT: SAN and NYSE: SNY) announced today that they have entered into a
global, strategic alliance to discover, develop, and commercialize microRNA
therapeutics.  The alliance represents
the largest microRNA partnership formed to date, valued at potentially over
$750 million, and includes a $25 million upfront fee, a $10 million future
equity investment subject to mutual agreement on company valuation, and annual
research support for three years with the option to extend two additional
years.  The alliance will initially focus
on the therapeutic area of fibrosis. 
Regulus and sanofi-aventis will collaborate on up to four microRNA
targets, including Regulus’ lead fibrosis program targeting microRNA-21.  sanofi-aventis also receives an option for a
broader technology alliance that provides Regulus certain rights to participate
in development and commercialization of resulting products.  If exercised, this three-year option is worth
an additional $50 million to Regulus.

 

microRNAs
are a new class of small non-coding RNAs that regulate gene expression by
interfering with translation or stability of target messenger RNA transcripts.  Endogenous microRNAs regulate the expression
of over one-third of all human genes, and the association of microRNA
dysfunction with disease phenotypes has given rise to an entirely new class of
pharmaceutically relevant targets.  In
preclinical studies, Regulus has demonstrated that modulating microRNAs can
effectively regulate disease pathways and produce therapeutically beneficial
effects.

 

“This
new partnership continues to illustrate sanofi-aventis’ commitment to develop
innovative therapies,” declared Marc Cluzel, M.D., Ph.D, Executive
Vice-President, Research & Development, sanofi-aventis. “microRNAs are
believed to be extremely important in human development and physiology.
Together with Regulus we will develop therapeutics which could potentially open
a new paradigm in the treatment of major diseases and could offer an attractive
new therapeutic approach for patients.”

 

“Regulus
is very pleased to form this landmark alliance with sanofi-aventis, a leading
visionary company developing important new medicines,” said Kleanthis
Xanthopoulos, Ph.D., President and Chief Executive Officer of Regulus. “The
significant support from sanofi-aventis

 

 

in
this new alliance will strengthen our efforts as we continue to build the
leading microRNA therapeutics company through our commitment to scientific
excellence and advancement of our pipeline of innovative new medicines.  Indeed, this landmark alliance will
significantly extend our capabilities and resources to lead the discovery and
development of microRNA therapeutics.”

 

Alnylam
Pharmaceuticals (Nasdaq: ALNY) and Isis Pharmaceuticals (Nasdaq: ISIS) formed
Regulus in 2007, with each company currently owning approximately 50% of the
preferred stock.

 

About
the Regulus and sanofi-aventis Collaboration

 

Regulus
and sanofi-aventis have entered into a strategic alliance on microRNA
therapeutics.  The alliance is initially
focused on the therapeutic area of fibrosis. 
Regulus has granted sanofi-aventis four worldwide, exclusive licenses to
discover, develop, and commercialize microRNA therapeutics, including Regulus’
leading fibrosis program targeting microRNA-21. 
Regulus receives from sanofi-aventis an upfront fee of $25 million, a
future equity investment of $10 million subject to mutual agreement on company
valuation, and annual research funding for three years with the option to
extend for two additional one-year periods. Regulus also could receive
preclinical milestones as well as development and sales milestones for
collaboration targets.  In addition, Regulus
is eligible to receive royalties on microRNA therapeutic products
commercialized by sanofi-aventis. 
sanofi-aventis will support 100% of the costs of clinical development
and commercialization of each program. 
In addition, Regulus has granted sanofi-aventis an option to enter into
a technology alliance worth up to $50 million that could provide sanofi-aventis
with access to Regulus’ microRNA platform and a limited number of product
licenses.  Assuming exercise of the
technology alliance option, Regulus has certain opt-in rights to participate in
the development and commercialization of future sanofi-aventis clinical
microRNA programs.  In addition, Regulus
is eligible to receive milestone payments and royalties on microRNA therapeutic
products developed and commercialized under the technology alliance option.

 

The
alliance is valued at potentially over $750 million in consideration of upfront
payments, equity investment, research funding, and potential preclinical,
clinical and commercial milestone payments for multiple products if all
products are successfully commercialized. Regulus will pay approximately $4
million of the initial funding to its licensors, the majority of which will be
to Isis and Alnylam. Isis and Alnylam could also receive additional payments
based on future success-based milestone payments earned during the alliance.

 

About
microRNAs

 

The
discovery of microRNA in humans is one of the most exciting scientific
breakthroughs in the last decade. microRNAs are small RNA molecules, typically
20 to 25 nucleotides in length that do not encode proteins but instead regulate
gene expression. Nearly 700 microRNAs have been identified in the human genome,
and more than one-third of all human genes are believed to be regulated by
microRNAs. As a single microRNA can regulate entire networks of genes, these
new molecules are considered the master regulators of the genome. microRNAs
have been shown to play an integral role in numerous biological processes 

 

 

including
the immune response, cell-cycle control, metabolism, viral replication, stem
cell differentiation and human development. Most microRNAs are conserved across
multiple species indicating the evolutionary importance of these molecules as
modulators of critical biological pathways. Indeed, microRNA expression or
function has been shown to be significantly altered in many disease states,
including cancer, heart failure and viral infections. Targeting microRNAs with
anti-miRs, antisense oligonucleotide inhibitors of microRNAs, or miR-mimics,
double-stranded oligonucleotides to replace microRNA function, opens the
possibility of a novel class of therapeutics and a unique approach to treating
disease by modulating entire biological pathways.  To learn more about microRNAs please
visit  http://www.regulusrx.com/microrna/microrna-explained.php.

 

About
Regulus Therapeutics Inc.

 

Regulus
Therapeutics is a biopharmaceutical company leading the discovery and
development of innovative new medicines based on microRNAs.  Regulus is targeting microRNAs as a new class
of therapeutics by working with a broad network of academic collaborators and
leveraging oligonucleotide drug discovery and development expertise from its
founding companies Alnylam Pharmaceuticals (Nasdaq:ALNY) and Isis
Pharmaceuticals (Nasdaq:ISIS). Regulus is advancing microRNA therapeutics
towards the clinic in several areas including hepatitis C infection,
cardiovascular disease, fibrosis, oncology, immuno-inflammatory diseases, and
metabolic diseases. Regulus’ intellectual property estate contains both the
fundamental and core patents in the field and includes over 600 patents and
more than 300 pending patent applications pertaining primarily to chemical
modifications of oligonucleotides targeting microRNAs for therapeutic
applications.  In 2008, Regulus entered
into a major alliance with GlaxoSmithKline to discover and develop microRNA
therapeutics for immuno-inflammatory diseases. In 2010, Regulus entered into a
new collaboration with GlaxoSmithKline to develop and commercialize microRNA therapeutics
targeting microRNA-122 for the treatment of Hepatitis C Viral infection. For
more information, visit http://www.regulusrx.com.

 

About
sanofi-aventis

 

Sanofi-aventis,
a leading global pharmaceutical company, discovers, develops and distributes therapeutic
solutions to improve the lives of everyone. 
Sanofi-aventis is listed in Paris (EURONEXT: SAN) and in New York (NYSE:
SNY). For more information, please visit: www.sanofi-aventis.com.

 

About
Alnylam Pharmaceuticals

 

Alnylam
is a biopharmaceutical company developing novel therapeutics based on RNA
interference, or RNAi.  The company is
applying its therapeutic expertise in RNAi to address significant medical
needs, many of which cannot effectively be addressed with small molecules or
antibodies, the current major classes of drugs. 
Alnylam is leading the translation of RNAi as a new class of innovative
medicines with peer-reviewed research efforts published in the world’s top
scientific journals including Nature, Nature Medicine, and Cell.  The company is leveraging these capabilities
to build a broad pipeline of RNAi therapeutics for the treatment of a wide
range of disease areas, including respiratory syncytial virus (RSV), liver
cancers, TTR-mediated amyloidosis (ATTR), hypercholesterolemia, and Huntington’s
disease.  In addition, Alnylam 

 

 

formed
Alnylam Biotherapeutics, a division of the company focused on the development
of RNAi technologies for application in manufacturing processes for
biotherapeutic products, including recombinant proteins and monoclonal
antibodies.  The company’s leadership
position in fundamental patents, technology, and know-how relating to RNAi has
enabled it to form major alliances with leading companies including Medtronic,
Novartis, Biogen Idec, Roche, Takeda, Kyowa Hakko Kirin, and Cubist.  Alnylam and Isis are joint owners of Regulus
Therapeutics Inc., a company focused on the discovery, development, and
commercialization of microRNA-based therapeutics.  Founded in 2002, Alnylam maintains
headquarters in Cambridge, Massachusetts. 
For more information, please visit www.alnylam.com.

 

About
Isis Pharmaceuticals, Inc.

 

Isis
is exploiting its expertise in RNA to discover and develop novel drugs for its
product pipeline and for its partners. The Company has successfully
commercialized the world’s first antisense drug and has 22 drugs in
development. Isis’ drug development programs are focused on treating
cardiovascular, metabolic, and severe neurodegenerative diseases and cancer.
Isis’ partners are developing antisense drugs invented by Isis to treat a wide
variety of diseases. Isis and Alnylam Pharmaceuticals are joint owners of
Regulus Therapeutics Inc., a company focused on the discovery, development and
commercialization of microRNA therapeutics. Isis also has made significant
innovations beyond human therapeutics resulting in products that other
companies, including Abbott, are commercializing. As an innovator in RNA-based
drug discovery and development, Isis is the owner or exclusive licensee of
over 1,600 issued patents worldwide. Additional information about Isis is
available at www.isispharm.com.

 

Forward-Looking
Statements

 

This
press release includes forward-looking statements regarding the future
therapeutic and commercial potential of Isis’, Alnylam’s and Regulus’ business
plans, technologies and intellectual property related to microRNA therapeutics
being discovered and developed by Regulus, including statements regarding
expectations around the newly formed alliance between Regulus and
sanofi-aventis, the therapeutic potential of targeting microRNA-21 and the
potential for future payments to Isis and Alnylam under this alliance.  Any statement describing Isis’, Alnylam’s or
Regulus’ goals, expectations, financial or other projections, intentions or
beliefs is a forward-looking statement and should be considered an at-risk
statement.  Such statements are subject
to certain risks and uncertainties, particularly those inherent in the process
of discovering, developing and commercializing drugs that are safe and effective
for use as human therapeutics, and in the endeavor of building a business
around such products.  Such parties’
forward-looking statements also involve assumptions that, if they never
materialize or prove correct, could cause their results to differ materially
from those expressed or implied by such forward-looking statements.  Although these forward-looking statements
reflect the good faith judgment of the management of each such party, these
statements are based only on facts and factors currently known by Isis, Alnylam
or Regulus, as the case may be.  As a
result, you are cautioned not to rely on these forward-looking statements.  These and other risks concerning Regulus’, Isis’,
and Alnylam’s programs are described in additional detail in each of Isis’ and
Alnylam’s annual report on Form 10-K for the year ended December 31,
2009 and their most recent quarterly report on Form 10-Q, which are on
file with the SEC.  Copies of these and
other documents are available from either Isis or Alnylam.

 

 

Appendix 7.3B

 

Sanofi Initial Press Release

 

Sanofi-Aventis
and Regulus Therapeutics Form Major Strategic Alliance on microRNA
Therapeutics

 

-
Collaboration starting with a specific lead in Fibrosis -

 

Paris,
France - June XX, 2010 - Sanofi-Aventis (EURONEXT: SAN and NYSE: SNY) and
Regulus Therapeutics Inc announced today that they have entered into a global
strategic alliance to discover, develop, and commercialize microRNA
therapeutics. The alliance will initially focus on the therapeutic area of
fibrosis.

 

MicroRNAs
(micro-RiboNucleic Acid) are a new class of small non-coding RNAs that regulate
gene expression by interfering with translation or stability of target
messenger RNA transcripts. Endogenous microRNAs regulate the expression of over
one-third of all human genes. The association of microRNA dysfunction with
disease phenotypes has given rise to an entirely new class of pharmaceutically
relevant targets.

 

Sanofi-aventis
and Regulus will collaborate on microRNA drug discovery and preclinical development
for up to four microRNA targets, including the lead fibrosis program targeting
microRNA-21. Sanofi-Aventis also received an option, which if exercised,
provides access to the technology to develop and commercialize other micro-RNA
based therapeutics, beyond the first four targets.

 

“Regulus
is very pleased to form this new major alliance with sanofi-aventis, a leading
visionary company developing important new medicines bringing value to
patients,” said Kleanthis G. Xanthopoulos, Ph.D., President and Chief Executive
Officer of Regulus. “The significant support from sanofi-aventis in this new
alliance will strengthen our efforts as we continue to build the leading
micro-RNA therapeutics company based on a commitment to scientific excellence
and advancement of a pipeline of innovative new medicines. Indeed, we are
confident that this new alliance will significantly extend our capabilities and
resources to lead the discovery and development of micro-RNA therapeutics.”

 

“This
new partnership continues to illustrate sanofi-aventis’ commitment to develop
innovative therapies”, declared Marc Cluzel, M.D., Ph.D, Executive
Vice-President, Research & Development, sanofi-aventis.

 

“Micro-RNAs
are believed to be extremely important in human development and physiology.
Together with Regulus we will develop therapeutics which could potentially open
a new paradigm in the treatment of major diseases and could offer an attractive
new therapeutic approach for patients”.

 

Regulus
will receive a $25 million upfront fee and a future $10 million equity
investment subject to mutual agreement on company valuation. The alliance could
be valued at over $750 million 

 

 

when
taking into account upfront payments, equity investment, research funding, and
potential near-term preclinical, clinical and commercial milestone payments for
multiple products.

 

Regulus
was formed in 2007 and is jointly owned by Alnylam Pharmaceuticals (Nasdaq:
ALNY) and Isis Pharmaceuticals (Nasdaq: ISIS).

 

About
microRNAs

 

The
discovery of microRNA in humans is one of the most exciting scientific
breakthroughs in the last decade. MicroRNAs are small RNA molecules, typically
20 to 25 nucleotides in length, that do not encode proteins but instead
regulate gene expression. Nearly 700 microRNAs have been identified in the
human genome, and more than one-third of all human genes are believed to be
regulated by microRNAs. As a single microRNA can regulate entire networks of
genes, these new molecules are considered the master regulators of the genome.
MicroRNAs have been shown to play an integral role in numerous biological
processes including the immune response, cell-cycle control, metabolism, viral
replication, stem cell differentiation and human development. Most microRNAs
are conserved across multiple species indicating the evolutionary importance of
these molecules as modulators of critical biological pathways. Indeed, microRNA
expression or function has been shown to be significantly altered in many
disease states, including cancer, heart failure and viral infections. Targeting
microRNAs with anti-miRs, antisense oligonucleotide inhibitors of microRNAs, or
miR-mimics, double-stranded oligonucleotides to replace microRNA function,
opens the possibility of a novel class of therapeutics and a unique approach to
treating disease by modulating entire biological pathways. To learn more about
microRNAs please visit http://www.regulusrx.com/microrna/microrna-explained.php

 

About
Regulus Therapeutics Inc.

