10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                               to

Commission File No. 0-14680

GENZYME CORPORATION
(Exact name of registrant as specified in its charter)

Massachusetts (State or other jurisdiction of incorporation or organization)	06-1047163 (I.R.S. Employer Identification No.)
500 Kendall Street Cambridge, Massachusetts (Address of principal executive offices)	02142 (Zip Code)
(617) 252-7500 (Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o    No ý

        Number of shares of Genzyme Stock outstanding as of July 31, 2008: 268,653,485

NOTE REGARDING REFERENCES TO OUR COMMON STOCK

        Throughout this Form 10-Q, the words "we," "us," "our" and "Genzyme" refer to Genzyme Corporation as a whole, and "our board of directors" refers to the board of directors of Genzyme Corporation. We have one outstanding series of common stock, which we refer to as "Genzyme Stock."

NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This Form 10-Q contains forward-looking statements, including statements regarding:

•

our plans to seek marketing approvals for our products in additional jurisdictions, including Renvela, Myozyme, Aldurazyme and Synvisc-One;



•

our expectations for United States Food and Drug Administration, or FDA, approval of alglucosidase alfa (Myozyme®) produced at the 2000 liter bioreactor, or 2000L, scale and the timing of this anticipated approval;



•

our intention to seek approval from the European Agency for the Evaluation of Medicinal Products, or EMEA, for Myozyme produced at the 4000 liter bioreactor, or 4000L, scale and our expectations regarding the timing of EMEA action;



•

our expectations for Myozyme revenue and costs in 2008 and for sales growth, and our assessment of Myozyme supply;



•

our plans and the anticipated timing for pursuing additional indications and uses for our products and services, including Renvela and Clolar and for regulatory action on our U.S. submission for Synvisc-One;



•

our expectations for sales of Renagel/Renvela and Hectorol and the anticipated drivers for the future growth of these products;



•

our expectations for Thymoglobulin, including our estimates of product returns due to product we recalled in 2008;



•

our estimated timetable for regulatory approvals and launches of Mozobil in the United States and Europe;



•

our assessment of competitors and potential competitors and the anticipated impact of potentially competitive products and services on our revenues;



•

Cerezyme's future contribution to our revenues and our expectations regarding its current growth trends;



•

our intention to pursue our rights with respect to insurance coverage for our settlement of a class action lawsuit under a director and officer liability insurance program;



•

our assessment of the financial impact of legal proceedings and claims on our financial position and results of operations;



•

the sufficiency of our cash, investments and cash flows from operations;



•

our U.S. and foreign income tax audits, including our provision for potential liabilities;



•

our estimates of the cost to complete and estimated commercialization dates for our in-process research and development programs;



•

our assessment of the deductibility of the amounts allocated to goodwill for our Bioenvision acquisition; and

2

•

our expectations regarding the amortization of intangible assets related to our expected future contingent payments due to Synpac (North Carolina), Inc. and Wyeth.

        These statements are subject to risks and uncertainties, and our actual results may differ materially from those that are described in this report. These risks and uncertainties include:

•

our ability to successfully complete preclinical and clinical development of our products and services;



•

our ability to secure regulatory approvals for our products, services and manufacturing facilities, and to do so in the anticipated timeframes, including our ability to obtain and maintain regulatory approvals for alglucosidase alfa (Myozyme®) produced at the 2000L scale in the United States and 4000L scale in Europe and the timing of these anticipated approvals;



•

the content and timing of submissions to and decisions made by the FDA, the EMEA, and other regulatory agencies related to our products and services and the facilities and processes used to manufacture our products;



•

our ability to accurately forecast the impact of regulatory delays on our revenues, costs and earnings;



•

our ability to manufacture sufficient amounts of our products for development and commercialization activities and to do so in a timely and cost-effective manner, including our ability to manufacture Thymoglobulin that meets our product specifications and in quantities sufficient to meet projected market demand and our ability to manufacture Myozyme at the 2000L and 4000L scales;



•

our ability to satisfy the post-marketing commitments made as a condition of the marketing approvals of Fabrazyme, Aldurazyme, Myozyme and Clolar;



•

our reliance on third parties to provide us with materials and services in connection with the manufacture of our products;



•

the accuracy of our estimates of the size and characteristics of the markets to be addressed by our products and services, including growth projections;



•

market acceptance of our products and services in expanded areas of use and new markets;



•

our ability to identify new patients for our products and services;



•

our ability to increase market penetration of our products and services both outside and within the United States;



•

the accuracy of our information regarding the products and resources of our competitors and potential competitors;



•

competition from lower cost generic or follow-on products;



•

the availability of reimbursement for our products and services from third party payors, the extent of such coverage and the accuracy of our estimates of the payor mix for our products;



•

our ability to effectively manage wholesaler inventories of our products and the levels of their compliance with our inventory management programs;



•

our use of cash in business combinations or other strategic initiatives;



•

the resolution of our dispute with our insurance carriers regarding our claim for coverage under a director and officer liability insurance program;



•

the outcome of legal proceedings by or against us;

3

•

our ability to successfully integrate the business we acquired from Bioenvision, Inc., or Bioenvision;



•

the outcome of our IRS and foreign tax audits; and



•

the possible disruption of our operations due to terrorist activities, armed conflict, severe climate change or outbreak of diseases, including as a result of the disruption of operations of regulatory authorities, our subsidiaries, manufacturing facilities, customers, suppliers, distributors, couriers, collaborative partners, licensees or clinical trial sites.

        We have included more detailed descriptions of these and other risks and uncertainties under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Risk Factors," in Part I., Item 2. of this Quarterly Report on Form 10-Q. We encourage you to read those descriptions carefully. We caution investors not to place substantial reliance on the forward-looking statements contained in this report. These statements, like all statements in this report, speak only as of the date of this report (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.

NOTE REGARDING INCORPORATION BY REFERENCE

        The United States Securities and Exchange Commission, commonly referred to as the SEC, allows us to disclose important information to you by referring you to other documents we have filed with them. The information that we refer you to is "incorporated by reference" into this Form 10-Q. Please read that information.

NOTE REGARDING TRADEMARKS

        Genzyme®, Cerezyme®, Ceredase®, Fabrazyme®, Thyrogen®, Myozyme®, Renagel®, Renvela®, Campath®, Clolar®, Thymoglobulin®, Synvisc®, Sepra®, Seprafilm®, Carticel®, Epicel®, MACI®, Hylaform®, Cholestagel® and Hectorol® are registered trademarks, and Mozobil™, Lymphoglobuline™ and Synvisc-One™ are trademarks, of Genzyme or its subsidiaries. WelChol® is a registered trademark of Sankyo Pharma, Inc. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. All rights reserved.

4

GENZYME CORPORATION AND SUBSIDIARIES

FORM 10-Q, JUNE 30, 2008

TABLE OF CONTENTS

		PAGE NO.
PART I.	FINANCIAL INFORMATION		6
ITEM 1.	Financial Statements		6
	Unaudited, Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2008 and 2007		6
	Unaudited, Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007		7
	Unaudited, Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007		8
	Notes to Unaudited, Consolidated Financial Statements		9
ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		30
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		70
ITEM 4.	Controls and Procedures		71
PART II.	OTHER INFORMATION		71
ITEM 1.	Legal Proceedings		71
ITEM 1A.	Risk Factors		72
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		72
ITEM 4.	Submission of Matters to a Vote of Security Holders		72
ITEM 6.	Exhibits		73
Signatures			74

5

PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income

(Unaudited, amounts in thousands, except per share amounts)

				Three Months Ended June 30,						Six Months Ended June 30,
				2008			2007			2008			2007
Revenues:
	Net product sales			$	1,071,801		$	845,482		$	2,078,069		$	1,643,672
	Net service sales				90,622			82,475			176,486			158,356
	Research and development revenue				8,711			5,462			16,640			14,574
		Total revenues			1,171,134			933,419			2,271,195			1,816,602
Operating costs and expenses:
	Cost of products sold				241,343			163,252			458,082			317,976
	Cost of services sold				58,987			54,346			114,561			102,085
	Selling, general and administrative				347,305			339,480			665,691			608,501
	Research and development				381,861			198,442			644,658			364,562
	Amortization of intangibles				55,605			49,465			111,263			99,482
		Total operating costs and expenses			1,085,101			804,985			1,994,255			1,492,606
Operating income					86,033			128,434			276,940			323,996
Other income (expenses):
	Equity in income of equity method investments				—			5,945			188			11,557
	Minority interest				563			15			1,026			3,927
	Gains on investments in equity securities, net				9,153			143			9,928			12,931
	Other				19			(278	)		(141	)		(803	)
	Investment income				13,352			17,246			28,222			33,465
	Interest expense				(1,149	)		(3,621	)		(2,804	)		(7,809	)
		Total other income			21,938			19,450			36,419			53,268
Income before income taxes					107,971			147,884			313,359			377,264
Provision for income taxes					(38,407	)		(64,090	)		(98,524	)		(135,283	)
Net income				$	69,564		$	83,794		$	214,835		$	241,981
Net income per share:
	Basic			$	0.26		$	0.32		$	0.80		$	0.92
	Diluted			$	0.25		$	0.31		$	0.77		$	0.88
Weighted average shares outstanding:
	Basic				266,904			263,911			267,127			263,693
	Diluted				284,262			280,564			285,028			280,244
Comprehensive income, net of tax:
Net income				$	69,564		$	83,794		$	214,835		$	241,981
Other comprehensive income (loss):
	Foreign currency translation adjustments				(3,981	)		8,636			105,673			21,246
	Pension liability adjustments, net of tax				(7	)		(464	)		71			(266	)
	Unrealized gains (losses) on securities, net of tax:
		Unrealized gains (losses) arising during the period			806			(4,601	)		4,711			(2,732	)
		Reclassification adjustments for gains (losses) included in net income			(5,628	)		398			(5,898	)		246
			Unrealized losses on securities, net of tax		(4,822	)		(4,203	)		(1,187	)		(2,486	)
	Other comprehensive income (loss)				(8,810	)		3,969			104,557			18,494
Comprehensive income				$	60,754		$	87,763		$	319,392		$	260,475

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

6

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited, amounts in thousands, except par value amounts)

			June 30, 2008			December 31, 2007
ASSETS
Current assets:
	Cash and cash equivalents		$	693,687		$	867,012
	Short-term investments			67,688			80,445
	Accounts receivable, net			1,066,478			904,101
	Inventories			472,538			439,115
	Prepaid expenses and other current assets			170,711			154,183
	Deferred tax assets			158,728			164,341
		Total current assets		2,629,830			2,609,197
Property, plant and equipment, net				2,212,044			1,968,402
Long-term investments				493,119			512,937
Goodwill				1,404,070			1,403,828
Other intangible assets, net				1,990,162			1,555,652
Deferred tax assets				270,750			95,664
Investments in equity securities				162,930			89,181
Other noncurrent assets				19,947			66,880
		Total assets	$	9,182,852		$	8,301,741
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	117,180		$	128,380
	Accrued expenses			636,205			645,645
	Income taxes payable			23,166			18,479
	Deferred revenue			18,732			13,277
	Current portion of long-term debt and capital lease obligations			696,860			696,625
		Total current liabilities		1,492,143			1,502,406
Long-term debt and capital lease obligations				109,157			113,748
Deferred revenue—noncurrent				14,783			16,662
Other noncurrent liabilities				525,365			55,988
		Total liabilities		2,141,448			1,688,804
Commitments and contingencies
Stockholders' equity:
	Preferred stock, $0.01 par value			—			—
	Common stock, $0.01 par value			2,670			2,660
	Additional paid-in capital			5,491,727			5,385,154
	Notes receivable from stockholders			(13,178	)		(15,670	)
	Accumulated earnings			1,041,550			826,715
	Accumulated other comprehensive income			518,635			414,078
		Total stockholders' equity		7,041,404			6,612,937
		Total liabilities and stockholders' equity	$	9,182,852		$	8,301,741

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

7

GENZYME CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited, amounts in thousands)

					Six Months Ended June 30,
					2008			2007
Cash Flows from Operating Activities:
	Net income				$	214,835		$	241,981
	Reconciliation of net income to cash flows from operating activities:
		Depreciation and amortization				183,119			162,827
		Stock-based compensation				96,952			102,023
		Provision for bad debts				5,844			4,569
		Equity in income of equity method investments				(188	)		(11,557	)
		Minority interest				—			(3,927	)
		Gains on investments in equity securities, net				(9,928	)		(12,931	)
		Deferred income tax benefit				(172,813	)		(55,026	)
		Tax benefit from employee stock-based compensation				25,645			8,349
		Excess tax benefits from stock-based compensation				(8,647	)		(565	)
		Other				2,175			3,048
		Increase (decrease) in cash from working capital changes (excluding impact of acquired assets and assumed liabilities):
			Accounts receivable			(98,174	)		(71,660	)
			Inventories			(4,812	)		(47,312	)
			Prepaid expenses and other current assets			(15,295	)		(1,589	)
			Income taxes payable			13,288			(11,496	)
			Accounts payable, accrued expenses and deferred revenue			(52,692	)		69,434
				Cash flows from operating activities		179,309			376,168
Cash Flows from Investing Activities:
	Purchases of investments					(289,129	)		(412,067	)
	Sales and maturities of investments					319,758			496,986
	Purchases of equity securities					(81,472	)		(19,945	)
	Proceeds from sales of investments in equity securities					16,169			19,277
	Purchases of property, plant and equipment					(251,785	)		(180,041	)
	Distributions from equity method investments					6,595			10,900
	Purchases of other intangible assets					(75,400	)		(27,618	)
	Other					2,571			891
				Cash flows from investing activities		(352,693	)		(111,617	)
Cash Flows from Financing Activities:
	Proceeds from issuance of our common stock					127,008			68,174
	Repurchases of our common stock					(143,012	)		(63,430	)
	Excess tax benefits from stock-based compensation					8,647			565
	Payments of debt and capital lease obligations					(3,886	)		(3,356	)
	Increase in bank overdrafts					29,309			15,935
	Payments of notes receivable from stockholders					2,770			—
	Minority interest contributions					—			4,136
	Other					34			2,474
				Cash flows from financing activities		20,870			24,498
Effect of exchange rate changes on cash						(20,811	)		10,222
Increase (decrease) in cash and cash equivalents						(173,325	)		299,271
Cash and cash equivalents at beginning of period						867,012			492,170
Cash and cash equivalents at end of period					$	693,687		$	791,441

The accompanying notes are an integral part of these unaudited, consolidated financial statements.

8

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements

1.    Description of Business

        We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our broad product and service portfolio is focused on rare disorders, renal diseases, orthopaedics, organ transplant, diagnostic and predictive testing, and cancer. We are organized into six financial reporting units, which we also consider to be our reporting segments:

•

Renal, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure. The unit derives substantially all of its revenue from sales of Renagel/Renvela (including sales of bulk sevelamer) and Hectorol;



•

Therapeutics, which develops, manufactures and distributes therapeutic products, with an expanding focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as lysosomal storage disorders, or LSDs, and other specialty therapeutics, such as Thyrogen. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme, Myozyme, Aldurazyme and Thyrogen;



•

Transplant, which develops, manufactures and distributes therapeutic products that address pre-transplantation, prevention and treatment of graft rejection in organ transplantation and other hematologic and auto-immune disorders. The unit derives substantially all of its revenue from sales of Thymoglobulin;



•

Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial-based products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives substantially all of its revenue from sales of Synvisc, the Sepra line of products, Carticel and Matrix-induced Autologous Chondrocyte Implantation, or MACI;



•

Genetics, which provides testing services for the oncology, prenatal and reproductive markets; and



•

Oncology, which develops, manufactures and distributes products for the treatment of cancer, with a focus on antibody- and small molecule-based therapies. The unit derives substantially all of its revenue from sales and royalties received on sales of Campath and Clolar and from the reimbursement of Campath development expenses.

        We report the activities of our diagnostic products, bulk pharmaceuticals and cardiovascular business units under the caption "Other." We report our corporate, general and administrative operations and corporate science activities under the caption "Corporate."

        Effective January 1, 2008, as a result of changes in how we review our business, certain general and administrative expenses, which were formerly allocated amongst our reporting segments and Other, are now allocated to Corporate.

        As a result of our acquisition of Bioenvision in October 2007, our Oncology business unit, which was formerly reported combined with "Other," now meets the criteria for disclosure as a separate reporting segment. We have revised our 2007 segment disclosures to conform to our 2008 presentation.

9

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies

Basis of Presentation

        Our unaudited, consolidated financial statements for each period include the statements of operations and comprehensive income, balance sheets and statements of cash flows for our operations taken as a whole. We have eliminated all intercompany items and transactions in consolidation. We prepare our unaudited, consolidated financial statements following the requirements of the SEC for interim reporting. As permitted under these rules, we condense or omit certain footnotes and other financial information that are normally required by accounting principles generally accepted in the United States.

        These financial statements include all normal and recurring adjustments that we consider necessary for the fair presentation of our financial condition and results of operations. Since these are interim financial statements, you should also read our audited, consolidated financial statements and notes included in our 2007 Form 10-K. Revenues, expenses, assets and liabilities can vary from quarter to quarter. Therefore, the results and trends in these interim financial statements may not be indicative of results for future periods.

        Our unaudited, consolidated financial statements for each period include the accounts of our wholly owned and majority owned subsidiaries. As a result of our adoption of FASB Interpretation No., or FIN, 46R, "Consolidation of Variable Interest Entities," we also consolidate certain variable interest entities for which we are the primary beneficiary. For consolidated subsidiaries in which we have less than a 100% interest, we record minority interest in our consolidated statements of operations for the ownership interest of the minority owner. We use the equity method of accounting to account for our investments in entities in which we have a substantial ownership interest (20% to 50%) which do not fall in the scope of FIN 46R, or over which we exercise significant influence. Our consolidated net income includes our share of the earnings or losses of these entities.

Recent Accounting Pronouncements

         FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115."    Effective January 1, 2008, we adopted FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115," which permits, but does not require, entities to measure certain financial instruments and other assets and liabilities at fair value on an instrument-by-instrument basis. Unrealized gains and losses on items for which the fair value option has been elected should be recognized in earnings at each subsequent reporting date. In adopting FAS 159, we did not elect to measure any new assets or liabilities at their respective fair values and, therefore, the adoption of FAS 159 did not have an impact on our results of operations and financial position.

         EITF Issue No. 07-1, "Accounting for Collaborative Arrangements."    In December 2007, the Emerging Issues Task Force, or EITF, of the FASB reached a consensus on Issue No. 07-1, "Accounting for Collaborative Arrangements." The EITF concluded on the definition of a collaborative arrangement and that revenues and costs incurred with third parties in connection with collaborative arrangements would be presented gross or net based on the criteria in EITF 99-19 and other accounting literature. Companies are also required to disclose the nature and purpose of collaborative arrangements along with the accounting policies and the classification and amounts attributable to transactions related to the arrangements. EITF 07-1 is effective January 1, 2009 and we will apply it retrospectively to all

10

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

periods presented for all collaborative arrangements existing as of the effective date. We are evaluating the impact, if any, that EITF 07-1 will have on our consolidated financial statements.

         EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities."    In June 2007, the FASB ratified the EITF consensus reached in EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities," which provides guidance for nonrefundable prepayments for goods or services that will be used or rendered for future research and development activities and directs that such payments should be deferred and capitalized. Such amounts should be recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. EITF 07-3 was effective for us beginning January 1, 2008 and we applied it prospectively to new contracts we entered into on or after that date. The implementation of EITF 07-3 did not have a material impact on our financial position, results of operations or cash flows.

         FAS 141 (revised 2007), "Business Combinations."    In December 2007, the FASB issued FAS 141 (revised 2007), "Business Combinations," or FAS 141R, which replaces FAS 141, "Business Combinations." FAS 141R retains the underlying concepts of FAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but changes a number of significant aspects of applying this method. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development, or IPR&D, will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. FAS 141R is effective for us on a prospective basis for all business combinations for which the acquisition date is on or after January 1, 2009. Early adoption is not permitted. We are currently evaluating the effects, if any, that FAS 141R will have on our consolidated financial statements.

         FAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51."    In December 2007, the FASB issued FAS 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51," which establishes new accounting and reporting standards that require the ownership interests in subsidiaries not held by the parent to be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. FAS 160 also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest, commonly referred to as the minority interest, to be clearly identified and presented on the face of the consolidated statement of income. Changes in a parent's ownership interest while the parent retains its controlling financial interest must be accounted for consistently, and when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary must be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment. FAS 160 also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective for us January 1, 2009 and adoption is prospective only. However, upon adoption, presentation and disclosure requirements described above must be applied retrospectively for all

11

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

2.    Basis of Presentation and Significant Accounting Policies (Continued)

periods presented in our consolidated financial statements. We are currently evaluating the effects, if any, that FAS 160 will have on our consolidated financial statements.

FASB Staff Position, or FSP, No. 157-2, "Effective Date of FASB Statement No. 157."    In accordance with the provisions of FSP No. 157-2, "Effective Date of FASB Statement No. 157," we elected to defer implementation of FAS 157, as it relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in our consolidated financial statements on a nonrecurring basis, until January 1, 2009. We are evaluating the impact, if any, the adoption of FAS 157, for those assets and liabilities within the scope of FSP No. FAS 157-2, will have on our financial position, results of operations and liquidity. We did not have any non-financial assets or non-financial liabilities that would be recognized or disclosed on a recurring basis as of June 30, 2008.

         FAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133."    In March 2008, the FASB issued FAS 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133," which amends and expands the disclosure requirements of FAS 133, "Accounting for Derivative Instruments and Hedging Activities." FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the effects, if any, that FAS 161 will have on our consolidated financial statements.

         FSP No. 142-3, "Determination of the Useful Life of Intangible Assets."    In April 2008, the FASB issued FSP No. 142-3, "Determination of the Useful Life of Intangible Assets." FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets". FSP No. 142-3 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the effects, if any, that FSP No. 142-3 will have on our consolidated financial statements.

         FAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles."    In May 2008, the FASB issued FAS 162, "The Hierarchy of Generally Accepted Accounting Principles." FAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. FAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." The implementation of this standard will not have a material impact on our consolidated financial position and results of operations.

3.    Fair Value Measurements

        A significant number of our financial instruments are carried at fair value. These assets and liabilities include:

•

fixed income and money market investments;



•

derivatives; and

12

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

•

investments in publicly-traded equity securities.

Fair Value Measurement—Definition and Hierarchy

        Effective January 1, 2008, we implemented FAS 157, "Fair Value Measurements," for our financial assets and liabilities that are re-measured and reported at fair value at each reporting period. The adoption of FAS 157 to our financial assets and liabilities did not have a material impact on our financial position and results of operations.

        FAS 157 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date. In determining fair value, FAS 157 permits the use of various valuation approaches, including market, income and cost approaches. FAS 157 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

        The fair value hierarchy is broken down into three levels based on the reliability of inputs. We have categorized our fixed income, derivatives and equity securities within the hierarchy as follows:

•

Level 1—These valuations are based on a "market approach" using quoted prices in active markets for identical assets. Valuations of these products do not require a significant degree of judgment. Assets utilizing Level 1 inputs include money market funds, U.S. government securities, bank deposits and exchange-traded equity securities;



•

Level 2—These valuations are based primarily on a "market approach" using quoted prices in markets that are not very active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Fixed income assets utilizing Level 2 inputs include U.S. agency securities, including direct issuance bonds and mortgage-backed securities, asset-backed securities, corporate bonds and commercial paper. Derivative securities utilizing Level 2 inputs include forward foreign-exchange contracts; and



•

Level 3—These valuations are based on various approaches using inputs that are unobservable and significant to the overall fair value measurement. Certain assets are classified within Level 3 of the fair value hierarchy because they trade infrequently and, therefore, have little or no transparency. We currently have no assets or liabilities that are valued with Level 3 inputs.

Valuation Techniques

        Fair value is a market-based measure considered from the perspective of a market participant who would buy the asset or assume the liability rather than our own specific measure. All of our fixed income securities are priced by our custodial agent and nationally known pricing vendors, using a variety of daily data sources, largely readily-available market data and broker quotes. To validate these prices, we compare the fair market values of our fixed income investments using market data from observable and corroborated sources. We also perform the fair value calculations for our derivative and equity securities using market data from observable and corroborated sources. In periods of market inactivity, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

3.    Fair Value Measurements (Continued)

        The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2008 (amounts in thousands):

Description			Total			Level 1		Level 2			Level 3
Fixed income investments(1):	Cash equivalents:	Money market funds	$	498,111		$	498,111	$	—		$	—
	Short-term investments:	U.S. agency notes		8,388			—		8,388			—
		Corporate notes—global		59,300			—		59,300			—
		Total		67,688			—		67,688			—
	Long-term investments:	U.S. Treasury notes		105,243			105,243		—			—
		U.S. agency notes		170,613			—		170,613			—
		Corporate notes—global		217,263			—		217,263			—
		Total		493,119			105,243		387,876			—
	Total fixed income investments			1,058,918			603,354		455,564			—
Derivatives:	Foreign exchange contracts(2)			(4,824	)		—		(4,824	)		—
Equity holdings:	Publicly-traded equity securities(1)			57,224			57,224		—			—
Total assets and (liabilities) at fair value			$	1,111,318		$	660,578	$	450,740		$	—

(1)

Changes in fair value of our fixed income investments and investments in publicly-traded equity securities are recorded in accumulated other comprehensive income, a component of stockholders' equity, in our consolidated balance sheets.

(2)

As of June 30, 2008, the aggregate fair value of our foreign exchange contracts was an unrealized loss of $4.8 million, which we recorded as an increase to accrued expenses in our consolidated balance sheets as of that date. Changes in fair value of our forward foreign exchange contracts are recorded in unrealized foreign exchange gains and losses, a component of selling, general and administrative expenses, or SG&A, in our consolidated statements of operations.

        The carrying amounts reflected in our consolidated balance sheets for cash, accounts receivable, other current assets, accounts payable and accrued expenses approximate fair value due to their short-term maturities.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

4.    Net Income Per Share

        The following table sets forth our computation of basic and diluted net income per share (amounts in thousands, except per share amounts):

			Three Months Ended June 30,				Six Months Ended June 30,
			2008		2007		2008		2007
Net income—basic			$	69,564	$	83,794	$	214,835	$	241,981
Effect of dilutive securities:
	Interest expense and debt fee amortization, net of tax, related to our 1.25% convertible senior notes			1,886		1,887		3,772		3,772
Net income—diluted			$	71,450	$	85,681	$	218,607	$	245,753
Shares used in computing net income per common share—basic				266,904		263,911		267,127		263,693
Effect of dilutive securities:
	Shares issuable upon the assumed conversion of our 1.25% convertible senior notes			9,686		9,686		9,686		9,686
	Stock options(1)			7,123		6,906		7,712		6,829
	Restricted stock units(2)			538		50		491		25
	Warrants and stock purchase rights			11		11		12		11
		Dilutive potential common shares		17,358		16,653		17,901		16,551
Shares used in computing net income per common share—diluted(1,2)				284,262		280,564		285,028		280,244
Net income per common share:
	Basic		$	0.26	$	0.32	$	0.80	$	0.92
	Diluted		$	0.25	$	0.31	$	0.77	$	0.88

(1)

We did not include the securities described in the following table in the computation of diluted earnings per share because these securities were anti-dilutive during the corresponding period (amounts in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Shares issuable upon exercise of outstanding options		4,258		15,053		3,120		14,268

(2)

We began issuing restricted stock units, or RSUs, under our 2004 Equity Incentive Plan in May 2007, in connection with our general grant program.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions

Bioenvision

        Effective October 23, 2007, we completed our acquisition of Bioenvision through the culmination of a two step process consisting of a tender offer completed in July 2007, and a merger approved in October 2007. We paid gross consideration of $349.9 million in cash, including $345.4 million for the outstanding shares of Bioenvision Common and Series A Preferred Stock and options to purchase shares of Bioenvision Common Stock, and approximately $5 million for acquisition costs. The acquisition of Bioenvision provided us with the rights to clofarabine outside North America.

        In connection with the merger, holders of 2,880,000 shares of Bioenvision Common Stock, representing less than 5% of the outstanding shares of Bioenvision Common Stock on an as-converted basis immediately before the merger became effective, submitted written demands for appraisal of their shares and elected not to accept the $5.60 per share merger consideration. We refer to these stockholders as dissenting stockholders. We obtained ownership of the dissenting shares and accounted for the merger based on 100% ownership of Bioenvision. In October 2007, we accrued $16.1 million in our consolidated balance sheets, which represented our estimate of the price to be paid to the dissenting shareholders upon resolution of their appraisal demand.

        The purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed amounted to $85.3 million, which was allocated to goodwill. We expect that substantially all of the amount allocated to goodwill will be deductible for tax purposes.

        The allocation of purchase price remains subject to potential adjustments, including adjustments for liabilities associated with certain exit and tax restructuring activities. We recorded immaterial adjustments to the purchase price in the first half of 2008.

Purchase of In-Process Research and Development

        We did not complete any acquisitions in the six months ended June 30, 2008. In connection with certain acquisitions that we completed between January 1, 2006 and December 31, 2007, we acquired various IPR&D projects. The following table sets forth the significant IPR&D projects for companies and certain assets we acquired between January 1, 2006 and December 31, 2007 (amounts in millions):

Company/Assets Acquired	Purchase Price		IPR&D		Programs Acquired	Discount Rate Used in Estimating Cash Flows			Year of Expected Launch
Bioenvision (2007)	$	349.9	$	125.5	Evoltra (clofarabine)(1,2)		17	%		2008-2010
AnorMED Inc. (2006)	$	589.2	$	526.8 26.1	Mozobil (stem cell transplant)(3) AMD070 (HIV)(4)		15 15	% %		2009-2014 —
			$	552.9

(1)

IPR&D charges totaled $125.5 million related to the acquisition of Bioenvision, of which $106.4 million was charged to IPR&D and $19.1 million was charged to equity in income of equity method investments.

16

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions (Continued)

(2)

Clofarabine, which is approved for the treatment of relapsed and refractory pediatric acute lymphoblastic leukemia, or ALL, is marketed under the name Clolar in North America and as Evoltra elsewhere in the world. The IPR&D projects for Clolar are related to the development of the product for the treatment of other medical diseases.

(3)

In June 2008, we submitted marketing applications for Mozobil in the United States and Europe. We expect to launch Mozobil in these regions during the first half of 2009, following regulatory approval.

(4)

Year of expected launch is not provided for AMD070 at this time because we are assessing our future plans for this program.

Exit Activities

        In connection with several of our acquisitions, we initiated integration plans to consolidate and restructure certain functions and operations, including the relocation and termination of certain personnel of these acquired entities and the closure of certain of the acquired entities' leased facilities. These costs have been recognized as liabilities in accordance with EITF Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase or Business Combination," and are subject to potential adjustments as certain exit activities are confirmed or refined. The following table summarizes the liabilities established for exit activities related to these acquisitions (amounts in thousands):

		Employee Related Benefits			Closure of Leased Facilities			Other Exit Activities			Total Exit Activities
Balance at December 31, 2006		$	6,105		$	24		$	—		$	6,129
	Acquisition(1)		2,601			—			70			2,671
	Revision of estimates		(931	)		2,593			—			1,662
	Payments		(5,602	)		(453	)		—			(6,055	)
Balance at December 31, 2007			2,173			2,164			70			4,407
	Revision of estimates		(182	)		—			—			(182	)
	Payments		(1,654	)		(384	)		(70	)		(2,108	)
Balance at June 30, 2008(2)		$	337		$	1,780		$	—		$	2,117

(1)

Represents amounts accrued for employee related benefits resulting from our acquisition of Bioenvision. We completed payment of these benefits in June 2008.

(2)

We expect to pay employee benefits related to our acquisition of AnorMED through 2008 and payments related to the closing of the leased facility through 2012.

Pro Forma Financial Summary

        The following pro forma financial summary is presented as if the acquisition of Bioenvision had been completed as of January 1, 2007. These pro forma combined results are not necessarily indicative of the actual results that would have occurred had the acquisition been consummated on that date, or of the future operations of the combined entities. Material nonrecurring charges related to the

17

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

5.    Mergers and Acquisitions (Continued)

acquisition of Bioenvision, such as IPR&D charges of $125.5 million, are included in the following pro forma financial summary as of January 1, 2007 (amounts in thousands, except per share amounts):

		Three Months Ended June 30, 2007		Six Months Ended June 30, 2007
Total revenues		$	937,437	$	1,822,742
Net income		$	76,192	$	116,965
Net income per share:
	Basic	$	0.29	$	0.44
	Diluted	$	0.28	$	0.43
Weighted average shares outstanding:
	Basic		263,911		263,693
	Diluted		280,564		280,244

6.    Strategic Transactions

Collaboration with PTC Therapeutics, Inc.

        On July 15, 2008, we entered into a collaboration agreement with PTC Therapeutics, Inc., or PTC, to develop and commercialize PTC124, PTC's novel oral therapy in late-stage development for the treatment of nonsense-mutation-mediated Duchenne muscular dystrophy, or DMD, and nonsense-mutation-mediated cystic fibrosis, or CF. Under the terms of the agreement, PTC will commercialize PTC124 in the United States and Canada, and we will commercialize the treatment in all other countries. In connection with the collaboration agreement, we paid PTC a nonrefundable upfront payment of $100.0 million, which we recorded as a charge to research and development expense in our consolidated statements of operations in July 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense. PTC will conduct and be responsible for the phase 2b trial of PTC124 in DMD, the phase 2b trial in CF and two proof-of-concept studies in other indications to be determined. Once these four studies have been completed, we and PTC will share research and development costs for PTC124 equally. We and PTC will each bear the sales and marketing and other costs associated with the commercialization of PTC124 in our respective territories. PTC is eligible to receive up to $337.0 million in milestone payments as follows:

•

up to $165.0 million in development and approval milestones, the majority of which are to be paid upon approvals obtained outside of the United States and Canada; and



•

up to $172.0 million in sales milestones, commencing when annual net revenues for PTC124 reach $300.0 million and increasing in increments through revenues of $2.4 billion.

PTC is also eligible to receive tiered, double-digit royalties from sales of PTC124 outside of the United States and Canada.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

6.    Strategic Transactions (Continued)

Strategic Alliance with Isis

        On January 7, 2008, we entered into a strategic alliance with Isis, whereby we obtained an exclusive license to develop and commercialize mipomersen, a lipid-lowering drug targeting apolipoprotein B-100, for the treatment of familial hypercholesterolemia, or FH, an inherited disorder that causes exceptionally high levels of LDL-cholesterol. In February 2008, we made a nonrefundable payment to Isis of $150.0 million, of which $80.1 million was recorded as an investment in equity securities in our consolidated balance sheets based on the fair value of the five million shares of Isis common stock we acquired in connection with the transaction, and the remaining $69.9 million was allocated to the mipomersen license, which had not reached technological feasibility and did not have alternative future use. We recorded the $69.9 million license fee as a charge to research and development expense in our consolidated statements of operations in the first quarter of 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense.