 

Regulus
Therapeutics is a biopharmaceutical company leading the discovery and
development of innovative new medicines based on microRNAs. Regulus is
targeting microRNAs as a new class of therapeutics by working with a broad
network of academic collaborators and leveraging oligonucleotide drug discovery
and development expertise from its founding companies Alnylam Pharmaceuticals
(Nasdaq:ALNY) and Isis Pharmaceuticals (Nasdaq:ISIS). Regulus is advancing
microRNA therapeutics towards the clinic in several areas including hepatitis C
infection, cardiovascular disease, fibrosis, oncology, immuno-inflammatory
diseases, and metabolic diseases. Regulus’ intellectual property estate
contains both the fundamental and core patents in the field and includes over
600 patents and more than 300 pending patent applications pertaining primarily
to chemical modifications of oligonucleotides targeting microRNAs for
therapeutic applications. For more information, visit http://www.regulusrx.com.

 

About
sanofi-aventis

 

Sanofi-aventis,
a leading global pharmaceutical company, discovers, develops and distributes
therapeutic solutions to improve the lives of everyone. Sanofi-aventis is
listed in Paris (EURONEXT: SAN) and in New York (NYSE: SNY). For more
information, please visit: www.sanofi-aventis.com.

 

 

Forward-Looking
Statement

 

This
press release contains forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995, as amended. Forward-looking
statements are statements that are not historical facts. These statements
include projections and estimates and their underlying assumptions, statements
regarding plans, objectives, intentions and expectations with respect to future
financial results, events, operations, services, product development and
potential and statements regarding future performance. Forward-looking
statements are generally identified by the words “expects,” “anticipates,” “believes,”
“intends,” “estimates,” “plans” and similar expressions. Although
sanofi-aventis’ management believes that the expectations reflected in such
forward-looking statements are reasonable, investors are cautioned that
forward-looking information and statements are subject to various risks and
uncertainties, many of which are difficult to predict and generally beyond the
control of sanofi-aventis, that could cause actual results and developments to
differ materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties
include among other things, the uncertainties inherent in research and
development, future clinical data and analysis, including post marketing,
decisions by regulatory authorities, such as the FDA or the EMA, regarding
whether and when to approve any drug, device or biological application that may
be filed for any such product candidates as well as their decisions regarding
labelling and other matters that could affect the availability or commercial
potential of such products candidates, the absence of guarantee that the
products candidates if approved will be commercially successful, the future
approval and commercial success of therapeutic alternatives, the Group’s
ability to benefit from external growth opportunities as well as those
discussed or identified in the public filings with the SEC and the AMF made by
sanofi-aventis, including those listed under “Risk Factors” and “Cautionary
Statement Regarding Forward-Looking Statements” in sanofi-aventis’ annual
report on Form 20-F for the year ended December 31, 2009. Other than
as required by applicable law, sanofi-aventis does not undertake any obligation
to update or revise any forward-looking information or statements.

 

 

APPENDIX 9

 

Regulus Detailed Allocation of Upfront Payments

 

[***]Exhibit 10.2

 

EXECUTION COPY

 

CONFIDENTIAL
TREATMENT REQUESTED UNDER 17 C.F.R. §§ 200.80(B)4, AND 240.24B-2

 

 

NON-EXCLUSIVE TECHNOLOGY ALLIANCE

AND OPTION AGREEMENT

 

between

 

REGULUS THERAPEUTICS INC.

 

and

 

SANOFI-AVENTIS

 

 

 

 

NON-EXCLUSIVE TECHNOLOGY ALLIANCE AND OPTION AGREEMENT

 

THIS NON-EXCLUSIVE TECHNOLOGY ALLIANCE AND OPTION AGREEMENT (the “Agreement”) is made
and entered into this June 17, 2010 (the “Effective Date”), by and between SANOFI-AVENTIS, a French Corporation (“Sanofi”) having a
place of business at 174 avenue de France, 75013, Paris, France and
registered in the Paris Trade and Company Register under no. 395 030 844, and REGULUS THERAPEUTICS INC., a Delaware
Corporation (“Regulus”)
having a place of business at 1896 Rutherford Road, Carlsbad, California
92008.  Sanofi and Regulus each may be
referred to herein individually as a “Party,” or collectively as the “Parties.”

 

WHEREAS, Regulus possesses certain patent rights,
know-how and technology with respect to therapeutic microRNA Compounds;

 

WHEREAS, the Parties concurrently entered into a
Collaboration and License Agreement of even date herewith (the “Collaboration Agreement”);

 

WHEREAS, Sanofi desires to obtain from Regulus an
option to obtain (i) a nonexclusive license to conduct Research on
microRNA Compounds, including a technology sharing from Regulus; and
(ii) an exclusive license to Develop and Commercialize a limited number of
microRNA Compounds as Option Products; and

 

WHEREAS, Regulus desires to grant Sanofi such
options, and if Sanofi exercises such options, to perform such technology
sharing and grant Sanofi such licenses.

 

NOW, THEREFORE, in consideration of the
foregoing and the mutual covenants herein contained, the Parties do hereby
agree as follows.

 

ARTICLE 1

 

DEFINITIONS

 

The
terms used in this Agreement with initial letters capitalized, whether used in
the singular or the plural, will have the meaning set forth in Appendix 1, or if not listed in Appendix 1, the meaning designated in
places throughout the Agreement.

 

ARTICLE 2

 

RESEARCH
OPTION AND TECHNOLOGY ALLIANCE

 

2.1          Research
Option.  Subject to the terms and
conditions of this Agreement, Regulus hereby grants to Sanofi the nonexclusive,
nontransferable right, exercisable in accordance with this ARTICLE 2, to
obtain the nonexclusive license set forth in Section 2.3 below under the
terms and conditions set forth in this Agreement (the “Research Option”).

 

2.2          Research
Option Exercise.  Subject to the
one-time extension described in the last sentence of this Section 2.2, Sanofi
may exercise the Research Option  at
any time prior to

 

1

 

5:00 PM Pacific time on the 30th day following the expiration of the third
anniversary of the Effective Date (as may be adjusted per the one-time,
one-year extension, the “Research
Option Deadline”), by (i) providing Regulus a written
notice that Sanofi is exercising the Research Option prior to the Research
Option Deadline; and (ii) paying Regulus the first installment of the
option exercise payment set forth in Section 5.1 below.  If Sanofi does not provide Regulus a written
notice that Sanofi is exercising the Research Option on or before the Research
Option Deadline, then the Research Option will automatically expire and become
null and void.  Sanofi may extend the
Research Option Deadline for [***], by providing Regulus a written notice
thereof and paying Regulus an irrevocable, non-creditable and nonrefundable
payment of $[***] for such [***] extension, such notice must be made prior to
the original Research Option Deadline, and such payment must be made no later
than 10 Business Days after such notice is given.  If Sanofi intends to exercise the Research
Option, it will so notify Regulus in a non-binding written notice and Regulus
will have [***] Business Days from its receipt of such notice (the “Bring Down Period”)
to deliver a schedule of exceptions (the “Disclosure Schedule”) qualifying the
representations and warranties (collectively, the “Bring Down Warranties”) Regulus
previously made in Sections 10.1 and 10.2 of this Agreement; provided, however that if the Research
Option Deadline would occur during the Bring Down Period and Regulus has not
delivered to Sanofi the Disclosure Schedule prior to the Research Option
Deadline, then the Research Option Deadline will automatically be extended to
the next Business Day immediately following the expiration of the Bring Down
Period.  Notwithstanding anything to the
contrary, if following the expiration of the Bring Down Period, Sanofi
exercises its Research Option, then Regulus will be deemed to reissue, as of
the end of the Bring Down Period and as qualified by the Disclosure Schedule,
the Bring Down Warranties.

 

2.3          Research
License.  Effective
solely upon exercise (if any) of the Research Option in accordance with
Section 2.2 above (the date of such exercise, the “Research Option Exercise Date”),
and subject to the terms and conditions of this Agreement, Regulus hereby
grants to Sanofi a worldwide, royalty-free, nonexclusive license (with the
right to grant sublicenses solely to Affiliates of Sanofi) under the Regulus
Platform Technology solely to Research microRNA Compounds.  The license granted under this
Section 2.3 will be referred to as the “Research License.”  For clarity, the Research License does not
include the right to Develop or Commercialize microRNA Compounds, and Sanofi
covenants that it will not use any Regulus Platform Technology to Develop or
Commercialize microRNA Compounds except as expressly permitted by the
Collaboration Agreement or in accordance with Commercial Licenses granted
pursuant to this Agreement.

 

2.4          Technology
Alliance.  Commencing
on the Research Option Exercise Date, Regulus and Sanofi will conduct a
technology sharing program (the “Technology Sharing Program”) as follows:

 

2.4.1       the Technology Sharing
Program will begin on the Research Option Exercise Date and continue until the
[***] anniversary of the Research Option Exercise Date (such period, the “Technology Sharing Period”);
provided, however that if Regulus does
not achieve the technology sharing milestones contemplated by clauses (ii) and
(iii) of Section 5.1.1 or clause (ii) of
Section 5.1.2, as applicable, before sixty (60) days prior to the
scheduled end of the Technology Sharing Period, then the Technology Sharing
Period shall be automatically extended for additional [***] periods until the
earlier of (a) the date all such technology sharing

 

2

 

milestones have been achieved; and (b) the
[***] anniversary of the Research Option Exercise Date.

 

2.4.2       on a periodic basis as
agreed by the Parties, and promptly following Sanofi’s reasonable request from
time to time, Regulus will deliver to Sanofi, for no additional consideration,
all relevant Regulus Platform Technology (including Regulus Tangible Materials)
that exists in recorded form (or copies thereof) and is necessary or useful for
Sanofi to exercise its rights under the Research License;

 

2.4.3       at Sanofi’s reasonable
request, Regulus will collaborate with Sanofi to ensure that Sanofi can
optimize Option Compounds for the Option Targets; and

 

2.4.4       Regulus will make its
relevant scientific and technical personnel (including, but not limited to
personnel from Regulus’ bioinformatics, chemistry, oligonucleotide design,
biology, toxicology and pharmacokinetics groups) reasonably available to Sanofi
as reasonably necessary to implement the Technology Sharing Plan, and to answer
any questions or provide instruction (which may include hands-on training) as
reasonably requested by Sanofi concerning the items delivered pursuant to
Section 2.4.2, in connection with Sanofi’s Research of microRNA Compounds
under the Research License.

 

2.5          Technology
Sharing Plan.

 

2.5.1       Before
Research Option Deadline.  No later than [***] [***]
prior to the Research Option Deadline, Regulus will deliver to Sanofi
(i) a schedule disclosing the material terms of the Regulus Existing
In-Licenses and Regulus Future In-Licenses in effect as of the date of such
schedule (including any potential milestone, royalty or similar payments
related to Option Compounds or Option Products under such Regulus Existing
In-Licenses and Regulus Future In-Licenses) (an “In-License Summary”); and (ii) a
preliminary Technology Sharing Plan (consistent with the requirements of
Section 2.5.2).  In addition, at any
time prior to the Research Option Exercise Deadline, if Sanofi is considering
an exercise of the Research Option, Regulus and Sanofi will reasonably
cooperate to draft a preliminary Technology Sharing Plan (consistent with the
requirements of Section 2.5.2) and In-License Summary in advance of Sanofi’s
exercise of its Research Option, such right to be exercised no more than [***]
in any [***]-month period.

 

2.5.2       After
Research Option Exercise Date.  The Parties contemplate that the bulk of the
Technology Sharing Program will occur in the first [***].  Within forty-five (45) days after the
Research Option Exercise Date, the Parties will update the latest technology sharing
plan provided to Sanofi under Section 2.5.1, subject to mutual agreement
by the Parties (the “Technology
Sharing Plan”). The Technology Sharing Plan will:
(i) specify goals and time lines for the achievement of the technology
sharing under Section 2.4; (ii) identify specific technology to be
shared; (iii) specify criteria for successful achievement of the
technology sharing; and (iv) assign obligations to each Party with respect
to technology sharing and technical assistance. 
The Technology Sharing Plan may be amended from time to time through
written amendments unanimously approved by both Parties’ JTSC representatives.

 

3

 

2.6          Technology
Sharing Committee.  No later
than thirty (30) days after the Research Option Exercise Date, the Parties will
establish a Joint Technology Sharing Committee (the “JTSC”) that will,
during the Technology Sharing Period, oversee the activities of the Parties
under the Technology Sharing Plan and facilitate the sharing of technology (and
information related thereto) from Regulus to Sanofi.  The JTSC will dissolve at the end of the
Technology Sharing Period.

 

2.6.1       The JTSC will be composed of
two (2) representatives designated by Regulus and two (2) representatives
designated by Sanofi, provided
that the Parties will appoint additional representatives as appropriate with
respect to subject area-specific subteams. Each Party’s JTSC representatives
will be of the seniority and experience appropriate for service on the JTSC in
light of the functions, responsibilities and authority of the JTSC.  Sanofi will select from its representatives a
chairperson for the JTSC. Each Party may replace any or all of its
representatives on the JTSC with individual(s) of appropriate experience
and seniority at any time upon written notice to the other Party.  The JTSC chairperson will call a meeting of
the JTSC as required by this Agreement or promptly upon the written request of
either Party.

 

2.6.2       The JTSC will meet in person
or hold video conferences once per Calendar Quarter basis until the end of the
Technology Sharing Period; provided,
that two (2) such meetings will occur in person and two (2) such
meetings will occur by video conference. Meetings of the JTSC in person will
alternate between the offices of Regulus and Sanofi, or such other place as the
Parties may agree, with the first such meeting for the JTSC being at Regulus’
offices. The members of the JTSC also may convene or be polled or consulted
from time to time by means of telecommunications, video conferences, electronic
mail or correspondence, as deemed necessary or appropriate.

 

2.6.3       The JTSC will perform the
following functions: (1) managing and overseeing the performance of the
Technology Sharing Plan, (2) providing updates to the Parties regarding
the Technology Sharing Plan, (3) reviewing and approving any updates,
amendments or modifications to the Technology Sharing Plan, (4) developing
and adopting remediation plan(s) specifically designed to address any
incomplete sharing of Regulus Platform Technology, including amendments to the
Technology Sharing Plan with respect to the achievement of the applicable
timelines set forth therein, (5) providing an initial forum for resolving
disputes arising under the Technology Sharing Plan, and (6) such other
responsibilities as may be assigned to the JTSC pursuant to this Agreement or
as may be mutually agreed upon by the Parties from time to time.  For purposes of clarity, the JTSC will not
have the authority to modify the terms of this Agreement or to take any action
inconsistent with the terms of this Agreement.

 

2.7          End of Technology Sharing Period.  Upon the expiration of the Technology Sharing
Period, Regulus will not be obligated to continue to perform work under the
Technology Sharing Plan.

 

4

 

ARTICLE 3

 

LIMITED
OPTION TO OBTAIN COMMERCIAL LICENSE

 

3.1          Option
Targets.

 

3.1.1       Designating Option
Targets.  At any time after the Research
Option Exercise Date through the [***] anniversary of the Effective Date,
Sanofi may designate a new microRNA with respect to which Sanofi would like a
Commercial License (any such microRNA to which a Commercial License is granted,
an “Option Target”) by providing
Regulus with a written notice (the “Request Notice”)
of the microRNA it wishes to designate as an Option Target (the “Proposed Target”); provided, however, there can be no more than [***] Option
Targets at any time.  The Request Notice
will include the microRNA name and the miRBase Accession Number and specify
whether Sanofi wants to pursue such microRNA with a microRNA Antagonist or a
microRNA Mimic.  Within 15 Business Days
of receipt of the Request Notice, Regulus will give Sanofi written notice
(i) stating if any of the criteria set forth in clauses (a) through (e) below
applied to such Proposed Target at the time of Regulus’ receipt of the Request
Notice (or otherwise confirming that such Proposed Target is available); and
(ii) only if none of clauses (a) through (e) below applied to
such Proposed Target at the time of Regulus’ receipt of the Request Notice,
disclosing all relevant Regulus In-License Agreements and prior Third Party
Agreements and other potential encumbrances known by Regulus and related to the
Proposed Target (“Target Encumbrances”).  If, at such time, the Proposed Target is
(a) subject to a [***]; (b) subject to [***] (and not merely an
[***]) granted by Regulus to a Third Party that explicitly identifies such
Proposed Target by name and prohibits Regulus from collaborating with Sanofi
under this Agreement or from granting a license under Section 3.5 with
respect to the Proposed Target, (c) subject to [***] has [***];
(d) identified by name and the subject of a bona fide
[***] Regulus has [***] a Third Party [***] (except
where Regulus has not [***] following Regulus’ [***]) under [***] such Third
Party either a Regulus Collaborator Exclusive Option with respect to microRNA
Compounds directed to such Proposed Target, or an exclusive license to Develop
and Commercialize microRNA Compounds directed to such Proposed Target, or
(e) the subject of the Collaboration Agreement, then, and only then, in
each case, the Proposed Target will be rejected and will not become an Option
Target.  If the Proposed Target is
rejected, Sanofi can request another microRNA in accordance with the terms of
this Section 3.1.1.  If the Proposed
Target is not rejected, the Proposed Target will become an Option Target; provided, however, that if the Proposed Target has any
Target Encumbrances (and Regulus has disclosed such Target Encumbrances to Sanofi),
before such Proposed Target can become an Option Target, Sanofi must agree in
writing (within 30 days of receiving from Regulus the description of such
Target Encumbrances) to assume all applicable Target Encumbrances for such
Proposed Target.

 

3.1.2       Confidentiality.  The fact that Sanofi has designated a
particular microRNA an Option Target is Confidential Information of
Sanofi.  The fact that Regulus has
rejected a particular microRNA under Section 3.1.1 and any information
disclosed under an Inquiry Notice is Confidential Information of Regulus.

 

3.2          Commercialization
Options.  Subject to the terms and
conditions of this Agreement, on an Option Target-by-Option Target basis, effective solely upon the Research

 

5

 

Option Exercise Date,  Regulus hereby grants to Sanofi the nonexclusive,
nontransferable right, exercisable in accordance with this ARTICLE 3, to
obtain the exclusive licenses set forth in Section 3.5 below under the
terms and conditions set forth in this Agreement (each a “Commercial Option”).  For clarity, until Regulus grants Sanofi a
Commercial License with respect to a particular Option Target, Regulus may
collaborate with a Third Party (including granting a license) with respect to
such Option Target, and any Commercial License Regulus later grants to Sanofi
with respect to such Option Target will be subject to any rights Regulus
granted to such Third Party prior to Sanofi’s exercise of the applicable
Commercial Option.  If after the Research
Option Exercise Date, Sanofi reasonably believes that [***] under either the
[***] or [***] fall within the definition of Regulus Platform Technology
Patents and cover a Option Product being developed by Sanofi, Regulus and
Sanofi will negotiate in good faith and use commercially reasonable efforts to
[***] under the specific [***] that cover the Option Product solely to
Research, Develop, make, have made, use, gain Approval, Commercialize, sell,
offer for sale, have sold, export and import the applicable Option Compounds
and Option Products.

 

3.3          Commercial
Option Exercise.  Sanofi shall be
deemed to have exercised its Commercial Option with respect to any Option
Target and any related Option Products when the microRNA under any Request
Notice becomes an Option Target pursuant to Section 3.1.1.  If Sanofi does not exercise its Commercial
Option for a microRNA Antagonist or a microRNA Mimic before the [***]
anniversary of the Effective Date (the “Commercial Option
Deadline”), then such Commercial Option will automatically
expire and become null and void.

 

3.4          Filing of
INDs.  At any time, and from time
to time, during the IP Period, Sanofi shall have the right to file up to a
total of [***] INDs for Option Compounds (each, an “Option IND”) that is
either a microRNA Antagonist that inhibits an Option Target, or is a microRNA
Mimic that mimics Option Targets.  Any
product which contains an Option Compound that is the subject of an Option IND
shall herein be referred to as an “Option Product”.

 

3.5          Commercial
License.  Effective
solely upon exercise of the Commercial Option in accordance with
Section 3.3 above, and subject to the terms and conditions of this
Agreement Regulus will grant to Sanofi a worldwide, royalty-bearing, exclusive
license, with the right to grant sublicenses as set forth in Section 3.7
below, under the Regulus Platform Technology to Research, Develop, make, have
made, use, gain Approval, Commercialize, sell, offer for sale, have sold,
export and import Option Compounds and Option Products. Each license granted
under this Section 3.5 will be referred to as a “Commercial License.”

 

3.6          Term of the
Commercial Licenses.  Except as set
forth in the immediately following sentence, each Commercial License shall
automatically expire on the [***] anniversary of the Effective Date.  Solely to the extent necessary to Develop and
Commercialize Option Products, each Commercial License or portion thereof,
shall survive beyond the [***] anniversary of the Effective Date and continue
unless and until otherwise terminated pursuant to ARTICLE 8.

 

3.7          Sublicenses.  The licenses granted to
Sanofi under Section 3.5 are fully sublicensable to any Affiliate of
Sanofi, and only sublicensable to a Third Party in connection with a sublicense
of an Option Compound or Option Product for the continued Research,

 

6

 

Development and Commercialization of such Option
Compound or Option Product in accordance with the terms of this Agreement.  If Sanofi sublicenses any Commercial License
to a Third Party, then Sanofi shall pay Regulus a non-refundable royalty of
[***] of any Sanofi Licensing Revenues received by Sanofi from any Third
Party.  For purposes of this Agreement, “Sanofi Licensing Revenues”
will mean any payments that Sanofi receives from a Third Party in consideration
of a license (or sublicense) to further the Development and Commercialization
of an Option Compound or Option Product, in each case including, but not
limited to, upfront payments, license fees, regulatory or sales milestone
payments, royalties and/or profit sharing payments, but excluding: (i) payments made in
consideration of Sanofi’s equity or debt securities (except to the extent such
payments exceed the fair market value of such securities upon date of receipt),
(ii) payments to reimburse Sanofi for the out-of-pocket costs and expenses
of research and development, and (iii) payments to reimburse Sanofi for
patent prosecution costs and expenses.

 

3.8          Exclusivity
Covenants.

 

3.8.1       Regulus
Exclusivity Covenant.  On an Option
Target-by-Option Target basis, so long as the applicable Commercial License
granted to Sanofi under Section 3.5 is in effect, Regulus agrees that it
will not practice the Regulus Platform Technology or inventions claimed within
Sanofi Blocking Patents to work independently of this Agreement for itself or
any Third Party (including the grant of any license to any Third Party under
the Regulus Platform Technology or Sanofi Blocking Patents) to discover,
Research, Develop and/or Commercialize (i) with respect to Option Targets
that are the subject of a Commercial License under Section 3.5 where the
applicable Option Product contains a microRNA Antagonist, microRNA Compounds
that [***] such Option Target; and (ii) with respect to Option Targets
that are the subject of a Commercial License under Section 3.5 where the
applicable Option Product contains a microRNA Mimic, microRNA Compounds with a
[***] as the applicable Option Target that are [***] such Option Target.  Notwithstanding any other provision of this
Agreement, Regulus retains the right to grant Permitted Licenses.

 

3.8.2       Sanofi
Exclusivity Covenant.  On a Regulus
Target-by-Regulus Target basis, during the Technology Sharing Period and
thereafter during the Term, Sanofi agrees that it will not practice the Regulus
Platform Technology, Regulus Collaborator Blocking Technology or inventions
claimed within Sanofi Blocking Patents or to work independently of this
Agreement for itself or any Third Party (including the grant of any license to
any Third Party under the Regulus Platform Technology, Regulus Collaborator
Blocking Technology or Sanofi Blocking Patents) to discover, Research, Develop
and/or Commercialize (i) with respect to Regulus Targets where the
applicable Regulus Product contains a microRNA Antagonist, microRNA Compounds
that [***] such Regulus Target; and (ii) with respect to Regulus Targets
where the applicable Regulus Product contains a microRNA Mimic, microRNA
Compounds with a [***] as the applicable Regulus Target that are [***] such
Regulus Target.  For purposes of this
Agreement, “Regulus
Product” means any product that contains a microRNA Compound as
an active pharmaceutical ingredient, that Regulus is Developing and/or
Commercializing pursuant to [***] (whether on its own or in collaboration with
or under a license with a Third Party). 
For purposes of this Agreement, “Regulus Target” means (i) with respect
to a Regulus Product that is a microRNA Antagonist, the microRNA that is
inhibited by such Regulus

 

7

 

Product; or (ii) with respect to a Regulus
Product that is a microRNA Mimic, the microRNA that is mimicked by such Regulus
Product.

 

ARTICLE 4

 

LIMITATIONS
ON LICENSES

 

4.1          License Conditions; Limitations.

 

4.1.1       Sanofi will use Commercially
Reasonable Efforts to Develop and Commercialize the applicable Option Compound
and Option Product.

 

4.1.2       The Research License is
subject to and limited by the Prior Third Party Agreements as listed in Appendix 5 attached hereto.  From time to time, on or before the Research
Option Deadline, Regulus shall be free to enter into license and/or
collaboration agreements with Third Parties with respect to Regulus Platform
Technology on a product-by-product or target-by-target basis; provided, however, that Regulus shall not grant to any Third
Party any [***] (such as [***]) with respect to Regulus Platform Technology,
unless either (a) such [***] on or before the Research Option Deadline, or
(b) the Research License, each Commercial License, and subject to Section 3.1.1,
Sanofi’s right to obtain Commercial Licenses are excluded from Regulus’
[***].  From time to time, on or before
the Research Option Deadline, Regulus may update Appendix 5
to include any license and/or collaboration agreement entered into by Regulus
and any Third Party as permitted by this Section 4.1.2, by providing
written notice to Sanofi.

 

4.1.3       Each Commercial License and
the exclusivity covenants under Section 3.8.1 are subject to and limited
by the Prior Third Party Agreements listed in Appendix 6
attached hereto.  From time to time
during the Term, Regulus shall be free to enter into license and/or
collaboration agreements with Third Parties with respect to Regulus Platform
Technology on a product-by-product or target-by-target basis; provided, however, that Regulus shall not grant to any Third
Party any [***] (such as [***]) with respect to Regulus Platform Technology,
unless either (a) such [***] on or before the Research Option Deadline, or
(b) the Research License, each Commercial License, and subject to Section 3.1.1,
Sanofi’s right to obtain Commercial Licenses are excluded from Regulus’
[***].  From time to time on or before
the Commercial Option Deadline, Regulus may update Appendix 6
to include any license and/or collaboration agreement entered into by Regulus
and any Third Party as permitted by this Section 4.1.3 by providing
written notice to Sanofi.

 

4.1.4       Without limiting this
Article 4, Regulus’ ability to grant Sanofi the Research License or any
Commercial License with respect to [***] is limited by, and subject to, the
terms of the Founding Company License Agreement solely to the extent Regulus
has, prior to the Effective Date, provided Sanofi the provisions of such
agreements in unredacted form.  Regulus
will use commercially reasonable efforts (and will exercise its rights under
the Founding Company License Agreement) to secure the right to grant Sanofi the
Research License or any Commercial License with respect to Option Compounds
that are [***] to the fullest extent contemplated by this Agreement.

 

8

 

4.1.5       Notwithstanding
Section 3.5 and Section 3.8.1, Regulus retains the right to grant
Permitted Licenses.

 

4.1.6       Certain of the Regulus
Platform Technology that may be licensed to Sanofi under Section 2.3 or
3.5 will have been in-licensed or acquired by Regulus under the Regulus Future
In-License Agreements (such Regulus Platform Technology, the “Regulus Future In-Licensed
Technology”), and certain milestone and/or royalty payments may
become payable by Regulus to such Third Parties under such license or purchase
agreements based on the Research, Development and/or Commercialization of an
Option Compound and/or Option Product by Sanofi under this Agreement.  The Parties acknowledge that whether a
milestone and/or royalty payment becomes payable by Regulus to such Third Party
licensor depends on the terms and conditions of the Regulus Future In-License
Agreement.  If Sanofi wishes to include
any Regulus Future In-Licensed Technology as part of the licenses granted by
Regulus under Section 2.3 or 3.5, Sanofi will notify Regulus of its desire
to do so and the Parties will [***] upfront payments or ongoing payment
obligations [***] and [***] that are [***] and other Regulus licensees, if
appropriate.  As part of this [***],
Regulus will share with Sanofi, in reasonable detail, the [***] Regulus used to
[***].  [***] does not [***]to Option
Compound and Option Products, and to be responsible for the [***] of any [***]
to Option Compound and Option Products, then the applicable Regulus Future
In-licensed Patents will [***].

 

4.1.7       After the Effective Date,
Regulus will not enter into any Regulus Future In-License Agreements that
(i) treat Sanofi differently than Regulus’ other partners who are
Developing and Commercializing microRNA compounds under license from, or in
collaboration with, Regulus; or (ii) contain obligations that would have a
material adverse effect on Option Compounds or Option Products and that are [***]
that are in effect on the Effective Date.

 

ARTICLE 5

 

FINANCIAL
PROVISIONS.

 

5.1          Research
Option Exercise.  In partial
consideration for the licenses and other rights granted under this Agreement,
as a condition to exercise of the Research Option, Sanofi will pay Regulus an
irrevocable, non-creditable and nonrefundable option exercise fee as follows:

 

5.1.1       If Sanofi exercises the
Research Option before 5:00 PM Pacific time on the 30th day following the expiration of the third
anniversary of the Effective Date, the option exercise fee will be $[***],
which will be payable in installments as follows: (i) $[***] of such fee
is payable within ten Business Days following the Research Option Exercise
Date; (ii) subject to the successful achievement of the relevant technology
sharing milestones as set forth in the Technology Sharing Plan, $[***] of such
fee is payable within ten (10) Business Days of the first anniversary of
the Research Option Exercise Date; and (iii) subject to the successful
achievement of the relevant technology sharing milestones as set forth in the
Technology Sharing Plan, the remaining $[***] of such fee is payable within ten
(10) Business Days of the second anniversary of the Research Option
Exercise Date; or

 

9

 

5.1.2       If, in compliance with 2.2,
Sanofi exercises the Research Option after 5:00 PM Pacific time on the 30th day following the expiration of the third
anniversary of the Effective Date, the option exercise fee will be $[***],
which will be payable in installments as follows: (i) $[***] of such fee
is payable within ten Business Days following the Research Option Exercise
Date; and (ii) subject to the successful achievement of the relevant
technology sharing milestones as set forth in the Technology Sharing Plan,
$[***] of such fee is payable within ten (10) Business Days of the first
anniversary of the Research Option Exercise Date.