        In June 2008, we finalized the terms of our license and collaboration agreement with Isis and paid Isis an additional $175.0 million upfront nonrefundable license fee, which we recorded as a charge to research and development expense in our consolidated statements of operations in June 2008. Under the terms of the agreement, Isis will contribute up to the first $125.0 million in funding for the development of mipomersen and, thereafter, we and Isis will share development costs for mipomersen equally. The initial funding commitment by Isis and shared development funding will end when the mipomersen program is profitable. In the event the research and development of mipomersen is terminated prior to Isis completing their funding obligation, we are not entitled to any refund of our $175.0 million upfront payment. Accordingly, the $175.0 million was recorded as research and development expense in June 2008. Isis is eligible to receive up to $750.0 million in commercial milestone payments and up to $825.0 million in development and regulatory milestone payments.

        We will be responsible for funding sales and marketing expenses until mipomersen revenues are sufficient to cover such costs. Profits on mipomersen initially will be allocated 70% to us and 30% to Isis. The profit ratio will be adjusted on a sliding scale as annual revenues for mipomersen ramp up to $2.0 billion, at which point we will share profits equally with Isis. The results of our mipomersen program are included in the results of our cardiovascular business unit, which are reported under the caption "Other" in our segment disclosures.

7.    Inventories

		June 30, 2008		December 31, 2007
		(Amounts in thousands)
Raw materials		$	105,931	$	120,409
Work-in-process			147,408		130,812
Finished goods			219,199		187,894
	Total	$	472,538	$	439,115

        In July 2008, we wrote off one lot of Thymoglobulin, valued at approximately $5 million, due to a filter failure at our fill-finish facility in Waterford, Ireland.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

8.    Goodwill and Other Intangible Assets

Goodwill

        The following table contains the change in our goodwill during the six months ended June 30, 2008 (amounts in thousands):

	As of December 31, 2007		Adjustments			As of June 30, 2008
Renal	$	303,951	$	—		$	303,951
Therapeutics		355,494		—			355,494
Transplant		163,061		—			163,061
Biosurgery		7,585		—			7,585
Oncology		530,909		477			531,386
Other		42,828		(235	)		42,593
Goodwill	$	1,403,828	$	242		$	1,404,070

Other Intangible Assets

        The following table contains information about our other intangible assets for the periods presented (amounts in thousands):

		As of June 30, 2008							As of December 31, 2007
		Gross Other Intangible Assets		Accumulated Amortization			Net Other Intangible Assets		Gross Other Intangible Assets		Accumulated Amortization			Net Other Intangible Assets
Technology(1)		$	2,162,028	$	(626,643	)	$	1,535,385	$	1,680,190	$	(545,817	)	$	1,134,373
Patents			194,560		(113,088	)		81,472		194,560		(104,413	)		90,147
Trademarks			60,623		(39,498	)		21,125		60,634		(36,787	)		23,847
License fees			90,871		(33,410	)		57,461		90,237		(28,833	)		61,404
Distribution rights(2)			382,976		(147,356	)		235,620		307,260		(125,678	)		181,582
Customer lists(3)			88,754		(29,924	)		58,830		97,031		(33,209	)		63,822
Other			2,054		(1,785	)		269		2,050		(1,573	)		477
	Total	$	2,981,866	$	(991,704	)	$	1,990,162	$	2,431,962	$	(876,310	)	$	1,555,652

(1)

Effective January 1, 2008, reflects the consolidation of the results of BioMarin/Genzyme LLC at fair value in accordance with FIN 46R, including $480.5 million for the fair value of the manufacturing and commercialization rights to Aldurazyme, net of $12.0 million of related accumulated amortization. This intangible asset is being amortized on a straight-lined basis over a period of 20 years.

(2)

Includes an additional $75.7 million of intangible assets resulting from additional payments made or accrued in the first half of 2008 in connection with our reacquisition of the Synvisc sales and marketing rights from Wyeth, including a $60.0 million milestone payment recorded in May 2008.

(3)

Reflects the write off, during the first quarter of 2008, of $8.3 million of fully amortized customer lists assigned to our Genetics reporting unit.

20

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

8.    Goodwill and Other Intangible Assets (Continued)

        All of our other intangible assets are amortized over their estimated useful lives.

        The estimated future amortization expense for other intangible assets for the remainder of fiscal year 2008, the four succeeding fiscal years and thereafter is as follows (amounts in thousands):

Year Ended December 31,	Estimated Amortization Expense(1,2)
2008 (remaining six months)	$	113,413
2009		228,835
2010		242,005
2011		259,820
2012		200,754
Thereafter		567,645

(1)

Includes estimated future amortization expense for the Synvisc distribution rights based on the forecasted respective future sales of Synvisc and the resulting future contingent payments we will be required to make to Wyeth, and for the Myozyme patent and technology rights pursuant to a license agreement with Synpac based on forecasted future sales of Myozyme and the milestone payments we will be required to make to Synpac related to future anticipated regulatory approvals. These contingent payments will be recorded as intangible assets when the payments are accrued. Estimated future amortization expense also includes estimated future amortization expense for other arrangements involving contingent payments.

(2)

Excludes future amortization expense related to the $480.5 million of technology recorded effective January 1, 2008, related to our consolidation of the results of BioMarin/Genzyme LLC, because such amortization is entirely offset by the corresponding amortization of a noncurrent liability related to the consolidation of BioMarin/Genzyme LLC.

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

9.    Investments in Equity Securities

        We recorded the following gains on investments in equity securities, net of charges for impairment of investments, for the periods presented (amounts in thousands):

			Three Months Ended June 30,					Six Months Ended June 30,
			2008			2007		2008			2007
Gross gains on investments in equity securities:
	Sirtris Pharmaceuticals, Inc. (Sirtris)		$	10,304		$	—	$	10,304		$	—
	Therapeutic Human Polyclonals, Inc. (THP)			—			—		—			10,848
	Other			138			143		913			2,083
		Total		10,442			143		11,217			12,931
Less: charge for impairment of investment				(1,289	)		—		(1,289	)		—
Gains on investments in equity securities, net			$	9,153		$	143	$	9,928		$	12,931

        In the second quarter of 2008, we recorded a $10.3 million gain resulting from the liquidation of our investment in the common stock of Sirtris for net cash proceeds of $14.8 million.

        In March 2007, we recorded a $10.8 million gain in connection with the sale of our entire investment in the capital stock of THP, which had a zero cost basis, for net cash proceeds of $10.8 million.

        At June 30, 2008, our stockholders' equity includes $28.8 million of unrealized gains and $2.6 million of unrealized losses related to our strategic investments in equity securities.

10.    Joint Venture with BioMarin

        We and BioMarin Pharmaceutical Inc., or BioMarin, formed BioMarin/Genzyme LLC to develop and commercialize Aldurazyme, a recombinant form of the human enzyme alpha-L-iduronidase, used to treat an LSD known as mucopolysaccharidosis I, or MPS I. Prior to January 1, 2008, we recorded our portion of the results of BioMarin/Genzyme LLC in equity in income of equity method investments in our consolidated statements of operations. Our portion of BioMarin/Genzyme LLC's net income was $6.5 million for the three months ended June 30, 2007 and $12.6 million for the six months ended June 30, 2007.

        Condensed financial information for BioMarin/Genzyme LLC is summarized below for the three and six months ended June 30, 2007 (amounts in thousands):

	Three Months Ended June 30, 2007			Six Months Ended June 30, 2007
Revenue	$	29,127		$	55,948
Gross margin		22,434			42,957
Operating expenses		(9,560	)		(18,034	)
Net income		13,016			25,237

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GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

10.    Joint Venture with BioMarin (Continued)

        Effective January 1, 2008, we restructured our relationship with BioMarin/Genzyme LLC regarding the manufacturing and commercialization of Aldurazyme by entering into several new agreements. BioMarin/Genzyme LLC will no longer engage in commercial activities related to Aldurazyme and will solely:

•

hold the intellectual property relating to Aldurazyme and other future collaboration products; and



•

engage in research and development activities that are mutually selected and funded by BioMarin and us, the costs of which we will share equally.

Under the restructured relationship, BioMarin/Genzyme LLC has licensed all intellectual property related to Aldurazyme and other collaboration products on a royalty-free basis to BioMarin and us. BioMarin holds the manufacturing rights and we hold the global marketing rights. We are required to pay BioMarin a tiered payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme.

        As a result of the restructuring of our relationship with BioMarin/Genzyme LLC, effective January 1, 2008, in accordance with the provisions of FIN 46R, we began consolidating the results of BioMarin/Genzyme LLC. Upon consolidation of BioMarin/Genzyme LLC, we recorded the assets and liabilities of the joint venture in our consolidated balance sheets at fair value. The value of the intellectual property of the joint venture of approximately $480.5 million was recorded as an intangible asset and will be amortized over a useful life of 20 years. As this intellectual property has been outlicensed from the joint venture to BioMarin and us for no consideration, a noncurrent liability was recorded for an amount equal to the negative value of these licenses. The noncurrent liability is being amortized over a period of 20 years. We recorded BioMarin's portion of the joint venture's losses, the amount of which was not significant for the three and six months ended June 30, 2008, as minority interest in our consolidated statements of operations.

11.    Long-Term Debt

Revolving Credit Facility

        As of June 30, 2008, no amounts were outstanding under our five-year $350.0 million senior unsecured revolving credit facility. The terms of this credit facility include various covenants, including financial covenants, that require us to meet minimum interest coverage ratios and maximum leverage ratios. As of June 30, 2008, we were in compliance with these covenants.

Mortgage

        In July 2008, we purchased land and a manufacturing facility we formerly leased in Framingham, Massachusetts for an aggregate purchase price of $38.9 million, including fees. We paid $20.8 million of cash and assumed the remaining $18.1 million in principal outstanding under the existing mortgage for the facility, which bears interest at 5.57% annually and is due in May 2020. We will allocate the purchase price to the fair value of the acquired land and buildings in our consolidated balance sheets as of July 31, 2008.

23

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

12.    Stockholders' Equity

Stock Repurchase

        During the three months ended June 30, 2008, we repurchased and retired an additional 1,000,000 shares of our common stock at an average price of $69.78 per share for a total of $69.8 million in cash, including fees. Since June 2007, when we first began repurchasing shares of our common stock, we have repurchased a cumulative total of 5,500,000 shares of our common stock at an average price of $68.09 per share for a total of $374.6 million in cash, including fees. We recorded the repurchases in our consolidated balance sheets as a reduction to our common stock account for the par value of the repurchased shares and as a reduction to our additional paid-in capital account.

Stock-Based Compensation Expense, Net of Estimated Forfeitures

        We allocated pre-tax stock-based compensation expense, net of estimated forfeitures, based on the functional cost center of each employee as follows (amounts in thousands, except per share amounts):

			Three Months Ended June 30,						Six Months Ended June 30,
			2008			2007			2008			2007
Pre-tax stock-based compensation expense, net of estimated forfeitures, charged to:
	Cost of products and services sold(1)		$	(6,311	)	$	(6,865	)	$	(12,825	)	$	(12,761	)
	Selling, general and administrative expense			(31,904	)		(35,248	)		(54,793	)		(57,747	)
	Research and development expense			(16,092	)		(19,143	)		(28,677	)		(31,455	)
		Total		(54,307	)		(61,256	)		(96,295	)		(101,963	)
Less: tax benefit from stock options				16,834			18,703			29,371			31,135
		Total stock-based compensation expense, net of tax	$	(37,473	)	$	(42,553	)	$	(66,924	)	$	(70,828	)
Effect per common share:
	Basic		$	(0.14	)	$	(0.16	)	$	(0.26	)	$	(0.27	)
	Diluted		$	(0.13	)	$	(0.15	)	$	(0.23	)	$	(0.25	)

(1)

We also capitalized the following amounts of stock-based compensation expense to inventory, all of which is attributable to participating employees that support our manufacturing operations (amounts in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008		2007
Stock-based compensation expense capitalized to inventory	$	3,875	$	4,957	$	6,996	$	7,839

24

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

12.    Stockholders' Equity (Continued)

        We amortize stock-based compensation expense capitalized to inventory based on inventory turns.

        At June 30, 2008, there was $329.6 million of pre-tax stock-based compensation expense, net of estimated forfeitures, related to unvested awards not yet recognized which is expected to be recognized over a weighted average period of 2.4 years.

Notes Receivable from Stockholders

        In connection with our acquisition of Biomatrix, we assumed notes receivable from five former employees, directors and consultants of Biomatrix, who we refer to as the Makers of the notes. The notes are full-recourse promissory notes that accrue interest at rates ranging from 5.30% to 7.18% and mature at various dates from May 2007 through September 2009. As of June 30, 2008, there was a total of $13.2 million outstanding for these notes, including $8.1 million of principal and $5.1 million of accrued interest. Of these amounts, a total of $8.0 million of principal and $4.7 million of accrued interest is attributable to one Maker. We record the amount of principal and interest outstanding under the notes in stockholders' equity because the notes were originally received in exchange for the issuance of Biomatrix common stock, which was subsequently converted into Genzyme Stock.

        During the second quarter of 2008, we received a total of $2.8 million of cash and shares of Genzyme stock valued at $0.3 million from three of the Makers as payment in full of their notes, including accrued interest. A total of $11.5 million in principal and accrued interest has come due under the notes but has not yet been repaid, all due from one Maker. We are pursuing collection of this past due amount and the notes will continue to accrue interest until the outstanding principal and accrued interest have been repaid.

13.    Commitments and Contingencies

Legal Proceedings

        We periodically become subject to legal proceedings and claims arising in connection with our business.

        In April 2005, Church & Dwight Co., Inc., or Church & Dwight, filed a suit in U.S. District Court for the District of New Jersey against Abbott Laboratories, or Abbott, claiming that certain over-the-counter pregnancy tests distributed by Abbott between 1999 and 2003 infringed upon patents owned by Church & Dwight. During part of this period, a portion of the test kits distributed by Abbott were manufactured by Wyntek Diagnostics, Inc., or Wyntek, which had agreed to indemnify Abbott for patent infringement related costs and damages for these products. In 2002, we acquired Wyntek and assumed the obligations under this agreement. In June 2008, the court issued a ruling awarding Church & Dwight approximately $29 million in damages based on a jury finding of willful infringement by Abbott. This award has not yet been entered as a final ruling. Abbott will have 60 days from the final entry of this award to file an appeal. Because multiple parties, including Abbott, manufactured infringing product for Abbott during this period, any responsibility that we may have for indemnifying Abbott is only for a portion of its costs and damages related to this case. We currently are disputing with Abbott the percentage of infringing product that was supplied by us and may in the future assert additional claims that, if successful, would reduce or relieve us of any liability.

        Through June 30, 2003, we had three outstanding series of common stock, which we referred to as tracking stocks; Genzyme General Stock (which we now refer to as Genzyme Stock), Biosurgery Stock

25

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

13.    Commitments and Contingencies (Continued)

and Molecular Oncology Stock. On August 6, 2007, we reached an agreement in principle to settle for $64.0 million, lawsuits related to our 2003 exchange of Genzyme Stock for Biosurgery Stock. As a result, we recorded a liability for the settlement payment of $64.0 million as a charge to SG&A in our consolidated statements of operations in June 2007, which we subsequently paid in August 2007. The court approved the settlement in October 2007. We have submitted claims to our insurers for reimbursement of portions of the expenses incurred in connection with these cases; the insurers have purported to deny coverage, and therefore, we have not recorded a receivable for any potential recovery from our insurers. We intend to vigorously pursue our rights with respect to insurance coverage and to the extent we are successful, we will record the recovery in our consolidated statements of operations.

        We periodically become subject to legal proceedings and claims arising in connection with our business. Although we cannot predict the outcome of these additional proceedings and claims, we do not believe the ultimate resolution of any of these existing matters would have a material adverse affect on our financial position or results of operations.

14.    Provision for Income Taxes

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(Amounts in thousands)
Provision for income taxes	$	38,407		$	64,090		$	98,524		$	135,283
Effective tax rate		36	%		43	%		31	%		36	%

        Our effective tax rate for all periods presented varies from the U.S. statutory tax rate as a result of:

•

our provision for state income taxes;



•

the tax benefits from manufacturing activities;



•

benefits related to tax credits;



•

income and expenses taxed at rates other than the U.S. statutory tax rate; and



•

non-deductible stock-based compensation expenses totaling $8.7 million for the three months ended and $16.7 million for the six months ended June 30, 2008, as compared to $8.5 million for the three months ended and $15.4 million for the six months ended June 30, 2007.

        Our effective tax rate for the three and six months ended June 30, 2008 was also impacted by the settlement of IRS audits for the tax years 2004 to 2005. We recorded a $4.3 million tax benefit to our income tax provision reflecting the settlement of various issues. In conjunction with those settlements, we reduced our tax reserves by $4.9 million and recorded current and deferred tax benefits for the remaining portion of the settlement amounts.

        We are currently under IRS audit for the tax years 2006 to 2007 and various states for the tax years 1999 to 2005. We believe that we have provided sufficiently for all audit exposures. Settlement of these audits or the expiration of the statute of limitations on the assessment of income taxes for any tax

26

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

14.    Provision for Income Taxes (Continued)

year may result in an adjustment of future tax provisions. Any such adjustment would be recorded upon the effective settlement of the audit or expiration of the applicable statute of limitations.

15.    Segment Information

        In accordance with FAS 131, "Disclosures about Segments of an Enterprise and Related Information," we present segment information in a manner consistent with the method we use to report this information to our management. Applying FAS 131, we have six reporting segments as described above in Note 1., "Description of Business," to these consolidated financial statements. Effective January 1, 2008, as a result of changes in how we review our business, certain general and administrative expenses, which were formerly allocated amongst our reporting segments and Other, are now allocated to Corporate. We have revised our 2007 segment presentation to conform to our 2008 presentation.

        We have provided information concerning the operations of these reportable segments in the following tables (amounts in thousands):

			Three Months Ended June 30,				Six Months Ended June 30,
			2008		2007		2008		2007
Revenues:
	Renal		$	199,419	$	172,249	$	397,189	$	337,926
	Therapeutics(1)			611,935		464,749		1,180,628		894,266
	Transplant			47,843		43,424		93,773		84,701
	Biosurgery			131,215		107,889		242,877		206,282
	Genetics			78,534		73,714		152,863		139,872
	Oncology			33,324		17,430		62,372		39,879
	Other			68,407		53,564		140,653		112,973
	Corporate			457		400		840		703
		Total	$	1,171,134	$	933,419	$	2,271,195	$	1,816,602

27

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

15.    Segment Information (Continued)

			Three Months Ended June 30,						Six Months Ended June 30,
			2008			2007			2008			2007
Income (loss) before income taxes:
	Renal		$	88,170		$	72,757		$	181,445		$	137,760
	Therapeutics(1)			378,199			292,025			743,409			589,999
	Transplant			(11,496	)		(7,127	)		(19,410	)		(10,325	)
	Biosurgery			28,670			18,968			47,456			31,835
	Genetics			3,620			11,965			7,729			15,769
	Oncology(2)			(26,666	)		(12,826	)		(51,651	)		(19,712	)
	Other(2,3)			(175,599	)		(224	)		(240,578	)		1,415
	Corporate(4)			(176,927	)		(227,654	)		(355,041	)		(369,477	)
		Total	$	107,971		$	147,884		$	313,359		$	377,264

(1)

Effective January 1, 2008, as a result of our restructured relationship with BioMarin/Genzyme LLC, instead of sharing all costs and profits of Aldurazyme equally, we began to record all sales of, and SG&A related to Aldurazyme.

(2)

The results of operations of acquired companies and assets and the amortization expense related to acquired intangible assets are included in segment results beginning on the date of acquisition.

(3)

Includes a charge of $175.0 million recorded in June 2008 and a charge of $69.9 million recorded in February 2008 representing license fees paid to Isis for the exclusive worldwide rights to mipomersen which we recorded to research and development expense in our consolidated statements of operations. These charges were incurred by our cardiovascular business unit which had minimal revenues and expenses excluding this charge.

(4)

Loss before income taxes for Corporate includes our corporate, general and administrative and corporate science activities, all of our stock-based compensation expense, as well as gains on investments in equity securities, net of a charge for impairment of investment, interest income, interest expense and other income and expense items that we do not specifically allocate to a particular reporting segment.

28

GENZYME CORPORATION AND SUBSIDIARIES

Notes to Unaudited, Consolidated Financial Statements (Continued)

15.    Segment Information (Continued)

Segment Assets

        We provide information concerning the assets of our reportable segments in the following table (amounts in thousands):

			June 30, 2008		December 31, 2007
Segment Assets(1):
	Renal		$	1,462,292	$	1,468,428
	Therapeutics(2)			1,829,763		1,230,128
	Transplant			435,234		415,903
	Biosurgery			515,357		458,412
	Genetics			172,853		148,787
	Oncology			939,637		940,097
	Other			238,972		246,496
	Corporate(3)			3,588,744		3,393,490
		Total	$	9,182,852	$	8,301,741

(1)

Assets for our six reporting segments and Other include primarily accounts receivable, inventory and certain fixed and intangible assets, including goodwill.

(2)

Includes the consolidation of the results of BioMarin/Genzyme LLC at fair value, including $480.5 million of additional technology recorded in the first quarter of 2008 for the fair value of BioMarin/Genzyme LLC's manufacturing and commercialization rights to Aldurazyme, net of $12.0 million of related accumulated amortization.

(3)

Includes the assets related to our corporate, general and administrative operations, and corporate science activities that we do not allocate to a particular segment. Segment assets for Corporate consist of the following (amounts in thousands):

		June 30, 2008		December 31, 2007
Cash, cash equivalents, short- and long-term investments in debt securities		$	1,254,495	$	1,460,394
Deferred tax assets, net			429,478		260,005
Property, plant & equipment, net			1,407,459		1,240,992
Investments in equity securities			162,930		89,181
Other assets			334,382		342,918
	Total	$	3,588,744	$	3,393,490

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF GENZYME CORPORATION AND SUBSIDIARIES' FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that characterize our business. In particular, we encourage you to review the risks and uncertainties described under the heading "Risk Factors" below. These risks and uncertainties could cause actual results to differ materially from those forecasted in forward-looking statements or implied by past results and trends. Forward-looking statements are statements that attempt to project or anticipate future developments in our business; we encourage you to review the examples of forward-looking statements under "Note Regarding Forward-Looking Statements" at the beginning of this report. These statements, like all statements in this report, speak only as of the date of this report (unless another date is indicated), and we undertake no obligation to update or revise the statements in light of future developments.

INTRODUCTION

        We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our broad product and service portfolio is focused on rare disorders, renal diseases, orthopaedics, organ transplant, diagnostic and predictive testing, and cancer. We are organized into six financial reporting units, which we also consider to be our reporting segments:

•

Renal, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure. The unit derives substantially all of its revenue from sales of Renagel/Renvela (including sales of bulk sevelamer) and Hectorol;



•

Therapeutics, which develops, manufactures and distributes therapeutic products, with an expanding focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as LSDs, and other specialty therapeutics, such as Thyrogen. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme, Myozyme, Aldurazyme and Thyrogen;



•

Transplant, which develops, manufactures and distributes therapeutic products that address pre-transplantation, prevention and treatment of graft rejection in organ transplantation and other hematologic and auto-immune disorders. The unit derives substantially all of its revenue from sales of Thymoglobulin;



•

Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial-based products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives substantially all of its revenue from sales of Synvisc, the Sepra line of products, Carticel and MACI;



•

Genetics, which provides testing services for the oncology, prenatal and reproductive markets; and



•

Oncology, which develops, manufactures and distributes products for the treatment of cancer, with a focus on antibody- and small molecule-based therapies. The unit derives substantially all of its revenue from sales and royalties received on sales of Campath and Clolar and from the reimbursement of Campath development expenses.

        We report the activities of our diagnostic products, bulk pharmaceuticals and cardiovascular business units under the caption "Other." We report our corporate, general and administrative operations and corporate science activities under the caption "Corporate."

        Effective January 1, 2008, as a result of a change in how we review our business, certain general and administrative expenses which were formerly allocated amongst our reporting segments and Other, are now allocated to Corporate.

30

        As a result of our acquisition of Bioenvision in October 2007, our Oncology business unit, which was formerly reported combined with "Other," now meets the criteria for disclosure as a separate reporting segment. We have revised our 2007 segment disclosures to conform to our 2008 presentation.

MERGERS AND ACQUISITIONS

        The following acquisitions were accounted for as business combinations and, accordingly, we have included their results of operations in our consolidated statements of operations from the date of acquisition.

Diagnostic Assets of Diagnostic Chemicals Limited

        On December 3, 2007, we acquired certain diagnostic assets from Diagnostic Chemicals Limited, or DCL, a privately-held diagnostics and biopharmaceutical company, including DCL's line of over 50 formulated clinical chemistry reagents and their diagnostics operations in Prince Edward Island, Canada and Connecticut. We paid consideration of $53.8 million in cash.

Bioenvision

        Effective October 23, 2007, we completed our acquisition of Bioenvision through the culmination of a two step process consisting of a tender offer completed in July 2007, and a merger approved in October 2007. We paid gross consideration of $349.9 million in cash, including $345.4 million for the outstanding shares of Bioenvision Common and Series A Preferred Stock and options to purchase shares of Bioenvision Common Stock, and approximately $5 million for acquisition costs. Net consideration was $304.7 million as we acquired Bioenvision's cash and cash equivalents totaling $45.2 million.

        Bioenvision was focused on the acquisition, development and marketing of compounds and technologies for the treatment of cancer, autoimmune disease and infection. The acquisition of Bioenvision provides us with the rights to clofarabine outside North America. We currently market clofarabine in the United States and Canada under the brand name Clolar for relapsed and refractory pediatric ALL patients. In Europe, we co-developed clofarabine with Bioenvision and, prior to the acquisition, Bioenvision had been marketing the product under the brand name Evoltra, also for the treatment of relapsed and refractory pediatric ALL patients. We are developing clofarabine for diseases with significantly larger patient populations, including use as a first-line therapy for the treatment of adult AML. Clofarabine has been granted orphan drug status for the treatment of ALL and AML in both the United States and European Union.

STRATEGIC TRANSACTIONS

Collaboration with PTC

        On July 15, 2008, we entered into a collaboration agreement with PTC to develop and commercialize PTC124, PTC's novel oral therapy in late-stage development for the treatment of nonsense-mutation-mediated DMD and nonsense-mutation-mediated CF. Under the terms of the agreement, PTC will commercialize PTC124 in the United States and Canada, and we will commercialize the treatment in all other countries. In connection with the collaboration agreement, we paid PTC a nonrefundable upfront payment of $100.0 million, which we recorded as a charge to research and development in our consolidated statements of operations in July 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense. PTC will conduct and be responsible for the phase 2b trial of PTC124 in DMD, the phase 2b trial in CF and two proof-of-concept studies in other indications to be determined. Once these four studies have been completed, we and PTC will share research and development costs for

31

PTC124 equally. We and PTC will each bear the sales and marketing and other costs associated with the commercialization of PTC124 in our respective territories. PTC is eligible to receive up to $337.0 million in milestone payments as follows:

•

up to $165.0 million in development and approval milestones, the majority of which are to be paid upon approvals obtained outside of the United States and Canada; and



•

up to $172.0 million in sales milestones, commencing when annual net revenues for PTC124 reach $300.0 million and increasing in increments through revenues of $2.4 billion.

PTC is also eligible to receive tiered, double-digit royalties from sales of PTC124 outside of the United States and Canada.

Strategic Alliance with Isis

        On January 7, 2008, we entered into a strategic alliance with Isis, whereby we obtained an exclusive license to develop and commercialize mipomersen, a lipid-lowering drug targeting apolipoprotein B-100, for the treatment of FH, an inherited disorder that causes exceptionally high levels of LDL-cholesterol. In February 2008, we made a nonrefundable payment to Isis of $150.0 million, of which $80.1 million was recorded as an investment in equity securities in our consolidated balance sheets based on the fair value of the five million shares of Isis common stock we acquired in connection with the transaction and the remaining $69.9 million was allocated to the mipomersen license, which had not reached technological feasibility and did not have alternative future use. We recorded the $69.9 million license fee as a charge to research and development expense in our consolidated statements of operations in the first quarter of 2008. We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense.

        In June 2008, we finalized the terms of our license and collaboration agreement with Isis and paid Isis an additional $175.0 million upfront nonrefundable license fee, which we recorded as a charge to research and development expense in our consolidated statements of operations in June 2008. Under the terms of the agreement, Isis will contribute up to the first $125.0 million in funding for the development of mipomersen and, thereafter, we and Isis will share development costs for mipomersen equally. The initial funding commitment by Isis and shared development funding will end when the mipomersen program is profitable. In the event the research and development of mipomersen is terminated prior to Isis completing their funding obligation, we are not entitled to any refund of our $175.0 million upfront payment. Accordingly, the $175.0 million was recorded as research and development expense in June 2008. Isis is eligible to receive up to $750.0 million in commercial milestone payments and up to $825.0 million in development and regulatory milestone payments.

        We will be responsible for funding sales and marketing expenses until mipomersen revenues are sufficient to cover such costs. Profits on mipomersen initially will be allocated 70% to us and 30% to Isis. The profit ratio will be adjusted on a sliding scale as annual revenues for mipomersen ramp up to $2.0 billion, at which point we will share profits equally with Isis. The results of our mipomersen program will be included in the results of our cardiovascular business unit, which are reported under the caption "Other" in our segment disclosures.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

        Our critical accounting policies and significant judgments and estimates are set forth under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates" in Exhibit 13 to our 2007 Form 10-K. There have been no significant changes to our critical accounting policies or significant judgments and estimates since December 31, 2007. Additional

32

information regarding our provisions and estimates for our product sales allowances, sales allowance reserves and accruals, and distributor fees, and the key assumptions we use to determine the fair value assigned to in-process research and development are included below.

Revenue Recognition

Product Sales Allowances

        Sales of many biotechnology products in the United States are subject to increased pricing pressure from managed care groups, institutions, government agencies, and other groups seeking discounts. We and other biotechnology companies in the U.S. market are also required to provide statutorily defined rebates and discounts to various U.S. government agencies in order to participate in the Medicaid program and other government-funded programs. In most international markets, we operate in an environment where governments may and have mandated cost-containment programs, placed restrictions on physician prescription levels and patient reimbursements, emphasized greater use of generic drugs and enacted across-the-board price cuts as methods to control costs. The sensitivity of our estimates can vary by program, type of customer and geographic location. Estimates associated with Medicaid and other government allowances may become subject to adjustment in a subsequent period.

        We record product sales net of the following significant categories of product sales allowances:

•

Contractual adjustments—We offer chargebacks and contractual discounts and rebates, which we collectively refer to as contractual adjustments, to certain private institutions and various government agencies in both the United States and international markets. We record chargebacks and contractual discounts as allowances against accounts receivable in our consolidated balance sheets. We account for rebates by establishing an accrual for the amounts payable by us to these agencies and institutions, which is included in accrued liabilities in our consolidated balance sheets. We estimate the allowances and accruals for our contractual adjustments based on historical experience and current contract prices, using both internal data as well as information obtained from external sources, such as independent market research agencies and data from wholesalers. We continually monitor the adequacy of these estimates and adjust the allowances and accruals periodically throughout each quarter to reflect our actual experience. In evaluating these allowances and accruals, we consider several factors, including significant changes in the sales performance of our products subject to contractual adjustments, inventory in the distribution channel, changes in U.S. and foreign healthcare legislation impacting rebate or allowance rates, changes in contractual discount rates and the estimated lag time between a sale and payment of the corresponding rebate;



•

Discounts—In some countries, we offer cash discounts for certain products as an incentive for prompt payment, which are generally a stated percentage off the sales price. We account for cash discounts by reducing accounts receivable by the full amounts of the discounts. We consider payment performance and adjust the accrual to reflect actual experience; and



•

Sales returns—We record allowances for product returns at the time product sales are recorded. The product returns reserve is estimated based on the returns policies for our individual products and our experience of returns for each of our products. If the price of a product changes or if the history of product returns changes, the reserve is adjusted accordingly. We determine our estimates of the sales return accrual for new products primarily based on the historical sales returns experience of similar products, or those within the same or similar therapeutic category.

33

        Our provisions for product sales allowances reduced gross product sales as follows (amounts in thousands):

			Three Months Ended June 30,									Six Months Ended June 30,
									Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
			2008			2007						2008			2007
Product sales allowances:
	Contractual adjustments		$	107,095		$	101,396			6	%	$	209,014		$	186,191			12	%
	Discounts			5,503			4,779			15	%		11,008			9,193			20	%
	Sales returns			4,917			5,705			(14	)%		11,668			7,422			57	%
		Total product sales allowances	$	117,515		$	111,880			5	%	$	231,690		$	202,806			14	%
Total gross product sales			$	1,189,317		$	957,362			24	%	$	2,309,759		$	1,846,478			25	%
Total product sales allowances as a percent of total gross product sales				10	%		12	%					10	%		11	%

        Total product sales allowances increased $5.6 million, or 5%, for the three months ended June 30, 2008, as compared to the same period of 2007, and $28.9 million, or 14%, for the six months ended June 30, 2008, as compared to the same period of 2007, primarily due to an increase in overall gross product sales, and to a lesser extent, changes in rebate rates or product mix. The decrease in sales returns allowances for the three months ended June 30, 2008, as compared to the same period of 2007, is primarily due to a slight decrease in estimates for the volume of product returns for our Renal segment. The increase in sales returns allowances for the six months ended June 30, 2008, as compared to the same period of 2007, is primarily due to increased estimates for the volume of product returns for our Transplant, Biosurgery and Renal segments.

        Total estimated product sales allowance reserves and accruals in our consolidated balance sheets increased 6% to approximately $164 million as of June 30, 2008, as compared to approximately $155 million as of December 31, 2007, primarily due to increased product sales. Our actual results have not differed materially from amounts recorded. The annual variation has been less than 0.5% of total product sales for each of the last three years.

Distributor Fees

        EITF Issue No. 01-9, "Accounting for Consideration given by a Vendor to a Customer (including a Reseller of a Vendor's Products)" specifies that cash consideration (including a sales incentive) given by a vendor to a customer is presumed to be a reduction of the selling prices of the vendor's products or services and, therefore, should be characterized as a reduction of revenue. We include such fees in contractual adjustments, which are recorded as a reduction to product sales. That presumption is overcome and the consideration should be characterized as a cost incurred if, and to the extent that, both of the following conditions are met:

•

the vendor receives, or will receive, an identifiable benefit (goods or services) in exchange for the consideration; and



•

the vendor can reasonably estimate the fair value of the benefit received.