 

5.2          Royalties.  Subject to the other provisions of this
Agreement, Sanofi will pay to Regulus a royalty of [***]% (as adjusted per
Section 5.3, the “Royalty
Rate”) on Net Sales of each Option Product during the applicable
Royalty Term.  Royalties payable under
this Section 5.2 will be payable for each Option Product on an Option
Product-by-Option Product and country-by-country basis until the date that is
the [***] of (i) [***] years after the First Commercial Sale of the Option
Product in such country or (ii) the expiration of the last to expire Valid
Claim within the Regulus Platform Technology Patents which would be infringed
by the sale of the applicable Option Product in the applicable country by an
unauthorized party.  In addition, to the
extent Sanofi has [***] (collectively, the “[***]”), Sanofi will pay Regulus such
financial obligations in addition to the royalties set forth in this
Section 5.2.  Such period during
which royalties are payable with respect to an Option Product in a country,
including giving effect to any cessation due to Generic Products as described
in Section 5.3, is referred to herein as the “Royalty Term” for
such Option Product in such country; provided
however that Sanofi will be required to pay any Sanofi Supported
Obligations to the extent such Sanofi Supported Obligations extend past the
Royalty Term.  Regulus will be solely
responsible for [***]% of any payments due under the Regulus Existing
In-Licenses in relation to the Development and Commercialization of Option
Products by Sanofi under this Agreement.

 

5.3          Generic
Competition.  Notwithstanding
anything to the contrary, if a Generic Product corresponding to an Option
Product is launched in a particular country and the Percentage Reduction of Net
Sales is greater than [***] for any given Calendar Quarter, then the Royalty
Rate will be reduced to [***].  As used
herein, the “Percentage
Reduction of Net Sales” for any particular Calendar Quarter
means the quotient (expressed as a percentage) obtained by dividing
(A) the difference obtained by subtracting [***] such applicable Calendar
Quarter from the [***] by (B) the [***]. 
Notwithstanding the foregoing, to the extent that, after the [***] to
the extent so [***].

 

5.4          [***]
Milestone.  On an  Option Product-by-Option Product basis,
Sanofi will give Regulus written notice within thirty (30) days of
receiving the [***].  After receiving
such written notice Regulus shall submit an invoice to Sanofi for $[***], and
Sanofi will pay Regulus such amount within ten (10) Business Days after
receipt of such invoice from Regulus. 
For each Option Product such $[***] milestone payment by Sanofi to
Regulus will only be triggered by the first [***] by Sanofi, its sublicensees
or their respective Affiliates by each Option Product.

 

5.5          Royalty
Report and Payment.  During the
Royalty Term following the First Commercial Sale of any Option Product, within
[***] after the end of each Calendar Quarter, 

 

10

 

Sanofi will provide Regulus with a royalty report
for such Quarter showing, on an Option Product-by-Option Product and
country-by-country basis:

 

(a)                   the Net Sales of
Option Products sold by Sanofi, its sublicensees and their respective
Affiliates during such Calendar Quarter reporting period;

 

(b)                   the royalties
which will have accrued hereunder with respect to such Net Sales;

 

(c)                   any adjustment
for Generic Products under Section 5.3; and

 

(d)                   any other
information related to the calculation of Net Sales of Option Products
reasonably requested by Regulus that (i) is contained in a report and
format that is regularly generated by Sanofi’s accounting department in its normal
course of business and (ii) is reasonably necessary for Regulus to comply
with a Regulus Existing In-License Agreement or Regulus Future In-License
Agreement.

 

Sanofi
will keep, and will require its sublicensees and their respective Affiliates to
keep, complete, true and accurate books of account and records for the purpose
of determining the payments to be made under this Agreement.  Upon reasonable request by Regulus (but no
more frequently than [***] in any [***]-month period), Sanofi will report to
Regulus the quantity of Option Product not subject to royalties distributed by
Sanofi, its Affiliates or sublicensees as part of an expanded access program to
include compassionate use, named patients or other similar use or as part of
Phase 4 Trials or as bona fide samples. 
All information disclosed by Sanofi to Regulus under this
Section 5.5 will be Sanofi Confidential Information.

 

5.6          Manner of
Payment and Exchange Rate.  Except as otherwise provided in this
Agreement, Regulus shall invoice Sanofi for all milestone, royalty and other
payments hereunder and Sanofi shall pay all such milestone, royalty and other
payments that are due within ten (10) Business Days after the receipt of
the applicable invoice.  All payments to
be made by Sanofi to Regulus hereunder will be made by deposit of U.S. Dollars
by wire transfer in immediately available funds in the requisite amount to such
bank account Regulus may from time to time designate by notice to Sanofi.  For sales that were made in a currency other
than U.S. Dollars, such amounts will be converted into U.S. Dollars using the
average exchange rates as calculated and utilized by Sanofi’s group reporting
system and published accounts for the applicable royalty period.  All invoices to be provided by Regulus to
Sanofi under this Agreement shall include a breakdown of the goods, services
and/or activities for which payment is due, as well is payment instructions and
shall be sent by express courier service to:

 

Sanofi-Aventis

Direction Comptable Holding

174 avenue de France

75013
Paris

France

 

11

 

5.7          Audits,
including Audits of Royalty Reports.

 

5.7.1       Audits of
Royalty Reports.  Upon the
written request of Regulus and not more than once in each Calendar Year, Sanofi
will permit an independent certified public accounting firm of nationally
recognized standing selected by Regulus and reasonably acceptable to Sanofi, at
Regulus’ expense to have access during normal business hours to such records of
Sanofi and/or its Affiliates as may be reasonably necessary to verify the
accuracy of the royalty reports hereunder for any Calendar Year ending not more
than [***] months prior to the date of such request.  These audit rights (but not any obligation to
pay unpaid royalties for such periods) with respect to any Calendar Year will
terminate [***] years after the end of such Calendar Year.  Regulus will provide Sanofi with a copy of
the accounting firm’s written report within 30 days of completion of such
report.

 

5.7.2       If such accounting firm
concludes that an overpayment or underpayment was made, then the owing Party
will pay the amount due within 30 days of the date Regulus delivers to
Sanofi such accounting firm’s written report so correctly concluding.  Regulus will bear the full cost of such audit
unless such audit correctly discloses that the additional payment payable by
Sanofi for the audited period is more than 5% of the amount of the royalties
paid for that audited period, in which case Sanofi will pay the reasonable fees
and expenses charged by the accounting firm.

 

5.7.3       Sanofi will use commercially
reasonable efforts to include in each sublicense granted by it to any
sublicensee a provision requiring the sublicensee to maintain records of sales
made pursuant to such license and to grant access to such records by Sanofi’s
independent accountant to the same extent and under substantially similar
obligations as required of Sanofi under this Agreement.  Sanofi will advise Regulus in advance of each
audit of any sublicensee with respect to Product sales.  Sanofi will provide Regulus with a summary of
the results received from the audit and, if Regulus so requests, a copy of the
audit report with respect to Product sales. 
Sanofi will pay the reasonable fees and expenses charged by the
accounting firm, except that Regulus will pay for all additional services
requested exclusively by Regulus from Sanofi’s independent accountant unless
the audit discloses that the additional payments payable to Regulus for the
audited period differ by more than 5% from the amount of the royalties
otherwise paid.

 

5.7.4       All financial information
subject to review under this Section or under any license agreement with a
sublicensee will be Sanofi Confidential Information and will be treated in accordance
with the confidentiality provisions of this Agreement.  As a condition precedent to Regulus’ audit
rights under this Section, Regulus’ accounting firm will enter into a
confidentiality agreement with Sanofi obligating it to treat all such financial
information in confidence pursuant to such confidentiality agreement.  Regulus may provide Third Parties to which
Regulus owes royalties on Products information in such audit report that are
relevant and required to comply with such Third Party’s audit rights under the
applicable license agreement between Regulus and such Third Party, provided that such Third Party agrees in
writing to keep such information confidential under terms no less restrictive
than Regulus’ obligations of confidentiality under this Agreement.

 

12

 

5.8          Interest.  If Sanofi fails to make any payment due to
Regulus under this Agreement, then interest will accrue on a daily basis at the
greater of an annual rate equal to the 1 month LIBOR Rate plus 1% (or such
lower interest rate to the extent necessary to comply with Applicable Law).

 

5.9          Taxes.

 

5.9.1       Sanofi will make all payments to Regulus under this
Agreement without deduction or withholding for taxes except to the extent that
any such deduction or withholding is required by Applicable Law in effect at
the time of payment.

 

5.9.2       Sanofi
will promptly pay on behalf of Regulus any tax required to be withheld on
amounts payable under this Agreement to the appropriate governmental authority,
and Sanofi will furnish Regulus with proof of payment of such tax.  Any such tax required to be withheld will be
an expense of and borne by Regulus.

 

5.9.3       Sanofi and Regulus will
cooperate with respect to all documentation required by any taxing authority or reasonably requested by
Sanofi to secure a reduction in the rate of applicable withholding taxes.

 

ARTICLE 6

 

CONFIDENTIALITY;
PRESS RELEASES & PUBLICATIONS

 

6.1          Confidentiality;
Exceptions.  Except to
the extent expressly authorized by this Agreement or otherwise agreed in
writing, the Parties agree that, during the Term and for five (5) years
thereafter, the receiving Party (the “Receiving Party”) and its Affiliates will
keep confidential and will not publish or otherwise disclose or use for any purpose
other than as provided for in this Agreement any Know-How or other confidential
and proprietary information and materials, patentable or otherwise, in any form
(written, oral, photographic, electronic, magnetic, or otherwise) which is
disclosed to it by the other Party (the “Disclosing Party”) or its Affiliates or
otherwise received or accessed by a Receiving Party in the course of performing
its obligations or exercising its rights under this Agreement, including, but
not limited to, trade secrets, Know-How, inventions or discoveries, proprietary
information, formulae, processes, techniques and information relating to the
past, present and future marketing, financial, and research and development
activities of any product or potential product or useful technology of the
Disclosing Party or its Affiliates and the pricing thereof (collectively, “Confidential Information”),
except to the extent that it can be established by the Receiving Party that
such Confidential Information:

 

6.1.1       was in the lawful knowledge
and possession of the Receiving Party or its Affiliates prior to the time it
was disclosed to, or learned by, the Receiving Party or its Affiliates, or was
otherwise developed independently by the Receiving Party or its Affiliates, as
evidenced by written records kept in the ordinary course of business, or other
documentary proof of actual use by the Receiving Party or its Affiliates;

 

6.1.2       was generally available to
the public or otherwise part of the public domain at the time of its disclosure
to the Receiving Party or its Affiliates;

 

13

 

6.1.3       became generally available
to the public or otherwise part of the public domain after its disclosure and
other than through any act or omission of the Receiving Party or its Affiliates
in breach of this Agreement; or

 

6.1.4       was disclosed to the
Receiving Party or its Affiliates, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the Disclosing Party
or its Affiliates not to disclose such information to others.

 

6.2          Authorized
Disclosure.  Except as
expressly provided otherwise in this Agreement, a Receiving Party or its
Affiliates may use and disclose to Third Parties Confidential Information of
the Disclosing Party as follows: (i) with respect to any such disclosure
of Confidential Information, under confidentiality provisions no less
restrictive than those in this Agreement, and solely in connection with the
performance of its obligations or exercise of rights granted or reserved in
this Agreement (including, without limitation, the rights to Develop and
Commercialize Option Compounds and/or Option Products under Section 3.3,
and to grant licenses and sublicenses hereunder), provided, that Confidential Information may be disclosed by
a Receiving Party to a governmental entity or agency without requiring such
entity or agency to enter into a confidentiality agreement with such Receiving
Party if such Receiving Party has used reasonable efforts to impose such
requirement without success and disclosure to such governmental entity or
agency is necessary for the performance of the Receiving Party’s obligations
hereunder; (ii) to the extent such disclosure is reasonably necessary in
filing or prosecuting patent, copyright and trademark applications, complying
with applicable governmental regulations, obtaining Approvals, conducting
clinical trials, marketing Option Products, or as otherwise required by
applicable law, regulation, rule or legal process (including the rules of
the SEC and any stock exchange); provided,
however, that if a Receiving Party or any of its Affiliates is
required by law or regulation to make any such disclosure of a Disclosing Party’s
Confidential Information it will, except where impracticable for necessary
disclosures, for example, but without limitation, in the event of a medical
emergency, give reasonable advance notice to the Disclosing Party of such
disclosure requirement and will use its reasonable efforts to secure
confidential treatment of such Confidential Information required to be
disclosed; (iii) in communication with actual or potential lenders, arm’s
length financial investors, merger partners, acquirers, consultants, or
professional advisors on a need-to-know basis, in each case under confidentiality
provisions no less restrictive than those of this Agreement; (iv) to the
extent and only to the extent that such disclosure is required to comply with
existing expressly stated contractual obligations owed to such Party’s or its
Affiliates’ licensor with respect to any intellectual property licensed to the
other Party under this Agreement; (v) to prosecute or defend litigation as
permitted by this Agreement or (vi) to the extent mutually agreed to in
writing by the Parties.

 

6.3          Press
Release; Disclosure of Agreement.  The Parties agree that the public
announcement of the execution of this Agreement will be made by individual
press releases issued by each Party and will not be made in a joint press
release.  Except to the extent required
to comply with applicable law, regulation, rule or legal process or as
otherwise permitted in accordance with this Section 6.3, neither Party nor
such Party’s Affiliates will make any public announcements, press releases or
other public disclosures concerning this Agreement or the terms or the subject
matter hereof without the prior written consent of the other, which will not be
unreasonably withheld.  Each Party will
give the other Party a reasonable opportunity (to the 

 

14

 

extent consistent with law) to review all material
filings with the SEC describing the terms of this Agreement prior to submission
of such filings, and will give due consideration to any reasonable comments by
the non-filing Party relating to such filing, including without limitation the
provisions of this Agreement for which confidential treatment should be sought.

 

6.4          Remedies.  Each Party will be entitled to seek, in
addition to any other right or remedy it may have, at law or in equity, a temporary
injunction, without the posting of any bond or other security, enjoining or
restraining the other Party from any violation or threatened violation of this
Article 6.

 

6.5          Acknowledgment.  Unless otherwise agreed upon in writing by
the Parties, each Party will acknowledge in any press release, public
presentation or publication regarding an Option Target, Option Compound and/or
Option Product, the other Party’s role in discovering and developing the Option
Target, Option Compound or Option Product, as applicable, and that such Option
Targets, Option Compounds or Option Products are under license from Regulus
(including, if requested by Regulus, Regulus’ stock ticker) and otherwise
acknowledge the contributions from the other Party.

 

ARTICLE 7

 

PATENTS

 

7.1          CREATE Act.  Notwithstanding anything to the contrary in
this Article 7, neither Party will have the right to make an election
under the Cooperative Research and Technology Enhancement Act of 2004, 35
U.S.C. § 103(c)(2)-(c)(3) (the “CREATE Act”) when exercising its rights
under this Article 7 without the prior written consent of the other Party,
which will not be unreasonably withheld, conditioned or delayed.  With respect to any such permitted election,
the Parties will use reasonable efforts to cooperate and coordinate their
activities with respect to any submissions, filings or other activities in
support thereof.  The Parties acknowledge
and agree that this Agreement is a “joint research agreement” as defined in the
CREATE Act.

 

7.2          Filing,
Prosecution and Maintenance of Patents.  Except as
otherwise may be agreed pursuant to any written agreement between the Parties,
each Party will have the sole right, at its cost and expense and at its sole
discretion, to prepare, file, prosecute (including, without limitation, to
control any interferences, reissue proceedings, oppositions and
reexaminations), maintain, enforce and defend throughout the world any Patents
solely owned or Controlled by such Party, including, with respect to Regulus,
the Regulus Platform Technology Patents, provided however, that Sanofi will
have the right to prepare, file, prosecute (including, without limitation, to
control any interferences, reissue proceedings, oppositions and
reexaminations), maintain, enforce and defend throughout the world the Regulus
Platform Technology Patents, solely to the extent that Sanofi possesses such
rights pursuant to the Collaboration Agreement.