        We record fees paid to our distributors for services as a charge to SG&A, a component of operating expenses, only if the criteria set forth above are met. The following table sets forth the

34

distributor fees recorded as a reduction to product sales and charged to SG&A (amounts in thousands):

			Three Months Ended June 30,				Six Months Ended June 30,
			2008		2007		2008		2007
Distributor fees:
	Included in contractual adjustments and recorded as a reduction to product sales		$	1,611	$	3,198	$	6,019	$	6,290
	Charged to SG&A			3,569		3,458		6,520		6,434
		Total distributor fees	$	5,180	$	6,656	$	12,539	$	12,724

        Total distributor fees decreased $1.5 million for the three months ended June 30, 2008, as compared to the same period of 2007, primarily due to decreased estimates for distributor fees for our Renal segment.

In-Process Research and Development

        In-process research and development represents the fair value assigned to incomplete technologies that we acquire, which at the time of acquisition, have not reached technological feasibility and have no alternative future use. The fair value of such technologies is expensed upon acquisition. A technology is considered to have an alternative future use if it is probable that the acquirer will use the asset in its current, incomplete state as it existed at the acquisition date, the asset will be used in another research and development project that has not yet commenced, and economic benefit is anticipated from that use. If a technology is determined to have an alternative future use, then the fair value of the program would be recorded as an asset on the balance sheet rather than expensed. None of the incomplete technology programs we have acquired through our business combinations have reached technological feasibility nor had an alternative future use and, therefore, the fair value of those programs was expensed on the acquisition date. Substantial additional research and development will be required before any of our acquired programs reach technological feasibility. In addition, once research is completed, each underlying product candidate will need to complete a series of clinical trials and receive regulatory approvals prior to commercialization.

        Charges for in-process research and development acquired through business combinations, which we refer to as IPR&D, are classified in our consolidated statements of operations within the line item Purchase of In-Process Research and Development. Conversely, nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use are classified in our consolidated statements of operations within the line item Research and Development.

        Management assumes responsibility for determining the valuation of the acquired IPR&D programs. The fair value assigned to IPR&D for each acquisition is estimated by discounting, to present value, the future cash flows expected from the programs since the date of our acquisition. Accordingly, such cash flows reflect our estimates of revenues, costs of sales, operating expenses and income taxes from the acquired IPR&D programs based on the following factors:

•

relevant market sizes and market growth factors;



•

current and expected trends in technology and product life cycles;



•

the time and investment that will be required to develop products and technologies;



•

the ability to obtain marketing authorization and regulatory approvals;



•

the ability to manufacture and commercialize the products;

35

•

the extent and timing of potential new product introductions by our competitors that may be deemed more efficacious, more convenient to use, or more cost effective;



•

the amount of revenues that will be derived from the products; and



•

the appropriate discount rates to use in the analysis.

        The discount rates used are commensurate with the uncertainties associated with the economic estimates described above. The resulting discounted future cash flows are then probability-adjusted to reflect the different stages of development, the time and resources needed to complete the development of the product and the risks of advancement through the product approval process. In estimating the future cash flows, we also consider the tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D programs and adjust future cash flows for a charge reflecting the contribution to value of these assets. Such contributory tangible and intangible assets may include, but are not limited to, working capital, fixed assets, assembled workforce, customer relationships, patents, trademarks, and core technology.

        Use of different estimates and judgments could yield materially different results in our analysis and could result in materially different asset values and IPR&D expense. There can be no assurance that we will be able to successfully develop and complete the acquired IPR&D programs and profitably commercialize the underlying product candidates before our competitors develop and commercialize products for the same indications. Moreover, if certain of the acquired IPR&D programs fail, are abandoned during development, or do not receive regulatory approval, then we may not realize the future cash flows we have estimated and recorded as IPR&D on the acquisition date, and we may also not recover the research and development investment made since the acquisition to further develop that program. If such circumstances were to occur, our future operating results could be materially adversely impacted.

        We have included additional information on the nature, timing and estimated costs necessary to complete our acquired IPR&D programs and the key assumptions used to determine the fair value of specific IPR&D programs under the caption "Purchase of In-Process Research and Development" in this "Management's Discussion and Analysis of Financial Condition and Results of Operations."

RESULTS OF OPERATIONS

        The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.

REVENUES

        The components of our total revenues are described in the following table (amounts in thousands):

		Three Months Ended June 30,							Six Months Ended June 30,
						Increase/ (Decrease) % Change							Increase/ (Decrease) % Change
		2008		2007					2008		2007
Product revenue		$	1,071,801	$	845,482		27	%	$	2,078,069	$	1,643,672		26	%
Service revenue			90,622		82,475		10	%		176,486		158,356		11	%
	Total product and service revenue		1,162,423		927,957		25	%		2,254,555		1,802,028		25	%
Research and development revenue			8,711		5,462		59	%		16,640		14,574		14	%
	Total revenues	$	1,171,134	$	933,419		25	%	$	2,271,195	$	1,816,602		25	%

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Product Revenue

        We derive product revenue from sales of:

•

Renal products, including Renagel/Renvela, Hectorol and bulk sevelamer;



•

Therapeutics products, including Cerezyme, Fabrazyme, Myozyme, Aldurazyme and Thyrogen;



•

Transplant products, primarily Thymoglobulin;



•

Biosurgery products, including orthopaedic products, such as Synvisc, and the Sepra line of products, such as Seprafilm;



•

Oncology products, including Campath and Clolar; and



•

Other products, including:


•

diagnostic products, including infectious disease and cholesterol testing products; and



•

bulk pharmaceuticals, including WelChol.

        The following table sets forth our product revenue on a reporting segment basis (amounts in thousands):

			Three Months Ended June 30,							Six Months Ended June 30,
							Increase/ (Decrease) % Change							Increase/ (Decrease) % Change
			2008		2007					2008		2007
Renal:
	Renagel/Renvela (including sales of bulk sevelamer)		$	168,567	$	144,954		16	%	$	337,261	$	282,338		19	%
	Hectorol			30,852		27,295		13	%		59,928		55,588		8	%
		Total Renal		199,419		172,249		16	%		397,189		337,926		18	%
Therapeutics:
	Cerezyme			319,360		282,979		13	%		623,663		546,770		14	%
	Fabrazyme			126,608		104,349		21	%		243,083		205,013		19	%
	Thyrogen			39,448		29,540		34	%		73,233		55,878		31	%
	Myozyme			77,222		46,745		65	%		144,546		84,664		71	%
	Aldurazyme			38,667		—		N/A			75,506		—		N/A
	Other Therapeutics			10,437		705		>100	%		20,209		872		>100	%
		Total Therapeutics		611,742		464,318		32	%		1,180,240		893,197		32	%
Transplant:
	Thymoglobulin/Lymphoglobuline			45,592		41,376		10	%		89,265		80,818		10	%
	Other Transplant			2,251		2,048		10	%		4,508		3,703		22	%
		Total Transplant		47,843		43,424		10	%		93,773		84,521		11	%
Biosurgery:
	Synvisc/Synvisc-One			70,927		64,863		9	%		127,069		118,459		7	%
	Sepra products			34,780		25,076		39	%		65,384		48,191		36	%
	Other Biosurgery			13,392		8,386		60	%		26,973		18,958		42	%
		Total Biosurgery		119,099		98,325		21	%		219,426		185,608		18	%
Oncology				25,939		14,574		78	%		48,220		31,271		54	%
Other product revenue				67,759		52,592		29	%		139,221		111,149		25	%
		Total product revenues	$	1,071,801	$	845,482		27	%	$	2,078,069	$	1,643,672		26	%

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Renal

        Sales of Renagel/Renvela, including sales of bulk sevelamer, increased 16% to $168.6 million for the three months ended June 30, 2008, as compared to the same period of 2007. Renagel price increases in the United States in April 2007 accounted for $4.7 million of the additional revenue, while increased end-user demand worldwide accounted for $11.4 million of additional revenue. The strengthening of foreign currencies, primarily the Euro against the U.S. dollar, for the three months ended June 30, 2008, as compared to the same period of 2007, positively impacted Renagel revenue by $9.1 million. Sales of Renagel/Renvela, including sales of bulk sevelamer, were 14% of our total revenue for the three months ended June 30, 2008, as compared to 16% for the same period of 2007.

        Sales of Renagel/Renvela, including sales of bulk sevelamer, increased 19% to $337.3 million for the six months ended June 30, 2008, as compared to the same period of 2007. Renagel price increases in the United States in April 2007 accounted for $11.2 million of the additional revenue, while increased end-user demand worldwide accounted for $23.0 million of additional revenue. The strengthening of foreign currencies, primarily the Euro against the U.S. dollar, for the six months ended June 30, 2008, as compared to the same period of 2007, positively impacted Renagel revenue by $17.7 million. Sales of Renagel/Renvela, including sales of bulk sevelamer, were 15% of our total revenue for the six months ended June 30, 2008, as compared to 16% for the same period of 2007.

        On October 22, 2007, the FDA granted marketing approval for Renvela, a second-generation buffered form of Renagel for the control of serum phosphorus in patients with CKD on dialysis. In March 2008, we launched Renvela for dialysis patients in the United States and the product is now included in more than 85% of health plan formularies. Sales of Renvela in the United States were $0.8 million for the three months ended and $5.4 million for the six months ended June 30, 2008. We are currently pursuing regulatory approvals in Europe, South America and in other international markets.

        In October 2007, an FDA advisory committee voted to recommend that the agency extend the indications for phosphate binders to include pre-dialysis patients with hyperphosphatemia. We are engaged in discussions with the FDA regarding the expansion of the product's labeling to include CKD patients with hyperphosphatemia who have not progressed to dialysis. In addition, we expect to file for approval of a powder form of Renvela that may make it easier for patients to comply with their prescribed treatment program. While Renagel will remain available for a period of time, our long-term goal is to transition patients to Renvela.

        Sales of Hectorol increased 13% to $30.9 million for the three months ended and 8% to $59.9 million for the six months ended June 30, 2008, as compared to $27.3 million and $55.6 million for the same periods of 2007, primarily due to higher end-user demand.

        We expect sales of Renagel/Renvela and Hectorol to continue to increase, driven primarily by growing patient access to these products, including through the Medicare Part D program in the United States, and the continued adoption of the products by nephrologists worldwide. Adoption rates for Renagel/Renvela are expected to trend favorably as a result of the recent introduction of Renvela in the U.S. market, anticipation of a label expansion to include hyperphosphatemic patients who are not on dialysis, and the introduction of a powder formulation expected in the first half of 2009. Adoption rates for Hectorol are expected to trend favorably as a result of growth of the CKD market and the anticipated launch of a 1 mg capsule form of Hectorol in the first half of 2009. In addition, we expect adoption rates to increase for both Renagel/Renvela and Hectorol as the result of our recent expansion and redeployment of our Renal sales force.

        Renagel/Renvela and Hectorol compete with several other marketed products and our future sales may be impacted negatively by these products. Both Renagel and Hectorol also are subjects of Abbreviated New Drug Applications (ANDAs) containing "Paragraph IV certifications," which is the

38

filing a generic manufacturer uses to challenge one or more patents in order to seek U.S. regulatory approval to market a generic version of a drug prior to the expiration date of those patents.

        In the case of Renagel, the ANDA Paragraph IV certification relates only to one of our Renagel patents, namely our patent that covers features of our tablet dosage form. This patent expires in 2020. The ANDA applicant has alleged that its generic tablet would not infringe our tablet dosage form patent, but we have not yet received sufficient information from the ANDA applicant to assess the merits of this position. The ANDA does not contain a Paragraph IV certification with respect to our Renagel pharmaceutical composition and medical use patent estate, which protect the product and its approved indications until 2014.

        In the case of Hectorol, the ANDA applicant has submitted a Paragraph IV certification alleging the invalidity of our patent related to the use of Hectorol to treat hyperparathyroidism secondary to end-stage renal disease (which patent expires in 2014), and alleging non-infringement of our patent claiming our highly purified form of Hectorol (which patent expires in 2021). We believe that our patents are valid, and have not yet received sufficient information from the ANDA application to assess the merits of its non-infringement allegation.

        If either of the ANDA filers or any other generic manufacturer were to receive approval to sell a generic version of Renagel or Hectorol, our revenues from those products would be adversely affected. In addition, our ability to continue to increase sales of Renagel/Renvela and Hectorol will depend on many other factors, including our ability to optimize dosing and improve patient compliance with Renagel/Renvela dosing, the availability of reimbursement from third-party payors and the extent of coverage, including under the Medicare Part D program. Also, the accuracy of our estimates of fluctuations in the payor mix and our ability to effectively manage wholesaler inventories and the levels of compliance with the inventory management programs we implemented for Renagel/Renvela and Hectorol with our wholesalers could impact the revenue from our Renal reporting segment that we record from period to period.

Therapeutics

        Therapeutics product revenue increased 32% to $611.7 million for the three months ended and 32% to $1.2 billion for the six months ended June 30, 2008, as compared to the same periods of 2007, due to continued growth in sales of Cerezyme, Fabrazyme and Myozyme and the inclusion of Aldurazyme sales in our results of operations beginning in 2008. As a result of our restructured relationship with BioMarin and BioMarin/Genzyme LLC regarding the manufacturing, marketing and sale of Aldurazyme, effective January 1, 2008, we began to record all sales of Aldurazyme.

        Sales of Cerezyme increased 13% to $319.4 million for the three months ended and 14% to $623.7 million for the six months ended June 30, 2008, as compared to the same periods of 2007, is attributable to our continued identification of new Gaucher disease patients, particularly in international markets. Through October 2007, our price for Cerezyme had remained consistent from period to period. Effective November 1, 2007, we implemented a 3% price increase in the United States for Cerezyme. Although we expect Cerezyme to continue to be a substantial contributor to revenues in the future, it is a mature product, and as a result, we do not expect that the current new patient growth trend will continue. The strengthening of foreign currencies, primarily the Euro against the U.S. dollar, positively impacted Cerezyme revenue by $19.2 million for the three months ended and $36.5 million for the six months ended June 30, 2008, as compared to the same periods of 2007.

        Sales of Fabrazyme increased 21% to $126.6 million for the three months ended and 19% to $243.1 million for the six months ended June 30, 2008, as compared to the same periods of 2007, is primarily attributable to increased patient identification worldwide as Fabrazyme is introduced into new markets. We implemented a 3% price increase for Fabrazyme in the United States in November 2007 which did not have a significant impact on Fabrazyme revenue for the three and six months ended

39

June 30, 2008. The strengthening of foreign currencies, primarily the Euro against the U.S. dollar, positively impacted Fabrazyme revenue by $8.3 million for the three months ended and $15.8 million for the six months ended June 30, 2008, as compared to the same periods of 2007.

        Sales of Myozyme were $77.2 million for the three months ended and $144.5 million for the six months ended June 30, 2008, as compared to $46.7 million and $84.7 million for the same periods of 2007. We launched Myozyme in the United States in May 2006, in Europe a month later and in Canada in September 2006. We are introducing Myozyme on a country-by-country basis in the European Union, as pricing and reimbursement approvals are obtained. Myozyme has received orphan drug designation in both the United States, which provides seven years of market exclusivity, and in the European Union, which provides ten years of market exclusivity. In April 2007, Myozyme was approved for commercial sale in Japan and subsequently, in June 2007, we launched the product upon receipt of reimbursement approval. We expect to file for approval in several additional countries in the second half of 2008. The strengthening of foreign currencies, primarily the Euro, against the U.S. dollar, positively impacted Myozyme revenue by $4.5 million for the three months ended and $7.9 million for the six months ended June 30, 2008, as compared to the same periods of 2007.

        We currently manufacture Myozyme in the United States at the 160 liter bioreactor, or 160L, scale at our manufacturing facility in Framingham, Massachusetts and at the 2000L scale at our manufacturing facility in Allston, Massachusetts. We have begun Myozyme fill-finish at our 2000L facility in Waterford, Ireland. We have approval to sell Myozyme manufactured at the 160L scale in the United States and Myozyme produced at the 2000L scale has been approved for sale in more than 40 countries outside the United States.

        In October 2007, we submitted an application to the FDA seeking approval of Myozyme produced at the 2000L scale to meet the expected demand for the product in the U.S. market going forward. In April 2008, the FDA concluded that Myozyme produced at the 160L scale and at the 2000L scale should be classified as two different products because of differences in the carbohydrate structures of the molecules. As a result, the FDA has required us to submit a separate BLA to gain U.S. approval for alglucosidase alfa (Myozyme) produced at the 2000L scale. The FDA proposed that we initiate a rolling BLA review process by submitting results from our Late Onset Treatment Study, or LOTS study, for Myozyme because the Myozyme used in that study was produced at the 2000L scale. We had already been in the process of preparing the results of that study for submission to the FDA to fulfill a post-marketing commitment. The LOTS study, which met its co-primary efficacy endpoints, was undertaken to evaluate the safety and efficacy of Myozyme in juvenile and adult patients with Pompe disease. In May 2008, we submitted the BLA for alglucosidase alfa (Myozyme) produced at the 2000L scale to the FDA. We expect the FDA to give the BLA priority review and to act on the application by the end of 2008. We anticipate that this process will culminate in the availability of two commercial versions of Myozyme in the United States: one produced at the 160L scale and the other produced at the 2000L scale. This decision by the FDA will negatively impact our anticipated 2008 Myozyme revenue growth by approximately $45 million and because we will continue to provide Myozyme to some patients through a clinical access program, we anticipate that costs related to Myozyme in 2008 will be approximately $8-$10 million more than originally expected. We expect demand for Myozyme to continue to grow and expect to begin providing U.S. patients with commercial 2000L product during the first quarter of 2009. In the meantime, we are continuing our efforts to optimize supply for the U.S. market.

        To meet the global demand for Myozyme, we are working to secure approval to produce Myozyme at our 4000 liter bioreactor, or 4000L, scale manufacturing facility in Belgium. We are conducting process validation runs for Myozyme produced at the 4000L scale, which we expect to complete in 2008 and subsequently file for EMEA approval. We expect European authorities will approve Myozyme production at the 4000L scale at our Belgium manufacturing facility during the first half of 2009.

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Product supply of Myozyme in 2009 is expected to be particularly tight until production at the 4000L scale at this facility is approved.

        Effective January 1, 2008, we, BioMarin and BioMarin/Genzyme LLC restructured our relationship regarding the manufacturing, marketing and sale of Aldurazyme and entered into several new agreements. BioMarin will continue to manufacture Aldurazyme. We will continue to purchase Aldurazyme exclusively from BioMarin and globally market and sell the product. Effective January 1, 2008, instead of sharing all costs and profits of Aldurazyme equally, we began to record all sales of Aldurazyme and began paying BioMarin a tiered payment ranging from approximately 39.5% to 50% of worldwide net product sales of Aldurazyme. Aldurazyme product revenue was $38.7 million for the three months ended and $75.5 million for the six months ended June 30, 2008. Prior to January 1, 2008, on behalf of BioMarin/Genzyme LLC, we were commercializing Aldurazyme in the United States, Canada, the European Union, Latin America and the Asia-Pacific regions and continuing to launch Aldurazyme on a country-by-country basis as pricing and reimbursement approvals were obtained. BioMarin/Genzyme LLC's Aldurazyme product revenue recorded by BioMarin/Genzyme LLC, was $29.1 million for the three months ended and $55.9 million for the six months ended June 30, 2007. The increase in Aldurazyme sales of $9.5 million for the three months ended and $19.6 million for the six months ended June 30, 2008 are primarily attributable to increased patient identification worldwide as Aldurazyme was introduced into new markets. We have applications for marketing approval for Aldurazyme currently pending in several countries in Latin America, Central and Eastern Europe and the Asia-Pacific regions.

        Sales of Thyrogen increased 34% to $39.4 million for the three months ended and 31% to $73.2 million for the six months ended June 30, 2008, as compared to the same periods of 2007. Thyrogen price increases of approximately 10% in the United States in April 2007 and 15% in the United States in March 2008 accounted for additional revenue of $2.8 million for the three months ended and $4.2 million for the six months ended June 30, 2008, while worldwide volume growth positively impacted sales by $5.9 million for the three months ended and $10.0 million for the six months ended June 30, 2008. The strengthening of foreign currencies, primarily the Euro against the U.S. dollar, positively impacted Thyrogen revenue by $2.0 million for the three months ended and $3.9 million for the six months ended June 30, 2008, as compared to the same periods of 2007. In December 2007 we received FDA approval for the use of Thyrogen in thyroid cancer remnant ablation procedures.

Transplant

        Transplant product revenue increased 10% to $47.8 million for the three months ended and 11% to $93.8 million for the six months ended June 30, 2008, as compared to the same periods of 2007. This was primarily due to a $4.3 million increase for the three months ended and a $9.7 million increase for the six months ended June 30, 2008 in Thymoglobulin revenue as a result of an 11% increase in the worldwide average sales price of Thymoglobulin. In addition, sales of Thymoglobulin increased $2.7 million for the three months ended and $4.0 million for the six months ended June 30, 2008, due to an increase in sales volume resulting from increased utilization of Thymoglobulin in transplant procedures worldwide.

        In March 2008, we recalled one lot and in April 2008 we recalled an additional three lots of Thymoglobulin that no longer met our specifications for product appearance. The value of the product returned as a result of these recalls was not significant. We expect to recall additional lots this year for the same reason, although most of the product will likely be consumed prior to a recall being necessary. In July 2008, we wrote off one lot of Thymoglobulin, valued at approximately $5 million, due to a filter failure at our fill-finish facility in Waterford, Ireland. We will continue to closely monitor our Thymoglobulin inventory levels and have increased production in an effort to maintain adequate supply

41

levels throughout the remainder of 2008. We have begun construction of a new manufacturing plant for Thymoglobulin in Lyon, France to support the long-term growth of the product.

Biosurgery

        Biosurgery product revenue increased 21% to $119.1 million for the three months ended and 18% to $219.4 million for the six months ended June 30, 2008, as compared to the same periods of 2007. Seprafilm revenue increased $8.2 million for the three months ended and $14.9 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to greater penetration of the product into the United States, Japanese and European markets.

        We received approval to market Synvisc-One, a single injection regimen, in the European Union in December 2007. In November 2007, we received a letter from the FDA requesting additional analysis and data regarding our marketing application for Synvisc-One in the United States. We responded to the FDA's letter in June 2008 and we currently expect regulatory action on our marketing application by the end of 2008. We also plan on pursuing marketing approvals for Synvisc-One in Canada, Asia and Latin America.

        The combined revenues of Synvisc/Synvisc-One increased 9% to $70.9 million for the three months ended and 7% to $127.1 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to an expanded sales and marketing investment and the initiation of direct sales of the product in Latin America.

        Other Biosurgery product revenue increased 60% to $13.4 million for the three months ended and 42% to $27.0 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to $4.6 million of revenue for the three months ended and $7.1 million of revenue for the six months ended June 30, 2008 related to a dermal filler we are developing with and manufacturing for sale to Mentor Corporation, or Mentor.

Oncology

        Oncology product revenue increased 78% to $25.9 million for the three months ended and 54% to $48.2 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to the addition of sales of Clolar outside of North America, which rights we acquired in connection with our acquisition of Bioenvision in October 2007.

        In September 2007, the FDA approved expanded labeling for Campath to include first-line treatment of patients with B-cell chronic lymphocytic leukemia, or B-CLL, significantly increasing the number of patients eligible to receive the product. In December 2007 we received European approval for this expanded indication as well.

        We are developing the intravenous formulation of Clolar for significantly larger indications, including first-line and relapsed or refractory acute myelogenous leukemia, or AML, in adults. We are also developing an oral formulation of Clolar and have initiated clinical trials for the treatment of myelodysplastic syndrome, or MDS. Clolar has been granted orphan drug status for the treatment of ALL and AML in both the United States and European Union.

Other Product Revenue

        Other product revenue increased 29% to $67.8 million for the three months ended and 25% to $139.2 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to:

•

a 32% increase to $38.3 million for the three months ended and a 32% increase to $78.7 million for the six months ended June 30, 2008 in sales of diagnostic products, due to the acquisition of

42

DCL in December 2007 and the strengthening of foreign currencies, primarily the Euro, against the U.S. dollar, which positively impacted diagnostic products revenue by $1.0 million for the three months ended and $1.8 million for the six months ended June 30, 2008; and



•

a 46% increase in sales of liquid crystals to $10.4 million for the three months ended and a 41% increase to $23.7 million for the six months ended June 30, 2008 combined with a 43% increase in sales of WelChol to $14.5 million for the three months ended and a 20% increase to $30.1 million for the six months ended June 30, 2008, due to bulk sales and royalties earned as a result of increased demand from our U.S. marketing partner, Sankyo Pharma, Inc., or Sankyo.

Service Revenue

        We derive service revenue primarily from the following sources:

•

sales of MACI, our proprietary cell therapy product for cartilage repair, in Europe and Australia, Carticel for the treatment of cartilage damage, and Epicel for the treatment of severe burns, all of which are included in our Biosurgery reporting segment; and



•

reproductive/genetics and pathology/oncology diagnostic testing services, which are included in our Genetics reporting segment.

        The following table sets forth our service revenue on a segment basis (amounts in thousands):

		Three Months Ended June 30,							Six Months Ended June 30,
						Increase/ (Decrease) % Change							Increase/ (Decrease) % Change
		2008		2007					2008		2007
Therapeutics		$	167	$	—		N/A		$	343	$	—		N/A
Biosurgery			11,298		8,338		36	%		22,030		17,700		24	%
Genetics			78,534		73,714		7	%		152,863		139,872		9	%
Oncology			424		346		23	%		834		628		33	%
Other			199		77		>100	%		416		156		>100	%
	Total service revenue	$	90,622	$	82,475		10	%	$	176,486	$	158,356		11	%

        Service revenue attributable to our Biosurgery reporting segment increased 36% to $11.3 million for the three months ended and 24% to $22.0 million for the six months ended June 30, 2008, as compared to the same periods of 2007. The increases were primarily due to higher demand for Epicel and MACI.

        Service revenue attributable to our Genetics reporting segment increased 7% to $78.5 million for the three months ended and 9% to $152.9 million for the six months ended June 30, 2008, as compared to the same periods of 2007. The increases were primarily attributable to continued growth in revenue from our genetic testing and prenatal screening services and the increase in demand for certain testing services for patients diagnosed with cancer.

        The strengthening of foreign currencies against the U.S. dollar for the three and six months ended June 30, 2008, as compared to the same periods of 2007, did not have a significant impact on service revenue.

43

International Product and Service Revenue

        A substantial portion of our revenue is generated outside of the United States. The following table provides information regarding the change in international product and service revenue as a percentage of total product and service revenue during the periods presented (amounts in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
							Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
	2008			2007						2008			2007
International product and service revenue	$	623,237		$	439,897			42	%	$	1,187,364		$	850,916			40	%
% of total product and service revenue		54	%		47	%					53	%		47	%

        The 42% increase to $623.2 million in international product and service revenue for the three months ended and the 40% increase to $1.2 billion for the six months ended June 30, 2008, as compared to the same periods of 2007, is primarily due to an $107.7 million increase for the three month period and a $197.3 million increase for the six month period in the combined international sales of Renagel, Cerezyme, Fabrazyme and Myozyme, primarily due to an increase in the number of patients using these products in the European Union, South America and the Asia-Pacific rim. In addition, due to the restructured relationship with BioMarin/Genzyme LLC, we began to record Aldurazyme revenue effective January 1, 2008. Revenue generated outside the United States for Aldurazyme was $31.5 million for the three months ended and $61.2 million for the six months ended June 30, 2008, which had been recorded as joint venture revenue by BioMarin/Genzyme LLC in 2007.

        International product and service revenue as a percentage of total product and service revenue increased due primarily to the addition of revenue generated outside the United States for Aldurazyme and clofarabine. We began recording clofarabine revenue outside the United States as a result of our acquisition of Bioenvision in October 2007, which provided us with the exclusive, worldwide rights to clofarabine.

        The strengthening of foreign currencies against the U.S. dollar, primarily the Euro, positively impacted total product and service revenue by $51.9 million for the three months ended and $98.5 million for the six months ended June 30, 2008, as compared to the same periods of 2007.

Research and Development Revenue

        The following table sets forth our research and development revenue on a segment basis (amounts in thousands):

		Three Months Ended June 30,							Six Months Ended June 30,
						Increase/ (Decrease) % Change							Increase/ (Decrease) % Change
		2008		2007					2008		2007
Therapeutics		$	26	$	431		(94	)%	$	45	$	1,069		(96	)%
Transplant			—		—		N/A			—		180		(100	)%
Biosurgery			818		1,226		(33	)%		1,421		2,974		(52	)%
Oncology			6,961		2,510		>100	%		13,318		7,980		67	%
Other			464		896		(48	)%		1,031		1,669		(38	)%
Corporate			442		399		11	%		825		702		18	%
	Total research and development revenue	$	8,711	$	5,462		59	%	$	16,640	$	14,574		14	%

44

        Total research and development revenue increased by $3.2 million for the three months ended and $2.1 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to increases in revenue recognized by our Oncology reporting segment due to higher development activity for Campath, particularly in the multiple sclerosis development program.

MARGINS

        The components of our total margins are described in the following table (amounts in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
							Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
	2008			2007						2008			2007
Product margin	$	830,458		$	682,230			22	%	$	1,619,987		$	1,325,696			22	%
% of total product revenue		77	%		81	%					78	%		81	%
Service margin	$	31,635		$	28,129			12	%	$	61,925		$	56,271			10	%
% of total service revenue		35	%		34	%					35	%		36	%
Total product and service margin	$	862,093		$	710,359			21	%	$	1,681,912		$	1,381,967			22	%
% of total product and service revenue		74	%		77	%					75	%		77	%

Product Margin

        Our overall product margin increased $148.2 million, or 22%, for the three months ended and $294.3 million, or 22%, for the six months ended June 30, 2008, as compared to the same periods of 2007. This is primarily due to:

•

improved margins for Hectorol and Renagel due to price increases, increased unit volume and increased efficiency at our global manufacturing facilities;



•

increased margins for Cerezyme, Fabrazyme, Thyrogen and Myozyme due to increased sales volume;



•

an increase in product margin for Seprafilm due to increased sales;



•

an increase in product margin for Hylaform due to milestone payments received in 2008 for which there were no comparable amounts received in 2007;



•

an increase in product margin for diagnostic products due to our acquisition of DCL in December 2007; and



•

an increase in product margin for our oncology business due to higher demand for Campath worldwide, and an increase in worldwide sales of Clolar due to our acquisition of Bioenvision in October 2007.

        These increases in product margin were partially offset by the unfavorable effect of exchange rates of $10.3 million for the three months ended and $19.8 million for the six months ended June 30, 2008 due to the weakening of the U.S. dollar against foreign currencies, primarily the Euro.

        Total product margin as a percentage of total product revenue for the three and six months ended June 30, 2008, as compared to the same periods of 2007, decreased due to the increase in sales of Myozyme and the addition of Aldurazyme to the results, both of which have lower than average margins, and to higher unit costs for Cerezyme and Fabrazyme.

        For purposes of this discussion, the amortization of product related intangible assets is included in amortization expense and, as a result, is excluded from cost of products sold and the determination of product margins.

45

Service Margin

        Our overall service margin increased $3.5 million, or 12%, for the three months ended and $5.7 million, or 10%, for the six months ended June 30, 2008, as compared to the same periods of 2007. The increases were primarily attributable to increases in revenues from our genetic testing and prenatal screening services.

        Total service margin as a percent of total service revenue increased by 1% for the three months ended June 30, 2008, as compared to the same period of 2007, due to an increase in Epicel revenue. Total service margin as a percent of total service revenue decreased by 1% for the six months ended June 30, 2008, as compared to the same period of 2007, primarily due to an increase in Carticel and MACI unit costs.

OPERATING EXPENSES

Selling, General and Administrative Expenses

        Effective January 1, 2008, as a result of changes in how we review our business, certain general and administrative expenses which were formerly allocated amongst our reporting segments and Other, are now allocated to Corporate. We have revised our 2007 segment disclosures to conform to our 2008 presentation.

        The following table provides information regarding the change in SG&A during the periods presented (amounts in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
							Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
	2008			2007						2008			2007
Selling, general and administrative expenses	$	347,305		$	339,480			2	%	$	665,691		$	608,501			9	%
% of total revenue		30	%		36	%					29	%		33	%

        SG&A increased by $7.8 million for the three months ended and $57.2 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to spending increases of:

•

$6.7 million for the three months ended and $9.4 million for the six months ended June 30, 2008 for Renal, primarily due to sales force expansion for Renvela;



•

$17.9 million for the three months ended and $30.3 million for the six months ended June 30, 2008 for Therapeutics, primarily due to costs incurred related to Aldurazyme, which were recorded by BioMarin/Genzyme LLC in the same period of 2007, combined with continued marketing activities for Cerezyme, Fabrazyme and Myozyme;



•

$2.3 million for the three months ended and $3.9 million for the six months ended June 30, 2008 for Transplant, primarily due to our investment in international programs and personnel;



•

$7.9 million for the three months ended and $13.2 million for the six months ended June 30, 2008 for Biosurgery, primarily due to the expansion of our Sepra sales force in the second half of 2007, combined with additional marketing activities;



•

$9.8 million for the three months ended and $12.0 million for the six months ended June 30, 2008 for Genetics, primarily due to a $6.1 million adjustment recorded in June 2007 to accruals related to our acquisition of the Physician Services and Analytical Services business units of IMPATH Inc. in May 2004 and to personnel additions;

46

•

$4.7 million for the three months ended and $9.3 million for the six months ended June 30, 2008 for Oncology, primarily due to the inclusion of Bioenvision activities after the acquisition and increased domestic marketing expenses for Clolar;



•

$6.4 million for the three months ended and $10.1 million for the six months ended June 30, 2008 for Other, primarily due to the continued Cholestagel commercial infrastructure build out combined with the acquisition of diagnostic assets from DCL in December 2007; and



•

$16.0 million for the three months ended and $33.0 million for the six months ended June 30, 2008 for Corporate, primarily due to the strengthening of foreign currencies, primarily the Euro against the U.S. dollar and increased spending for information technology and legal expenses.

        These increases were partially offset by a decrease in SG&A for the three and six months ended June 30, 2008 for Corporate because we recorded a $64.0 million charge in June 2007 for the settlement of the litigation related to the consolidation of our former tracking stocks for which there was no comparable amount recorded in 2008.

Research and Development Expenses

        The following table provides information regarding the change in research and development expenses during the periods presented (amounts in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
							Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
	2008			2007						2008			2007
Research and development expenses	$	381,861		$	198,442			92	%	$	644,658		$	364,562			77	%
% of total revenue		33	%		21	%					28	%		20	%

        Research and development expenses increased $183.4 million for the three months ended and $280.1 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to:

•

spending increases of $16.8 million for the three months ended and $33.9 million for the six months ended June 30, 2008 on certain Therapeutics research and development programs and the addition of Aldurazyme expenses due to the restructuring of our relationship with BioMarin/Genzyme LLC;



•

spending increases of $3.0 million for the three months ended and $7.8 million for the six months ended June 30, 2008 on Transplant research and development programs, primarily on Mozobil due to new drug application filing activity;



•

spending increases of $18.7 million for the three months ended and $34.5 million for the six months ended June 30, 2008 on Oncology research and development programs, primarily on the development of alemtuzumab for the treatment of multiple sclerosis and the addition of Bioenvision expenses for the development of Clolar for adult AML;



•

charges of $175.0 million recorded in June 2008 and $69.9 million recorded in February 2008 for license fees paid to Isis for exclusive worldwide rights to mipomersen; and



•

increases of $5.6 million for the three months ended and $10.8 million for the six months ended June 30, 2008 due to the strengthening of foreign currencies against the U.S. dollar, primarily the Euro.

47

        These increases were partially offset by spending decreases of:

•

$30.9 million for the three months ended and $39.3 million for the six months ended June 30, 2008 on certain Therapeutics research and development programs, including a $25.0 million upfront payment to Ceregene in June 2007 in connection with a collaboration agreement for the development and commercialization of CERE-120, a gene therapy product for the treatment of Parkinson's disease, for which there was no comparable amount paid in 2008, and an $8.1 million decrease in spending for the six month period due to the termination in February 2007 of our joint venture with Dyax for the development of DX-88 for the treatment of hereditary angioedema, or HAE; and



•

$4.2 million for the three months ended and $8.1 million for the six months ended June 30, 2008 on our Renal programs due to the termination of our late stage clinical trial for tolevamer.

Amortization of Intangibles

        The following table provides information regarding the change in amortization of intangibles expense during the periods presented (amounts in thousands):

	Three Months Ended June 30,									Six Months Ended June 30,
							Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
	2008			2007						2008			2007
Amortization of intangibles	$	55,605		$	49,465			12	%	$	111,263		$	99,482			12	%
% of total revenue		5	%		5	%					5	%		5	%

        Amortization of intangibles expense increased by $6.1 million for the three months ended and $11.8 million for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to the acquisition of technology in connection with our acquisition of Bioenvision in October 2007 and the acquisition of customer lists and trademarks in connection with our acquisition of the diagnostic assets of DCL in December 2007.

        As discussed in Note 8., "Goodwill and Other Intangible Assets," to our financial statements included in this report, we calculate amortization expense for the Synvisc sales and marketing rights we reacquired from Wyeth and the Myozyme patent and technology rights pursuant to a licensing agreement with Synpac by taking into account forecasted future sales of the products, and the resulting estimated future contingent payments we will be required to make. As a result, we expect amortization of intangibles expense to fluctuate over the next five years based on these future contingent payments.

Purchase of In-Process Research and Development

        We did not complete any acquisitions in the six months ended June 30, 2008. In connection with certain of our acquisitions we completed between January 1, 2006 and December 31, 2007, we have

48

acquired various IPR&D projects. The following table sets forth IPR&D projects for companies and certain assets we have acquired between January 1, 2006 and December 31, 2007 (amounts in millions):

Company/Assets Acquired	Purchase Price		IPR&D		Programs Acquired	Discount Rate Used in Estimating Cash Flows			Year of Expected Launch		Estimated Cost to Complete
Bioenvision (2007)	$	349.9	$	125.5	Evoltra (clofarabine)(1,2)		17	%		2008-2010	$	41
AnorMED (2006)	$	589.2	$	526.8	Mozobil (stem cell transplant)(3)		15	%		2009-2014	$	125
				26.1	AMD070 (HIV)(4)		15	%		—	$	—
			$	552.9

(1)

IPR&D charges totaled $125.5 million related to the acquisition of Bioenvision, of which $106.4 million was charged to IPR&D and $19.1 million was charged to equity in income (loss) of equity method investments.

(2)

Clofarabine, which is approved for the treatment of relapsed and refractory pediatric ALL, is marketed under the name Clolar in North America and as Evoltra elsewhere in the world. The IPR&D projects for Clolar are related to the development of these products for the treatment of other medical diseases.

(3)

In June 2008, we submitted marketing applications for Mozobil in the United States and Europe. We expect to launch Mozobil in those regions during the first half of 2009, following regulatory approval.

(4)

Year of expected launch and estimated cost to complete data is not provided for AMD070 at this time because we are assessing our future plans for this program.

OTHER INCOME AND EXPENSES

		Three Months Ended June 30,									Six Months Ended June 30,
								Increase/ (Decrease) % Change									Increase/ (Decrease) % Change
		2008			2007						2008			2007
		(Amounts in thousands)
Equity in income of equity method investments		$	—		$	5,945			(100	)%	$	188		$	11,557			(98	)%
Minority interest			563			15			>100	%		1,026			3,927			(74	)%
Gains on investments in equity securities, net			9,153			143			>100	%		9,928			12,931			(23	)%
Other			19			(278	)		>(100	)%		(141	)		(803	)		(82	)%
Investment income			13,352			17,246			(23	)%		28,222			33,465			(16	)%
Interest expense			(1,149	)		(3,621	)		(68	)%		(2,804	)		(7,809	)		(64	)%
	Total other income	$	21,938		$	19,450			13	%	$	36,419		$	53,268			(32	)%

Equity in Income of Equity Method Investments

        Under this caption, we record our portion of the results of our joint venture with Medtronic, Inc., or Medtronic, and our investment in Peptimmune, Inc., or Peptimmune, and for the three and six months ended June 30, 2007, our portion of the results of BioMarin/Genzyme LLC.

        Equity in income of equity method investments decreased 100% for the three months ended and 98% for the six months ended June 30, 2008, as compared to the same periods of 2007, primarily due to the restructuring of the relationship with BioMarin/Genzyme LLC. Beginning January 1, 2008, as a result of our restructured relationship with BioMarin, we no longer account for BioMarin/Genzyme LLC using the equity method of accounting.

49

Minority Interest

        As a result of the restructuring of our relationship with BioMarin/Genzyme LLC, effective January 1, 2008, in accordance with the provisions of FIN 46R, we began consolidating the results of BioMarin/Genzyme LLC. We recorded BioMarin's portion of this joint venture's income for the three and six months ended as of June 30, 2008 as minority interest in our consolidated statement of operations for that period, the amounts of which were not significant.

        As a result of our application of FIN 46R, we consolidated the results of Excigen Inc., or Excigen, and, prior to February 20, 2007, Dyax-Genzyme LLC. On February 20, 2007, we agreed with Dyax to terminate our participation and interest in Dyax-Genzyme LLC. We recorded Dyax's portion of this joint venture's losses as minority interest in our consolidated statements of operations through February 20, 2007. The results of Excigen were not significant for the three and six months ended June 30, 2008 and 2007.

Gains on Investments in Equity Securities, Net

        We recorded the following gains on investments in equity securities, net of charges for impairment of investments, during the periods presented (amounts in thousands):

			Three Months Ended June 30,					Six Months Ended June 30,
			2008			2007		2008			2007
Gross gains on investments in equity securities:
	Sirtris		$	10,304		$	—	$	10,304		$	—
	THP			—			—		—			10,848
	Other			138			143		913			2,083
		Total		10,442			143		11,217			12,931
Less: charge for impairment of investment				(1,289	)		—		(1,289	)		—
Gains on investments in equity securities, net			$	9,153		$	143	$	9,928		$	12,931

        In the second quarter of 2008, we recorded a $10.3 million gain resulting from the liquidation of our investment in the common stock of Sirtris for net cash proceeds of $14.8 million.

        In March 2007, we recorded a $10.8 million gain in connection with the sale of our entire investment in the capital stock of THP, which had a zero cost basis, for net cash proceeds of $10.8 million.

        At June 30, 2008, our stockholders' equity includes $28.8 million of unrealized gains and $2.6 million of unrealized losses related to our strategic investments in equity securities.

Investment Income

        Our investment income decreased 23% to $13.4 million for the three months ended and 16% to $28.2 million for the six months ended June 30, 2008, as compared to $17.2 million and $33.5 million for the same periods of 2007, primarily due to a decrease in our average portfolio yield and lower balances for international cash, partially offset by higher domestic average cash balances.

Interest Expense

        Our interest expense decreased 68% to $1.1 million for the three months ended and 64% to $2.8 million for the six months ended June 30, 2008, as compared to $3.6 million and $7.8 million for the same periods of 2007, primarily due to a $1.2 million decrease in interest expense for the three months ended and $2.6 million for the six months ended June 30, 2008 related to asset retirement

50

obligations and a $1.3 million increase for the three months ended and $2.4 million for the six months ended June 30, 2008 in capitalized interest.

Provision for Income Taxes

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(Amounts in thousands)
Provision for income taxes	$	38,407		$	64,090		$	98,524		$	135,283
Effective tax rate		36	%		43	%		31	%		36	%

        Our effective tax rate for all periods presented varies from the U.S. statutory tax rate as a result of:

•

our provision for state income taxes;



•

the tax benefits from manufacturing activities;



•

benefits related to tax credits;



•

income and expenses taxed at rates other than the U.S. statutory tax rate; and



•

non-deductible stock-based compensation expenses totaling $8.7 million for the three months ended and $16.7 million for the six months ended June 30, 2008, as compared to $8.5 million for the three months ended and $15.4 million for the six months ended June 30, 2007.

        Our effective tax rate for the three and six months ended June 30, 2008 was also impacted by the settlement of IRS audits for the tax years 2004 to 2005. We recorded a $4.3 million tax benefit to our income tax provision reflecting the settlement of various issues. In conjunction with those settlements, we reduced our tax reserves by $4.9 million and recorded current and deferred tax benefits for the remaining portion of the settlement amounts.

        We are currently under IRS audit for the tax years 2006 to 2007 and various states for the tax years 1999 to 2005. We believe that we have provided sufficiently for all audit exposures. Settlement of these audits or the expiration of the statute of limitations on the assessment of income taxes for any tax year may result in an adjustment of future tax provisions. Any such adjustment would be recorded upon the effective settlement of the audit or expiration of the applicable statute of limitations.

LIQUIDITY AND CAPITAL RESOURCES

        We continue to generate cash from operations. We had cash, cash equivalents and short- and long-term investments of $1.25 billion at June 30, 2008 and $1.46 billion at December 31, 2007.

        The following is a summary of our statements of cash flows for the six months ended June 30, 2008 and 2007.

51

Cash Flows from Operating Activities

        Cash flows from operating activities are as follows (amounts in thousands):

		Six Months Ended June 30,
		2008			2007
Cash flows from operating activities:
Net income		$	214,835		$	241,981
Non-cash charges			241,953			196,810
Decrease in cash from working capital changes (excluding impact of acquired assets and assumed liabilities)			(277,480	)		(62,623	)
	Cash flows from operating activities	$	179,308		$	376,168

        Cash provided by operating activities decreased $196.9 million for the six months ended June 30, 2008, as compared to the same period of 2007, primarily driven by a $27.1 million decrease in net income, which was impacted by a $244.9 million charge for license fees paid to Isis in exchange for the exclusive worldwide rights to mipomersen and a $214.9 million increase in cash used for working capital, offset, in part, by a net increase of $45.1 million in non-cash charges. The net increase in non-cash charges for the six months ended June 30, 2008, as compared to the same period of 2007, is primarily attributable to:

•

a $20.3 million increase in depreciation and amortization; and



•

a $17.3 million increase in the tax benefit from employee stock-based compensation.

Cash Flows from Investing Activities

        Cash flows from investing activities are as follows (amounts in thousands):

		Six Months Ended June 30,
		2008			2007
Cash flows from investing activities:
Net sales of investments, excluding investments in equity securities		$	30,629		$	84,919
Net purchases of investments in equity securities			(65,303	)		(668	)
Purchases of property, plant and equipment			(251,785	)		(180,041	)
Distributions from equity method investments			6,595			10,900
Purchases of other intangible assets			(75,400	)		(27,618	)
Other investing activities			2,572			891
	Cash flows from investing activities	$	(352,692	)	$	(111,617	)

        For the six months ended June 30, 2008, net purchases of investments in equity securities, purchases of other intangible assets and capital expenditures accounted for significant cash outlays for investing activities. During the six months ended June 30, 2008, we used:

•

$80.1 million in cash to purchase five million shares of Isis common stock in February 2008;



•

$251.8 million in cash to fund the purchase of property, plant and equipment, primarily related to the ongoing expansion of our manufacturing capacity in the Republic of Ireland, the United Kingdom, Belgium and France, the construction of a new research and development facility in Framingham, Massachusetts, planned improvements at our facility in Allston, Massachusetts and capitalized costs of an internally developed enterprise software system for our Genetics business; and

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•

$60.0 million in cash for a milestone payment to Wyeth in May 2008;

These cash outlays were partially offset by $16.2 million of net cash proceeds from the sale of investments in equity securities and $6.6 million of cash distributions from BioMarin/Genzyme LLC.

Cash Flows from Financing Activities

        Cash flows from financing activities are as follows (amounts in thousands):

		Six Months Ended June 30,
		2008			2007
Cash flows from financing activities:
Proceeds from issuance of our common stock		$	127,008		$	68,174
Repurchases of our common stock			(143,012	)		(63,430	)
Excess tax benefits from stock-based compensation			8,647			565
Payments of debt and capital lease obligations			(3,886	)		(3,356	)
Increase in bank overdrafts			29,309			15,935
Payments of notes receivable from stockholders			2,770			—
Minority interest contributions			—			4,136
Other financing activities			34			2,474
	Cash flows from financing activities	$	20,870		$	24,498

        In May 2007, our board of directors authorized a stock repurchase program to repurchase up to an aggregate maximum amount of $1.5 billion or 20,000,000 shares of our outstanding common stock over three years, beginning in June 2007. The repurchases are being made from time to time and can be effectuated through open market purchases, privately negotiated transactions, transactions structured through investment banking institutions, or by other means, subject to management's discretion and as permitted by securities laws and other legal requirements. During the six months ended June 30, 2008, we repurchased an additional 2,000,000 shares of our common stock at an average price of $71.49 per share for a total of $143.0 million in cash, including fees. As of June 30, 2008 we have repurchased a cumulative total of 5,500,000 shares of our common stock at an average price of $68.09 per share for a total of $374.6 million in cash, including fees.

Revolving Credit Facility

        As of June 30, 2008, no amounts were outstanding under our five year, $350.0 million senior unsecured revolving credit facility. The terms of this credit facility include various covenants, including financial covenants that require us to meet minimum interest coverage ratios and maximum leverage ratios. As of June 30, 2008, we were in compliance with these covenants.

Contractual Obligations

        The disclosure of payments we have committed to make under our contractual obligations is set forth under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Liquidity and Capital Resources" in Exhibit 13 to our 2007 Form 10-K. As of June 30, 2008, there have been no material changes to our contractual obligations since December 31, 2007 except the following:

•

the contingent payments to PTC and Isis as described above under the heading "Strategic Transactions;" and



•

the remaining $18.1 million in principal outstanding under the existing mortgage for the manufacturing facility we formerly leased and acquired in July 2008, which bears interest at 5.57% annually and is due in May 2020 with a balloon payment of $11.1 million in principal.

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Financial Position

        We believe that our available cash, investments and cash flows from operations will be sufficient to fund our planned operations and capital requirements for the foreseeable future. Although we currently have substantial cash resources and positive cash flow, we have used or intend to use substantial portions of our available cash and may make additional borrowings for:

•

product development and marketing;



•

business combinations and strategic business initiatives;



•

the remaining $1.1 billion approved for our ongoing stock repurchase program over approximately the next 2 years;



•

expanding existing and constructing new manufacturing facilities;



•

upgrading our information technology systems;



•

contingent payments under license and other agreements, including payments related to our license of mipomersen from Isis and PTC124 from PTC;



•

expanding staff; and



•

working capital and satisfaction of our obligations under capital and operating leases.

        Our cash reserves may be further reduced to pay principal and interest on the $690.0 million in principal under our 1.25% convertible senior notes due December 1, 2023. The notes are initially convertible into Genzyme Stock at a conversion price of approximately $71.24 per share. Holders of the notes may require us to repurchase all or any part of the notes for cash, common stock, or a combination, at our option, on December 1, 2008, 2013 or 2018, at a price equal to 100% of the principal amount of the notes plus accrued and unpaid interest through the date prior to the date of repurchase. Additionally, upon a change of control, each holder may require us to repurchase, at 100% of the principal amount of the notes plus accrued interest, all or a portion of the holder's notes for cash. On or after December 1, 2008, we may redeem for cash at 100% of the principal amount of the notes plus accrued interest, all or part of the notes that have not been previously converted or repurchased.

        In addition, we have several outstanding legal proceedings. Involvement in investigations and litigation can be expensive and a court may ultimately require that we pay expenses and damages. As a result of legal proceedings, we also may be required to pay fees to a holder of proprietary rights in order to continue certain operations.

        To satisfy these and other commitments, we may have to obtain additional financing. We cannot guarantee that we will be able to obtain any additional financing, extend any existing financing arrangement, or obtain either on favorable terms.

Off-Balance Sheet Arrangements

        We do not use special purpose entities or other off-balance sheet financing arrangements. We enter into guarantees in the ordinary course of business related to the guarantee of our own performance and the performance of our subsidiaries. In addition, we have joint ventures and certain other arrangements that are focused on the research, development and commercialization of products. Entities falling within the scope of FIN 46R are included in our consolidated statements of operations if we qualify as the primary beneficiary. Entities not subject to consolidation under FIN 46R are accounted for under the equity method of accounting if our ownership percent exceeds 20% or if we exercise significant influence over the entity. We account for our portion of the results of these entities in the line item "Equity in income of equity method investments" in our consolidated statements of

54

operations. We also acquire companies in which we agree to pay contingent consideration based on attaining certain thresholds.

Recent Accounting Pronouncements

         FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115."    Effective January 1, 2008, we adopted FAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115," which permits, but does not require, entities to measure certain financial instruments and other assets and liabilities at fair value on an instrument-by-instrument basis. Unrealized gains and losses on items for which the fair value option has been elected should be recognized in earnings at each subsequent reporting date. In adopting FAS 159, we did not elect to measure any new assets or liabilities at their respective fair values and, therefore, the adoption of FAS 159 did not have an impact on our results of operations and financial position.

         EITF Issue No. 07-1, "Accounting for Collaborative Arrangements."    In December 2007, the Emerging Issues Task Force, or EITF, of the FASB reached a consensus on Issue No. 07-1, "Accounting for Collaborative Arrangements." The EITF concluded on the definition of a collaborative arrangement and that revenues and costs incurred with third parties in connection with collaborative arrangements would be presented gross or net based on the criteria in EITF 99-19 and other accounting literature. Companies are also required to disclose the nature and purpose of collaborative arrangements along with the accounting policies and the classification and amounts of significant financial-statement amounts related to the arrangements. EITF 07-1 will become effective for us January 1, 2009 and will be applied retrospectively to all periods presented for all collaborative arrangements existing as of the effective date. We are evaluating the impact, if any, this standard will have on our consolidated financial statements.

         EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities."    In June 2007, the FASB ratified the EITF consensus reached in EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities," which provides guidance for nonrefundable prepayments for goods or services that will be used or rendered for future research and development activities and directs that such payments should be deferred and capitalized. Such amounts should be recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered or the services rendered. EITF 07-3 was effective for us beginning January 1, 2008 and we applied it prospectively to new contracts we entered into on or after that date. The implementation of this standard did not have a material impact on our financial position, results of operations or cash flows.

         FAS 141 (revised 2007), "Business Combinations."    In December 2007, the FASB issued FAS 141 (revised 2007), "Business Combinations," or FAS 141R, which replaces FAS 141, "Business Combinations." FAS 141R retains the underlying concepts of FAS 141 in that all business combinations are still required to be accounted for at fair value under the acquisition method of accounting but changes a number of significant aspects of applying this method. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; IPR&D will be recorded at fair value as an indefinite-lived intangible asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. FAS 141R is effective for us on a prospective basis for all business combinations for which the acquisition date is on or after January 1, 2009. Early adoption is not permitted. We are currently evaluating the effects, if any, that FAS 141R will have on our consolidated financial statements.

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         FAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51."    In December 2007, the FASB issued FAS 160, "Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51," which establishes new accounting and reporting standards that require the ownership interests in subsidiaries not held by the parent to be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. FAS 160 also requires the amount of consolidated net income attributable to the parent and to the noncontrolling interest, commonly referred to as the minority interest, to be clearly identified and presented on the face of the consolidated statement of income. Changes in a parent's ownership interest while the parent retains its controlling financial interest must be accounted for consistently, and when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary must be initially measured at fair value. The gain or loss on the deconsolidation of the subsidiary is measured using the fair value of any noncontrolling equity investment. FAS 160 also requires entities to provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. FAS 160 is effective for us January 1, 2009 and adoption is prospective only. However, upon adoption, presentation and disclosure requirements described above must be applied retrospectively for all periods presented in our consolidated financial statements. We are currently evaluating the effects, if any, that FAS 160 will have on our consolidated financial statements.

         FSP No. 157-2, "Effective Date of FASB Statement No. 157."    In accordance with the provisions of FSP No. 157-2, "Effective Date of FASB Statement No. 157," we elected to defer implementation of FAS 157, as it relates to our non-financial assets and non-financial liabilities that are recognized and disclosed at fair value in our consolidated financial statements on a nonrecurring basis, until January 1, 2009. We are evaluating the impact, if any, the adoption of FAS 157, for those assets and liabilities within the scope of FSP No. 157-2, will have on our financial position, results of operations and liquidity. We did not have any non-financial assets or non-financial liabilities that would be recognized or disclosed on a recurring basis as of June 30, 2008.

         FAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133."    In March 2008, the FASB issued FAS 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133," which amends and expands the disclosure requirements of FAS 133, "Accounting for Derivative Instruments and Hedging Activities." FAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. We are currently evaluating the effects, if any, that FAS 161 will have on our consolidated financial statements.

         FSP No. 142-3, "Determination of the Useful Life of Intangible Assets."    In April 2008, the FASB issued FSP No. 142-3, "Determination of the Useful Life of Intangible Assets." FSP No. 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FAS 142, "Goodwill and Other Intangible Assets." FSP No. 142-3 is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the effects, if any, that FSP No. 142-3 will have on our consolidated financial statements.

         FAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles."    In May 2008, the FASB issued FAS 162, "The Hierarchy of Generally Accepted Accounting Principles." FAS 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements. FAS 162 is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles." The implementation of this standard will not have a material impact on our consolidated financial position and results of operations.

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RISK FACTORS

        Our future operating results could differ materially from the results described in this report due to the risks and uncertainties related to our business, including those discussed below.

If we fail to increase sales of several existing products and services, we will not meet our financial goals.

        Over the next few years, our success will depend substantially on our ability to increase revenue from our existing products and services. These products and services include Renagel/Renvela, Synvisc, Synvisc-One, Fabrazyme, Myozyme, Hectorol, Thymoglobulin, Thyrogen, Clolar, Campath, Aldurazyme and diagnostic testing services. Our ability to increase sales will depend on a number of factors, including:

•

acceptance by the medical community of each product or service;



•

the availability of competing treatments that are deemed safer, more efficacious, more convenient to use, or more cost effective;



•

our ability, and the ability of our collaborators, to efficiently manufacture sufficient quantities of each product to meet demand and to do so in a timely and cost efficient manner;



•

regulation by the U.S. Food and Drug Administration, commonly referred to as the FDA, and the European Agency for the Evaluation of Medicinal Products, or EMEA, and other regulatory authorities of these products and the facilities and processes used to manufacture these products;



•

the scope of the labeling approved by regulatory authorities for each product and competitive products;



•

the effectiveness of our sales force;



•

the availability and extent of coverage, pricing and level of reimbursement from governmental agencies and third party payors; and



•

the size of the patient population for each product or service and our ability to identify new patients.

        Part of our growth strategy involves conducting additional clinical trials to support approval of expanded uses of some of our products, including Clolar and alemtuzumab, pursuing marketing approval for our products in new jurisdictions and developing next generation products, such as Synvisc-One and Genz-112638. The success of this component of our growth strategy will depend on the outcome of these additional clinical trials, the content and timing of our submissions to regulatory authorities and whether and when those authorities determine to grant approvals.

        Because the healthcare industry is extremely competitive and regulatory requirements are rigorous, we spend substantial funds marketing our products and attempting to expand approved uses for them. These expenditures depress near-term profitability with no assurance that the expenditures will generate future profits that justify the expenditures.

Our future success will depend on our ability to effectively develop and market our products and services against those of our competitors.

        The human healthcare products and services industry is extremely competitive. Other organizations, including pharmaceutical, biotechnology, device and diagnostic testing companies, have developed and are developing products and services to compete with our products, services, and product candidates. If healthcare providers, patients or payors prefer these competitive products or services or these competitive products or services have superior safety, efficacy, pricing or

57

reimbursement characteristics, we will have difficulty maintaining or increasing the sales of our products and services.

        Renagel/Renvela competes with two other products approved in the United States for the control of elevated phosphorus levels in patients with chronic kidney failure on hemodialysis. Fresenius Medical Care markets PhosLo®, a calcium-based phosphate binder. Shire Pharmaceuticals Group plc, or Shire, markets Fosrenol®, a non-calcium based phosphate binder. In 2007, Amgen, Inc. acquired Ilypsa and its product candidate, ILY101 (now AMG 223), a polymeric phosphate binder that completed a phase 2 trial in CKD patients on dialysis. Amgen is currently conducting a Phase 2b study. Renagel also competes with over-the-counter calcium carbonate products such as TUMS® and metal-based options such as aluminum and magnesium.

        UCB S.A. has developed Zavesca®, a small molecule drug for the treatment of Gaucher disease, the disease addressed by Cerezyme. Zavesca, sold by Actelion Ltd., has been approved in the United States, European Union and Israel as an oral therapy for use in patients with mild to moderate Type 1 Gaucher disease for whom enzyme replacement therapy is unsuitable. In addition, Shire reported top-line data from a phase 1/2 clinical trial for its gene-activated glucocerebrosidase program, also to treat Gaucher disease, and initiated phase 3 studies in July 2007. Protalix Biotherapeutics Ltd. initiated a phase 3 trial for plant-derived enzyme replacement therapy to treat Gaucher disease in the third quarter of 2007. Amicus Therapeutics, Inc., or Amicus, is conducting phase 2 trials for oral chaperone medication to treat Gaucher disease. We are also aware of other development efforts aimed at treating Gaucher disease.

        Outside the United States, Shire is marketing Replagal™, a competitive enzyme replacement therapy for Fabry disease which is the disease addressed by Fabrazyme. In addition, while Fabrazyme has received orphan drug designation, which provides us with seven years of market exclusivity for the product in the United States, other companies may seek to overcome our market exclusivity and, if successful, compete with Fabrazyme in the United States. Amicus has completed phase 2 trials for an oral chaperone medication to treat Fabry disease and plans to meet with the FDA and EMEA to discuss the conduct of phase 3 clinical trials. We are aware of other development efforts aimed at treating Fabry disease.

        Current competition for Synvisc and Synvisc-One includes Supartz®, a product manufactured by Seikagaku Corporation that is sold in the United States by Smith & Nephew Orthopaedics and in Japan by Kaken Pharmaceutical Co. under the name Artz®; Hyalgan®, produced by Fidia Farmaceutici S.p.A. and marketed in the United States by Sanofi-Aventis; Orthovisc®, produced by Anika Therapeutics, Inc., and marketed in the United States by Johnson & Johnson's Mitek division and marketed outside the United States through distributors; Euflexxa™, a product manufactured and sold by Ferring Pharmaceuticals and marketed by Ferring in the United States and Europe; and Durolane®, manufactured by Q-Med AB and distributed outside the United States by Smith & Nephew Orthopedics. Durolane and Euflexxa are produced by bacterial fermentation, which may provide these products a competitive advantage over avian-sourced Synvisc and Synvisc-One. We are aware of various viscosupplementation products on the market or in development, but are unaware of any products that have physical properties of viscosity, elasticity or molecular weight comparable to those of Synvisc and Synvisc-One. Furthermore, several companies market products that are not viscosupplementation products but which are designed to relieve the pain associated with osteoarthritis. Synvisc and Synvisc-One will have difficulty competing with any of these products to the extent the competitive products are considered more efficacious, less burdensome to administer or more cost-effective.

        Myozyme has marketing exclusivity in the United States until 2013 and in the European Union until 2016 due to its orphan drug status. Amicus Therapeutics has completed two phase 1 clinical studies for a small molecule treatment for Pompe disease and initiated a phase 2 clinical trial in June 2008.

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        Several companies market products that, like Thymoglobulin, are used for the prevention and treatment of acute rejection in renal transplant. These products include Novartis' Simulect® and Roche's ZENAPAX®. Competition in the acute transplant rejection market is driven largely by product efficacy due to the potential decreased long-term survival of transplanted organs as the result of an acute organ rejection episode.

        The examples above are illustrative and not exhaustive. Almost all of our products and services face competition. Furthermore, the field of biotechnology is characterized by significant and rapid technological change. Discoveries by others may make our products or services obsolete. For example, competitors may develop approaches to treating LSDs that are more effective, convenient or less expensive than our products and product candidates. Because a significant portion of our revenue is derived from products that address this class of diseases and a substantial portion of our expenditures is devoted to developing new therapies for this class of diseases, such a development would have a material negative impact on our results of operations.

If we fail to obtain and maintain adequate levels of reimbursement for our products and services from third party payors, the commercial potential of our products and services will be significantly limited.

        A substantial portion of our domestic and international revenue comes from payments by third party payors, including government health administration authorities and private health insurers. Governments and other third party payors may not provide adequate insurance coverage or reimbursement for our products and services, which could impair our financial results.

        Third party payors are increasingly scrutinizing pharmaceutical budgets and healthcare expenses and are attempting to contain healthcare costs by:

•

challenging the prices charged for healthcare products and services;



•

limiting both the coverage and the amount of reimbursement for new therapeutic products;



•

reducing existing reimbursement rates for commercialized products and services;



•

limiting coverage for the treatment of a particular patient to a maximum dollar amount or specified period of time;



•

denying or limiting coverage for products that are approved by the FDA or other governmental regulatory bodies but are considered experimental or investigational by third party payors; and



•

refusing in some cases to provide coverage when an approved product is used for disease indications in a way that has not received FDA or other applicable marketing approval.

        Efforts by third party payors to reduce costs could decrease demand for our products and services. In addition, in certain countries, including countries in the European Union and Canada, the coverage of prescription drugs, pricing and levels of reimbursement are subject to governmental control. Therefore, we may be unable to negotiate coverage, pricing and/or reimbursement on terms that are favorable to us. Government health administration authorities may also rely on analyses of the cost-effectiveness of certain therapeutic products in determining whether to provide reimbursement for such products. Our ability to obtain satisfactory pricing and reimbursement may depend in part on whether our products, the cost of some of which is high in comparison to other therapeutic products, are viewed as cost-effective.

        Furthermore, governmental regulatory bodies, such as the Centers for Medicare and Medicaid Services (CMS), may from time-to-time make unilateral changes to reimbursement rates for our products and services. These changes could reduce our revenue by causing healthcare providers to be less willing to use our products and services. Although we actively seek to assure that any initiatives that are undertaken by regulatory agencies involving reimbursement for our products and services do not have an adverse impact on us, we may not always be successful in these efforts.

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The development of new biotechnology products involves a lengthy and complex process, and we may be unable to commercialize any of the products we are currently developing.

        We have numerous products under development and devote considerable resources to research and development, including clinical trials.

        Before we can commercialize our development-stage product candidates, we will need to:

•

conduct substantial research and development;



•

undertake preclinical and clinical testing;



•

develop and scale-up manufacturing processes; and



•

pursue marketing approvals and, in some jurisdictions, pricing and reimbursement approvals.

        This process involves a high degree of risk and takes many years. Our product development efforts with respect to a product candidate may fail for many reasons, including:

•

failure of the product candidate in preclinical studies;



•

difficulty enrolling patients in clinical trials, particularly for disease indications with small patient populations;



•

patients exhibiting adverse reactions to the product candidate or indications of other safety concerns;



•

insufficient clinical trial data to support the effectiveness of the product candidate;



•

our inability to manufacture sufficient quantities of the product candidate for development or commercialization activities in a timely and cost-efficient manner;



•

our failure to obtain the required regulatory approvals for the product candidate, the facilities or the process used to manufacture the product candidate; or



•

changes in the regulatory environment, including pricing and reimbursement, that make development of a new product or indication no longer desirable.

        Few research and development projects result in commercial products, and success in preclinical studies or early clinical trials often is not replicated in later studies. For example, in our phase 3 trial known as the Polymer Alternative for CDAD Treatment (PACT) study, tolevamer did not meet its primary endpoint. In our pivotal study of hylastan for treatment of patients with osteoarthritis of the knee, hylastan did not meet its primary endpoint. We may decide to abandon development of a product or service candidate at any time or we may be required to expend considerable resources repeating clinical trials or conducting additional trials, either of which would increase costs of development and delay any revenue from those programs.

        Our efforts to expand the approved indications for our products and to gain marketing approval in new jurisdictions and to develop next generation products also may fail. These expansion efforts are subject to many of the risks associated with completely new products and, accordingly, we may fail to recoup the investments we make pursuing these strategies.

Our financial results are dependent on sales of Cerezyme.

        Sales of Cerezyme, our enzyme-replacement product for patients with Gaucher disease, totaled $623.7 million for the six months ended June 30, 2008, representing approximately 27% of our total revenue. Because our business is dependent on Cerezyme, negative trends in revenue from this product could have an adverse effect on our results of operations and cause the value of our securities to decline. We will lose revenue if alternative treatments gain commercial acceptance, if our marketing activities are restricted, or if coverage, pricing or reimbursement is limited. In addition, the patient population with Gaucher disease is not large. Because a significant percentage of that population

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already uses Cerezyme, opportunities for future sales growth are constrained. Furthermore, changes in the methods for treating patients with Gaucher disease, including treatment protocols that combine Cerezyme with other therapeutic products or reduce the amount of Cerezyme prescribed, could limit growth, or result in a decline, in Cerezyme sales.

We may encounter substantial difficulties managing our growth.

        Several risks are inherent to our plans to grow our business. Achieving our goals will require substantial investments in research and development, sales and marketing, and facilities. For example, we have spent considerable resources building and seeking regulatory approvals for our manufacturing plants. We cannot assure you that these facilities will prove sufficient to meet demand for our products or that we will not have excess capacity at these facilities. In addition, building our facilities is expensive, and our ability to recover these costs will depend on increased revenue from the products produced at the facilities.