 

7.3          No
Challenge.  As a material
inducement for entering into this Agreement, Sanofi covenants to Regulus that
during the Term, solely with respect to claims within the Regulus Platform
Technology Patents that are included in the options or license granted to
Sanofi under Article 2 or Article 3, Sanofi, its Affiliates or
sublicensees will not (a) commence or otherwise voluntarily determine to
participate in (other than as may be necessary or reasonably required to 

 

15

 

respond to a court request or order or
administrative law request or order) any action or proceeding, challenging or
denying the validity of any claim within an issued patent or patent application
within the Regulus Platform Technology Patents, or (b) direct, support or
actively assist any other Person (other than as may be necessary or reasonably
required to respond to a court request or order or administrative law request
or order) in bringing or prosecuting any action or proceeding challenging or
denying the validity of any claim within an issued patent or patent application
within the Regulus Platform Technology Patents. 
For purposes of clarification, any breach of this Section 7.3 will
be a material breach of this Agreement and will be grounds for termination by
Regulus of this Agreement under Section 8.3.

 

7.4          Unblocking
License.

 

7.4.1       Subject to
Section 7.4.2, Sanofi hereby grants Regulus a worldwide, royalty-free,
nonexclusive license, with the right to grant sublicenses, under any Sanofi
Blocking Patent to Research, Develop, make, have made, use, gain Approval,
Commercialize, sell, offer for sale, have sold, export and import microRNA
Compounds that are neither Licensed Compounds under the Collaboration Agreement
nor Option Compounds being Developed or Commercialized by Sanofi under this
Agreement (“Regulus Collaborator Compounds”).  The license granted pursuant to this
Section 7.4.1 is hereinafter referred to as the “Unblocking License”.

 

7.4.2       The sublicense of any Unblocking License to any Regulus Collaborator
will be [***] if (i) Regulus’ sublicense agreement with such Regulus
Collaborator would permit [***] to Sanofi of any of such Regulus Collaborator’s
Regulus Collaborator Blocking Technology [***] and otherwise under
substantially similar terms and conditions in all material respects as the
Unblocking License granted by Sanofi under this Agreement, (ii) Regulus
remains responsible to Sanofi for the performance of Regulus’ obligations with
respect to the Sanofi Blocking Patents under this Agreement (either directly by
Regulus or by the Regulus Collaborator), and (iii) Regulus provides to Sanofi
a copy of such sublicense (and/or the applicable license agreement with such
Regulus Collaborator) solely to the extent reasonably necessary to demonstrate
the satisfaction of the condition in subsection (i) above and a
written confirmation by the Regulus Collaborator that it agrees to be bound by
the terms and conditions of this Agreement that are applicable to the Sanofi
Blocking Patents.

 

7.4.3       If the sublicense of any
Unblocking License does not meet the requirements of Section 7.4.2, then
Regulus will pay to Sanofi a [***] royalty on annual worldwide Calendar Year
Net Sales by such Regulus Collaborator or its Affiliates or sublicensees of
products containing any Regulus Collaborator Compound the sale of which is
covered by the Sanofi Blocking Patents (“Regulus Collaborator
Products”).  Royalties
payable under this Section 7.4.3 will be payable for each Regulus
Collaborator Product on a product-by-product and country-by-country basis until
the date that is the later of (i) [***] years after the first
commercial sale of such product in such country and (ii) the expiration of
the last to expire Valid Claim within the Sanofi Blocking Patents which would
be infringed by the sale of such product in the applicable country by an
unauthorized party; in each case, in accordance with the terms of
Sections 5.3 through 5.8, mutatis
mutandis.

 

16

 

ARTICLE 8

 

TERM AND
TERMINATION

 

8.1          Term.  The term of this Agreement (the “Term”) commences
upon the Effective Date and, unless earlier terminated in accordance with the
provisions of this Article 8, this Agreement will continue until:
(a) the Research Option Deadline, unless Sanofi exercises the Research
Option prior to the Research Option Deadline; or (b) if Sanofi exercises
the Research Option prior to the Research Option Deadline, the later of the
expiration of all Sanofi payment obligations to Regulus or Regulus payment
obligations to Sanofi.

 

8.2          Sanofi
Right to Terminate.  Sanofi may terminate this
Agreement (including its license rights under this Agreement) in full, or on an
Option Product-by-Option Product basis, effective upon 30 calendar days prior
written notice.

 

8.3          Material
Breach.

 

(a)   If either Party believes
that the other is in material breach of this Agreement, then the non-breaching
Party may deliver notice of such breach to the other Party.  In such notice the non-breaching Party will
identify the actions or conduct that it wishes such Party to take for an
acceptable and prompt cure of such breach (or will otherwise state its good
faith belief that such breach is incurable); provided
that such identified actions or conduct will not be binding upon the other
Party with respect to the actions that it may need to take to cure such
breach.  If the breach is curable, the
allegedly breaching Party will have [***] days to either cure such breach
(except to the extent such breach involves the failure to make a payment when
due, which breach must be cured within thirty (30) days following such notice)
or, if a cure cannot be reasonably effected within such [***] day period, to
deliver to the non-breaching Party a plan for curing such breach which is
reasonably sufficient to effect a cure within a reasonable period.  If the breaching Party fails to (i) cure
such breach within the [***] day period (or 30 day as applicable) or
(ii) use Commercially Reasonable Efforts to carry out the plan and cure
the breach, the non-breaching Party may terminate this Agreement on an Option
Target-by-Option Target basis or Option Product-by-Option Product basis by
providing written notice to the breaching Party.

 

(b)   Notwithstanding the
foregoing, if the allegedly breaching Party disputes in good faith the
existence, materiality, or failure to cure of any such breach which is not a
payment breach, and provides notice to the non-breaching Party (the “Other Party”) of
such dispute within such [***]  day
period, the Other Party will not have the right to terminate this Agreement in
accordance with this Section 8.3 unless and until it has been determined
in accordance with Section 11.4 that this Agreement was materially
breached by the allegedly breaching Party and that Party fails to cure such
breach within [***]  days following such
determination.  It is understood and
acknowledged that during the pendency of such a dispute, all of the terms and
conditions of this Agreement will remain in effect and the Parties will
continue to perform all of their respective obligations hereunder.

 

(c)   Using the same procedures
set forth in paragraphs (a) and (b) of this Section 8.3,
Regulus may terminate this Agreement if Regulus exercises its termination right

 

17

 

under the Collaboration Agreement for Sanofi’s
uncured material breach of the Collaboration Agreement.

 

8.4          Consequences
of Termination.

 

8.4.1       Options and
Licenses.  Upon
termination of this Agreement in its entirety (or in part with respect to an
Option Product) by either Party pursuant to this Article 8, the options
and licenses granted by Regulus to Sanofi hereunder with respect to the Option
Products that were the subject of such termination will terminate.  Upon termination of this Agreement with
respect to an Option Target or an Option Product pursuant to this
Article 8, the options and licenses granted by Regulus to Sanofi hereunder
with respect to such Option Targets, associated Option Compounds and Option
Products will terminate.

 

8.4.2       Return of
Information and Materials.  Upon termination of this Agreement in its
entirety (or on an Option Target or Option Product basis) by either Party
pursuant to this Article 8, the Parties will return (or destroy, as
directed by the other Party) all data, files, records and other materials
containing or comprising the other Party’s Confidential Information that is
related to the Option Target(s) or Option Product(s) that were the
subject of such termination. 
Notwithstanding the foregoing, the Parties will be permitted to retain
one copy of such data, files, records, and other materials for archival purposes.

 

8.5          Accrued
Rights; Surviving Obligations.

 

8.5.1       Accrued
Rights.  Termination or expiration of
this Agreement for any reason will be without prejudice to any rights or
financial compensation that will have accrued to the benefit of a Party prior
to such termination or expiration.  Such
termination or expiration will not relieve a Party from obligations that are
expressly indicated to survive the termination or expiration of this Agreement.  For clarification, if Sanofi exercises the
Research Option under Article 2, Sanofi’s obligation to pay the full
$[***] option exercise fee under Section 5.1 will have accrued as of the
Research Option Exercise Date, and no termination under this Agreement after
the Research Option Exercise Date will relieve Sanofi of its obligation to pay
the full $[***] option exercise fee under Section 5.1.

 

8.5.2       Survival.  Articles 6, 9, and 11 and
Sections 5.7, 5.8, 7.4, 8.4, 8.5, 8.6, 8.7, 8.8 and 10.4 of this
Agreement will survive expiration or termination of this Agreement for any
reason.

 

8.6          Rights in
Bankruptcy.  All rights,
options, and licenses granted under or pursuant to this Agreement by Regulus or
Sanofi are, and will otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code (i.e., Title 11 of the U.S. Code) or
analogous provisions of Applicable Law outside the United States, licenses of
rights to “intellectual property” as defined under Section 101 of the U.S.
Bankruptcy Code or analogous provisions of Applicable Law outside the United States.  The Parties agree that each Party, as
licensee of such rights under this Agreement, will retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code or any
other provisions of Applicable Law outside the United States that provide
similar protection for ‘intellectual property.’ 
The Parties further agree that, in the event of the commencement of a
bankruptcy proceeding by or against a Party 

 

18

 

under the U.S. Bankruptcy Code or analogous
provisions of Applicable Law outside the United States, the Party that is not
subject to such proceeding will be entitled to a complete duplicate of (or
complete access to, as appropriate) such intellectual property and all
embodiments of such intellectual property, which, if not already in the non
subject Party’s possession, will be promptly delivered to it upon the non
subject Party’s written request therefor. 
Any agreements supplemental hereto will be deemed to be “agreements
supplementary to” this Agreement for purposes of Section 365(n) of
the U.S. Bankruptcy Code.

 

8.7          Regulus
Opt-In Rights.

 

8.7.1       If Sanofi terminates the
Agreement under Section 8.2, Regulus may continue to Develop and
Commercialize any Option Compound or Option Product that is the subject of such
termination (a “Discontinued
Product”).  If Regulus
provides a notice in writing to Sanofi within 90 days of such termination (an “Election Notice”)
that Regulus is exercising its rights under this Section 8.7.1, Sanofi will,
subject to Regulus’ payment obligations in Section 8.7.2: (i) grant
to Regulus a sublicensable, worldwide license or sublicense, as the case may
be, to all [***] Controlled by Sanofi as of the date of the Election Notice
solely as they are necessary to make, have made, use, sell, offer for sale,
have sold and import Discontinued Products, (ii) transfer to Regulus, for
Regulus’ use with respect to the Development and Commercialization of the
Discontinued Products, any data, results, regulatory information and files in
the possession of Sanofi as of the date of the Election Notice that relate to
such Discontinued Products, and (iii) [***] and [***] to Regulus [***]
with respect to such Discontinued Product (including but not limited to [***]
for Regulus, and [***] Regulus to [***], any [***] with a [***] related to such
Discontinued Product).

 

8.7.2       Regulus
Payment Obligations for Opt-In Rights.  If Regulus provides an Election Notice for
any Discontinued Product which has [***], then Regulus shall pay to Sanofi a
non-refundable royalty of (i) [***] of any Regulus Licensing Revenues
received by Regulus from a Third Party in consideration for licensing such
Discontinued Product to such Third Party; or (ii) if Regulus is Developing
and Commercializing such Discontinued Product on its own or through an
Affiliate, a royalty equal to [***]% of the Net Sales of such Discontinued
Product made through Regulus or any of its Affiliates with the provisions of
Section 5.3 through 5.8 applying mutatis
mutandis.  For purposes of
this Agreement, “Regulus
Licensing Revenues” will mean any payments that Regulus receives
from a Third Party in consideration of a license (or sublicense) to further the
Development and Commercialization of a Discontinued Product, in each case including,
but not limited to, upfront payments, license fees, regulatory or sales
milestone payments, royalties and/or profit sharing payments, but excluding:
(i) payments made in consideration of Regulus’ equity or debt securities
(except to the extent such payments exceed the fair market value of such
securities upon date of receipt), (ii) payments to reimburse Regulus for
the out-of-pocket costs and expenses of research and development, and
(iii) payments to reimburse Regulus for patent prosecution costs and
expenses.

 

8.8          Regulus
Right of First Negotiation.  If Sanofi has a
good-faith desire to grant any Third any right to Develop or Commercializing an
Option Compound or Option Product, then Sanofi will promptly (but in any case
within thirty (30) days) provide written notice to Regulus, and Sanofi will
promptly deliver to Regulus evaluation materials reasonably relevant to the
Option Compound or Option Product and no less than those materials provided to
applicable

 

19

 

Third Parties. 
Regulus will then have forty-five (45) days to notify Sanofi in writing
whether Regulus desires to take a license from Sanofi to Develop and
Commercialize the applicable Option Compound and Option Product.  If Regulus provides Sanofi with timely
written notice that Regulus desires to take a license from Sanofi to Develop
and Commercialize the applicable Option Compound and Option Product, then
Regulus and Sanofi will, in good faith, use commercially reasonable efforts to
conclude a written collaboration and license agreement within one hundred
twenty (120) days.  If Regulus fails to
timely notify Sanofi that Regulus desires to take a license from Sanofi to
Develop and Commercialize the applicable Option Compound and Option Product, or
if despite good-faith commercially reasonable efforts Regulus and Sanofi are
unable to reach an agreement within one hundred twenty (120) days after Regulus’
receipt of such notice from Sanofi, then Sanofi may enter into a collaboration
and license agreement with any Third Party with respect to the applicable
Option Compound and Option Product on economic terms which, when taken as a
whole, are no more favorable to any such Third Party than the terms last
offered under this right of first negotiation by Sanofi to Regulus.

 

ARTICLE 9

 

INDEMNIFICATION, INSURANCE
AND LIMITATION OF LIABILITY

 

9.1          Indemnification of Regulus.  Sanofi agrees to defend Regulus, its
Affiliates and their respective directors, officers, stockholders, employees
and agents, and their respective successors, heirs and assigns (collectively,
the “Regulus Indemnitees”),
and will indemnify and hold harmless the Regulus Indemnitees, from and against
any liabilities, losses, costs, damages, fees or expenses payable to a Third
Party, and reasonable attorneys’ fees and other legal expenses with respect
thereto (collectively, “Losses”)
arising out of any claim, action, lawsuit or other proceeding by a Third Party
(collectively, “Third
Party Claims”) brought against any Regulus Indemnitee and
resulting from or occurring as a result of: (a) the Development,
manufacture, use, handling, storage, sale or other Commercialization or
disposition of any Option Compound or Option Product in the Territory by Sanofi
or its Affiliates, sublicensees or contractors, (b) any breach by Sanofi
of any of its representations, warranties or covenants pursuant to this
Agreement or (c) the  negligence or
willful misconduct of Sanofi or any Sanofi Affiliate or sublicensee in
connection with this Agreement; except
in any such case to the extent such Losses result from: (i) the negligence
or willful misconduct of any Regulus Indemnitee, (ii) any breach by
Regulus of any of its representations, warranties, covenants or obligations
pursuant to this Agreement, or (iii) any breach of Applicable Law by any
Regulus Indemnitee.