        We produce relatively small amounts of material for research and development activities and pre-clinical trials. Even if a product candidate receives all necessary approvals for commercialization, we may not be able to successfully scale-up production of the product material at a reasonable cost or at all and we may not receive manufacturing approvals in sufficient time to meet product demand. For example, the FDA has concluded that Myozyme produced in our 2000 liter bioreactors is a different product than Myozyme produced in our 160 liter bioreactors and has therefore required us to submit a separate BLA for the 2000 liter product. This delay in receipt of FDA approval has had an adverse effect on our revenues and earnings and will continue to have an adverse effect until we receive regulatory approval. In addition, to meet the global demand for Myozyme, we are working to secure EMEA approval of Myozyme produced at our 4000 liter bioreactor scale manufacturing plant in Belgium. Product supply will be tight until the Belgian plant is approved, and delay in securing approval would have an adverse effect on our revenues and earnings.

        If we are able to increase sales of our products, we may have difficulty managing inventory levels. Marketing new therapies is a complicated process, and gauging future demand is difficult. With Renagel, for example, we have encountered problems in the past managing inventory levels at wholesalers. Comparable problems may arise with any of our products, particularly during market introduction.

        Growth in our business may also contribute to fluctuations in our operating results, which may cause the price of our securities to decline. Our revenue may fluctuate due to many factors, including changes in:

•

wholesaler buying patterns;



•

reimbursement rates;



•

physician prescribing habits;



•

the availability or pricing of competitive products; and



•

currency exchange rates.

        We may also experience fluctuations in our quarterly results due to price changes and sales incentives. For example, purchasers of our products, particularly wholesalers, may increase purchase orders in anticipation of a price increase and reduce order levels following the price increase. We occasionally offer sales incentives and promotional discounts on some of our products and services that could have a similar impact. In addition, some of our products, including Synvisc, are subject to seasonal fluctuation in demand.

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Our operating results and financial position may be impacted when we attempt to grow through business combination transactions.

        We may encounter problems assimilating operations acquired in business combination transactions. These transactions often entail the assumption of unknown liabilities, the loss of key employees, and the diversion of management attention. Furthermore, in any business combination, including our acquisition of Bioenvision, there is a substantial risk that we will fail to realize the benefits we anticipated when we decided to undertake the transaction. We have in the past taken significant charges for impaired goodwill and for impaired assets acquired in business combination transactions. We may be required to take similar charges in the future. We enter into most such transactions with an expectation that an acquired business will enhance the long-term strength of our business. These transactions, however, often depress our earnings in the near-term and the expected long-term benefits may never be realized. Business combination transactions also deplete cash resources and some may require us to issue substantial equity or incur significant debt.

Manufacturing problems may cause product launch delays, inventory shortages, recalls and unanticipated costs.

        In order to generate revenue from our approved products, we must be able to produce sufficient quantities of the products. Many of our products are difficult to manufacture. Our products that are biologics, for example, require product characterization steps that are more onerous than those required for most chemical pharmaceuticals. Accordingly, we employ multiple steps to attempt to control the manufacturing processes. Minor deviations in these manufacturing processes could result in unacceptable changes in the products that result in lot failures, product recalls, product liability claims and insufficient inventory. For example, we have experienced manufacturing issues with Thymoglobulin that resulted in write-offs or recalls of lots that went out of specification prior to expiry.

        Certain of the raw materials required in the commercial manufacturing and the formulation of our products are derived from biological sources, including mammalian sources and human plasma. Such raw materials may be difficult to procure and subject to contamination or recall. Also, some countries in which we market our products may restrict the use of certain biologically derived substances in the manufacture of drugs. A material shortage, contamination, recall, or restriction of the use of certain biologically derived substances in the manufacture of our products could adversely impact or disrupt our commercial manufacturing of our products or could result in a mandated withdrawal of our products from markets. This too, in turn, could adversely affect our ability to satisfy demand for our products, which could materially and adversely affect our operating results.

        In addition, we may only be able to produce some of our products at a very limited number of facilities and, in some cases, we rely on third parties to formulate and manufacture our products. For example, we manufacture all of our Cerezyme and a portion of our Fabrazyme and Myozyme products at our facility in Allston, Massachusetts. A number of factors could cause production interruptions at our facilities or the facilities of our third party providers, including equipment malfunctions, labor problems, raw material shortages, natural disasters, power outages, terrorist activities, or disruptions in the operations of our suppliers.

        Manufacturing is also subject to extensive government regulation. Regulatory authorities must approve the facilities in which human healthcare products are produced and those facilities are subject to ongoing inspections. In addition, changes in manufacturing processes may require additional regulatory approvals. Obtaining and maintaining these regulatory approvals could cause us to incur significant additional costs and lose revenue. Furthermore, any third party we use to manufacture, fill-finish or package our products to be sold must also be licensed by the applicable regulatory authorities. As a result, alternative third party providers may not be readily available on a timely basis.

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Guidelines and recommendations published by various organizations can reduce the use of our products.

        Professional societies, practice management groups, private health/science foundations, and organizations involved in various diseases may publish guidelines or recommendations to the healthcare and patient communities from time to time. Recommendations of government agencies or these other groups/organizations may relate to such matters as usage, dosage, route of administration, cost-effectiveness, and use of related therapies. Organizations like these have in the past made recommendations about our products and products of our competitors. Recommendations or guidelines that are followed by patients and healthcare providers could result in decreased use of our products. The perception by the investment community or shareholders that recommendations or guidelines will result in decreased use of our products could adversely affect prevailing market price for our common stock. In addition, our success also depends on our ability to educate patients and healthcare providers about our products and their uses. If these education efforts are not effective, then we may not be able to increase the sales of our existing products or successfully introduce new products to the market.

We rely on third parties to provide us with materials and services in connection with the manufacture of our products.

        Some materials necessary for commercial production of our products, including specialty chemicals and components necessary for manufacture, fill-finish and packaging, are provided by unaffiliated third party suppliers. In some cases, such materials are specifically cited in our marketing application with regulatory authorities so that they must be obtained from that specific source unless and until the applicable authority approves another supplier. In addition, there may only be one available source for a particular chemical or component. For example, we acquire polyalylamine (PAA), used in the manufacture of Renagel, Renvela, Cholestagel and WelChol, from Cambrex Charles City, Inc., the only source for this material currently qualified in our FDA drug applications for these products. Our suppliers also may be subject to FDA regulations or the regulations of other governmental agencies outside the United States regarding manufacturing practices. We may be unable to manufacture our products in a timely manner or at all if these third party suppliers were to cease or interrupt production or otherwise fail to supply sufficient quantities of these materials or products to us for any reason, including due to regulatory requirements or actions, adverse financial developments at or affecting the supplier, or labor shortages or disputes.

        We also source some of our manufacturing, fill-finish, packaging and distribution operations to third party contractors. The manufacture of products, fill-finish, packaging and distribution of our products requires successful coordination among these third party providers and Genzyme. Our inability to coordinate these efforts, the inability of a third party contractor to secure sufficient source materials, the lack of capacity available at a third party contractor or any other problems with the operations of a third party contractor could require us to delay shipment of saleable products, recall products previously shipped or could impair our ability to supply products at all. This could increase our costs, cause us to lose revenue or market share and damage our reputation.

Government regulation imposes significant costs and restrictions on the development and commercialization of our products and services.

        Our success will depend on our ability to satisfy regulatory requirements. We may not receive required regulatory approvals on a timely basis or at all. Government agencies heavily regulate the production and sale of healthcare products and the provision of healthcare services. In particular, the FDA and comparable regulatory agencies in foreign jurisdictions must approve human therapeutic and diagnostic products before they are marketed, as well as the facilities in which they are made. This approval process can involve lengthy and detailed laboratory and clinical testing, sampling activities and other costly and time-consuming procedures. Several biotechnology companies have failed to obtain

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regulatory approvals because regulatory agencies were not satisfied with the structure or conduct of clinical trials. Similar problems could delay or prevent us from obtaining approvals. Furthermore, regulatory authorities, including the FDA, may not agree with our interpretations of our clinical trial data, which could delay, limit or prevent regulatory approvals.

        Therapies that have received regulatory approval for commercial sale may continue to face regulatory difficulties. If we fail to comply with applicable regulatory requirements, regulatory authorities could take actions against us, including:

•

issuing warning letters;



•

issuing fines and other civil penalties;



•

suspending regulatory approvals;



•

refusing to approve pending applications or supplements to approved applications;



•

suspending product sales, imports and/or exports;



•

requiring us to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, and other issues involving Genzyme products;



•

mandating product recalls; and



•

seizing products.

        Furthermore, the FDA and comparable foreign regulatory agencies may require post-marketing clinical trials or patient outcome studies. We have agreed with the FDA, for example, to a number of post-marketing commitments as a condition to U.S. marketing approval for Fabrazyme, Aldurazyme, Myozyme and Clolar. In addition, regulatory agencies subject a marketed therapy, its manufacturer and the manufacturer's facilities to continual review and periodic inspections. The discovery of previously unknown problems with a therapy or the facility or process used to produce the therapy could prompt a regulatory authority to impose restrictions on us, or could cause us to voluntarily adopt such restrictions, including withdrawal of one or more of our products or services from the market. For example, we received a warning letter from the FDA in September 2007 that addresses certain of our manufacturing procedures in our Thymoglobulin production facility in Lyon, France. The FDA has accepted our response to the warning letter and we continue to work to optimize our processes at this plant.

We may incur substantial costs as a result of litigation or other proceedings.

        A third party may sue us or one of our strategic collaborators for infringing the third party's patent or other intellectual property rights. Likewise, we or one of our strategic collaborators may sue to enforce intellectual property rights or to determine the scope and validity of third party proprietary rights. If we do not prevail in this type of litigation, we or our strategic collaborators may be required to:

•

pay monetary damages;



•

stop commercial activities relating to the affected products or services;



•

obtain a license in order to continue manufacturing or marketing the affected products or services; or



•

compete in the market with a different product.

        We are also currently involved in litigation matters and investigations that do not involve intellectual property claims and may be subject to additional actions in the future. For example, the federal government, state governments and private payors are investigating and have begun to file

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actions against numerous pharmaceutical and biotechnology companies, including Genzyme, alleging that the companies have overstated prices in order to inflate reimbursement rates. Domestic and international enforcement authorities also have instituted actions under healthcare "fraud and abuse" laws, including anti-kickback and false claims statutes. Moreover, individuals who use our products or services, including our diagnostic products and genetic testing services, sometimes bring product and professional liability claims against us or our subsidiaries.

        Some of our products are prescribed by physicians for uses not approved by the FDA or comparable regulatory agencies outside the United States. Although physicians may lawfully prescribe our products for off-label uses, any promotion by us of off-label uses would be unlawful. Some of our practices intended to make physicians aware of off-label uses of our products without engaging in off-label promotion could nonetheless be construed as off-label promotion. Although we have policies and procedures in place designed to help assure ongoing compliance with regulatory requirements regarding off-label promotion, some non-compliant actions may nonetheless occur. Regulatory authorities could take enforcement action against us if they believe we are promoting, or have promoted, our products for off-label use.

        We have only limited amounts of insurance, which may not provide coverage to offset a negative judgment or a settlement payment. We may be unable to obtain additional insurance in the future, or we may be unable to do so on favorable terms. Our insurers may dispute our claims for coverage. For example, we have submitted claims to our insurers for reimbursement of portions of the expenses incurred in connection with the litigation and settlement related to the consolidation of our tracking stock and are seeking coverage for the settlement. The insurers have purported to deny coverage. Any additional insurance we do obtain may not provide adequate coverage against any asserted claims.

        Regardless of merit or eventual outcome, investigations and litigation can result in:

•

the diversion of management's time and attention;



•

the expenditure of large amounts of cash on legal fees, expenses, and payment of damages;



•

limitations on our ability to continue some of our operations;



•

decreased demand for our products and services; and



•

injury to our reputation.

Our international sales, clinical activities, manufacturing and other operations are subject to the economic, political, legal and business environments of the countries in which we do business, and our failure to operate successfully or adapt to changes in these environments could cause our international sales and operations to be limited or disrupted.

        Our international operations accounted for approximately 53% of our consolidated product and service revenues for the six months ended June 30, 2008. We expect that international product and service sales will continue to account for a significant percentage of our revenues for the foreseeable future. In addition, we have direct investments in a number of subsidiaries outside of the United States. Our international sales and operations could be limited or disrupted, and the value of our direct investments may be diminished, by any of the following:

•

economic problems that disrupt foreign healthcare payment systems;



•

the imposition of governmental controls, including foreign exchange and currency restrictions;



•

less favorable intellectual property or other applicable laws;



•

the inability to obtain any necessary foreign regulatory or pricing approvals of products in a timely manner;

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•

the inability to obtain third party reimbursement support for products;



•

product counterfeiting and intellectual property piracy;



•

parallel imports;



•

anti-competitive trade practices;



•

import and export license requirements;



•

political instability;



•

terrorist activities, armed conflict, or a pandemic;



•

restrictions on direct investments by foreign entities and trade restrictions;



•

changes in tax laws and tariffs;



•

difficulties in staffing and managing international operations; and



•

longer payment cycles.

        Our operations and marketing practices are also subject to regulation and scrutiny by the governments of the countries in which we operate. In addition, the United States Foreign Corrupt Practices Act prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. Failure to comply with domestic or foreign laws could result in various adverse consequences, including possible delay in the approval or refusal to approve a product, recalls, seizures, withdrawal of an approved product from the market, and/or the imposition of civil or criminal sanctions.

Our international sales and operating expenses are subject to fluctuations in currency exchange rates.

        A significant portion of our business is conducted in currencies other than our reporting currency, the U.S. dollar. We recognize foreign currency gains or losses arising from our operations in the period in which we incur those gains or losses. As a result, currency fluctuations among the U.S. dollar and the currencies in which we do business have caused foreign currency translation gains and losses in the past and will likely do so in the future. Because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates, we may suffer significant foreign currency translation losses in the future due to the effect of exchange rate fluctuations.

We may fail to adequately protect our proprietary technology, which would allow competitors or others to take advantage of our research and development efforts.

        Our long-term success largely depends on our ability to market technologically competitive products. If we fail to obtain or maintain adequate intellectual property protection in the United States or abroad, we may not be able to prevent third parties from using our proprietary technologies. Our currently pending or future patent applications may not result in issued patents. Patent applications are confidential for 18 months following their filing, and because third parties may have filed patent applications for technology covered by our pending patent applications without us being aware of those applications, our patent applications may not have priority over patent applications of others. In addition, our issued patents may not contain claims sufficiently broad to protect us against third parties with similar technologies or products, or provide us with any competitive advantage. If a third party initiates litigation regarding our patents, our collaborators' patents, or those patents for which we have license rights, and is successful, a court could declare our patents invalid or unenforceable or limit the scope of coverage of those patents. Governmental patent offices and courts have not consistently treated the breadth of claims allowed in biotechnology patents. If patent offices or the courts begin to allow or interpret claims more broadly, the incidence and cost of patent interference proceedings and

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the risk of infringement litigation will likely increase. On the other hand, if patent offices or the courts begin to allow or interpret claims more narrowly, the value of our proprietary rights may be reduced. Any changes in, or unexpected interpretations of, the patent laws may adversely affect our ability to enforce our patent position.

        We also rely upon trade secrets, proprietary know-how, and continuing technological innovation to remain competitive. We attempt to protect this information with security measures, including the use of confidentiality agreements with employees, consultants, and corporate collaborators. These individuals may breach these agreements and any remedies available to us may be insufficient to compensate for our damages. Furthermore, our trade secrets, know-how and other technology may otherwise become known or be independently discovered by our competitors.

Some of our products may face competition from lower cost generic or follow-on products.

        Some of our drug products, for example Renagel, Renvela, Clolar and Hectorol, are approved under the provisions of the United States Food, Drug and Cosmetic Act that render them susceptible to potential competition from generic manufacturers via the Abbreviated New Drug Application (ANDA) procedure. Generic manufacturers pursuing ANDA approval are not required to conduct costly and time-consuming clinical trials to establish the safety and efficacy of their products; rather, they are permitted to rely on the innovator's data regarding safety and efficacy. Thus, generic manufacturers can sell their products at prices much lower than those charged by the innovative pharmaceutical companies who have incurred substantial expenses associated with the research and development of the drug product.

        The ANDA procedure includes provisions allowing generic manufacturers to challenge the effectiveness of the innovator's patent protection long prior to the generic manufacturer actually commercializing their products—the so-called "Paragraph IV" certification procedure. In recent years, generic manufacturers have used Paragraph IV certifications extensively to challenge patents on a wide array of innovative pharmaceuticals, and we expect this trend to continue and to implicate drug products with even relatively small total revenues.

        Other of our products, including Cerezyme, Fabrazyme, Aldurazyme, Myozyme and Campath (so-called "biotech drugs") are not currently considered susceptible to an abbreviated approval procedure, either due to current United States law or FDA practice in approving biologic products. However, the United States Congress is expected to continue to explore, and ultimately enact, legislation that would establish a procedure for the FDA to accept ANDA-like abbreviated applications for the approval of "follow-on," "biosimilar" or "comparable" biotech drugs. Such legislation has already been adopted in the European Union.

        Both Renagel and Hectorol are subjects of ANDAs containing Paragraph IV certifications. In the case of Renagel, the ANDA Paragraph IV certification relates only to one of our Renagel patents, namely our patent that covers features of our tablet dosage form. This patent expires in 2020. The ANDA applicant has alleged that its generic tablet would not infringe our tablet dosage form patent, but we have not yet received sufficient information from the ANDA applicant to assess the merits of this position. The ANDA does not contain a Paragraph IV certification with respect to our Renagel pharmaceutical composition and medical use patent estate, which protect the product and its approved indications until 2014. Because the last of our composition of matter patents expire in 2014, we would expect Renagel to be subject to competition beginning in 2014.

        In the case of Hectorol, the ANDA applicant has submitted a Paragraph IV certification alleging the invalidity of our patent related to the use of Hectorol to treat hyperparathyroidism secondary to end-stage renal disease (which patent expires in 2014), and alleging non-infringement of our patent claiming our highly purified form of Hectorol (which patent expires in 2021). We believe that our

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patents are valid, and have not yet received sufficient information from the ANDA application to assess the merits of its non-infringement allegation.

        If either of the ANDA filers or any other generic manufacturer were to receive approval to sell a generic or follow-on version of one of our products, that product would become subject to increased competition and our revenues for that product would be adversely affected.

We may be required to license technology from competitors or others in order to develop and commercialize some of our products and services, and it is uncertain whether these licenses would be available.

        Third party patents may cover some of the products or services that we or our strategic partners are developing or producing. A patent is entitled to a presumption of validity and accordingly, we face significant hurdles in any challenge to a patent. In addition, even if we are successful in challenging the validity of a patent, the challenge itself may be expensive and require significant management attention.

        To the extent valid third party patent rights cover our products or services, we or our strategic collaborators would be required to seek licenses from the holders of these patents in order to manufacture, use or sell these products and services, and payments under them would reduce our profits from these products and services. We may not be able to obtain these licenses on favorable terms, or at all. If we fail to obtain a required license or are unable to alter the design of our technology to fall outside the scope of a third party patent, we may be unable to market some of our products and services, which would limit our profitability.

Importation of products may lower the prices we receive for our products.

        In the United States and abroad, many of our products are subject to competition from lower-priced versions of our products and competing products from other countries where government price controls or other market dynamics result in lower prices for such products. Our products that require a prescription in the United States may be available to consumers in markets such as Canada, Mexico, Taiwan and the Middle East without a prescription, which may cause consumers to further seek out these products in these lower priced markets. The ability of patients and other customers to obtain these lower priced imports has grown significantly as a result of the Internet, an expansion of pharmacies in Canada and elsewhere that target American purchasers, an increase in U.S.-based businesses affiliated with Canadian pharmacies marketing to American purchasers and other factors. Most of these foreign imports are illegal under current United States law. However, the volume of imports continues to rise due to the limited enforcement resources of the FDA and the United States Customs Service, and there is increased political pressure to permit such imports as a mechanism for expanding access to lower-priced medicines. The importation of lower-priced versions of our products into the United States and other markets adversely affects our profitability. This impact could become more significant in the future.

Legislative or regulatory changes may adversely impact our business.

        The United States government and other governments have shown significant interest in pursuing healthcare reform. Any government-adopted reform measures could adversely impact:

•

the pricing of healthcare products in the United States or internationally; and



•

the amount of reimbursement available from governmental agencies or other third party payors.

        New laws, regulations and judicial decisions, or new interpretations of existing laws, regulations and decisions, that relate to healthcare availability, methods of delivery or payment for products and services, or sales, marketing or pricing may cause our revenue to decline, and we may need to revise our research and development programs.

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        On September 27, 2007, the Food and Drug Administration Amendments Act of 2007 (the "FDAAA") was enacted, giving the FDA enhanced post-market authority, including the authority to require post-marketing studies and clinical trials, labeling changes based on new safety information, and compliance with risk evaluations and mitigation strategies approved by the FDA. The FDA's exercise of its new authority could result in delays or increased costs during the period of product development, clinical trials and regulatory review and approval, increased costs to assure compliance with new post-approval regulatory requirements, and potential restrictions on the sale of approved products.

If our strategic alliances are unsuccessful, our operating results will be negatively impacted.

        Several of our strategic initiatives involve alliances with other biotechnology and pharmaceutical companies. The success of these arrangements is largely dependent on technology and other intellectual property contributed by our strategic partners or the resources, efforts, and skills of our partners. Disputes and difficulties in such relationships are common, often due to conflicting priorities or conflicts of interest. Merger and acquisition activity may exacerbate these conflicts. The benefits of these alliances are reduced or eliminated when strategic partners:

•

terminate the agreements or limit our access to the underlying intellectual property;



•

fail to devote financial or other resources to the alliances and thereby hinder or delay development, manufacturing or commercialization activities;



•

fail to successfully develop, manufacture or commercialize any products; or



•

fail to maintain the financial resources necessary to continue financing their portion of the development, manufacturing, or commercialization costs of their own operations.

        Furthermore, payments we make under these arrangements may exacerbate fluctuations in our financial results. In addition, under some of our strategic alliances, we make milestone payments well in advance of commercialization of products with no assurance that we will ever recoup these payments. We also may make equity investments in our strategic partners, as we did with RenaMed Biologics, Inc., or RenaMed, in June 2005. Our strategic equity investments are subject to market fluctuations, access to capital and other business events, such as initial public offerings, the completion of clinical trials and regulatory approvals, which can impact the value of these investments. For example, in October 2006, RenaMed suspended clinical trials of its renal assist device which was being developed to treat patients with acute renal failure, causing us to write off our entire investment in RenaMed. If any of our other strategic equity investments decline in value and remain below cost for an extended duration, we may incur additional charges.

We may require significant additional financing, which may not be available to us on favorable terms, if at all.

        As of June 30, 2008, we had $1.25 billion in cash, cash equivalents and short- and long-term investments, excluding our investments in equity securities.

        We intend to use substantial portions of our available cash for:

•

product development and marketing;



•

business combinations and strategic business initiatives;



•

the remaining $1.1 billion available under our ongoing stock repurchase program over approximately the next 2 years;



•

upgrading our information technology systems;



•

expanding existing and constructing new manufacturing facilities;

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•

contingent payments under license and other agreements, including payments related to our license of mipomersen from Isis and PTC124 from PTC;



•

expanding staff; and



•

working capital and satisfaction of our obligations under capital and operating leases.

        We may further reduce available cash reserves to pay principal and interest on outstanding debt, including our $690.0 million in principal of 1.25% convertible senior notes.

        To satisfy our cash requirements, we may have to obtain additional financing. We may be unable to obtain any additional financing or extend any existing financing arrangements at all or on terms that we or our investors consider favorable.

Our level of indebtedness may harm our financial condition and results of operations.

        As of June 30, 2008, we had $696.8 million of outstanding indebtedness, excluding capital leases. We may incur additional indebtedness in the future. Our level of indebtedness will have several important effects on our future financial condition and results of operations, including:

•

increasing our vulnerability to adverse changes in general economic and industry conditions; and



•

limiting our ability to obtain additional financing for capital expenditures, acquisitions and general corporate and other purposes.

        Our ability to make payments and interest on our outstanding and future indebtedness depends upon our future operating results and financial condition.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

        We are exposed to potential loss from exposure to market risks represented principally by changes in foreign exchange rates, interest rates and equity prices. At June 30, 2008, we held derivative contracts in the form of foreign exchange forward contracts. We also held a number of other financial instruments, including investments in marketable securities and we had debt securities outstanding. We do not hold derivatives or other financial instruments for speculative purposes.

Equity Price Risk

        We hold investments in a limited number of U.S. and European equity securities. We estimated the potential loss in fair value due to a 10% decrease in the equity prices of each marketable security held at June 30, 2008 to be $5.7 million, as compared to $6.5 million at December 31, 2007. This estimate assumes no change in foreign exchange rates from quarter-end spot rates and excludes any potential risk associated with securities that do not have a readily determinable market value.

Interest Rate Risk

        We are exposed to potential loss due to changes in interest rates. Our principal interest rate exposure is to changes in U.S. interest rates. Instruments with interest rate risk include short- and long-term investments in fixed income securities. Other exposures to interest rate risk include the fair value of fixed rate convertible debt and other fixed rate debt. To estimate the potential loss due to changes in interest rates, we performed a sensitivity analysis using the instantaneous adverse change in interest rates of 100 basis points across the yield curve.

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        We used the following assumptions in preparing the sensitivity analysis for our convertible bonds:

•

convertible notes that are "in-the-money" at June 30, 2008 are considered equity securities and are excluded;



•

convertible notes that are "out-of-the-money" at June 30, 2008 are analyzed by taking into account both fixed income and equity components; and



•

convertible notes will mature on the first available put or call date.

        On this basis, we estimate the potential loss in fair value that would result from a hypothetical 1% (100 basis points) decrease in interest rates to be $2.7 million as of June 30, 2008, as compared to $3.3 million as of December 31, 2007.

Foreign Exchange Risk

        As a result of our worldwide operations, we may face exposure to adverse movements in foreign currency exchange rates, primarily to the Euro, British Pound and Japanese Yen. Exposures to currency fluctuations that result from sales of our products in foreign markets are partially offset by the impact of currency fluctuations on our international expenses. We use forward foreign exchange contracts to further reduce our exposure to changes in exchange rates, primarily to offset the earnings effect from intercompany short-term foreign currency assets and liabilities. We also hold a limited amount of foreign cash and foreign currency denominated equity securities.

        As of June 30, 2008, we estimated the potential loss in fair value of our foreign currency contracts, foreign cash, and foreign equity holdings that would result from a hypothetical 10% adverse change in exchange rates to be $71.2 million, as compared to $36.2 million as of December 31, 2007. The change from the prior period is due to an increase in our net foreign currency contracts. Since the contracts hedge mainly transactional exchange exposures, any changes in the fair values of the contracts would be offset by changes in the underlying values of the hedged items.

ITEM 4.    CONTROLS AND PROCEDURES

        As of June 30, 2008, we evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2008.

        There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

        We periodically become subject to legal proceedings and claims arising in connection with our business. Although we cannot predict the outcome of these additional proceedings and claims, we do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our financial position or results of operations.

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ITEM 1A.    RISK FACTORS

        We incorporate by reference our disclosure related to risk factors which is set forth under the heading "Management's Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial Condition and Results of Operations—Risk Factors" in Part I., Item 2. of this Quarterly Report on Form 10-Q.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

        The following table provides information about our repurchases of our equity securities during the quarter ended June 30, 2008:

Period		Total Number of Shares Purchased			Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2008-April 30, 2008			—			—			—	$	1,195,296,813.47
May 1, 2008-May 31, 2008			1,000,000		$	69.78			1,000,000	$	1,125,521,738.47
June 1, 2008-June 30, 2008						—			—	$	1,125,521,738.47
	Total		1,000,000	(1)	$	69.78	(2)		1,000,000

(1)

In May 2007, our board of directors authorized a stock repurchase program to repurchase up to an aggregate maximum amount of $1.5 billion or 20,000,000 shares of our outstanding common stock over three years. During the second quarter of fiscal 2008, we repurchased 1,000,000 shares of our common stock under this program for $69.8 million of cash, including fees.

(2)

Represents the weighted average price paid per share for repurchases of our common stock made during the second quarter of fiscal 2008.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        We held our annual meeting of shareholders on May 22, 2008. We have set forth below the results of the voting on proposals submitted to our shareholders for a vote at the annual meeting. Abstentions and broker non-votes were counted for determining a quorum, but were not treated as votes cast on any of the proposals.

        a.     A proposal to re-elect five directors, each for a one-year term:

	Number of Votes
							Number of Broker Non-Votes
Nominee	For		Against		Abstain
Douglas A. Berthiaume		218,770,394		5,631,336		2,688,606		7
Gail K. Boudreaux		223,421,741		1,058,804		2,609,794		4
Robert J. Carpenter		218,814,032		5,593,529		2,682,776		6
Charles L. Cooney		218,809,678		5,580,163		2,700,495		7
Richard F. Syron		130,586,444		93,697,045		2,806,841		13

        The number of votes cast in favor of each nominee exceeded the number of votes cast against each nominee and therefore each was reelected as a director of Genzyme. The terms of office of Victor J. Dzau, M.D., Senator Connie Mack III and Henri A. Termeer continued after the annual meeting.

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        b.     A proposal to amend the 2004 Equity Incentive Plan by increasing the number of shares of common stock covered by the plan by 2,250,000 shares;

Number of Votes for		Number of Votes Against		Number of Votes Abstaining		Number of Broker Non-Votes
	177,441,327		21,932,661		2,208,390		25,507,965

        The number of votes cast in favor of the proposal exceeded the number of votes cast against it, and therefore the proposal was adopted.

        c.     A proposal to amend the 2007 Director Equity Plan to specify the automatic grant provisions under the plan;

Number of Votes for		Number of Votes Against		Number of Votes Abstaining		Number of Broker Non-Votes
	183,333,706		15,991,677		2,256,996		25,507,964

        The number of votes cast in favor of the proposal exceeded the number of votes cast against it, and therefore the proposal was adopted.

        d.     A proposal to ratify the audit committee's selection of PricewaterhouseCoopers, LLP as our independent auditors for 2008;

Number of Votes for		Number of Votes Against		Number of Votes Abstaining		Number of Broker Non-Votes
	221,211,634		3,641,708		2,236,996		5

        The number of votes cast in favor of the proposal exceeded the number of votes cast against it, and therefore the proposal was adopted.

ITEM 6.    EXHIBITS

(a)

Exhibits

        See the Exhibit Index following the signature page to this report on Form 10-Q.

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SIGNATURES

        Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENZYME CORPORATION
Dated: August 8, 2008	By:	/s/ MICHAEL S. WYZGA
		Michael S. Wyzga Executive Vice President, Finance, Chief Financial Officer, and Chief Accounting Officer

74

GENZYME CORPORATION AND SUBSIDIARIES

FORM 10-Q, JUNE 30, 2008

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
*3.1	Restated Articles of Organization of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Form 10-Q for the quarter ended June 30, 2006.
*3.2	By-laws of Genzyme, as amended. Filed as Exhibit 3.1 to Genzyme's Form 8-K filed May 25, 2007.
*10.1	2004 Equity Incentive Plan. Filed as Appendix A to Genzyme's Proxy Statement on Schedule 14A for the 2008 Annual Meeting of Shareholders filed April 10, 2008.
*10.2	2007 Director Equity Plan. Filed as Appendix B to Genzyme's Proxy Statement on Schedule 14A for the 2008 Annual Meeting of Shareholders filed April 10, 2008.
10.3	Form of Non-Statutory Stock Option Agreement for grants under Genzyme's 2007 Director Equity Plan. Filed herewith.
10.4	Form of Restricted Stock Unit Award Agreement for grants under Genzyme's 2007 Director Equity Plan. Filed herewith.
10.5	Forms of Non-Statutory Stock Option Agreement for grants to executive officers under Genzyme's 2001 Equity Incentive Plan. Filed herewith.
10.6	Forms of Incentive Stock Option Agreement for grants to executive officers under Genzyme's 2001 Equity Incentive Plan. Filed herewith.
**10.7	License and Co-Development Agreement between Genzyme and Isis Pharmaceuticals, Inc. dated June 24, 2008. Filed herewith.
31.1	Certification of the Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2	Certification of the Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32.1	Certification of the Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.
32.2	Certification of the Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith.

*

Indicates exhibit previously filed with the SEC and incorporated herein by reference. Exhibits filed with Forms 10-K, 10-Q, 8-K, 8-A or Schedule 14A of Genzyme Corporation were filed under Commission File No. 0-14680.

**

Confidential treatment has been requested for the redacted portions of Exhibit 10.7.

EX-10.3

Exhibit 10.3

Notice of Grant of Stock Options	GENZYME CORPORATION
and Option Agreement	ID: 06-1047163
	500 Kendall Street
	Cambridge, MA 02142
[First Name][Family Name]	Option Number:	[00000000]
[Address Line 1]	Plan:	[####]
[City], [State] [Postal Code]	ID:	[SSN or Emp. ID]]

Effective [Date], you have been granted a Non-Statutory Stock Option to buy [#,####] shares of GENZYME CORPORATION (the Company) stock at $[Value] per share.

The total option price of the shares granted is $[Value].

Shares in each period will become fully vested on the date shown.

Shares	Full Vest	Vest Type	Expiration
[#,###]	On Vest Date	[Date]	[Date]

MAINTAIN THIS COPY FOR YOUR RECORDS.

These options are granted under and governed by the terms and conditions of the Company’s 2007 Director Equity Plan as amended and the Option Agreement, all of which are attached and made a part of this document.

Genzyme Corporation 2007 Director Equity Plan (the “Plan”)

Non-Statutory Stock Option Agreement

1.  Plan Incorporated by Reference.  This Option is issued pursuant to the terms of the Plan, as amended and as may be amended, and this Non-Statutory Stock Option Agreement (“Agreement”), and may only be amended as provided in the Plan.  Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan.  This Agreement does not set forth all the terms and conditions of the Plan, which are incorporated herein by reference.  Grants of options under the Plan are automatic and any interpretation with respect to the Plan and options granted under it shall be determined by a committee consisting of all Directors of the Company who are not eligible to participate in the Plan and such determinations are final and binding.  Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations department of the Company.

2.  Option Price.  The price to be paid for each share of Stock issued upon exercise of the whole or any part of this Option (the “Option Price”) is the option price set forth in the Notice of Grant of Stock Options associated with this Agreement (“Notice”).