 

9.2          Indemnification of Sanofi.  Regulus agrees to defend Sanofi, its
Affiliates and their respective directors, officers, stockholders, employees
and agents, and their respective successors, heirs and assigns (collectively,
the “Sanofi Indemnitees”),
and will indemnify and hold harmless the Sanofi Indemnitees, from and against
any Losses and Third Party Claims brought against any Sanofi Indemnitee and
resulting from or occurring as a result of: (a) any activities conducted
by a Regulus employee, consultant or (sub)contractor in effecting a Sanofi
request pursuant to Section 2.4.3; (b) any breach by Regulus of any
of its representations, warranties or covenants pursuant to this Agreement; or
(c) the negligence or willful misconduct of any Regulus Indemnitee or any
(sub)contractor of Sanofi in connection with this Agreement; except in any such case to the extent such
Losses result from: (i) the negligence or willful 

 

20

 

misconduct of any Sanofi Indemnitee, (ii) any
breach by Sanofi of any of its representations, warranties, covenants or
obligations pursuant to this Agreement, or (iii) any breach of Applicable
Law by any Sanofi Indemnitee.

 

9.3          Notice of Claim. All indemnification
claims provided for in Sections 9.1 and 9.2 will be made solely by such
Party to this Agreement (the “Indemnified Party”). 
The Indemnified Party will give the indemnifying Party prompt written
notice (an “Indemnification
Claim Notice”) of any Losses or the discovery of any fact upon
which the Indemnified Party intends to base a request for indemnification under
Section 9.1 or 9.2, but in no event will the indemnifying Party be liable
for any Losses to the extent such Losses result from any delay in providing
such notice.  Each Indemnification Claim
Notice must contain a description of the claim and the nature and amount of
such Loss (to the extent that the nature and amount of such Loss is known at
such time).  The Indemnified Party will
furnish promptly to the indemnifying Party copies of all papers and official
documents received in respect of any Losses and Third Party Claims.

 

9.4          Defense, Settlement, Cooperation and
Expenses.

 

9.4.1       Control of Defense.  At its option, the indemnifying Party may
assume the defense of any Third Party Claim by giving written notice to the
Indemnified Party within 30 calendar days after the indemnifying Party’s
receipt of an Indemnification Claim Notice. 
The assumption of the defense of a Third Party Claim by the indemnifying
Party will not be construed as an acknowledgment that the indemnifying Party is
liable to indemnify the Indemnified Party in respect of the Third Party Claim,
nor will it constitute a waiver by the indemnifying Party of any defenses it
may assert against the Indemnified Party’s claim for indemnification.  Upon assuming the defense of a Third Party
Claim, the indemnifying Party may appoint as lead counsel in the defense of the
Third Party Claim any legal counsel selected by the indemnifying Party.  In the event the indemnifying Party assumes
the defense of a Third Party Claim, the Indemnified Party will as soon as is
reasonably possible deliver to the indemnifying Party all original notices and
documents (including court papers) received by the Indemnified Party in
connection with the Third Party Claim. 
Should the indemnifying Party assume the defense of a Third Party Claim,
except as provided in Section 9.4.1, the Indemnified Party will be
responsible for the legal costs or expenses subsequently incurred by such
Indemnified Party in connection with the analysis, defense or settlement of the
Third Party Claim.

 

9.4.2       Right to Participate in Defense.  Without limiting Section 9.4.1, any
Indemnified Party will be entitled to participate in, but not control, the
defense of such Third Party Claim and to employ counsel of its choice for such
purpose; provided, however, that
such employment will be at the Indemnified Party’s own cost and expense unless
(i) the employment thereof has been specifically authorized by the
indemnifying Party in writing, (ii) the indemnifying Party has failed to
assume the defense and employ counsel in accordance with Section 9.4.1 (in
which case the Indemnified Party will control the defense) or (iii) the
interests of the Indemnified Party and the indemnifying Party with respect to
such Third Party Claim are sufficiently adverse to prohibit the representation
by the same counsel of both Parties under Applicable Law, ethical rules or
equitable principles in which case the indemnifying Party will be responsible
for any such costs and expenses of counsel for the Indemnified Party.

 

21

 

9.4.3       Settlement.  With respect to any Third Party Claims
relating solely to the payment of money damages in connection with a Third
Party Claim and that will not admit liability or violation of Law on the part
of the Indemnified Party or result in the Indemnified Party’s becoming subject
to injunctive or other relief or otherwise adversely affecting the business of
the Indemnified Party in any manner (such as granting a license or admitting
the invalidity of a Patent Controlled by an Indemnified Party), and as to which
the indemnifying Party will have acknowledged in writing the obligation to
indemnify the Indemnified Party hereunder, the indemnifying Party will have the
sole right to consent to the entry of any judgment, enter into any settlement
or otherwise dispose of such Loss, on such terms as the indemnifying Party, in
its sole discretion, will deem appropriate. 
With respect to all other Losses in connection with Third Party Claims,
where the indemnifying Party has assumed the defense of the Third Party Claim
in accordance with Section 9.4.1, the indemnifying Party will have
authority to consent to the entry of any judgment, enter into any settlement or
otherwise dispose of such Loss provided it obtains the prior written consent of
the Indemnified Party (which consent will not be unreasonably withheld).  The indemnifying Party will not be liable for
any settlement or other disposition of a Loss by an Indemnified Party that is
reached without the written consent of the indemnifying Party.  Regardless of whether the indemnifying Party
chooses to defend or prosecute any Third Party Claim, no Indemnified Party will
admit any liability with respect to or settle, compromise or discharge, any
Third Party Claim without the prior written consent of the indemnifying Party,
such consent not to be unreasonably withheld.

 

9.4.4       Cooperation.  Regardless of whether the indemnifying Party
chooses to defend or prosecute any Third Party Claim, the Indemnified Party
will, and will cause each other Indemnified Party to, cooperate in the defense
or prosecution thereof and will furnish such records, information and testimony,
provide such witnesses and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith.  Such cooperation will include
access during normal business hours afforded to indemnifying Party to, and
reasonable retention by the Indemnified Party of, records and information that
are reasonably relevant to such Third Party Claim, and making Indemnified
Parties and other employees and agents available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder, and the indemnifying Party will reimburse the Indemnified Party for
all its reasonable out-of-pocket costs and expenses in connection therewith.

 

9.4.5       Costs and Expenses.  Except as provided above in this
Section 9.4, the costs and expenses, including attorneys’ fees and
expenses, incurred by the Indemnified Party in connection with any claim will
be reimbursed on a Calendar Quarter basis by the indemnifying Party, without
prejudice to the indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified
Party.

 

9.5          Insurance.

 

9.5.1       Regulus’ Insurance Obligations.  Regulus shall maintain, at its cost,
reasonable insurance against liability and other risks associated with its
activities contemplated by this Agreement, including but not limited to its
clinical trials and its indemnification obligations herein, in such amounts and
on such terms as are customary for prudent practices for 

 

22

 

biotech companies of similar size and with similar
resources in the pharmaceutical industry for the activities to be conducted by
it under this Agreement taking into account the scope of development of
products, provided, that, at a minimum, Regulus shall maintain, in force at its
sole cost, a general liability insurance policy providing coverage of at least
$[***] per claim and $[***] annual aggregate, provided that such coverage is
increased to at least $[***] at least thirty (30) days before Regulus initiates
the First Commercial Sale of any Discontinued Product hereunder.  Regulus shall furnish to Sanofi evidence of
such insurance, upon request.

 

9.5.2       Sanofi’s Insurance Obligations.  Sanofi hereby represents and warrants to
Regulus that it is self-insured against liability and other risks associated
with its activities and obligations under this Agreement in such amounts and on
such terms as are customary for prudent practices for large companies in the
pharmaceutical industry for the activities to be conducted by Sanofi under this
Agreement.  Sanofi shall furnish to
Regulus evidence of such self-insurance, upon request.

 

ARTICLE 10

 

REPRESENTATIONS
AND WARRANTIES

 

10.1        Representations and Warranties.  Each Party hereby represents
and warrants as of the Effective Date to the other Party that:

 

10.1.1     it has the power and
authority and the legal right to enter into this Agreement and perform its
obligations hereunder, and that it has taken all necessary action on its part
required to authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder;

 

10.1.2     this Agreement has been duly
executed and delivered on behalf of such Party and constitutes a legal, valid
and binding obligation of such Party and is enforceable against it in
accordance with its terms subject to the effects of bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and
general principles of equity, whether enforceability is considered a proceeding
at law or equity;

 

10.1.3     all necessary consents,
approvals and authorizations of all Regulatory Authorities and other parties
required to be obtained by such Party in connection with the execution and
delivery of this Agreement and the performance of its obligations hereunder
have been obtained; and

 

10.1.4     the execution and delivery
of this Agreement and the performance of such Party’s obligations hereunder
(i) do not conflict with or violate any requirement of Applicable Law or
any provision of the certificate of incorporation, bylaws or any similar
instrument of such Party, as applicable, in any material way, and (ii) do
not conflict with, violate, or breach or constitute a default or require any
consent not already obtained under, any contractual obligation or court or
administrative order by which such Party is bound.

 

10.2        Regulus Representations and Warranties.  Regulus  hereby
represents and warrants to Sanofi as of the Effective Date that:

 

23

 

10.2.1     Regulus is the owner of, or
otherwise has the right to grant all rights and licenses it purports to grant
to Sanofi with respect to the Regulus Platform Technology Patents under this
Agreement;

 

10.2.2     No written claims have been
made against Regulus alleging that (i) any of the Regulus Platform
Technology Patents are invalid or unenforceable or (ii) Regulus has
infringed any intellectual property rights of a Third Party.

 

10.2.3     The licenses granted to
Regulus under the Existing Regulus In-Licenses, the Regulus Future In-Licenses
and the Regulus In-License Agreements are in full force and effect and Regulus
has not received any written notice, and is not aware, of any breach by any
party to such agreements.

 

10.3        Sanofi Nonsolicitation Covenant.  During the period from the date hereof to and
including the [***] anniversary of the Effective Date (the “Nonsolicitation Period”),
Sanofi shall not and shall not permit any of their respective representatives
to directly or indirectly, (i) without the prior written consent of
Regulus, induce or attempt to induce any employee of Regulus to leave the
employ of Regulus, or in any way interfere with the relationship between
Regulus and any employee of Regulus, or known consultant or independent
contractor thereof.  For purposes of this
Section 10.3, “induce” shall not be deemed to mean (i) circumstances
where an employee, consultant or independent contractor or former employee,
consultant or independent contractor initiates contact with a Party with regard
to possible employment, or (ii) general solicitations of employment not
specifically targeted at specific employees of a Party, including responses to
general advertisements.

 

10.4        DISCLAIMER OF WARRANTY.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH
IN THIS ARTICLE 10, SANOFI
AND REGULUS MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR
IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND
SANOFI AND REGULUS EACH SPECIFICALLY DISCLAIM ANY WARRANTIES, WHETHER WRITTEN
OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS
TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL
PROPERTY RIGHTS OF THIRD PARTIES.

 

ARTICLE 11

 

MISCELLANEOUS

 

11.1        Assignment; Sanofi Affiliates.  Except as expressly set
forth in this Agreement, without the prior written consent of the other Party
hereto, neither Party will sell, transfer, assign, delegate, pledge or
otherwise dispose of, whether voluntarily, involuntarily, by operation of law
or otherwise, this Agreement or any of its rights or duties hereunder.  Any purported assignment or transfer in
violation of this Section 11.1 will be void ab initio and of no force or effect.  Notwithstanding the foregoing:

 

24

 

11.1.1     Sanofi may, without Regulus’
consent, assign this Agreement and its rights and obligations hereunder to an
Affiliate of Sanofi, provided that
such Affiliate agrees to be bound by the terms and conditions of this Agreement
and that no such assignment to an Affiliate will relieve Sanofi of its
obligations hereunder;

 

11.1.2     Regulus may assign or
transfer this Agreement or any of its rights or obligations hereunder without
Sanofi’s consent to any Third Party with which it has merged or consolidated,
or to which it has transferred all or substantially all of its assets or stock
of the business to which this Agreement relates, if in any such event the Third
Party assignee or surviving entity assumes in writing all of Regulus’ obligations
under this Agreement; provided further
that in the event of such a sale or transfer (whether this Agreement is
actually assigned or is assumed by the acquiring party by operation of law (e.g., in the context of a reverse
triangular merger)), intellectual property rights of the acquiring party in
such sale or transfer (if other than one of the Parties) shall not be included
in the technology licensed hereunder or otherwise subject to this Agreement;
and

 

11.1.3     Regulus may assign or
transfer its rights under Article 5 (but no liabilities) to a Third Party
in connection with a royalty factoring transaction.

 

11.2        Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable by a court of competent jurisdiction, such
adjudication will not affect or impair, in whole or in part, the validity,
enforceability, or legality of any remaining portions of this Agreement.  All remaining portions will remain in full
force and effect as if the original Agreement had been executed without the
invalidated, unenforceable or illegal part.

 

11.3        Governing Law; Jurisdiction.  This Agreement will be governed by and
construed and enforced in accordance with the laws of the State of New York,
USA without reference to any rules of conflicts of laws.  For clarification, any dispute relating to
the scope, validity, enforceability or infringement of any Patents will be
governed by and construed and enforced in accordance with the patent laws of
the applicable jurisdiction.

 

11.4        Dispute Resolution.

 

11.4.1     Resolution by Senior Representatives.  The Parties will seek to settle amicably any
and all disputes, controversies or claims arising out of or in connection with
this Agreement.  Any dispute between the
Parties which is outside the JTSC’s decision-making authority will be promptly
presented to each Party’s respective co-chair of the JTSC for resolution, and
if the co-chairs of the JTSC are unable to resolve such dispute, such dispute
will then be presented to the Executive Vice President of R&D of Sanofi and
the Executive Vice President of Regulus (the “Senior Representatives”), or their
respective designees, for resolution. 
Such Senior Representatives, or their respective designees, will meet
in-person or by teleconference as soon as reasonably possible thereafter, and
use their good faith efforts to mutually agree upon the resolution of the
dispute, controversy or claim.  Any
dispute within the JTSC’s decision-making authority will not be subject to
arbitration.

 

11.4.2     Arbitration.  If after negotiating in good
faith pursuant to Section 11.4.1, after good faith discussions undertaken
within reasonable promptness, to reach an amicable 

 

25

 

agreement within 90 days, then either Party may upon
written notice to the other submit to binding arbitration pursuant to this
Section 11.4.2 below.  No statements
made by either Party during such discussions will be used by the other Party or
admissible in arbitration or any other subsequent proceeding for resolving the
dispute.