3.  Period of Exercise.  This Option will become exercisable on the date of the next annual meeting of shareholders following the Date of Option Grant, provided that the Director is at the opening of business on such date, and since the date of grant has been continuously, serving as a Director of the Company. Once exercisable, this Option may be exercised from time to time up to the number of shares set forth in the Notice, but only for the purchase of whole shares.  A Director who ceases to serve as a member of the Board may, during his or her lifetime, exercise the rights he or she had under this Option at the time he or she ceased being a Director for the full unexpired term of the Option.  Upon the death of the Director, those entitled to do so under the Director’s will or the laws of descent and distribution shall have the right, at any time within twelve (12) months after the date of death, to exercise in whole or in part any rights which were available to the Director at the time of his or her death.  This Option may not be exercised as to any shares after the expiration date, which shall be ten years from the Date of Option Grant.

4.  Method of Exercise and Payment.  This Option may be exercised only by written notice to the company at its head office accompanied by payment of the full Option Price for the shares of Stock as to which they are exercised.  The Option Price shall be paid in cash or by check.  Promptly following notice and payment, the Company will deliver to the Director (or other person entitled to exercise the option) a certificate representing the number of shares with respect to which the Option is being exercised.

5.  Transferability.  This Option may be transferred without consideration (or for such consideration as the committee may from time to time deem appropriate) by the holder thereof to any Family Member of such director; provided, however, that no subsequent transfer of this Option shall be permitted except for transfers: (i) to a Family Member of such director; (ii) back to the director; or (iii) pursuant to the applicable laws of descent and distribution.  For this purpose, “Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including any adoptive relationships, and any other person sharing the transferor Director’s household (other than as a tenant or employee); (ii) any trust in which any of the persons described in clause (i) holds a greater than 50% beneficial interest;  (iii) any foundation in which any of the persons described in clause (i) or the transferor Director controls the management of assets; or (iv) any other entity in which any of the persons described in clause (i) or the Director holds more than 50% of the voting interests.

6.  Recapitalizations, Mergers, etc.  In the event of a Covered Transaction, this Option will become fully exercisable.  If exercised, shares of Stock will be issued, prior to the Covered Transaction, to give the holder of the Option a reasonable opportunity, as determined by the Company, following exercise of the Option to participate as a shareholder in the Covered Transaction, and the Option will terminate upon consummation of the Covered Transaction; provided, however, that in lieu of the foregoing the Board may make such other provision as it may consider equitable to the Director and in the best interests of the Company. Notwithstanding the foregoing, in the event of a change in control of the Company (as defined in a vote of the Compensation Committee adopted May 29, 2002), this option shall become exercisable as to all shares without regard to any deferred exercisability schedule or deferred exercise period.

7.  Limitation of Rights.  Neither the Plan, nor the granting of this Option or any other action taken pursuant to the Plan, shall constitute an agreement or understanding, express or implied, that the Company will retain an optionee as a Director for any period of time or at any particular rate of compensation.  A Director shall have no rights as a stockholder with respect to the shares covered by this Option until the date he or she exercises such Option and pays the Option Price to the Company.

8.  Compliance with Securities Laws.  It shall be a condition to the Director’s right to purchase shares of Stock hereunder that the Company may, in its discretion, require (a) that the shares of Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Director shall have made such undertakings and agreements with the Company as the Company may reasonable require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Director, or both.  The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

9.  Acceptance.  Failure of the Director to accept the terms and conditions of this Option can result in adverse consequences to the Director, including cancellation of the stock option.

ACKNOWLEDGED AND AGREED:

Signature

Name (Print)

Date

5/22/08

EX-10.4

Exhibit 10.4

	GENZYME CORPORATION
	ID: 06-1047163
Notice of Grant of Award	500 Kendall Street
and Award Agreement	Cambridge, MA 02142

[First Name][Family Name]	Award Number:	00000002
[Address Line 1]	Plan:	[####]
[City], [State] [Postal Code]	ID:	[SSN or Emp. ID]

Effective [Date], you have been granted an award of [#,####]restricted stock units.  These units are restricted until the vest date(s) shown below, at which time you will receive shares of GENZYME CORPORATION (the Company) common stock.

The current total value of the award is $[Value].

The award will vest in increments on the date(s) shown.

Shares	Full Vest
[#,###]	[Date]

MAINTAIN THIS COPY FOR YOUR RECORDS.

These awards are granted under and governed by the terms and conditions of the Company’s 2007 Director Equity Plan as amended and the Award Agreement, all of which are attached and made a part of this document.

Genzyme Corporation 2007 Director Equity Plan (the “Plan”)

Restricted Stock Unit Award Agreement

1.  Plan Incorporated by Reference.  This Restricted Stock Unit is issued pursuant to the terms of the Plan, as amended and as may be amended, and this Restricted Stock Unit Award Agreement (“Award Agreement”), and may only be amended as provided in the Plan.  Capitalized terms used and not otherwise defined in this Award Agreement have the meanings given to them in the Plan.  This Award Agreement does not set forth all the terms and conditions of the Plan, which are incorporated herein by reference.  Grants of Restricted Stock Units under the Plan are automatic and any interpretation with respect to the Plan and Restricted Stock Units granted under it shall be determined by a committee consisting of all Directors of the Company who are not eligible to participate in the Plan and such determinations are final and binding.  Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations department of the Company.

2.  Vesting Schedule.  The Director’s right to acquire the number of shares of Stock of the Company set forth in the Notice of Grant of Award associated with this Award Agreement (“Notice”) shall vest on the earlier of (a) the date of the next annual meeting of shareholders of the Company following the date of the grant of this Award or (b) if applicable, on the date prescribed by section 5 below, provided that the Director is at the opening of business on such date, and since the date of grant has been continuously, serving as a Director of the Company (the earlier of the dates specified in (a) and (b) shall be the “Vesting Date”).

3.  Delivery of Shares.  As soon as practicable after the Vesting Date for this Restricted Stock Unit, and in no event later than March 15th of the calendar year following the calendar year in which the Vesting Date occurs, the Company shall deliver to the Director the number of shares of Stock of the Company set forth in the Notice.  The provisions of this section 3 and of section 2 above shall not be construed as limiting the Company’s right to accelerate the vesting of any portion of the Restricted Stock Unit or of the delivery of shares in respect of any vested portion of the Restricted Stock Unit whether in connection with a Covered Transaction or Change in Control or otherwise.

4.  Restricted Stock Unit Not Transferable. This Restricted Stock Unit is not transferable by the Director.

5.  Recapitalizations, Mergers, etc.  In the event of a Covered Transaction, any deferred vesting period under section 2 above shall be automatically accelerated.  Shares of Stock issuable under the Restricted Stock Unit will be issued prior to the Covered Transaction so as to give the holder of the Restricted Stock Unit a reasonable opportunity, as determined by the Company, following the issuance of shares to participate as a shareholder in the Covered Transaction, and the Restricted Stock Unit will terminate upon consummation of the Covered Transaction; provided, however, that in lieu of the foregoing the Board may make such other provision as it may consider equitable to the Director and in the best interests of the Company.  Notwithstanding the foregoing, in the event of a Change in Control of the Company (as defined in a vote of the Compensation Committee adopted May 29, 2002), this Restricted Stock Unit shall become vested as to all shares without regard to any deferred vesting schedule or deferred vesting period under section 2 above.  With respect to any portion of this Restricted Stock Unit the vesting of which is accelerated under either of the immediately two preceding sentences, the date referred to in clause (b) of section 2 above shall be the date of the issuance of shares in connection with the Covered Transaction or the date of consummation of the Change in Control, as the case may be.

6.  Limitation of Rights.  Neither the Plan, nor the granting of this Restricted Stock Unit or any other action taken pursuant to the Plan, shall constitute an agreement or understanding, express or implied, that the Company will retain a Restricted Stock Unit holder as a Director for any period of time or at any particular rate of compensation.  A Director shall have no rights as a stockholder with respect to the shares covered by this Restricted Stock Unit until the date the Restricted Stock Unit vests and shares of Stock are issued to the Director.

7.  Compliance with Securities Laws.  It shall be a condition to the Director’s right to receive shares of Stock hereunder that the Company may, in its discretion, require (a) that the shares of Stock reserved for issue upon the vesting of this Restricted

5/22/08

Stock Unit shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed grant shall be exempt from registration under that Act and the Director shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Director, or both.  The certificates representing the shares to be granted under this Restricted Stock Unit may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

8.  Section 409A.  The Director acknowledges that the Restricted Stock Unit is intended to qualify for the “short-term deferral” exemption from Section 409A and shall be construed accordingly.  Notwithstanding the preceding sentence, neither the Company, nor the Board, nor any person acting on behalf of either of them, shall be liable to the Director by reason of any acceleration of income, or any tax or additional tax, asserted by reason of any failure of the Award or any portion thereof to satisfy the requirements for exemption from, or compliance with, Section 409A of the Code.

9.  Acceptance.  Failure of the Director to accept the terms and conditions of this Restricted Stock Unit can result in adverse consequences to the Director, including cancellation of the Restricted Stock Unit.

ACKNOWLEDGED AND AGREED:

Signature

Name (Print)

Date

5/22/08

EX-10.5

Exhibit 10.5

Notice of Grant of Stock Options	GENZYME CORPORATION
and Option Agreement	ID: 06-1047163
	500 Kendall Street
	Cambridge, MA 02142
[First Name][Family Name]	Option Number:	[00000000]
[Address Line 1]	Plan:	[####]
[City], [State] [Postal Code]	ID:	[SSN or Emp. ID]]

Effective [Date], you have been granted a Non-Statutory Stock Option to buy [#,####] shares of GENZYME CORPORATION (the Company) stock at $[Value] per share.

The total option price of the shares granted is $[Value].

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]

MAINTAIN THIS COPY FOR YOUR RECORDS.

These options are granted under and governed by the terms and conditions of the Company’s Stock Option plan as amended and the Option Agreement, all of which are attached and made a part of this document.

GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN

OFFICER (TIER I)

NONSTATUTORY STOCK OPTION AGREEMENT

1.  Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan, as amended or may be amended, and this Nonstatutory Stock Option Agreement (“Agreement”), and may be amended as provided in the Plan. Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan. This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding. Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations Department of the Company.

2.  Option Price. The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option (the “Option Price”) is the option price set forth in the Notice of Grant of Stock Options associated with this Agreement (“Notice”).

3.  Exercisability Schedule. This Stock Option will vest in accordance with the exercisability schedule set forth in the Notice, provided that Participant is continuously employed with the Company or an Affiliate through each applicable date set forth in such schedule, except as otherwise specified herein.  This Option may be exercised for the purchase of only whole shares at any time and from time to time up to the number of shares vested per such schedule set forth. This Option may not be exercised as to any shares after the date of expiration set forth in the Notice.

4.  Method of Exercise. To exercise this Option, the Participant shall deliver written notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares in cash, by certified check or in such other form, including shares of Common Stock of the Company valued at their Fair Market Value on the date of delivery, as the Committee may approve. Promptly following such notice, the Company will deliver to the Participant a certificate representing the number of shares with respect to which the Option is being exercised.

5.  Recapitalization, Mergers, Etc. In the event of a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, the Committee may upon written notice to the Participant provide that this Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised. In connection with such notice, the Committee may in its discretion accelerate or waive any deferred exercise period. Notwithstanding the foregoing, in the event of a change in control of the Company (as defined in the Participant’s employment agreement), this Option shall become exercisable as to all shares without regard to any deferred exercisability schedule or deferred exercise period.

6.  Transferability. This Option may be transferred without consideration (or for such consideration as the Committee may from time to time deem appropriate) by the holder thereof to any Family Member; provided, however, that no subsequent transfer of such option shall be permitted except for transfers: (i) to a Family Member; (ii) back to the Participant; or (iii) pursuant to the applicable laws of descent and distribution.  For this purpose, “Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including any adoptive relationships, and any other person sharing the Participant’s household (other than as a tenant or employee); (ii) any trust in which any of the persons described in clause (i) holds a greater than 50% beneficial interest; (iii) any foundation in which any of the persons described in clause (i) or the Participant controls the management of assets; or (iv) any other entity in which any of the persons described in clause (i) or the Participant holds more than 50% of the voting interests.

7.  Exercise of Option After Termination of Employment. If the Participant’s employment with (a) the Company, (b) an Affiliate, or (c) a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies, is terminated for any reason other than by the Company without cause; by the Company as a result of disability (as defined in the Participant’s employment agreement); due to death or after having achieved retirement status (defined as a minimum of age 60 plus a minimum of five years of service provided termination is not for cause), the Participant may exercise the rights that were available to the Participant at the time of such termination only within three months from the date of termination. If Participant’s employment is terminated by the Company without cause, this Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three months from the date of termination. If Participant’s employment is terminated as a result of disability, this Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within twelve months from the date of termination.  Upon the death of the Participant, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and his or her Designated Beneficiary shall have the right, at any time within twelve months after the date of death, to exercise such rights.  Notwithstanding the foregoing three sentences, if the Participant has achieved retirement status as of the date of termination for any reason (including death and disability) except for cause, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three years from the date of termination.  Termination by the Company of the Participant’s employment for “cause” shall mean termination upon (A) the willful and continued failure by him or her to substantially perform his or her duties with the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes that he or she has not substantially performed his or her duties, or (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  No act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.  In the case of any Participant who is a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Committee.  In the case of any Participant who is not a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Senior Vice President, Chief Human Resources Officer, in his sole discretion, whose decision shall be final.

8.  Compliance with Securities Laws. It shall be a condition to the Participant’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Common Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Participant shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Participant, or both. The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

9.  Payment of Taxes. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of any taxes required by law to be withheld with respect to the exercise of this Option. The Committee may, in its discretion,

require any other federal or state taxes imposed on the sale of the shares to be paid by the Participant.  In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of this Option, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

10.   Rights Limited.  The Committee, in its sole discretion, shall determine from the group of eligible persons whether an individual shall be a Participant under the Plan.  Any Option grant made under the Plan shall be made in the sole discretion of the Committee, or its delegate as appointed in accordance with the Plan, and no prior Option grant shall entitle a person to any future Award.  In no event shall the Plan, or any Option grant made under the Plan, form a part of an employee’s or consultant’s contract of employment or service, if any.  Neither the Plan, nor any Option grant made under the Plan, shall confer upon any employee or consultant of the Company or its Affiliate any right with respect to the continuance of his or her employment by, or other service with, the Company or its Affiliate, nor shall they limit the rights of the Company or its Affiliate to terminate the employee or consultant or otherwise change the terms of service.  No Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan or any Option until he or she becomes the holder thereof.  The loss of existing or potential profit in an Option grant shall not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or its Affiliate to the Participant.

11.  Acceptance.  Failure of the Participant to accept the terms and conditions of this Option in accordance with the requirements of the Committee or its delegate, as applicable, can result in adverse consequences to the Participant, including cancellation of the Option.

ACKNOWLEDGED AND AGREED:
Participant Signature
Participant Name (Print)	Date
	Revised 5/21/08

GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN

OFFICER (TIER II)

NONSTATUTORY STOCK OPTION AGREEMENT

1.  Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan, as amended or may be amended, and this Nonstatutory Stock Option Agreement (“Agreement”), and may be amended as provided in the Plan. Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan. This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding. Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations Department of the Company.

2.  Option Price. The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option (the “Option Price”) is the option price set forth in the Notice of Grant of Stock Options associated with this Agreement (“Notice”).

3.  Exercisability Schedule. This Stock Option will vest in accordance with the exercisability schedule set forth in the Notice, provided that Participant is continuously employed with the Company or an Affiliate through each applicable date set forth in such schedule, except as otherwise specified herein.  This Option may be exercised for the purchase of only whole shares at any time and from time to time up to the number of shares vested per such schedule.  Notwithstanding anything in this Agreement, this Option may not be exercised as to any shares after the date of expiration set forth in the Notice.

4.  Method of Exercise. To exercise this Option, the Participant shall deliver written notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares in cash, by certified check or in such other form, including shares of Common Stock of the Company valued at their Fair Market Value on the date of delivery, as the Committee may approve. Promptly following such notice, the Company will deliver to the Participant a certificate representing the number of shares with respect to which the Option is being exercised.

5.  Recapitalization, Mergers, Etc. In the event of a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, the Committee may upon written notice to the Participant provide that this Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised. In connection with such notice, the Committee may in its discretion accelerate or waive any deferred exercise period. Notwithstanding the foregoing, in the event of a change in control of the Company (as defined in a vote of the Compensation Committee adopted May 29, 2002), this Option shall become exercisable as to all shares without regard to any deferred exercisability schedule or deferred exercise period.

6.  Transferability. This Option may be transferred without consideration (or for such consideration as the Committee may from time to time deem appropriate) by the holder thereof to any Family Member; provided, however, that no subsequent transfer of such option shall be permitted except for transfers: (i) to a Family Member; (ii) back to the Participant; or (iii) pursuant to the applicable laws of descent and distribution.  For this purpose, “Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including any adoptive relationships, and any other person sharing the Participant’s household (other than as a tenant or employee); (ii) any trust in which any of the persons described in clause (i) holds a greater than 50% beneficial interest; (iii) any foundation in which any of the persons described in clause (i) or the Participant controls the management of assets; or (iv) any other entity in which any of the persons described in clause (i) or the Participant holds more than 50% of the voting interests.

7.  Exercise of Option After Termination of Employment. If the Participant’s employment with (a) the Company, (b) an Affiliate, or (c) a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies, is terminated for any reason other than by the Company as a result of disability (within the meaning of section 22(e)(3) of the Code); due to death; or after having achieved retirement status (defined as a minimum of age 60 plus a minimum of five years of service provided termination is not for cause), the Participant may exercise the rights that were available to the Participant at the time of such termination only within three months from the date of termination. If Participant’s employment is terminated as a result of disability, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within twelve months from the date of termination.  Upon the death of the Participant, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and his or her Designated Beneficiary shall have the right, at any time within twelve months after the date of death, to exercise such rights.  Notwithstanding the foregoing two sentences, if the Participant has achieved retirement status as of the date of termination for any reason (including death and disability) except for cause, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three years from the date of termination.  If the Participant’s employment is terminated for cause, the Participant may exercise the rights which were available to the Participant at the time of such termination only within three months from the date of termination.  Termination by the Company of the Participant’s employment for “cause” shall mean termination upon (A) the willful and continued failure by him or her to substantially perform his or her duties with the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes that he or she has not substantially performed his or her duties, or (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  No act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.  In the case of any Participant who is a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Committee.  In the case of any Participant who is not a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Senior Vice President, Chief Human Resources Officer, in his sole discretion, whose decision shall be final.

8.  Compliance with Securities Laws. It shall be a condition to the Participant’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Common Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Participant shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Participant, or both. The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

9.  Payment of Taxes. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of any taxes required by law to be withheld with respect to the exercise of this Option. The Committee may, in its discretion, require any other federal or state taxes imposed on

the sale of the shares to be paid by the Participant.  In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of this Option, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

10.   Rights Limited.  The Committee, in its sole discretion, shall determine from the group of eligible persons whether an individual shall be a Participant under the Plan.  Any Option grant made under the Plan shall be made in the sole discretion of the Committee, or its delegate as appointed in accordance with the Plan, and no prior Option grant shall entitle a person to any future Award.  In no event shall the Plan, or any Option grant made under the Plan, form a part of an employee’s or consultant’s contract of employment or service, if any.  Neither the Plan, nor any Option grant made under the Plan, shall confer upon any employee or consultant of the Company or its Affiliate any right with respect to the continuance of his or her employment by, or other service with, the Company or its Affiliate, nor shall they limit the rights of the Company or its Affiliate to terminate the employee or consultant or otherwise change the terms of service.  No Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan or any Option until he or she becomes the holder thereof.  The loss of existing or potential profit in an Option grant shall not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or its Affiliate to the Participant.

11.  Acceptance.  Failure of the Participant to accept the terms and conditions of this Option in accordance with the requirements of the Committee or its delegate, as applicable, can result in adverse consequences to the Participant, including cancellation of the Option.

ACKNOWLEDGED AND AGREED:
Participant Signature
Participant Name (Print)	Date
	Revised 5/21/08

EX-10.6

Exhibit 10.6

Notice of Grant of Stock Options	GENZYME CORPORATION
and Option Agreement	ID: 06-1047163
	500 Kendall Street
	Cambridge, MA 02142
[First Name][Family Name]	Option Number:	[00000000]
[Address Line 1]	Plan:	[####]
[City], [State] [Postal Code]	ID:	[SSN or Emp. ID]]

Effective [Date], you have been granted an Incentive Stock Option to buy [#,####] shares of GENZYME CORPORATION (the Company) stock at $[Value] per share.

The total option price of the shares granted is $[Value].

Shares in each period will become fully vested on the date shown.

Shares	Vest Type	Full Vest	Expiration
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]
[#,###]	On Vest Date	[Date]	[Date]

MAINTAIN THIS COPY FOR YOUR RECORDS.

These options are granted under and governed by the terms and conditions of the Company’s Stock Option plan as amended and the Option Agreement, all of which are attached and made a part of this document.

GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN

OFFICER (TIER I)

INCENTIVE STOCK OPTION AGREEMENT

1.  Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan, as amended or may be amended, and this Incentive Stock Option Agreement (“Agreement”), and may be amended as provided in the Plan. Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan. This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding. Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations Department of the Company.

2.  Option Price. The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option (the “Option Price”) is the option price set forth in the Notice of Grant of Stock Options associated with this Agreement (“Notice”).

3.  Exercisability Schedule. This Stock Option will vest in accordance with the exercisability schedule set forth in the Notice, provided that Participant is continuously employed with the Company or an Affiliate through each applicable date set forth in such schedule, except as otherwise specified herein.  This Option may be exercised for the purchase of only whole shares at any time and from time to time up to the number of shares vested per such schedule. Notwithstanding anything in this Agreement, this Option may not be exercised as to any shares after the date of expiration set forth in the Notice (the “Expiration Date”).

4.  Method of Exercise. To exercise this Option, the Participant shall deliver written notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares in cash, by certified check or in such other form, including shares of Common Stock of the Company valued at their Fair Market Value on the date of delivery, as the Committee may approve. Promptly following such notice, the Company will deliver to the Participant a certificate representing the number of shares with respect to which the Option is being exercised.

5.  Recapitalization, Mergers, Etc. In the event of a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, the Committee may upon written notice to the Participant provide that this Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised. In connection with such notice, the Committee may in its discretion accelerate or waive any deferred exercise period.  Notwithstanding the foregoing, in the event of a Change in Control of the Company (as defined in the Participant’s employment agreement), this Option shall become exercisable as to all shares without regard to any deferred exercisability schedule or deferred exercise period.

6.  Option Not Transferable. This Option is not transferable by the Participant otherwise than by will or the laws of descent and distribution, and is exercisable, during the Participant’s lifetime, only by the Participant. The naming of a Designated Beneficiary does not constitute a transfer.

7.  Exercise of Option After Termination of Employment. If the Participant’s employment with (a) the Company, (b) an Affiliate, or (c) a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies, is terminated for any reason other than by the Company without cause; by the Company as a result of disability (as defined in the Participant’s employment agreement); due to death or after having achieved retirement status (defined as a minimum of age 60 plus a minimum of five years of service provided termination is not for cause), the Participant may exercise the rights that

were available to the Participant at the time of such termination only within three months from the date of termination. If Participant’s employment is terminated by the Company without cause, this Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three months from the date of termination. If Participant’s employment is terminated as a result of disability, this Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within twelve months from the date of termination. Upon the death of the Participant, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and his or her Designated Beneficiary shall have the right, at any time within twelve months after the date of death, to exercise such rights.  Notwithstanding the foregoing three sentences, if the Participant has achieved retirement status as of the date of termination for any reason (including death and disability) except for cause, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three years from the date of termination.  Termination by the Company of the Participant’s employment for “cause” shall mean termination upon (A) the willful and continued failure by him or her to substantially perform his or her duties with the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes that he or she has not substantially performed his or her duties, or (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  No act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.  In the case of any Participant who is a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Committee.  In the case of any Participant who is not a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Senior Vice President, Chief Human Resources Officer, in his sole discretion, whose decision shall be final.

8.  Compliance with Securities Laws. It shall be a condition to the Participant’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Common Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Participant shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Participant, or both. The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

9.  Payment of Taxes. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of any taxes required by law to be withheld with respect to the exercise of this Option. The Committee may, in its discretion, require any other federal or state taxes imposed on the sale of the shares to be paid by the Participant.  In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of this Option, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

10.  Notice of Sale of Shares Required.  The Participant agrees to notify the Company in writing within 30 days of the disposition of any shares purchased upon exercise of this Option if such disposition occurs within two years of the date of the grant of this Option or within one year after such purchase.

11.  Rights Limited.  The Committee, in its sole discretion, shall determine from the group of eligible persons whether an individual shall be a Participant under the Plan.  Any Option grant made under the Plan shall be made in the sole discretion of the Committee, or its delegate as appointed in accordance with the Plan, and no prior Option grant shall entitle a person to any future Award.  In no event shall the Plan, or any Option grant made under the Plan, form a part of an employee’s or consultant’s contract of employment or service, if any.  Neither the Plan, nor any Option grant made under the Plan, shall confer upon any employee or consultant of the Company or its Affiliate any right with respect to the continuance of his or her employment by, or other service with, the Company or its Affiliate, nor shall they limit the rights of the Company or its Affiliate to terminate the employee or consultant or otherwise change the terms of service.  No Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan or any Option until he or she becomes the holder thereof.  The loss of existing or potential profit in an Option grant shall not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or its Affiliate to the Participant.

12.  Acceptance.  Failure of the Participant to accept the terms and conditions of this Option in accordance with the requirements of the Committee or its delegate, as applicable, can result in adverse consequences to the Participant, including cancellation of the Option.

ACKNOWLEDGED AND AGREED:
Participant Signature
Participant Name (Print)
Date
	Revised 5/21/08

GENZYME CORPORATION 2001 EQUITY INCENTIVE PLAN

OFFICER (TIER II)

INCENTIVE STOCK OPTION AGREEMENT

1.  Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan, as amended or may be amended, and this Incentive Stock Option Agreement (“Agreement”), and may be amended as provided in the Plan. Capitalized terms used and not otherwise defined in this Agreement have the meanings given to them in the Plan. This Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding. Copies of the Plan may be obtained upon written request without charge from the Shareholder Relations Department of the Company.

2.  Option Price. The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option (the “Option Price”) is the option price set forth in the Notice of Grant of Stock Options associated with this Agreement (“Notice”).

3.  Exercisability Schedule. This Stock Option will vest in accordance with the exercisability schedule set forth in the Notice, provided that Participant is continuously employed with the Company or an Affiliate through each applicable date set forth in such schedule, except as otherwise specified herein.  This Option may be exercised for the purchase of only whole shares at any time and from time to time up to the number of shares vested per such schedule.  Notwithstanding anything in this Agreement, this Option may not be exercised as to any shares after the date of expiration set forth in the Notice.

4.  Method of Exercise. To exercise this Option, the Participant shall deliver written notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares in cash, by certified check or in such other form, including shares of Common Stock of the Company valued at their Fair Market Value on the date of delivery, as the Committee may approve. Promptly following such notice, the Company will deliver to the Participant a certificate representing the number of shares with respect to which the Option is being exercised.

5.  Recapitalization, Mergers, Etc. In the event of a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, the Committee may upon written notice to the Participant provide that this Option shall terminate on a date not less than 20 days after the date of such notice unless theretofore exercised. In connection with such notice, the Committee may in its discretion accelerate or waive any deferred exercise period.  Notwithstanding the foregoing, in the event of a change in control of the Company (as defined in a vote of the Compensation Committee adopted May 29, 2002), this Option shall become exercisable as to all shares without regard to any deferred exercisability schedule or deferred exercise period.

6.  Option Not Transferable. This Option is not transferable by the Participant otherwise than by will or the laws of descent and distribution, and is exercisable, during the Participant’s lifetime, only by the Participant. The naming of a Designated Beneficiary does not constitute a transfer.

7.  Exercise of Option After Termination of Employment. If the Participant’s employment with (a) the Company, (b) an Affiliate, or (c) a corporation (or parent or subsidiary corporation of such corporation) issuing or assuming a stock option in a transaction to which section 424(a) of the Code applies, is terminated for any reason other than by the Company as a result of disability (within the meaning of section 22(e)(3) of the Code); due to death; or after having achieved retirement status (defined as a minimum of age 60 plus a minimum of five years of service provided termination is not for cause), the Participant may exercise the rights that were available to the Participant at the time of

such termination only within three months from the date of termination. If Participant’s employment is terminated as a result of disability, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within twelve months from the date of termination.  Upon the death of the Participant, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and his or her Designated Beneficiary shall have the right, at any time within twelve months after the date of death, to exercise such rights.  Notwithstanding the foregoing two sentences, if the Participant has achieved retirement status as of the date of termination for any reason (including death and disability) except for cause, this Stock Option shall become exercisable as to all shares without regard to any deferred exercise period, and such rights may be exercised within three years from the date of termination.  If the Participant’s employment is terminated for cause, the Participant may exercise the rights which were available to the Participant at the time of such termination only within three months from the date of termination.  Termination by the Company of the Participant’s employment for “cause” shall mean termination upon (A) the willful and continued failure by him or her to substantially perform his or her duties with the Company (other than any such failure resulting from his or her incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Participant by the Company, which demand specifically identifies the manner in which the Company believes that he or she has not substantially performed his or her duties, or (B) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.  No act, or failure to act, on the Participant’s part shall be deemed “willful” unless done, or omitted to be done, by him or her not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company.  In the case of any Participant who is a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Committee.  In the case of any Participant who is not a corporate officer of the Company, determination for purposes of this section of whether termination of such Participant’s employment is for “cause” shall be made by the Senior Vice President, Chief Human Resources Officer, in his sole discretion, whose decision shall be final.

8.  Compliance with Securities Laws. It shall be a condition to the Participant’s right to purchase shares of Common Stock hereunder that the Company may, in its discretion, require (a) that the shares of Common Stock reserved for issue upon the exercise of this Option shall have been duly listed, upon official notice of issuance, upon any national securities exchange or automated quotation system on which the Company’s Common Stock may then be listed or quoted, (b) that either (i) a registration statement under the Securities Act of 1933 with respect to the shares shall be in effect, or (ii) in the opinion of counsel for the Company, the proposed purchase shall be exempt from registration under that Act and the Participant shall have made such undertakings and agreements with the Company as the Company may reasonably require, and (c) that such other steps, if any, as counsel for the Company shall consider necessary to comply with any law applicable to the issue of such shares by the Company shall have been taken by the Company or the Participant, or both. The certificates representing the shares purchased under this Option may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

9.  Payment of Taxes. The Participant shall pay to the Company, or make provision satisfactory to the Company for payment of any taxes required by law to be withheld with respect to the exercise of this Option. The Committee may, in its discretion, require any other federal or state taxes imposed on the sale of the shares to be paid by the Participant.  In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of this Option, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

10. Notice of Sale of Shares Required.  The Participant agrees to notify the Company in writing within 30 days of the disposition of any shares purchased upon exercise of this Option if such disposition occurs within two years of the date of the grant of this Option or within one year after such purchase.

11.  Rights Limited.  The Committee, in its sole discretion, shall determine from the group of eligible persons whether an individual shall be a Participant under the Plan.  Any Option grant made under the Plan shall be made in the sole discretion of the Committee, or its delegate as appointed in accordance with the Plan, and no prior Option grant shall entitle a person to any future Award.  In no event shall the Plan, or any Option grant made under the Plan, form a part of an employee’s or consultant’s contract of employment or service, if any.  Neither the Plan, nor any Option grant made under the Plan, shall confer upon any employee or consultant of the Company or its Affiliate any right with respect to the continuance of his or her employment by, or other service with, the Company or its Affiliate, nor shall they limit the rights of the Company or its Affiliate to terminate the employee or consultant or otherwise change the terms of service.  No Participant or Designated Beneficiary shall have any rights as a shareholder with respect to any shares of Common Stock to be issued under the Plan or any Option until he or she becomes the holder thereof.  The loss of existing or potential profit in an Option grant shall not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of the Company or its Affiliate to the Participant.

12.  Acceptance.  Failure of the Participant to accept the terms and conditions of this Option in accordance with the requirements of the Committee or its delegate, as applicable, can result in adverse consequences to the Participant, including cancellation of the Option.

ACKNOWLEDGED AND AGREED:
Participant Signature
Participant Name (Print)
Date
	Revised 5/21/08

EX-10.7

Exhibit 10.7

LICENSE AND CO-DEVELOPMENT AGREEMENT

BY AND BETWEEN

GENZYME CORPORATION

AND

ISIS PHARMACEUTICALS, INC.

June 24, 2008

TABLE OF CONTENTS

Article 1. DEFINITIONS				1
Article 2. LICENSES				19
2.1.	Product License			19
2.2.	Limited Right to Sublicense			19
2.3.	Additional Rights after Prior Agreement Execution Date			19
2.4.	Follow-On Compound			20
2.5.	Retained Rights			21
2.6.	Isis’ Right of First Negotiation			21
2.7.	Third Party Agreements			22
2.8.	No Implied License			23
Article 3. EXCLUSIVITY				23
3.1.		Non-Compete		23
3.2.		[**] Technology		23
Article 4. JOINT COMMITTEES				23
4.1.		Joint Development Committee		23
4.2.		Joint Patent Committee		24
4.3.		Expenses		25
Article 5. DEVELOPMENT				25
5.1.		Development Plan and Development Budget		25
5.2.		Roles and Responsibilities		26
5.3.		Clinical and Launch Supplies		26
5.4.		Know-How Transfer		27
5.5.		Subcontracting		28
Article 6. COMMERCIALIZATION AND REGULATORY MATTERS				28
6.1.			Commercialization Responsibilities	28
6.2.			Regulatory Matters and Filings	28
6.3.			Commercial Manufacture	31
6.4.			Isis Safety Database	31
6.5.			Safety Reporting	32

ii

6.6.	Commercial Forecasts & Plans				32
Article 7. RESEARCH RELATED TO THE PRODUCT					33
7.1.			Research Programs		33
7.2.			Research Funding		33
7.3.			Research Efforts		33
Article 8. FINANCIAL PROVISIONS					34
8.1.				Upfront License Fee	34
8.2.				Milestones	34
8.3.				Financial Provisions Relating to Development Activities	37
8.4.				Sharing of Net Revenue	38
8.5.				Sharing of Net Profits	39
8.6.				Periodic Reporting and Reconciliation	40
8.7.				Accounting and Allocation Methods	41
8.8.				Audits and Interim Reviews	42
8.9.				Withholding Taxes	43
8.10.				Interest on Late Payments	43
8.11.				Currency; Payment	43
8.12.				Material Safety Warnings	44
Article 9. INTELLECTUAL PROPERTY MATTERS					44
9.1.		Product-Specific Patents			44
9.2.		Program IP			45
9.3.		Manufacturing Improvements			46
9.4.		Filing, Prosecution and Maintenance of Patents			49
9.5.		Enforcement of Patents and Know-How			52
9.6.		Claimed Infringement of Third Party Rights			56
9.7.		Other Infringement Resolutions			57
9.8.		Patent Term Extensions			57
9.9.		Orange Book Listings			58
9.10.		Cooperative Research and Technology Act Acknowledgement			58
9.11.		Common Interest			58
9.12.		Product Trademarks			58

iii

Article 10. REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION					59
10.1.	Representations and Warranties of Both Parties				59
10.2.	Isis’ Representations and Warranties				59
10.3.	Indemnification				62
10.4.	Insurance				64
Article 11. TERM AND TERMINATION					64
11.1.		Term			64
11.2.		Termination			64
11.3.		Consequences of Termination			67
11.4.		Remedies for Isis’ Material Breach			69
Article 12. CONFIDENTIALITY; PUBLIC DISCLOSURE					70
12.1.			Non-Disclosure		70
12.2.			Authorized Disclosure and Use		71
12.3.			Terms of Agreement		71
12.4			Public Disclosures		71
Article 13. DISPUTE RESOLUTION					73
13.1.			Escalation		73
13.2.			Mediation		74
13.3.			Jurisdiction; Venue; Service of Process		75
Article 14. MISCELLANEOUS					76
14.1.				Change of Control of Isis	76
14.2.				Specific Performance	77
14.3.				Governing Law	78
14.4.				Waiver; Remedies Cumulative	78
14.5.				Notices	78
14.6.				Entire Agreement	79
14.7.				Binding Effect; Assignment	79
14.8.				Severability	79
14.9.				Further Assurances	79
14.10.				Independent Contractors	79
14.11.				Interpretation	80

iv

14.12.	Counterparts	80
14.13.	Rights in Bankruptcy	80

v

Schedules and Exhibits
Schedule 1.35	Isis Methodology for Determining its Cost of Manufacture
Schedule 1.49	Example of Calculation of Internal Development Expenses
Schedule 1.52	Isis Core Technology Patents
Schedule 1.56	Isis Manufacturing and Analytical Patents
Schedule 1.99	Product-Specific Patents
Schedule 1.113	Special Isis Core Technology Patents
Schedule 2.1	Licenses to Third Parties
Schedule 10.2.2	Third Party Agreements
Exhibit A	Development Plan
Exhibit B	Development Budget
Exhibit C	Form of Supply Agreement
Exhibit D	Form of Quality Agreement
Exhibit E	Form of Patent Assignment
Exhibit F	Disclosure Schedule

vi

LICENSE AND CO-DEVELOPMENT AGREEMENT

This License and Co-Development Agreement (together with all Exhibits, Schedules and other attachments hereto, this “Agreement”), is dated as of the 24th day of June, 2008 (the “Execution Date”), by and between Genzyme Corporation, a Massachusetts corporation (“Genzyme”) and Isis Pharmaceuticals, Inc., a Delaware corporation (“Isis”). Genzyme and Isis each may be referred to herein individually as a “Party” or collectively as the “Parties.”

WITNESSETH:

WHEREAS, the Parties entered into a License and Research Agreement dated January 7, 2008 and effective as of January 30, 2008 (the “Prior Agreement”) pursuant to which Isis granted to Genzyme an exclusive license to certain Isis intellectual property to advance mipomersen, formerly known as ISIS 301012, and related compounds targeting apoB, through human clinical trials and ultimately commercialize it as a product;

WHEREAS, pursuant to Section 2.1.2 of the Prior Agreement, the Parties agreed to negotiate and enter into a more detailed written license and co-development agreement containing additional terms and conditions that are reasonable and customary for license and co-development agreements of this type (the “More Detailed Product Agreement”); and

WHEREAS, the Parties desire to enter into this Agreement to supersede and replace the Prior Agreement and evidence the More Detailed Product Agreement.

NOW, THEREFORE, in consideration of the respective covenants, representations, warranties and agreements set forth herein, the Parties hereto agree as follows:

Article 1.
DEFINITIONS

For purposes of this Agreement, the following capitalized terms have the following meanings.

1.1.“Action” has the meaning set forth in Section 13.3.1 (Jurisdiction).

1.2.“Additional Third Party Agreement” has the meaning set forth in Section 2.3 (Additional Rights after Prior Agreement Execution Date).

1.3.“Affiliate” of an entity means any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first entity. For purposes of this definition only, “control” (and, with correlative meanings, the terms “controlled by” and “under common control with”) means the possession of the actual power to direct the management or policies of an entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance. For clarity, as of the Execution Date, [**], which is engaged in the discovery, development and commercialization of microRNA therapeutics, is not an Affiliate of Isis because Isis has entered into an agreement pursuant to which Isis does

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

not have control of Regulus.

1.4.“API” means the active pharmaceutical ingredient of the Product.

1.5.“apoB” means apolipoprotein B.

1.6.“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 for a Product, Approval will not be deemed to have occurred until the earlier of (a) Genzyme or its Sublicensee and the Regulatory Authority have determined pricing, or (b) ninety (90) days after approval (whether national or centralized) is received for the applicable Regulatory Authority sufficient for the manufacture, distribution, use and sale of the Product in such jurisdiction (other than pricing authorization for the Product) in accordance with Applicable Laws.

1.7.“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 and copyright laws.

1.8.“ASO Product” any preparation in final form for sale by prescription, over-the-counter or any other method for any indication, including human or animal use, which contains one or more oligonucleotides or an analog thereof that [**].

1.9.“Bankruptcy Code” has the meaning set forth in Section 14.13 (Rights in Bankruptcy).

1.10.“Calendar Quarter”1.11.      means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

1.10.“Change of Control” means, with respect to a Party, (a) a merger or consolidation of such Party with a Third Party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger or consolidation, or (b) except in the case of a bona fide equity financing in which a Party issues new shares of its capital stock, a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates, but excluding any financial factoring arrangements.

1.12.“Commercially Reasonable Efforts” means, (a) with respect to the research, development or commercialization by Genzyme of a Product, at any given time as the case may be,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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efforts reasonably used by Genzyme or its Affiliates (giving due consideration to relevant industry standards) for Genzyme’s own products (including internally developed, acquired and in-licensed products) with similar commercial potential at a similar stage in their lifecycle (assuming continuing development of such product), taking into consideration their safety, tolerability and efficacy, the profitability (taking into account any payments payable under this Agreement), the extent of market exclusivity, patent protection, cost to develop the product, promotable claims and health economic claims and (b) with respect to the research and development by Isis of a Product, at any given time as the case may be, efforts reasonably used by an entity in the biotechnology/pharmaceutical industry of similar resources and expertise as Isis, for such similar entity’s own products (including internally developed, acquired and in-licensed products) with similar commercial potential at a similar stage in their lifecycle (assuming continuing development of such product), taking into consideration their safety, tolerability and efficacy, the profitability (taking into account any payments payable under this Agreement), the extent of market exclusivity, patent protection, cost to develop the product, promotable claims and health economic claims.

1.13.“Commercial Scale Manufacturing IP” means any confidential or patented scientific or technical data, information, method, technique, protocol, invention or processes that has been found to be useful for commercial scale manufacturing facility but is not generally useful for manufacturing oligonucleotides on a non-commercial scale, including all manufacturing plant designs, plans diagrams and descriptions and also including all regulatory filings.

(a)For illustrative purposes only and not as a limitation, the following would be considered to be Commercial Scale Manufacturing IP:

(i)            Piping and Instrumentation Diagrams (P&ID) for a Genzyme manufacturing facility;

(ii)           Design plans and schematics for a Genzyme manufacturing facility (including tank farms, synthesis and purification suites, and analytical testing laboratories);

(iii)          Operating Documents, for example batch records, SOPs, validation master plans;

(iv)          Floor plans and equipment layout drawings for a Genzyme manufacturing facility; and

(v)           Regulatory filings.

(b)For illustrative purposes only and not as a limitation, the following would not be considered to be Commercial Scale Manufacturing IP:

(i)            Discovery that a particular side reaction leads to an unexpected impurity;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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(ii)           Discovery regarding how to avoid the impurity or how to remove it.

(iii)          Development of the use of alternative reagents;

(iv)          Discovery of recycle possibilities;

(v)           Discovery to enhance yields;

(vi)          Discovery of the Mipomersen oxidant;

(vii)         Development and validation of QbD/Design Space filing strategy.

(viii)        Development and validation of PAT measures.

1.14.“Confidential Information” has the meaning set forth in Section 12.1 (Non-Disclosure).

1.15.“Control” or “Controlled” means, with respect to any Know-How, Patent or other intellectual property right or Regulatory Materials, possession by a Party (including its Affiliates) of the right (whether by ownership, license or otherwise) to grant to the other Party a license or a sublicense under such Know-How, Patent or other intellectual property right or access to Regulatory Materials without violating the terms of any agreement or other arrangement with any Third Party.

1.16.“Cover,” “Covered” or “Covering” means, with respect to a Patent and the subject matter at issue, that, but for a license granted under an issued claim included in such Patent, the manufacture, use, sale, offer for sale or importation of the subject matter at issue would infringe such claim or, in the case of a Patent that is a patent application, would infringe a claim in such patent application if it were to issue as a patent.

1.17.“Development Budget” means the initial written development budget attached hereto as Exhibit B setting forth, for the time period covered by the Development Plan, the budget for the development of the Product during the applicable time period, as it may be updated and amended by the JDC or the Parties during the Term in accordance with this Agreement.

1.18.“Development Expenses” means internal or external expenses incurred in accordance with the Development Plan and the Development Budget, including the costs of all clinical trials and preclinical studies, including post-marketing trials. The types of expenses included in this category are investigator grants, laboratory services, clinical PK assays, carcinogenicity studies, CMC studies, CRO services and pass-throughs, pharmacovigilence and risk management activities, costs for packaging, distribution and reconciliation (including labels and translations, inventory control, IVRS, off-site storage and destruction), data management (including EDC), clinical study reports, drug costs (API & DP), investigator meetings, monitoring, SAB costs, DSMB costs, key opinion leader costs, program specific travel, metabolomics assays, courier services and clinical trial liability insurance costs. Development Expenses include quality assurance costs for auditing clinical trial activities and preclinical studies support (report reviews and CMC

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

4

review). When a Party is a manufacturer of the Product under development, Development Expenses include such Party’s Fully Absorbed Cost of Goods.

1.19.“Development Plan” means the initial written development and regulatory plan attached hereto as Exhibit A for the Product as it may be updated and amended during the Term by the JDC or the Parties in accordance with this Agreement.

1.20.“Development Program” means the program to be conducted by the Parties in accordance with an approved Development Plan to develop and obtain Approval of the Product in the Territory, all as more fully described in Article 5 (Development).

1.21.“Disclosure Schedule” means the schedule delivered by Isis to Genzyme that includes exceptions to Isis’ representations and warranties in Section 10.2 (Isis Representations and Warranties) hereof.

1.22.“Dispute” has the meaning set forth in Section 13.1 (Dispute Resolution Mechanism).

1.23.“Effective Date” means January 30, 2008.

1.24.“Execution Date” has the meaning set forth in the preamble.

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

1.26.“Encumbered Follow-On Compound” has the meaning set forth in Section 2.4 (Follow-On Compound).

1.27.“Executives” has the meaning set forth in Section 13.1 (Escalation to Senior Management).

1.28.“External Development Expenses” means Development Expenses other than Internal Development Expenses. For clarity, External Development Expenses include the manufacturing Party’s Fully Absorbed Cost of Goods.

1.29.“External Sales & Marketing Expenses” means Sales & Marketing Expenses other than Internal Sales & Marketing Expenses.

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

1.31.“FH” means familial hypercholesterolemia.

1.32.“Fixed Costs” means the cost of facilities, utilities, insurance (including any accrual for self-insurance), facility and equipment depreciation, and other fixed costs directly attributable to the applicable activity, allocated based upon the proportion of such costs directly attributable to the support or performance of the applicable activity in accordance with the Development Plan or the Product’s manufacturing or commercialization plan, as

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

5

the case may be. Fixed Costs will be determined in accordance with GAAP.

1.33.“Follow-On Compound” means all pharmaceutical compositions, formulations, dosage forms, delivery systems and presentations that contain [**] apoB (alone or with other active ingredients) other than Mipomersen.

1.34.“Follow-On Compound Encumbrances” has the meaning set forth in Section 2.4.2.

1.35.“Fully Absorbed Cost of Goods” means:

(a)           with respect to units of Product produced by Genzyme, the Variable Costs and Fixed Costs incurred by Genzyme to the extent associated with the manufacture (inclusive of finishing processes including filling, packaging, labeling and other preparation), quality assurance, quality control and other testing, storage and shipping of batches of such units of Product;

(b)           with respect to units of Product manufactured by Isis, the costs incurred by Isis as determined using the methodology set forth in Schedule 1.35, which Schedule will be updated by Isis on an annual basis in advance of each fiscal year (with material changes to such methodology subject to Genzyme’s prior agreement); and

(c)           with respect to units or components of Product that are not manufactured by the Parties, the amounts paid to the vendor plus costs associated with acquisition from such vendor.

If a facility that is used to manufacture Product has the capacity to manufacture products for other programs of either Genzyme or Isis outside of the activities contemplated by this Agreement, the Fixed Costs component of the Fully Absorbed Cost of Goods will be allocated in proportion to the actual use of such facility for the manufacture of Product pursuant to this Agreement and the capacity to manufacture products for such other programs outside of this Agreement in a manner that is mutually agreeable to the Parties. No idle capacity of a manufacturing facility, or a proportionate use thereof, will be included in Fully Absorbed Cost of Goods unless such capacity or facility was built specifically to manufacture Product and is not being used to manufacture any other products, in which case the depreciation associated with such idle capacity will be included in Fully Absorbed Cost of Goods to the extent that such facility is in service. Fully Absorbed Cost of Goods will exclude all costs otherwise reimbursed pursuant to this Agreement. Fully Absorbed Costs of Goods will be determined in accordance with GAAP. Genzyme will use commercially reasonable efforts to minimize and mitigate circumstances that would result in idle capacity being included in Fully Absorbed Cost of Goods.

1.36.“G&A Costs” will mean the costs of general and administration services (including legal, finance, accounting, human resources and other general and administrative support services) as reasonably required to support the activities of the Parties under this

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

6

Agreement, which costs will be determined and reported in accordance with GAAP and in good faith by each Party.

1.37.“GAAP” means then-current United States generally accepted accounting principles, consistently applied.

1.38.“Genzyme” has the meaning set forth in the preamble.

1.39.“Genzyme Indemnitees” has the meaning set forth in Section 10.3.2 (Indemnification by Isis).

1.40.“Genzyme Manufacturing Improvements” has the meaning set forth in Section 9.3.2(b) (Terms of Sharing Program).

1.41.“Genzyme Program IP” means the Genzyme Program Patents, Genzyme Program Know-How and any work-of-authorship authored in the performance of the Development Program or Research Programs solely by Genzyme’s employees or Third Parties acting on Genzyme’s behalf.

1.42.“Genzyme Program Know-How” means any and all Know-How which is made or conceived during and in connection with the conduct of the Development Program or the Research Programs or commercializing the Product solely by Genzyme’s employees or Third Parties acting on Genzyme’s behalf.

1.43.“Genzyme Program Patents” means any and all Patents Controlled by Genzyme that Cover Genzyme Program Know-How.

1.44.“IND” means an Investigational New Drug Application, as defined in the US Federal Food, Drug, and Cosmetic Act, as amended from time to time (21 U.S.C. Section 301 et seq.), together with any rules and regulations promulgated thereunder, or similar application or submission that is required to be filed with any Regulatory Authority before beginning clinical testing of a Product in human subjects.

1.45.“Indemnitee” has the meaning set forth in Section 10.3.3 (Indemnification Procedure).

1.46.“Indemnifying Party” has the meaning set forth in Section 10.3.3 (Indemnification Procedure).

1.47.“Infringement Claim” has the meaning set forth in Section 9.6.1 (Notice).

1.48.“In-Licensed Third Party IP” means Patents or Know-How Controlled by Isis that are licensed to Isis pursuant to a Third Party Agreement.

1.49.“Internal Development Expenses” means Development Expenses attributable to the internal costs of base salary plus a factor for reasonable and customary employee benefits and payroll taxes for those employees and temporary employees directly responsible for performing the development activity, plus program specific travel for such employees

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

7

and temporary employees, plus G&A Costs, or other overhead costs; provided, however, that where the Product is being manufactured by a Party, Internal Development Expenses will not include such Party’s Fully Absorbed Cost of Goods. A hypothetical example illustrating the methodology Genzyme currently uses to calculate its Internal Development Costs is set forth in Schedule 1.49.

1.50.“Internal Sales & Marketing Expenses” means Sales & Marketing Expenses attributable to the internal costs of base salary and commissions payable to employees plus a factor for reasonable and customary employee benefits and payroll taxes for those employees directly responsible for performing the sales and marketing activity, plus sales and marketing specific travel for such employees, plus G&A Costs or other overhead costs.

1.51.“Isis” has the meaning set forth in the preamble.

1.52.“Isis Core Technology Patents” means all Patents Controlled by Isis or any of its Affiliates as of the Prior Agreement Execution Date or during the Term, including Isis Program Patents and Joint Patents, that are necessary or useful for the development and commercialization of Product, including the Patents identified on Schedule 1.52, in each case other than Product-Specific Patents, Licensed Product Patents and Isis Manufacturing and Analytical Patents.

1.53.“Isis Database” has the meaning set forth in Section 6.4 (Isis Safety Database).

1.54.“Isis Indemnitees” has the meaning set forth in Section 10.3.1 (Indemnification by Genzyme).

1.55.“Isis Manufacturing and Analytical Know-How” means Know-How other than Product Know-How Controlled by Isis or its Affiliates as of the Prior Agreement Execution Date or during the Term, including Isis Program Know-How and Joint Know-How, that relates to the synthesis or analysis of Products independent of sequence or chemical modification.

1.56.“Isis Manufacturing and Analytical Patents” means Patents Controlled by Isis or its Affiliates as of the Prior Agreement Execution Date or during the Term, including Isis Program Patents and Joint Patents, that claim methods and materials used in the synthesis or analysis of Products independent of sequence or chemical modification, including the Patents identified on Schedule 1.56. Isis Manufacturing and Analytical Patents do not include the Product-Specific Patents, Licensed Product Patents and the Isis Core Technology Patents.

1.57.“Isis Manufacturing and Analytical IP” means the Isis Manufacturing and Analytical Know-How and Isis Manufacturing and Analytical Patents solely to the extent necessary or useful to manufacture a Product.

1.58.“Isis Manufacturing Improvements” has the meaning set forth in Section 9.3.2(c) (Terms of Sharing Program).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

8

1.59.“Isis Program IP” means the Isis Program Patents and Isis Program Know-How and any works-of-authorship authored in the performance of the Development Program or Research Programs solely by Isis’ employees or Third Parties acting on Isis’ behalf.

1.60.“Isis Program Know-How” means any and all Know-How which is made or conceived in the performance of the Development Program or the Research Programs solely by Isis’ employees or Third Parties acting on Isis’ behalf.

1.61.“Isis Program Patents” means any and all Patents Controlled by Isis that Cover Isis Program Know-How.

1.62.“Joint Development Committee” or “JDC” has the meaning set forth in Section 4.1.1 (Establishment of JDC).

1.63.“Joint Know-How” means any and all Know-How that is made or conceived in the performance of the Development Program or the Research Programs jointly by Isis’ and Genzyme’s employees or others acting on Isis’ and Genzyme’s behalf.

1.64.“Joint Patent Committee” or “JPC” has the meaning set forth in Section 4.2.1 (Establishment of the JPC).

1.65.“Joint Patents” means any and all Patents that Cover Joint Know-How.

1.66.“Joint Program IP” means Joint Patents, Joint Know-How and any works-of-authorship authored in the performance of the Development Program or Research Programs jointly by Isis’ and Genzyme’s employees or others acting on their behalf.

1.67.“Know-How” means inventions, technical information, know-how and materials, including technology, software, instrumentation, devices, data, compositions, formulas, biological materials, assays, reagents, constructs, compounds, discoveries, procedures, processes, practices, protocols, methods, techniques, results of experimentation or testing, knowledge, trade secrets, skill and experience, in each case whether or not patentable or copyrightable.

1.68.“Licensed IP” means the Licensed Patents, the Product Know-How, the Isis Manufacturing and Analytical Know-How; provided, however, that (a) for any such Know-How or Patent that becomes Controlled by Isis after the Prior Agreement Execution Date pursuant to an Additional Third Party Agreement, the provisions of Section 2.3 (Additional Rights after Prior Agreement Execution Date) will govern whether such Know-How or Patent will be included as Licensed IP and (b) with respect to any Follow-On Compound, the provisions of Section 2.4 (Follow-On Compound) will govern the extent to which In-Licensed Third Party IP will be included in Licensed IP.

1.69.“Licensed Patent(s)” means the Licensed Product Patents, Isis Core Technology Patents and Isis Manufacturing and Analytical Patents.

1.70.“Licensed Product Patents” means (i) the [**] Patent, and (ii) any Patent Controlled by

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

9

Isis during the Term, including any Isis Program Patents and Joint Patents, claiming (a) [**] apoB, (b) the sequence of apoB, (c) the specific composition of matter of a Product, or (d) methods of using Product as a therapeutic, methods of using Product to modulate apoB, and methods of using the Product to inhibit expression of apoB; and also claiming or describing (x) [**], or (y) methods of using such nucleic acids as a therapeutic or to modulate a gene target [**]. Notwithstanding the foregoing, a Patent that has been issued for at least two years that claims (a), (b), (c) or (d) above and that also describes, but does not claim, (x) or (y) above, will be a Product-Specific Patent, not a Licensed Product Patent

1.71.[**].

1.72.“[**] Manufacturing Improvements” has the meaning set forth in Section [**].

1.73.“MAA” means a marketing authorization application filed with (a) the EMEA under the centralized EMEA filing procedure or (b) a Regulatory Authority in any Major European Country if the centralized EMEA filing procedure is not used, after completion of clinical trials to obtain marketing approval.

1.74.“MAA Approval” means the Approval of a MAA for the applicable Product in any of the Major European Countries.

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

1.76.“Major Market Countries” means Canada, the United States, Japan and each Major European Country.

1.77.“Manufacturing Improvements” means any and all scientific and technical data, information, methods, techniques, protocols, inventions, and processes that have been found to be useful in the manufacture of ASO Products, excluding Commercial Scale Manufacturing IP.

1.78.“Mipomersen” means mipomersen sodium, formerly known as ISIS 301012, including all pharmaceutically acceptable salts, solvates, hydrates, hemihydrates, metabolites, pro-drug forms, stereoisomers, enantiomers, racemates and all optically active forms thereof.

1.79.“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.

1.80.“NDA Approval” means the Approval of an NDA by the FDA for the applicable Product in the U.S.

1.81.“NDA Filing” means the acceptance by the FDA of the filing of an NDA for the applicable Product.

1.82.“Net Profits or Losses” means Net Revenues less Program Costs. To the extent Net

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

10

Revenues exceed Program Costs for the relevant period, the amount of such difference will be deemed “Net Profits,” and, to the extent Program Costs exceed Net Revenues for the relevant period, the amount of such difference will be deemed “Net Losses.”

1.83.“Net Revenue” during the relevant period means the sum of (a) Net Sales, if any, of Products in the Territory during such period, plus (b) all revenue received by either Party or their respective Affiliates from a Third Party in consideration for the grant of a right to make, use, sell, offer for sale or import a Product in the Territory, including monies received pursuant to a license with a Third Party such as upfront fees, milestones and royalties, and monies received for marketing rights or distribution rights. If Genzyme or its Affiliates receives non-cash consideration for the grant of a right to make, use, sell, offer for sale or import a Product in the Territory, the Parties will agree in good faith on the valuation of such consideration to be included in Net Revenue.

1.84.“Net Sales” means the gross invoiced sales amount of the Product billed by Genzyme or its Affiliates or Sublicensees, in each case to independent Third Parties, including to distributors and end-users, for the sale or other commercial disposition of the Product in the Territory, less the following items (“Net Sales Adjustments”) as applicable to such Product to the extent actually taken or incurred with respect to such sale:

(a)credits or allowances for returns, rejections or recalls (due to spoilage, damage, expiration of useful life or otherwise), retroactive price reductions or billing corrections;

(b)invoiced freight, postage, shipping and insurance, handling and other transportation costs;

(c)sales, use, value added and other similar taxes (excluding income taxes), tariffs, customs duties, surcharges and other governmental charges levied on the production, sale, transportation, delivery or use of the Product in the Territory that are incurred at time of sale or are directly related to the sale (which in all cases will be the direct responsibility of the selling Party); and

(d)quantity, cash or other trade discounts, rebates, refunds, charge backs, fees, credits or allowances (including amounts incurred in connection with government-mandated rebate and discount programs, Third Party rebates and charge backs, and hospital buying group/group purchasing organization administration fees and payor organizations), distribution fees, sales commissions, and commissions paid to Third Parties;

all in accordance with standard allocation procedures, allowance methodologies and accounting methods consistently applied, in accordance with GAAP.

Notwithstanding the foregoing, the following will not be included in Net Sales: (1) Genzyme’s transfer of Product to an Affiliate, (2) Product provided by Genzyme or an Affiliate for administration to patients enrolled in clinical trials or distributed through a not-for-profit foundation at no charge to eligible patients, provided, however, that

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

11

Genzyme or its Affiliate receive no consideration from such clinical trials or not-for-profit foundation for such use of Product and (3) Product used as samples to promote additional Net Sales, in amounts consistent with normal business practices of Genzyme.

1.85.“[**]” has the meaning set forth in Section [**].

1.86.“[**] Process” has the meaning set forth in Section [**].

1.87.“Participating Isis Partner” means any Third Party that has a then-current contractual relationship with Isis pursuant to which (i) such Third Party is required to disclose to Isis on at least an annual basis any Manufacturing Improvements invented or developed by such Third Party, and (ii) Isis has the right to license such Third Party’s Manufacturing Improvements to Genzyme under this Agreement and in accordance Section 9.3.2 (Terms of Sharing Arrangement), and (iii)  such Third Party is either (A) [**] or [**], (B) manufacturing at least 50% of its requirements for the active pharmaceutical ingredient for an ASO Product under license from Isis on its own behalf or through Isis (i.e., it is not using a Third Party manufacturer to manufacture such portion of such active ingredient) or (C) maintaining an ongoing and substantial internal process development program related to the manufacture of ASO Products.

1.88.“Party and Parties” has the meaning set forth in the preamble.

1.89.“Patent(s)” means (a) patents, patent applications and similar government-issued rights protecting inventions in any country or jurisdiction however denominated, (b) all priority applications, divisionals, continuations, substitutions, continuations-in-part of and similar applications claiming priority to any of the foregoing and (c) all patents and similar government-issued rights protecting inventions issuing on any of the foregoing applications, together with all registrations, reissues, renewals, re-examinations, confirmations, supplementary protection certificates, and extensions of any of (a), (b) or (c).

1.90.“Permitted Licenses” means licenses granted by Isis after the Effective Date to any Third Party under the Isis Core Technology Patents or the Isis Manufacturing and Analytical IP (but not under the Licensed Product Patents or for use of the [**]) to (a) use oligonucleotides (or supply oligonucleotides to end users) in quantities not to exceed [**] per oligonucleotide per end user solely to conduct Pre-Clinical Research, or (b) enable such Third Party to [**], where such Third Party is primarily engaged in providing contract manufacturing or services and is not engaged in drug discovery, development or commercialization. Notwithstanding the foregoing, Permitted Licenses do not include any licenses that allow (i) a Third Party to make, use or sell an oligonucleotide having the same [**] as a Product or Isis’ preferred [**]; (ii) a Third Party to manufacture any nucleic acid that (A) is designed to [**] apoB or (B) acts predominantly by [**] apoB, in each case ((A) or (B)), that will be incorporated into a therapeutic product for use in human clinical trials or for commercial sale; or (iii) Isis to directly supply to any Third Party any nucleic acid that any nucleic acid that (i) is designed to [**] apoB or (ii) acts predominantly by [**] apoB.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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1.91.“Pivotal Trial” means a clinical study (whether or not denominated as a “Phase III” clinical study under applicable regulations) in human patients that is of size and design agreed to by a Regulatory Authority to be appropriate to establish that the Product is safe and effective for its intended use, to define warnings, precautions and adverse reactions that are associated with the Product in the dosage range to be prescribed, and to support Regulatory Approval of such Product.

1.92.“Pre-Clinical 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 pharmacokinetic and toxicology studies required to meet the regulations for filing an IND, clinical development and commercialization.

1.93.“Primary Safety Contact Person” has the meaning set forth in Section 6.5 (Safety Reporting).

1.94.“Prior Agreement” has the meaning set forth in the recitals.

1.95.“Prior Agreement Execution Date” means January 7, 2008.

1.96.“Product” means all pharmaceutical compositions, formulations, dosage forms, delivery systems and presentations that contain Mipomersen or any Follow-On Compound as an active ingredient.

1.97.“Product Know-How” means Know-How Controlled by Isis on the Prior Agreement Execution Date or during the Term, including Isis Program Know-How and Joint Know-How, relating to or otherwise necessary for the development and commercialization of Product.  Product Know-How does not include the Isis Manufacturing and Analytical Know How.

1.98.“Product License” means the license granted to Genzyme in Section 2.1 (Product License).

1.99.“Product-Specific Patents” means Patents Controlled by Isis or any of its Affiliates as of the Prior Agreement Execution Date and during the Term, including any Isis Program Patents and Joint Patents, claiming (a) [**] apoB, (b) the [**] of apoB, (c) the specific composition of matter of a Product, or (d) methods of using Product as a therapeutic, methods of using Product to modulate apoB, or methods of using the Product to inhibit expression of apoB, including the Patents identified on Schedule 1.99, other than Licensed Product Patents.

1.100.“Product Trademarks” means the trademark(s), service mark(s), accompanying logos, trade dress and/or indicia of origin used in connection with the distribution, marketing, promotion and commercialization of the Product in the Territory.  For purposes of clarity, the term Product Trademark(s) will not include the corporate names and logos of either Party and will include any internet domain names incorporating such Product Trademarks.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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1.101.“Program Costs” during the relevant period means all actual costs and expenses (including accruals chargeable against profits under GAAP) incurred (a) by either Party in the conduct of the Development Program (including all Development Expenses) (or the Research Program to the extent permitted under Section 7.2) and (b) by Genzyme, its Affiliates or Sublicensees pursuant to the manufacturing, sale, promotion and marketing of the Product in the Territory.

Program Costs will be determined and accounted for in accordance with Section 8.7.1 (Accounting).  Each component of Program Costs will be allocated according to the allocation method mutually agreed to by the Parties under Section 8.7.2 (Allocation Methods).  Program Costs will include:

(a)direct, out-of-pocket external costs and expenses, including clinical grants, clinical laboratory fees, positive controls and the cost of pre-clinical and clinical studies conducted and services provided by contract research organizations;

(b)Fully Absorbed Cost of Goods associated with the manufacture of preclinical, clinical and commercial grade materials;

(c)depreciation and/or amortization relating to (i) capital investments, (ii) process improvements or, (iii) any other capital expenditure for the construction or renovation of any manufacturing facility for the production of the Product;

(d)costs and expenses related to the conduct of clinical studies, including costs and expenses associated with data management, statistical designs and studies, document preparation and other expenses associated with the clinical testing program for the Product;

(e)costs and expenses associated with pharmacovigilence and risk management activities associated with the Product;

(f)costs and expenses of samples (without any mark-up) of Product provided by Genzyme to Isis;

(g)costs and expenses of preparing, submitting, reviewing or developing data or information for the purpose of submission of applications to obtain Approvals for the Product or maintenance of such Approvals (including user fees, establishment fees, product fees, or similar international maintenance fees);

(h)all royalties, milestones and license fees payable to Third Parties, including (i) those owed by Isis to [**] and [**] under the existing Third Party Agreements set forth on Schedule 10.2.2, and (ii) Genzyme’s allocable portion of amounts due under any Additional Third Party Agreement in accordance with to Section 2.3 (Additional Rights after Prior Agreement Execution Date); provided, however that royalties, milestones and license fees payable under any Additional Third Party Agreement entered into in violation of Section 2.3 (Additional Rights After Prior Agreement Execution) will not be included in Program Costs;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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(i)Sales and Marketing Expenses;

(j)costs and expenses associated with shipping, storage and distribution of the Product in the Territory, including (i) invoice, freight, postage, shipping, insurance, handling and other transportation charges to fulfill orders and not otherwise accounted for as Net Sales Adjustments, (ii) customer services, including collection of data about sales to hospitals, prescribers and end users, order entry, billing and adjustments, inquiry, credit and collection, (iii) cost of labor utilized for the distribution of the Product, (iv) duties and other monies paid to Third Parties pursuant thereto and (v) amounts paid to Third Parties with respect to storage or distribution of the Product;

(k)G&A Costs to the extent they are attributable to a Product;

(l)bad debt expense as calculated in accordance with GAAP;

(m)costs and expenses associated with any write-offs relating to (i) inventory, (ii) manufacturing costs and expenses, if applicable, (iii) product failures or (iv) associated regulatory compliance costs and expenses (each such write-off will be deemed Program Costs in the period in which they are incurred);

(n)damages (including out-of-court settlements) and out-of-pocket legal expenses (collectively “Damages”) reasonably incurred by a Party or its Affiliates with respect to a Third Party claim or action arising out of the research, development, manufacture, use, distribution, marketing or sale of the Product within the scope of this Agreement (including Third Party Infringement Claims); provided, however, that such Damages (i) do not arise out of a claim or action that is subject to any indemnification obligation of Genzyme under Section 10.3.1 (Indemnification by Genzyme) or Isis under Section 10.3.2 (Indemnification by Isis), and (ii) are not incurred by either Party for activities conducted after the Term or conducted outside the scope of this Agreement;

(o)costs and expenses incurred in challenging Patents owned by Third Parties in accordance with Section 9.6.2 (Defense of Infringement Claim; Declaratory Judgment Actions) or 9.6.3 (Other Challenges);

(p)costs and expenses incurred enforcing intellectual property rights against Third Parties to the extent provided in Section 9.5.4 (Procedures and Expenses);

(q)costs and expenses relating to the filing, prosecution, maintenance and enforcement of Joint Patents and as provided in Section 9.4.2 (Election Not to Continue Prosecution; Abandonment), in each case in the Territory; and

(r)costs and expenses of insurance (including any product liability insurance or accrual for self-insurance).