 

(a)   Any dispute, claim or
controversy arising from or related in any way to this Agreement or the
interpretation, application, breach, termination or validity thereof, including
any claim of inducement of this Agreement by fraud or otherwise, not resolved
under the provisions of Sections 11.4.2 will be resolved by final and
binding arbitration conducted in accordance with the terms of this
Section 11.4.2.  The arbitration
will be held in New York, New York, USA according to Rules of Arbitration
of the International Chamber of Commerce (“ICC”).  The arbitration will be conducted by a panel
of three (3) arbitrators with significant experience in the pharmaceutical
industry, unless otherwise agreed by the Parties, appointed in accordance with
applicable ICC rules.  Any arbitration
herewith will be conducted in the English language to the maximum extent
possible.  The arbitrators will be
instructed not to award any punitive or special damages and will render a
written decision no later than twelve (12) months following the selection of
the arbitrator, including a basis for any damages awarded and a statement of
how the damages were calculated.  Any
award will be promptly paid in Euros free of any tax, deduction or offset.  Each Party agrees to abide by the award
rendered in any arbitration conducted pursuant to this Section 11.  With respect to money damages, nothing
contained herein will be construed to permit the arbitrator or any court or any
other forum to award punitive or exemplary damages.  By entering into this agreement to arbitrate,
the Parties expressly waive any claim for punitive or exemplary damages.  Each Party will pay its legal fees and costs
related to the arbitration (including witness and expert fees).  Judgment on the award so rendered will be
final and may be entered in any court having jurisdiction thereof.

 

(b)   EACH PARTY HERETO WAIVES ITS
RIGHT TO TRIAL OF ANY ISSUE BY JURY. 
EACH PARTY HERETO WAIVES ANY CLAIM FOR ATTORNEYS’ FEES AND COSTS AND
PREJUDGMENT INTEREST FROM THE OTHER.

 

(c)   EXCEPT FOR LOSSES COVERED BY
THE INDEMNITIES PROVIDED UNDER ARTICLE 9, AND ANY BREACH OF THE
CONFIDENTIALITY RESTRICTIONS UNDER ARTICLE 6, EACH PARTY HERETO WAIVES
(1) ANY CLAIM TO PUNITIVE, EXEMPLARY OR MULTIPLIED DAMAGES FROM THE OTHER;
AND (2) ANY CLAIM OF CONSEQUENTIAL, INDIRECT OR INCIDENTAL DAMAGES
FROM THE OTHER.

 

11.4.3     Disputes Regarding Material Breach.  If the Parties are in dispute as to whether
one Party is in material breach of this Agreement, then the arbitrator will
first determine if material breach has in fact occurred, and if so, will grant
the defaulting Party the cure period provided pursuant to
Section 8.3.  If the material breach
is not cured within the time period provided pursuant to Section 8.3, the
arbitration will continue and the arbitrator will, as part of the same
arbitration, award actual direct damages to the non-defaulting Party.

 

11.4.4     Court Actions.  Nothing contained in this Agreement shall
deny either Party the right to seek injunctive or other equitable relief from a
court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and
such an action may 

 

26

 

be filed and maintained notwithstanding any ongoing
dispute resolution discussions or arbitration proceeding.  In addition, either Party may bring an action
in any court of competent jurisdiction to resolve disputes pertaining to the
validity, construction, scope, enforceability, infringement or other violations
of patents or other proprietary or intellectual property rights, and no such
claim shall be subject to arbitration pursuant to Section 11.4.

 

11.5        Notices. 
Except as otherwise provided for in this Agreement, all notices or
other communications that are required or permitted hereunder will be in the
English language and in writing and delivered personally with acknowledgement
of receipt, sent by facsimile (and promptly confirmed by personal delivery,
registered or certified mail or overnight courier as provided herein), sent by
nationally-recognized overnight courier or sent by registered or certified
mail, postage prepaid, return receipt requested, addressed as follows:

 

	
  If
  to Sanofi, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sanofi-Aventis

  	
   

  
	
   

  	
  174, avenue de France

  	
   

  
	
   

  	
  75013 Paris, France

  	
   

  
	
   

  	
  Attention:       General
  Counsel

  	
   

  
	
   

  	
  Facsimile No.: +33 1 53 77 43 03

  	
   

  
	
   

  	
   

  	
   

  
	
  If
  to Regulus, to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Regulus
  Therapeutics Inc.

  	
   

  
	
   

  	
  1896
  Rutherford Road,

  	
   

  
	
   

  	
  Carlsbad,
  California 92008

  	
   

  
	
   

  	
  USA

  	
   

  
	
   

  	
  Attention:
  Executive Vice President

  	
   

  
	
   

  	
  Facsimile:
  +1(760) 268-6868

  	
   

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:
  General Counsel

  	
   

  
	
   

  	
  Facsimile:
  +1 (760) 268-4922

  	
   

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:
  Thomas Coll

  	
   

  
	
   

  	
  Cooley
  LLP

  	
   

  
	
   

  	
  4401
  Eastgate Mall

  	
   

  
	
   

  	
  San
  Diego, CA 92121

  	
   

  
	
   

  	
  USA

  	
   

  
	
   

  	
  Facsimile:
  +1 (858) 550-6420

  	
   

  
				

 

or
to such other address as the Party to whom notice is to be given may have
furnished to the other Party in writing in accordance herewith.  Any such communication will be deemed to have
been given (i) when delivered, if personally delivered or sent by
facsimile on a Business Day, (ii) on the Business Day after dispatch, if
sent by nationally-recognized overnight courier, and 

 

27

 

(iii) on
the third Business Day following the date of mailing, if sent by mail.  It is understood and agreed that this
Section 10.5 is not intended to govern the day-to-day business
communications necessary between the Parties in performing their duties, in due
course, under the terms of this Agreement.

 

11.6        Entire Agreement; Modifications.  This Agreement (including the attached
Appendices, and the Technology Sharing Plan, if any), together with the
Collaboration Agreement and the Stock Purchase Agreement (as such term is
defined in the Collaboration Agreement), sets forth and constitutes the entire
agreement and understanding between the Parties with respect to the subject
matter hereof and all prior agreements, understanding, promises and
representations, whether written or oral, with respect thereto are superseded
hereby; provided nothing in this
Agreement will be deemed to amend or modify the Collaboration Agreement and as
such the Collaboration Agreement remains in full force and effect in accordance
with its terms.  Each Party confirms that
it is not relying on any representations or warranties of the other Party
except as specifically set forth herein. 
No amendment, modification, release or discharge will be binding upon
the Parties unless in writing and duly executed by authorized representatives of
both Parties.

 

11.7        Headings.  The headings of Articles and
Sections of this Agreement are for ease of reference only and will not
affect the meaning or interpretation of this Agreement in any way.

 

11.8        Relationship of the Parties.  It is expressly agreed that the Parties will
be independent contractors of one another and that the relationship between the
Parties will not constitute a partnership, joint venture or agency.

 

11.9        Waiver.  Any term or condition of this Agreement may
be waived at any time by the Party that is entitled to the benefit thereof, but
no such waiver will be effective unless set forth in a written instrument duly
executed by or on behalf of the Party waiving such term or condition.  Any such waiver will not be deemed a waiver
of any other right or breach hereunder.

 

11.10      Counterparts.  This 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.

 

11.11      No Benefit to Third Parties.  The representations,
warranties, covenants and agreements set forth in this Agreement are for the
sole benefit of the Parties hereto and their successors and permitted assigns,
and they will not be construed as conferring any rights on any other parties.

 

11.12      Further Assurances.  Each Party will duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including the filing of such
assignments, agreements, documents and instruments, as may be necessary to
carry out the provisions and purposes of this Agreement.

 

11.13      Force Majeure.  Neither Party will be charged with any
liability for delay in performance of an obligation under this Agreement to the
extent such delay is due to a cause beyond the reasonable control of the
affected Party, such as war, riots, labor disturbances, fire, explosion,
earthquake, and compliance in good faith with any governmental Law, regulation
or 

 

28

 

order.  The
Party affected will give prompt written notice to the other Party of any
material delay due to such causes.

 

11.14      Interpretation.

 

11.14.1  Each of the Parties
acknowledges and agrees that this Agreement has been diligently reviewed by and
negotiated by and between them, that in such negotiations each of them has been
represented by competent counsel and that the final agreement contained herein,
including the language whereby it has been expressed, represents the joint
efforts of the Parties hereto and their counsel.  Accordingly, in the event an ambiguity or a
question of intent or interpretation arises, this Agreement will be construed
as if drafted jointly by the Parties and no presumption or burden of proof will
arise favoring or disfavoring any Party by virtue of the authorship of any
provisions of this Agreement.  This
Agreement has been prepared in the English language and the English language
shall control its interpretation.

 

11.14.2  The definitions of the terms
herein will apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun will include the corresponding masculine, feminine and
neuter forms.  The words “include”, “includes”
and “including” will be deemed to be followed by the phrase “without limitation”.  The word “will” will be construed to have the
same meaning and effect as the word “will”. 
The word “any” will mean “any and all” unless otherwise clearly
indicated by context.

 

11.14.3  Unless the context requires
otherwise, (i) any definition of or reference to any agreement, instrument
or other document herein will be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein or therein), (ii) any reference to any
Applicable Laws herein will be construed as referring to such Applicable Laws
as from time to time enacted, repealed or amended, (iii) any reference herein
to any person will be construed to include the person’s successors and assigns,
(iv) the words “herein”, “hereof” and “hereunder”, and words of similar
import, will be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, and (v) all references herein to
Articles, Sections or Appendices, unless otherwise specifically provided,
will be construed to refer to Articles, Sections and Appendices of this
Agreement.

 

11.14.4  References to sections of
the Code of Federal Regulations and to the United States Code will mean the
cited sections, as these may be amended from time to time.

 

[SIGNATURE PAGE FOLLOWS]

 

29

 

 

IN WITNESS WHEREOF, the Parties hereto have
caused this Agreement to be executed by their duly authorized representatives
as of the date first above written.

 

 

	
   

  	
  REGULUS THERAPEUTICS INC.:  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Kleanthis G. Xanthopoulos 

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SANOFI-AVENTIS: 

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Philippe GOUPIT

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  

  	
  VP
  Corporate Licenses

  

 

Signature Page - Non-Exclusive
Technology Alliance and Option Agreement

 

 

List of Appendices

 

	
  Appendix
  1:

  	
  Definitions

  
	
   

  	
   

  
	
  Appendix
  2:

  	
  Reserved

  
	
   

  	
   

  
	
  Appendix
  3:

  	
  Reserved

  
	
   

  	
   

  
	
  Appendix
  4:

  	
  Regulus
  Platform Technology Patents

  
	
   

  	
   

  
	
  Appendix
  5:

  	
  Certain
  Regulus Prior 3rd Party Agreements

  
	
   

  	
   

  
	
  Appendix
  6:

  	
  Certain
  Regulus Prior 3rd Party Agreements

  
	
   

  	
   

  
	
  Appendix
  7:

  	
  Option
  Targets

  

 

 

APPENDIX 1

 

DEFINITIONS

 

“Affiliate” means any
Person, whether de jure or de facto,
which directly or indirectly through one (1) or more intermediaries
controls, is controlled by or is under common control with another Person.  A Person will be deemed to “control” another
Person if it (a) owns, directly or indirectly, beneficially or legally, at
least fifty percent (50%) of the outstanding voting securities or capital stock
(or such lesser percentage which is the maximum allowed to be owned by a Person
in a particular jurisdiction) of such other Person, or has other comparable
ownership interest with respect to any Person other than a corporation; or
(b) has the power, whether pursuant to contract, ownership of securities
or otherwise, to direct the management and policies of the Person. Notwithstanding
the above, neither of the Founding Companies of Regulus will be deemed an
Affiliate of Regulus for the purposes of this Agreement under any
circumstances.

 

“Agreement” means this
Nonexclusive Technology Alliance and Option Agreement, together with all
Appendices attached hereto, and the Technology Sharing Plan, as the same may be
amended or supplemented from time to time in accordance with the terms of this
Agreement.

 

“Applicable Law” or “Law”
means all applicable laws, statutes, rules, regulations and other
pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
agency or other body, domestic or foreign, including but not limited to any
applicable rules, regulations, guidelines, or other requirements of the
Regulatory Authorities that may be in effect from time to time, but excluding
patent laws.

 

“Approval” means, with
respect to any Product in any regulatory jurisdiction, approval from the
applicable Regulatory Authority sufficient for the manufacture, distribution,
use and sale of the Product in such jurisdiction in accordance with Applicable
Laws.

 

“Business Day” means a day on
which banking institutions in New York, New York, United States and Paris,
France are both open for business.

 

“Calendar Quarter” means the
respective periods of three consecutive calendar months ending on March 31,
June 30, September 30 and December 31.

 

“Collaboration Agreement” has the
meaning set in the second recital of this Agreement

 

“Commercialize”, “Commercializing”
and “Commercialization”
means activities directed to manufacturing, obtaining pricing and reimbursement
approvals, for, marketing, promoting, distributing, importing or selling a
product, including, without limitation, conducting pre-and post-Approval
activities, including studies reasonably required to increase the market
potential of the product and studies to provide improved formulation and
product delivery.

 

“Commercially Reasonable
Efforts” means, with respect to an Option Compound and
product, the carrying out of discovery, research, Development or
Commercialization activities using the efforts that the applicable Party would
reasonably devote to a compound or product of 

 

 

similar
market potential at a similar stage in development or product life resulting
from its own research efforts, taking into account strategic considerations
such as product profile, the competitive landscape and other relevant
scientific, technical and commercial factors.

 

“Commercial Option Deadline” has the
meaning set forth in Section 3.3.

 

“Confidential Information”
has the meaning set forth in Section 6.1.

 

“Control” means, with
respect to any Know-How, Patent or other intellectual property right,
possession by a Party (including its Affiliates) of the right (whether by
ownership, license or otherwise) to grant to the other Party ownership, a
license, sublicense and/or other right to practice under such Know-How, Patent
or other intellectual property right as provided for herein without violating
the terms of any agreement or other arrangement with any Third Party.  Notwithstanding anything to the contrary
under this Agreement, with respect to any Third Party acquirer that later
becomes an Affiliate of Regulus after the Effective Date, no intellectual
property of such Third Party acquirer will be included in the licenses granted
hereunder by virtue of such Third Party becoming an Affiliate of Regulus.

 

“Development” means
IND-enabling toxicology studies and production of GMP quality product and
clinical development activities reasonably related to the development and
submission of information to a Regulatory Authority with respect to an Option
Compound or product, including, without limitation, clinical toxicology,
clinical pharmacology, test method development and stability testing,
manufacturing process development, formulation development, delivery system
development, quality assurance and quality control development, manufacturing,
statistical analysis, and clinical studies. 
When used as a verb, “Develop”
means to engage in Development.

 

“Disclosing Party” has the
meaning set forth in Section 6.1.

 

“Dollars” or “$”
means the lawful currency of the United States.

 

“Effective Date” has the
meaning set forth in the opening paragraph of this Agreement.

 

“EMEA” means the
European Regulatory Authority known as the European Medicines Agency and any
successor agency thereto.

 

“FDA” means the
United States Food and Drug Administration and any successor agency thereto.

 

“Founding Company”
means individually, either Isis Pharmaceuticals, Inc. or Alnylam
Pharmaceuticals, Inc.; and collectively, both Isis Pharmaceuticals, Inc.
and Alnylam Pharmaceuticals, Inc.

 

“Founding Company License
Agreement” means the Amended and Restated License and Collaboration
Agreement among Regulus and the Founding Companies dated January 1, 2009,
as amended as of the Effective Date.

 

2

 

“Good Manufacturing Practice(s)”
or “GMP” will mean the
regulatory requirements for current good manufacturing practices promulgated in
the United States Code of Federal Regulations including those rules promulgated
by the United States Food and Drug Administration  under the U.S. Food, Drug and Cosmetic Act,
21 C.F.R. § 210 et seq. (“FD&C Act”) and ICH Guidelines and
applicable regulations, as the same may be amended from time to time.

 

“IND” means an
Investigational New Drug Application (as defined in the Food, Drug and Cosmetic
Act, as amended) filed with the FDA or its foreign counterparts.

 

“IND-Enabling Studies” means the
pharmacokinetic and toxicology studies required to meet the regulations for
filing an IND.

 

“Indemnified Party” has the
meaning set forth in Section 9.3.

 

“Indemnification Claim
Notice” has the meaning set forth in Section 9.3.

 

“Indication” means mean any
human or animal disease or condition, or sign or symptom of a human or animal
disease or condition.

 

“IP Period” means the period
of time commencing on the Research Option Exercise Date and continuing until the
[***] anniversary of the Effective Date.

 

“JTSC” has the
meaning set forth in Section 2.6.

 

“Know-How” means
technical information and materials, including without limitation, technology,
software, instrumentation, devices, data, biological materials, assays,
constructs, compounds, inventions, practices, methods, knowledge, know-how,
trade secrets, skill and experience.

 

“Losses” has the
meaning set forth in Section 9.1.

 

“microRNA” means a
structurally defined functional RNA molecule usually between 21 and 25
nucleotides in length, which is derived from genetically-encoded non-coding RNA
which is predicted to be  processed into
a hairpin RNA structure that is a substrate for the double-stranded
RNA-specific ribonuclease Drosha and subsequently is predicted to serve as a
substrate for the enzyme Dicer, a member of the RNase III enzyme family;
including, without limitation, those microRNAs exemplified in miRBase
(http://microrna.sanger.ac.uk/).  To the
extent that scientific developments after the Effective Date would lead experts
in the field of microRNA to expand this definition of microRNA, the Parties
agree to discuss redefining microRNA for purposes of this Agreement; provided, however, that nothing contained
herein will require any Party hereto to expand this definition.

 

“microRNA Antagonist” means a
single-stranded oligonucleotide (or a single stranded analog thereof) that is
designed to interfere with or inhibit a particular microRNA.  For purposes of clarity, the definition of “microRNA
Antagonist” is not intended to include oligonucleotides that function
predominantly through the RNAi mechanism of action or the RNase H mechanism of
action.

 

3

 

“microRNA Compound” means a
compound consisting of (a) a microRNA Antagonist, or (b) a microRNA
Mimic.

 

“microRNA Mimic” means a
double-stranded or single-stranded oligonucleotide or analog thereof with a
substantially similar base composition as a particular microRNA and which is
designed to mimic the activity of such microRNA.

 

“Net Sales” means, with
respect to an Option Product or, for the purposes of Section 7.4.2, in the
case of a product containing a microRNA Compound, the gross invoice price of
all units of such products sold by Sanofi, its Affiliates and/or their
sublicensees to any Third Party or, for the purposes of Section 7.4.2, in
the case of a Third Party sublicense of Regulus, or its Affiliate, to any other
Third Party, less the following items: 
(a) trade discounts, credits or allowances, (b) credits or
allowances additionally granted upon returns, rejections or recalls,
(c) freight, shipping and insurance charges, (d) taxes, duties or
other governmental tariffs (other than income taxes),
(e) government-mandated rebates, and (f) a reasonable reserve for bad
debts.  “Net Sales” under the following
circumstances will mean the fair market value of such Product:  (i) Products which are used by Sanofi,
its Affiliates or sublicensees for any commercial purpose without charge or
provision of invoice, (ii) Products which are sold or disposed of in whole
or in part for non cash consideration, or (iii) Products which are
provided to a Third Party by Sanofi, its Affiliates or sublicensees without
charge or provision of invoice and used by such Third Party except in the cases
of Products used to conduct clinical trials, reasonable amounts of Products
used as marketing samples and Product provided without charge for compassionate
or similar uses.

 

Net
Sales will not include any transfer between or among Sanofi and any of its
Affiliates or sublicensees for resale.

 

In
the event a Product is sold as part of a Combination Product, the Net Sales
from the Combination Product, for the purposes of determining royalty payments,
will be determined by multiplying the Net Sales (as determined without
reference to this paragraph) of the Combination Product, by the fraction,
A/(A+B), where A is the average sale price of the Product when sold separately
in finished form and B is the average sale price of the other therapeutically active
pharmaceutical compound(s) included in the Combination Product when sold
separately in finished form, each during the applicable royalty period or, if
sales of all compounds did not occur in such period, then in the most recent
royalty reporting period in which sales of all occurred.  In the event that such average sale price
cannot be determined for both the Product and all other therapeutically active
pharmaceutical compounds included in the Combination Product, Net Sales for the
purposes of determining royalty payments will be calculated as above, but the
average sales price in the above equation will be replaced by a good faith
estimate of the fair market value of the compound(s) for which no such
price exists.

 

“Option Compound” means either
(i) with respect to Option Targets for which Sanofi has selected a
microRNA Antagonist under Section 3.1 above, any microRNA Antagonist
discovered by Sanofi or its Affiliates that modulates the expression of such
Option Target where its primary mechanism of action is [***] to such Option
Target, or (ii) with respect to Option Targets for which Sanofi has
selected a microRNA Mimic under Section 3.1 above, a microRNA 

 

4

 

Mimic
discovered by Sanofi or its Affiliates with a [***] as the applicable Option
Target and which is [***] of such Option Target.

 

“Option Target” has the
meaning set forth in Section 3.1.

 

“Option Product” has the
meaning set forth in Section 3.3 of this Agreement.

 

“Party(ies)” has the
meaning set forth in the opening paragraph of this Agreement.

 

“Patents” means
(a) patents and patent applications in any country or jurisdiction,
(b) all priority applications, divisionals, continuations, and
continuations-in-part of any of the foregoing, and (c) all patents issuing
on any of the foregoing patent applications, together with all registrations,
reissues, renewals, re-examinations, confirmations, supplementary protection
certificates, and extensions of any of (a), (b) or (c).

 

“Permitted
License” means a license
granted by Regulus to a Third Party (i) under the Regulus Platform
Technology to [***] (or [***] to [***]) solely to [***], or (ii) under the
Regulus Platform Technology to enable such Third Party to [***] or [***]
microRNA Compounds, where such Third Party is [***] and is not [***].

 

“Person” means any
individual, firm, corporation, partnership, limited liability company, trust,
business trust, joint venture company, governmental authority, association or
other entity.

 

“Prior Third Party Agreements” means certain
licenses granted by Regulus to Third Parties under a Patent Controlled by
Regulus under an agreement included in the agreements listed in Appendix 5 or Appendix 6.

 

“Proposed Target” has the
meaning set forth in Section 3.7.1.

 

“Receiving Party” has the
meaning set forth in Section 6.1.

 

“Regulatory Authority” means any
governmental authority, including without limitation FDA, EMEA or Koseisho
(i.e., the Japanese Ministry of Health, Labour and Welfare, or any successor
agency thereto), that has responsibility for granting any licenses or approvals
or granting pricing and/or reimbursement approvals necessary for the marketing
and sale of an Option Product in any
country.

 

“Regulus Collaborator” means
any Third Party developing or commercializing a miRNA Compound product alone or
in collaboration with Regulus under a license to Regulus Platform Technology
Patents.

 

“Regulus Collaborator Blocking Patents”
means Patents Controlled by a Regulus Collaborator that claim:

 

(i)            any invention that is
conceived or reduced to practice during the [***] years following Regulus’
grant of a sublicense under the Sanofi Blocking Patents to such Regulus
Collaborator by one or more employees of such Regulus Collaborator or any of
its Affiliates who (A) have participated in any collaboration activities
with Regulus pursuant to a license from 

 

5

 

Regulus
under the Regulus Platform Technology or (B) have otherwise received
Regulus Platform Technology (excluding any Regulus Platform Know-How that, at
the time of initial access by any such employee, was not confidential
information of Regulus); and

 

(ii)           either:

 

(a)           microRNA Compounds in
general;

 

(b)           chemistry or delivery
technology useful in connection with microRNA Compounds;

 

(c)           general mechanisms of action
by which a microRNA Compound modulates microRNA; or

 

(d)           general methods of treating
or preventing an Indication by modulating one or more microRNAs;

 

provided, however, that in each case, Regulus
Collaborator Blocking Patents exclude Patents Controlled by the applicable
Regulus Collaborator (in each, case other than as a result of the sublicense
granted by Regulus) to the extent that such Patents claim:

 

(1)           a microRNA sequence or a
portion thereof;

 

(2)           the specific compositions of
matter of any microRNA Compound; or

 

(3)           methods of using as a
therapeutic any microRNA Compound.

 

“Regulus Collaborator
Exclusive Option” means,
with respect to a particular Proposed Target, an exclusive option granted by
Regulus to a Third Party under a written agreement that (i) identifies
such Proposed Target by name; (ii) grants such Third Party the right to
obtain an exclusive license to Develop and Commercialize microRNA Compounds
directed to such Proposed Target; (iii) obligates Regulus to [***] (or
otherwise obligates Regulus to perform activities that will [***]) Researching
and/or Developing microRNA Compounds for such Proposed Target, where such Third
Party [***], whether in the form of [***] or in [***], that Regulus will use,
in whole or in part, to [***]; and (iv) prohibits Regulus from
collaborating with Sanofi or any other Third Party with respect to such
Proposed Target or from granting Sanofi or any other Third Party a license to
Research, Develop or Commercialize microRNA Compounds directed to such Proposed
Target.

 

“Regulus Existing
In-Licenses” means an agreement between Regulus and a
Third Party as in effect on the Effective Date, pursuant to which Regulus has
Control over a piece of the Regulus Platform Technology.

 

6

 

“Regulus Future In-Licenses”
means an agreement between Regulus and a Third Party entered after the
Effective Date, pursuant to which Regulus has Control over a piece of the
Regulus Platform Technology.

 

“Regulus In-License
Agreements” means those agreements listed on Appendix 5 or Appendix 6.

 

“Regulus Platform Know-How” means, subject
to Section 4.1.6, all Know-How Controlled by Regulus on the Effective Date
or during the IP Period and related to (a) microRNA Compounds in general,
(b) chemistry or delivery technology useful in connection with microRNA
Compounds, (c) general mechanisms of action by which a microRNA Compounds
modulate microRNA, or (d) general methods of treating an Indication by
modulating one or more microRNAs; provided,
however, that in each case, Regulus Platform Know-How will not
include Know-How related specifically to (i) a microRNA sequence or a
portion thereof; (ii) the specific composition of matter of any microRNA
Compounds; or (iii) methods of using as a therapeutic any microRNA
Compound.

 

“Regulus Platform
Technology Patents” means, subject to
Section 4.1.6, (A) all Patents Controlled by Regulus on the Effective
Date and listed on Appendix 4,
and (B) all Patents Controlled by Regulus during the IP Period that claim
(a) microRNA Compounds in general, (b) chemistry or delivery
technology useful technology useful in connection with microRNA Compounds,
(c) general mechanisms of action by which a microRNA Compound modulates
microRNAs, or (d) general methods of treating or preventing an Indication
by modulating one or more microRNAs; provided,
however, that in each case, Regulus Platform Technology Patents do
not include (1) any Patents
Controlled by Regulus or its Affiliates to the extent that such Patents claim
(a) the sequence or a portion thereof corresponding to a specific microRNA
sequence or a portion thereof, (b) the specific composition of matter of
any microRNA Compound,
(c) methods of using as a therapeutic any microRNA Compound;
(2) the Tuschl 3 Patents; and (3) the Rockefeller Patents.

 

“Regulus Platform
Technology” means the Regulus Platform Know How and the
Regulus Platform Technology Patents.

 

“Regulus Tangible Materials” means any
tangible documentation, whether written or electronic, existing as of the
Effective Date or during the IP Period, that is Controlled by Regulus, and
embodying or relating to the Regulus Platform Technology.

 

“Research” means chemical
synthesis, manufacturing microRNA Compounds for research purposes, pre-clinical
research with respect to microRNA Compounds including gene function, gene
expression and target validation research using cells and animals, which may
include small pilot toxicology studies but excludes IND-Enabling Studies,
clinical development and commercialization.

 

“Research License” has the
meaning set forth in Section 2.3.

 

“Research Option” has the
meaning set forth in Section 2.1.

 

“Research Option Deadline” has the
meaning set forth in Section 2.2.

 

7

 

“Research Option Exercise
Date” has the meaning set forth in Section 2.3.

 

“[***] Patents” means the
Patents in-licensed by Regulus pursuant to the Non-Exclusive License Agreement
between [***] and [***] dated [***] and assigned to Regulus June 30, 2008.

 

“Sanofi Blocking Patents” means Patents
Controlled by Sanofi or its Affiliates (in each, case other than as a result of
the licenses granted by Regulus to Sanofi hereunder) that claim:

 

(i)            [***]; and

 

(ii)           either:

 

(a)           microRNA Compounds in
general;

 

(b)           chemistry or delivery
technology useful in connection with microRNA Compounds;

 

(c)           general mechanisms of action
by which a microRNA Compound modulates microRNA; or

 

(d)           general methods of treating
or preventing an Indication by modulating one or more microRNAs;

 

provided, however, that in each case, Sanofi
Blocking Patents exclude Patents Controlled by Sanofi or its Affiliates (in
each, case other than as a result of the licenses granted by Regulus to Sanofi
hereunder) to the extent that such Patents claim:

 

(1)           a microRNA sequence or a
portion thereof;

 

(2)           the specific compositions of
matter of any microRNA Compound being developed by Sanofi, its Affiliate or any
Third Party under license from Sanofi; or

 

(3)           methods of using as a therapeutic
any microRNA Compound being developed by Sanofi, its Affiliate or any Third
Party under license from Sanofi.

 

“Sanofi Indemnitees” has the
meaning set forth in Section 9.2.

 

“Senior Representatives”
has the meaning set forth in Section 11.4.1

 

“Target Encumbrances” has the
meaning set forth in Section 3.7.1.

 

“Technology Sharing Period” has the
meaning set forth in Section 2.4.1.

 

“Technology Sharing Program” has the
meaning set forth in Section 2.4.

 

“Technology Sharing Plan” has the
meaning set forth in Section 2.5.

 

“Term” has the meaning
set forth in Section 8.1.

 

8

 

 

“Territory” means all
countries and jurisdictions throughout the world.

 

“Third Party” means any
Person other than Regulus or Sanofi or their respective Affiliates.

 

“Third Party Claims” has the
meaning set forth in Section 9.1.

 

“Tuschl 3
Patents” means the Patents
in-licensed by Regulus pursuant to the License Agreement among Garching
Innovation GmbH, Isis Pharmaceuticals, Inc. and Alnylam
Pharmaceuticals, Inc. dated October 18, 2004

 

“Valid Claim” means a claim of any issued, unexpired patent that has not been
revoked or held unenforceable or invalid by a decision of a court or
governmental agency of competent jurisdiction from which no appeal can be
taken, or with respect to which an appeal is not taken within the time allowed
for appeal, and that has not been disclaimed or admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.

 

9

 

APPENDIX 2

 

[reserved]

 

 

APPENDIX 3

 

[reserved]

 

 

APPENDIX 4

 

REGULUS PLATFORM TECHNOLOGY PATENTS

 

 

APPENDIX 5

 

REGULUS IN-LICENSE AGREEMENTS

AND

PRIOR THIRD PARTY AGREEMENTS

 

[***]

 

 

APPENDIX 6

 

REGULUS IN-LICENSE AGREEMENTS

AND

PRIOR THIRD PARTY AGREEMENTS

 

[***]

 

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]