For clarity, the following costs will not be considered Program Costs:

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

15

(a)the license fee or milestone payments payable by Genzyme to Isis pursuant to Section 8.1 or Section 8.2, respectively;

(b)Isis’ costs and expenses of prosecuting and maintaining the Isis Core Technology Patents and Isis Manufacturing and Analytical Patents (other than as provided in Section 9.6.3 (Other Challenges));

(c)Genzyme’s costs and expenses of prosecuting and maintaining the Product-Specific Patents and the Licensed Product Patents (other than as provided in Section 9.6.3 (Other Challenges));

(d)the costs and expenses of the mutually agreed upon Research Programs as described in Article 7 (Research Related to the Product);

(e)costs and expenses associated with stock-based compensation expenses or other pro forma adjustments to either Party’s financials determined in accordance with U.S. GAAP;

(f)any costs and expenses of corporate overhead expenses, other than G&A Costs;

(g)unless otherwise deemed necessary for activities under this Agreement and mutually agreed by the Parties:

(A)          amortization and depreciation expenses (unless consistent with Section 1.32 (Fixed Costs) hereof), deductions, credits, expenses including taxes and extraordinary or nonrecurring losses customarily deducted by a Party in calculating and reporting consolidated net income, manufacturing facility capital costs, capital expenditures, including purchases of facilities, property or equipment; and

(B)           property taxes and any other taxes not related to the research, development, manufacture, commercialization or distribution of a Product in the Territory.

In addition, in no event will any amounts deducted from gross sales (Net Sales Adjustments) for the purpose of calculating Net Sales also be counted toward the amount of Program Costs.

Each of the following will be accounted for as a credit against Program Costs:

(a)to the extent provided in Section 9.5.5 (Recoveries), amounts recovered from an infringer of the Licensed IP;

(b)amounts received as insurance payments for damages, losses, costs or expenses previously included in the calculation of Program Costs; and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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(c)tax refunds received to the extent they relate to tax payments previously deducted from Net Sales as a Net Sales Adjustment or Program Costs.

1.102.“Program IP” means Genzyme Program IP, Isis Program IP and Joint Program IP, collectively.

1.103.“Regulatory Authority” means any governmental authority, including the FDA, EMEA or Koseisho (i.e., the Japanese Ministry of Health 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.

1.104.“Regulatory Materials” means any regulatory submissions, notifications, registrations, approvals and/or other filings and correspondence made to or with a Regulatory Authority in any country or jurisdiction in the Territory, and any other records required by Applicable Law to be maintained that may be necessary or useful to develop, manufacture, market, sell or otherwise commercialize Product in the Territory.

1.105.“Reporting Period” has the meaning set forth in Section 8.6.1 (Reports).

1.106.“Research Programs” has the meaning set forth in Section 7.1 (Research Programs).

1.107.“Responsible Party” has the meaning set forth in either Section 9.4.1(b)(i) or 9.4.1(d) as the context requires.

1.108.“Reversion” has the meaning set forth in Section 11.3.5(a)(iii) (Isis Reversion Rights).

1.109.“Sales & Marketing Expenses” means sales and marketing costs and expenses (including labor costs) incurred in connection with the sale, promotion and marketing of the Product in the Territory including (i) costs and expenses related to performing market research, post-marketing studies, advertising, producing promotional literature, sponsoring seminars and symposia, sales training meetings and seminars, originating sales, providing reimbursement, and other similar sales, marketing, and patient support services and (ii) all costs and expenses incurred for the sales force and sales force management by Genzyme, including costs and expenses related to salaries, commissions, current period reasonable and customary employee benefits and payroll taxes, sales incentive payments, sales training expenses, and travel expenses, all in accordance with GAAP.

1.110.“Sharing Agreement” means an agreement between Isis and a Participating Isis Partner pursuant to which (i) the Participating Isis Partner is required to disclose to Isis on at least an annual basis any Manufacturing Improvements invented or developed by such Third Party, and (ii) Isis has the right to license such Participating Partner’s Manufacturing Improvements to Genzyme under this Agreement and in accordance Section 9.3.2 (Terms of Sharing Arrangement).

1.111.“Sharing Period” has the meaning given to it in Section 9.3.2(a) (Terms of Sharing Arrangement).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

17

1.112.“[**] Patent” means Patent No. PCT/US[**].

1.113.“Special Isis Core Technology Patents” means (a) the Isis Core Technology Patents identified on Schedule 1.113 and all divisionals, continuations, substitutions, continuations-in-part of and similar applications claiming priority to any of the foregoing and all patents and similar government-issued rights protecting inventions issuing on any of the foregoing applications, together with all registrations, reissues, renewals, re-examinations, confirmations, supplementary protection certificates, and extensions of any of the foregoing, and (b) any other Isis Core Technology Patent that is similar to the Patents identified on Schedule 1.113 that Isis or its Affiliates come to Control after the Execution Date during the Term that Genzyme reasonably requests in writing be designated as a Special Isis Core Technology Patent.

1.114.“Sublicensee” means a Third Party who receives a sublicense of the Product License in accordance with Section 2.2 (Limited Right to Sublicense).

1.115.“Supply Agreement” means the Supply Agreement entered into between Genzyme and Isis pursuant to Section 5.3 (Clinical and Launch Supplies).

1.116.“Territory” means worldwide.

1.117.“Term” has the meaning set forth in Section 11.1 (Term).

1.118.“Third Party” means a person or entity other than the Parties, their respective Affiliates and their employees.

1.119.“Third Party Agreement” means any agreement with a Third Party now existing or entered into during the Term pursuant to which Isis obtains rights applicable to the development or commercialization of a Product.

1.120.“Third Party Claim” has the meaning set forth in Section 10.3.3 (Indemnification Procedure).

1.121.“Third Party Services Agreement” has the meaning set forth in Section 6.2.2 (Third Party Services Agreements).

1.122.“Variable Costs” means the cost of labor (which includes salaries and wages plus a factor for reasonable and customary employee benefits and payroll taxes for the applicable employees), raw materials, scrap, obsolescence, supplies, services, fees and other resources directly consumed or used in the conduct of the applicable activity in accordance with the Development Plan, or Genzyme’s manufacturing or commercialization plan, as the case may be.  All such cost determinations will be made in accordance with GAAP.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Article 2.
LICENSES

2.1.Product License.  Isis hereby grants to Genzyme an exclusive license, with the limited right to sublicense as set forth in Section 2.2 (Limited Right to Sublicense), under the Licensed IP to research, develop, make, have made, use, sell, offer for sale, have sold, import and export Products in the Territory for therapeutic purposes.  Notwithstanding the foregoing, (a) the exclusive license to the Isis Core Technology Patents will be subject to the licenses granted by Isis to Third Parties identified on Schedule 2.1 and Isis’ right to grant Permitted Licenses and (b) with respect to any Follow-On Compound, the provisions of Section 2.4 (Follow-On Compound) will govern the extent to which In-Licensed Third Party IP is included within Licensed IP.

2.2.Limited Right to Sublicense.

2.2.1.The Product License is sublicensable only in connection with a sublicense of a Product to any Affiliate of Genzyme or to any Third Party, in each case for the continued research, development or commercialization of such Product in accordance with the terms of the Product License.

2.2.2.Notwithstanding the foregoing, the licenses granted to Genzyme under the Isis Manufacturing and Analytical IP are sublicensable to a Third Party [**] only in accordance with Section 6.3.1 (Manufacture).

2.3.Additional Rights after Prior Agreement Execution Date.  After the Prior Agreement Execution Date, Isis may wish to in-license or acquire rights to Know-How or Patents Controlled by Third Parties (such a Third Party in-license or acquisition agreement being an “Additional Third Party Agreement”) which, if so licensed or acquired, may be included in the Licensed IP licensed to Genzyme under Section 2.1.  In such event (and to the extent permitted by Isis’ confidentiality agreement with the applicable Third Party), Isis will notify Genzyme regarding the nature of the technology and status of negotiations related to the Additional Third Party Agreement through the JDC.  Once Isis has executed such Additional Third Party Agreement, Isis will offer such Third Party Patents or Know-How to Genzyme (which offer will include a description of the payments paid or potentially payable by Isis thereunder).  At such time, if Genzyme wishes to include such Third Party Patents or Know-How under the license granted under Section 2.1, Genzyme will notify Isis of its desire to do so and the Parties will fairly and in good faith allocate upfront payments or ongoing payment obligations between Products and compounds that are not Products, if any, and other Isis licensees, if appropriate.  As part of this allocation process, Isis will share with Genzyme, in reasonable detail, the assumptions and methodology Isis used to create the proposed allocation.  If Genzyme does not agree to reimburse Isis for the amount of any upfront or similar acquisition payments fairly allocated to Product, and to be responsible for the payment of its share of any upfront, milestone, and royalty payments, then the Know-How or Patents acquired or in licensed by Isis under the Additional Third Party Agreement will not be considered Licensed IP licensed to Genzyme under the Product License.  When Genzyme pays its share of any upfront, milestone, and royalty payments assumed by Genzyme under this Section 2.3, such payments will be considered Program Costs for the applicable Product.  Except for Patents acquired by Isis as part of an acquisition of a Third Party’s business,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

19

before Isis in-licenses or acquire rights to any Patent Controlled by Third Parties which, if acquired, would be a Product-Specific Patent, Isis will first notify Genzyme in writing and allow Genzyme to license or acquire such Patent on the terms offered Isis.  If Genzyme informs Isis that Genzyme is not interested in licensing or acquiring such Patent or does not license or acquire such Patent within 180 days of Isis’ notice to Genzyme, then Isis will be free to in-license or acquire such Patent.

2.4.Follow-On Compound.  The Parties contemplate that after the Effective Date Genzyme, either on its own or in collaboration with Isis, may wish to research, develop, and commercialize Follow-On Compounds.  The scope of the In-Licensed Third Party IP included in Licensed IP under the Product License with respect to such Follow-On Compounds will be determined in accordance with the procedures set forth in this Section 2.4.  At the time Genzyme intends to designate a Follow-On Compound as a development candidate, Genzyme will notify Isis in writing of such intention and will describe in reasonable detail the applicable Follow-On Compound.  Subject to Section 2.3 (Additional Rights after Prior Agreement Execution Date), if a Follow-On Compound utilizes any In-Licensed Third Party IP (an “Encumbered Follow-On Compound”), such In-Licensed Third Party IP will be included in Licensed IP only to the extent set forth below:

2.4.1.If the applicable Third Party Agreement contains a contractual obligation that would preclude Isis from including such In-Licensed Third Party IP in Licensed IP with respect to such Encumbered Follow-On Compound, then the In-Licensed Third Party IP that is the subject of such Third Party Agreement will not be included in Licensed IP.

2.4.2.If the applicable Third Party Agreement contains any potential encumbrances known by Isis and related to the potential Follow-On Compound, including field or territory restrictions, covenants, or milestones, royalty, sublicense revenue, or other payments (“Follow-On Compound Encumbrances”), Isis will fully disclose to Genzyme such Follow-On Compound Encumbrances and, if Genzyme agrees in writing to assume the Follow-On Compound Encumbrances (with any payments being included in Program Costs for such Encumbered Follow-On Compound), then the In-Licensed Third Party IP that is the subject of such Third Party Agreement will be included in Licensed IP.

2.4.3.If the applicable Third Party Agreement does not contain the obligations or encumbrances described in Sections 2.4.1 and 2.4.2 above, the In-Licensed Third Party IP that is the subject of such Third Party Agreement will automatically be included in Licensed IP.

2.4.4.If the applicable Third Party Agreement is or was also applicable to Mipomersen, then the In-Licensed Third Party IP that is the subject of such Third Party Agreement will automatically be included in the Licensed IP to the extent that (a) the terms of such Third Party Agreement do not preclude Isis from including it and (b) Genzyme agrees in writing to assume any applicable Follow-On

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

20

Compound Encumbrances associated with such Third Party Agreement.

2.4.5.Each time the Parties complete the process set forth above, Isis will update the schedules relating to Licensed Patents and Third Party Agreements, and Schedule 2.1 as appropriate.

2.5.Retained Rights.  Subject to the terms and conditions of this Agreement, Isis retains the non-exclusive, non-transferable, non-licensable right under the Licensed IP only to the extent necessary for Isis to perform its obligations under this Agreement and the Supply Agreement.

2.6.Isis’ Right of First Negotiation.  With respect to any Genzyme Program IP that would be relevant to antisense therapies as a whole, including but not limited to, manufacturing, formulation and delivery technologies or oligonucleotide chemical modifications or the design of antisense therapeutics generally, then Genzyme hereby grants to Isis a right of first negotiation with respect to any exclusive license that Genzyme may elect to grant under such Genzyme Program IP (each, an “Antisense License”) on the following terms and conditions:

2.6.1.General.  Genzyme will not grant an Antisense License to any Third Party (or enter into discussions with, or solicit interest from, any Third Party regarding an Antisense License) unless and until:

(a)           Genzyme gives written notice (the “Antisense License Notice”) to Isis of Genzyme’s interest in granting an Antisense License, which notice will identify in reasonable detail the proposed scope and terms and conditions of the license Genzyme proposes to grant; and

(b)           (i) Isis notifies Genzyme that it declines the opportunity to negotiate with Genzyme regarding such a license, (ii) Isis does not indicate to Genzyme a desire to proceed with negotiations within forty-five (45) days after receipt of the Antisense License Notice, or (iii) Genzyme is otherwise permitted to enter into an Antisense License with a Third Party pursuant to Section 2.6.3 (Look Back).

2.6.2.Negotiation Period.  If Isis notifies Genzyme, within forty-five (45) days after receipt of the Antisense License Notice, that it desires the opportunity to negotiate with Genzyme regarding such an Antisense License, the Parties will negotiate exclusively with each other for ninety (90) days (or such longer period as mutually agreed by the Parties) (the “Exclusive Negotiation Period”) and will use commercially reasonable efforts to reach agreement regarding a mutually satisfactory Antisense License on commercially reasonable terms.  During the Exclusive Negotiation Period, Genzyme will not enter into negotiations regarding an Antisense License with any Third Party.

2.6.3.Look Back.  In the event that the Exclusive Negotiation Period expires before Genzyme and Isis have entered into an Antisense License, Genzyme will have no further obligation to negotiate with Isis with respect to any Antisense License in

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

21

any country in the Territory, and Genzyme will be free to grant one or more Antisense Licenses to one or more Third Parties in any country or countries in the Territory at Genzyme’s sole discretion; provided, however, that for a period equal to the longer of (i) the Term plus one (1) year or (ii) three (3) years following the expiration of the Exclusive Negotiation Period, Genzyme will not offer any Third Party an Antisense License containing a license scope and financial terms that are more favorable to the Third Party than the license scope and financial terms that Genzyme last offered to Isis during the Negotiation Period unless Genzyme first offers an Antisense License with such more favorable scope and terms to Isis in writing and Isis fails to accept such offer within fourteen (14) days after receiving it.

2.6.4.Non-Exclusive License.  If Genzyme grants any Third Party a non-exclusive license under any Genzyme Program IP that would be relevant to antisense therapies as a whole, including but not limited to, manufacturing, formulation and delivery technologies or oligonucleotide chemical modifications or the design of antisense therapeutics generally, then Genzyme will promptly notify Isis of such license and will offer Isis a non-exclusive license under such licensed Genzyme Program IP with substantially similar scope and financial terms.

2.7.Third Party Agreements.

2.7.1.Exercise of Rights.  Isis will exercise its rights under the Third Party Agreements in a manner that is as consistent as possible with the terms of this Agreement and in consultation with and as reasonably requested by Genzyme.  Isis covenants that it will not, without Genzyme’s prior written consent, agree, consent or acquiesce to any amendment, supplement or other modification to any Third Party Agreement or take any action under such Third Party Agreement or with respect to the intellectual property licensed thereunder that would adversely affect the rights granted to Genzyme under this Agreement, including under the Product License.  Isis will immediately notify Genzyme of (a) any event that adversely affects the rights granted to Isis under a Third Party Agreement that are, in turn, sublicensed to Genzyme pursuant to this Agreement or (b) receipt by Isis of any notice of breach or termination of any Third Party Agreement.  Isis will take all reasonable actions necessary, or permit Genzyme to take such actions, to maintain and enforce its rights under the Third Party Agreements in a manner that is consistent with the terms of this Agreement.

2.7.2.Sublicense Survival.  Isis covenants that it will use good faith and Commercially Reasonable Efforts to enter into any necessary amendments or side agreements to its Third Party Agreements to ensure that (a) sublicenses under each Third Party Agreement will survive termination of such Third Party Agreement or (b) Genzyme will receive a direct license from the counterparty to each Third Party Agreement upon termination of such Third Party Agreement.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

22

2.8.No Implied License.  Except as expressly provided in this Agreement, neither Party will be deemed by estoppel or implication to have granted the other Party any license or other right with respect to any intellectual property of such Party.  Without limiting the generality for the foregoing, a license to use Know-How will not be interpreted as an implied license under any Patent Rights other than as expressly provided in this Agreement.

Article 3.
EXCLUSIVITY

3.1.Non-Compete.  During the Term, Isis and its Affiliates will not, directly or indirectly, and will not collaborate with, license or otherwise authorize any Third Party to, research, develop or commercialize any nucleic acid that (i) [**] apoB or (ii) [**] apoB, except pursuant to (a) the agreements identified on Schedule 2.1, as they existed on the Prior Agreement Execution Date, (b) Permitted Licenses, or (c) this Agreement.

3.2.[**] Technology.  Without first obtaining Genzyme’s written consent, which will not be unreasonably withheld, Isis will not license to a Third Party any technology that (a) is specifically useful in researching, developing or commercializing therapeutics whose primary purpose at the time of the license or primary therapeutic benefit at the time of commercialization is [**], (b) is not broadly applicable to other [**] and (c) was invented by Isis while performing activities pursuant to the Development Plan or pursuant to the Research Programs under Article 7 (Research).

Article 4.
JOINT COMMITTEES

4.1.Joint Development Committee.

4.1.1.Establishment of JDC.  The Parties will establish a Joint Development Committee (the “JDC”), which will consist of a total of eight (8) members, with four (4) members from each Party, to oversee the Development Program.  Members of the JDC may be represented at any meeting by a designee appointed by such member for such meeting.  Each Party will be free to change its members on prior written notice to the other Party.  The JDC will remain in place for four (4) years following the Effective Date; provided, however that if the commercial launch of the Product for a non-FH indication has not occurred by the end of such 4-year period, the Parties will mutually agree upon an appropriate extension of the JDC.

4.1.2.Responsibilities of the JDC.  In addition to any responsibilities expressly described elsewhere in this Agreement, the JDC will:

(a)           On a Calendar Quarter basis, review and evaluate progress under the Development Plan and expenditures relative to the Development Budget;

(b)           Develop updates or amendments to the Development Plan and the Development Budget;

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

23

(c)           Perform any other activities related to the Development Plan as jointly requested by both Parties from time to time;

(d)           Review and approve a scientific and medical publication plan and medical affairs plan for the Product;

(e)           Appoint one or more working group(s) to oversee particular activities to be performed under the Development Plan or create the scientific and medical publication plan and medical affairs plan for the Product, which working group(s) will dissolve no later than the date of the dissolution of the JDC.

For the avoidance of doubt, the JDC will have no authority to amend this Agreement.

4.1.3.Meetings; Minutes.  During the course of implementing the Development Plan, the JDC will meet at least once each Calendar Quarter, and more frequently as the Parties mutually agree is appropriate, on such dates, in such places and at such times as the Parties will agree.  The JDC will be chaired by Genzyme as of the Effective Date.  The role of the chairperson will be to convene and preside at meetings of the JDC, but the chairperson will not be entitled to prevent items from being discussed or to cast any tie-breaking vote.  Reasonably detailed written minutes will be kept of all JDC meetings and will reflect without limitation material decisions made at such meetings.  The chairperson of the JDC will have responsibility for keeping minutes.  Draft meeting minutes will be sent to each member of the JDC for review and approval within ten (10) business days after a meeting.  Minutes will be deemed approved unless a member of the JDC objects to the accuracy or completeness of such minutes within thirty (30) calendar days of receipt.

4.1.4.Decision-Making and Dispute Resolution.  The JDC will act by unanimous consent.  The representatives of each Party will have collectively one vote on behalf of such Party; provided, however, that no such vote taken at a meeting will be valid unless at least one representative of each Party is present and participating in the vote.  In the case of any matter which cannot be resolved unanimously by the JDC, at the written request of either Party, the dispute will be referred to senior management of the Parties in accordance with Section 13.1 (Escalation to Senior Management).

4.2.Joint Patent Committee.

4.2.1.Establishment of JPC. The Parties will establish a Joint Patent Committee (the “JPC”) to discuss the continued prosecution of the Licensed Patents and Product-Specific Patents, (including Joint Patents).  The JPC will be comprised of at least one (1) senior patent attorney from each Party.  Each Party will be free to change its members at its sole discretion.  The JPC will exist for so long as the JDC exists.  Thereafter, the Parties will meet from time to time as necessary, or as may

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

24

be mutually agreed by the Parties, to discuss patent related issues.

4.2.2.Responsibilities of the JPC.  At least once per Calendar Quarter, the JPC will meet (in person or by phone) to discuss prosecution strategy for the Licensed Patents and Product-Specific Patents (including Joint Patents) with the goal of maintaining the broadest coverage for the Product in accordance with Section 9.3 (Filing, Prosecution and Maintenance of Patents).  Subject to Section 9.5 (Enforcement of Patents and Know-How) and Section 9.6 (Claimed Infringement by Third Parties), the JPC will also discuss any (a) potential Third Party infringement of the Licensed Patents and Product-Specific Patents (including Joint Patents) that might affect the Product and (b) Third Party intellectual property right that the Parties may want to license or challenge.

4.2.3.Decision-Making and Dispute Resolution.  Subject to Section 9.3 (Filing, Prosecution and Maintenance of Patents), in the event a dispute relates to the prosecution or maintenance of a Patent, Genzyme will have the ultimate sole decision-making authority with respect to the Product-Specific Patents and Licensed Product Patents and Isis will have the ultimate sole decision-making authority with respect to the Isis Core Technology Patents and the Isis Manufacturing and Analytical Patents.  Any other dispute at the JPC will be referred to the JDC for resolution.

4.3.Expenses.  Each Party will be responsible for all of its own travel and related costs and expenses for its members (or designees) of the JDC and JPC and such expenses will not be treated as Program Costs.

Article 5.
DEVELOPMENT

5.1.Development Plan and Development Budget.  The initial Development Plan and Development Budget through the end of 2009 that have been agreed to by the Parties as of the Execution Date are attached to this Agreement as Exhibit A and Exhibit B, respectively.  The Parties acknowledge and agree that the Development Plan and Development Budget as of the Execution Date will need to be updated and augmented by the JDC on a quarterly basis and also from time to time in the discretion of the JDC.  The purpose of the Development Plan is to (a) set forth a strategy and plan for development, manufacturing and Approval for the Product, (b) detail the responsibilities and activities of Isis and Genzyme with respect to the development of the Product and (c) specify the expected timing of such activities, including the estimated dates of the initiation and completion of such activities.  The Development Budget contains the estimated costs associated with the tasks outlined in the Development Plan.  The JDC (or directly by the written mutual agreement of the authorized representatives of the Parties) may amend the Development Plan and Development Budget at any time, but, in any event, the JDC will review and update the Development Plan and Development Budget by agreeing to a Development Budget for each calendar year during the Term not later than November 15^th of the prior calendar year and prior to the commencement of each successive

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

25

calendar quarter during such calendar year.  Any update or amendment to the Development Plan or Development Budget must be in writing.  After the JDC has disbanded, if requested by either Party, Genzyme and Isis will meet as necessary at least annually on a mutually agreed schedule to review and evaluate progress under the Development Plan and expenditures relative to the Development Budget and to develop updates or amendments to the Development Plan and Development Budget, with decisions made by the Parties consistent with the principles contemplated for JDC decision making in Section 4.1.4 (Decision Making and Dispute Resolution).

5.2.Roles and Responsibilities.

5.2.1.Clinical Trials.  The Development Budget includes the preclinical work and clinical trials to be conducted in and initiated in calendar year 2008 and classifies each item of preclinical work and clinical trials as “Isis Funded” or “Non Isis Funded.”  The JDC will assign specific responsibilities with respect to the conduct of such work and trials and will develop a written plan for transitioning responsibility between the Parties; provided, however, that such transition plan will not delegate the JDC’s decision making authority to a Party.  Except as otherwise determined by the JDC, Genzyme will conduct all clinical trials and all preclinical work for Mipomersen initiated in calendar year 2009 and thereafter.  If pursuant to Section 4.1.4 (Decision-Making and Dispute Resolution) the JDC amends the Development Plan so as to increase the size or scope of a clinical study designated as “Isis Funded” (such as by increasing the number of patients or increasing the dosing period of a clinical study) and as a result of such increase the actual expenses associated with such study exceed [**]% of the amount budgeted for such study in the Development Budget as of the Execution Date, then the incremental cost and expenses for such study in excess of [**]% of such Development Budget amount will be considered “Non Isis Funded” (i.e. not “Isis Funded”) for purposes of Section 8.3 (Financial Provisions Related to Development Activities).

5.2.2.Performance of the Development Program.  Each Party will use Commercially Reasonable Efforts to conduct all activities and responsibilities assigned to it under the Development Plan and in accordance with the Development Budget and to cooperate with and provide reasonable support to the other Party in such other Party’s conduct of activities under the Development Plan.  Each Party will undertake its respective development activities, including its obligation to conduct clinical trials, in accordance with all Applicable Laws.

5.2.3.Responsibility.  Except for those certain clinical trial responsibilities allocated to Isis as set forth in the Development Plan or other written document approved by the JDC, Genzyme will be responsible for all other aspects of the development of the Product.

5.3.Clinical and Launch Supplies.  Isis will be responsible for manufacturing and supplying API for the Phase II clinical trials, the Pivotal Trial(s) and the initial commercial launch

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

26

of the Product, pursuant to a Supply Agreement the form of which is set forth on Exhibit C and a Quality Agreement the form of which is set forth on Exhibit D.  In accordance with Section 8(a) and (b) of the Supply Agreement, the transfer price for the Product under the Supply Agreement will be Isis’ Fully Absorbed Cost of Goods, and all amounts paid by Genzyme to Isis under the Supply Agreement will be Program Costs under this Agreement.  The quantity of API that Isis will be required to supply for commercial launch will be mutually agreed by the Parties and set forth in the Supply Agreement.  If Isis cannot manufacture as set forth above, upon written request by Genzyme, Isis will transfer to Genzyme all documentation and information, and permit Genzyme to reference and use any regulatory filings, and otherwise fully cooperate with Genzyme to enable Genzyme to make or have made the API for use by Genzyme in accordance with the Agreement.  Genzyme will be responsible for all finished drug product and placebo needed for clinical trials of Product and finished drug product for commercial sale.

5.4.Know-How Transfer.

5.4.1.Transfer to Genzyme.  During the existence of the JDC (or after the dissolution of the JDC at Genzyme’s request), Isis will transfer to Genzyme and its representatives all material Product Know-How and Isis Manufacturing and Analytical Know-How within the possession or Control of Isis or any of its Affiliates, including all Regulatory Materials related to the Product; provided, however, that Isis will be required to deliver Isis Manufacturing and Analytical Know-How only to Genzyme or a Third Party manufacturer approved by Isis in accordance with Section 6.3 (Commercial Manufacture).  Without limiting the generality of the foregoing:

(a)Before or promptly following the Execution Date, Isis will transfer any preclinical pharmacology and safety data, clinical data that then exists and any other information related to the Product that Genzyme may reasonably request.  Thereafter during the Term, Isis will provide copies of all data from Isis’ clinical or preclinical activities undertaken pursuant to the Development Plan.

(b)Isis will promptly disclose in reasonable detail and in a reasonable manner specified by Genzyme the Product Know-How and Isis Manufacturing and Analytical Know-How learned, discovered, developed, acquired or otherwise coming within the Control of Isis during the Term.

(c)At Genzyme’s request from time to time during the Term, Isis will deliver to Genzyme copies (for documents and information) and samples (for materials) of any documents, files, diagrams, plans, specifications, designs, recipes, schematics, reports, models, prototypes, chemical or biologic materials, assays, reagents, or other tangible documentation or material in Isis’ possession recording or embodying the Product Know-How and Isis Manufacturing and Analytical Know-How in Isis’ or its Affiliate’s possession.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

27

(d)At Genzyme’s request from time to time during the Term, and on a commercially reasonable schedule and at a commercially reasonable venue to be agreed on by the Parties, technically qualified personnel from each Party (and, if applicable, any Third Party manufacturer approved by Isis in accordance with Section 6.3 (Commercial Manufacture)) will meet and/or participate in telephone conference calls as reasonably necessary to exchange knowledge necessary to fully transfer all such Know-How.

(e)Section 2.2 (Limited Right to Sublicensee) and Article 12 (Confidentiality and Public Disclosures) will apply to any transfer of such Know How by Genzyme to a Third Party.

5.4.2.Transfer from Genzyme to Isis.  Upon Isis’ reasonable request, Genzyme will provide to Isis copies of any and all data from Genzyme’s clinical or preclinical studies with the Product.

5.5.Subcontracting.  Each Party may contract with one or more Third Party contractors to perform any or all of its obligations under the Development Plan; provided, however, that (a) except as otherwise agreed to by the JDC, each Third Party contractor will be approved by the JDC for the proposed work, such approval not to be unreasonably withheld, delayed or conditioned; and (b) the contracting Party provides the other Party with a true and accurate copy of each agreement pursuant to which such Third Party contractor is engaged promptly after execution thereof.

Article 6.
COMMERCIALIZATION AND REGULATORY MATTERS

6.1.Commercialization Responsibilities.  Genzyme will have the exclusive right to commercialize any Product itself or through one or more Affiliates or Third Parties selected by Genzyme in the Territory and will have sole discretion, authority and responsibility in all matters relating to the commercialization of any Product in the Territory; provided, however, that Genzyme must use Commercially Reasonable Efforts to commercialize at least one Product in each of the Major Market Countries upon obtaining Approval in such country.

6.2.Regulatory Matters and Filings.

6.2.1.Regulatory Responsibility.  Genzyme will be responsible for all regulatory matters relating to the Product in the Territory.  Isis will transfer to Genzyme (or to a Genzyme Affiliate designated by Genzyme) the IND(s), orphan drug designation(s) and other existing Regulatory Materials for Mipomersen within thirty (30) days of the Execution Date.  Between the Execution Date and the transfer to Genzyme of the IND related to the Product, Isis will not file or send any Regulatory Material related to the Product with or to any Regulatory Authority without Genzyme’s prior written consent, which consent will not unreasonably withheld or delayed.  Genzyme will prepare and file, in its own name, all NDAs, MAAs and other Regulatory Materials for the Product in the

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

28

Territory.  Genzyme will have sole authority with respect to (a) obtaining Approvals for the Product and subsequently maintaining such Approvals, (b) communicating with Regulatory Authorities about the Product and (c) preparing and submitting supplements, communications, annual reports, adverse event reports, manufacturing changes, supplier designations and other related regulatory filings and Regulatory Materials.  Isis will provide Genzyme with reasonable access to and copies of any documents or other materials Controlled by Isis that are useful for such regulatory filings and correspondence and maintenance of Approvals for the Product in the Territory and will otherwise cooperate with Genzyme’s efforts to obtain and maintain Approval for the Product.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

29

6.2.2.Third Party Services Agreements.

(a)           Isis will exercise its rights under any agreement with a Third Party now existing or entered into during the Term pursuant to which Isis obtains services applicable to the pre-clinical or clinical development of a Product, including without limitation any agreement with a contract research organization (each a “Third Party Services Agreement”) in a manner that is as consistent as possible with the terms of this Agreement and in consultation with and as reasonably requested by Genzyme.  Isis covenants that it will not, without Genzyme’s prior written consent, (i) agree, consent or acquiesce to any amendment, supplement or other modification to any Third Party Services Agreement or (ii) take any action under any Third Party Services Agreement, in each case that may adversely affect Genzyme as the holder of the Regulatory Materials related to the Product.  Isis will take all reasonable actions necessary, or permit Genzyme to take such actions, to maintain and enforce its rights under the Third Party Services Agreements in a manner that is consistent with the terms of this Agreement.

(b)           In connection with the transfer of the Regulatory Materials for Mipomerson and Genzyme’s assumption of responsibility for regulatory matters related to the Product, at Genzyme’s written request Isis will use commercially reasonable efforts to promptly assign and transfer to Genzyme any Third Party Services Agreements solely related to the pre-clinical or clinical development of the Products.  If the terms of any Third Party Services Agreement requires the consent of the other party thereto to effect such assignment, then upon Genzyme’s request for an assignment, Isis will use commercially reasonable efforts to obtain such consent.  In the event of any assignment to Genzyme under this Section 6.2.2, Genzyme will assume full responsibility for satisfying all obligations of Isis under any assigned agreement to the extent arising after such assignment and assumption, and Isis will remain responsible for satisfying all obligations under any assigned agreement to the extent arising prior to such assignment and assumption.  If a Third Party Services Agreement relates both to the pre-clinical or clinical development of the Product and to the development of some other Isis product not licensed to Genzyme under this Agreement, then at Genzyme’s request, the Parties will use commercially reasonable efforts to enter into such amendment(s) or new agreement(s) with the Third Party service provider to effect the transfer to Genzyme of all rights and obligations related to the Product under such Third Party Services Agreement.

6.2.3.Regulatory Audit.  If a Regulatory Authority desires to conduct an inspection or audit of a Party’s facility, or a facility under contract with a Party, with regard to a Product, then such Party will promptly notify the other Party and permit and cooperate with such inspection or audit, and will cause the contract facility to permit and cooperate with such Regulatory Authority and such other Party during such inspection or audit.  Genzyme will have the right to have a representative observe such inspection or audit of a facility operated by Isis or under contract with Isis.  Following receipt of the inspection or audit observations of such Regulatory Authority (a copy of which the audited Party will immediately provide to the other Party), the audited Party will prepare the response to any such

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

30

observations, and will provide a copy of such response to the other Party.

6.2.4.Class Generic Label Claims.  Notwithstanding the foregoing, to the extent Genzyme intends to make any claims in a Product label that are of general applicability to antisense oligonucleotides, Genzyme will provide such claims to Isis in advance and will consider any proposals and comments made by Isis.

6.3.Commercial Manufacture.

6.3.1.Manufacture.  Subject to Isis’ obligation to manufacture and supply API for the commercial launch of the Product pursuant to Section 5.3 (Clinical and Launch Supplies) and the Supply Agreement, Genzyme will be responsible for securing commercial quantities of API and finished drug product for the Product.  If Genzyme chooses not to manufacture the API for Product itself, then prior to using any Third Party manufacturer to supply commercial quantities of the API for Product, Genzyme must obtain Isis’ prior written consent to the identity of the Third Party manufacturer and the material terms and conditions on which such Third Party manufacturer will supply commercial quantities of the API for Product, which consent will not be unreasonably withheld, conditioned or delayed; provided, however, that Isis will not withhold its consent to a Third Party manufacturer if its basis for doing so is an objection to the country in which such manufacturing will take place and the country in question is a member country of the European Union or Switzerland.  In any event, Isis will cooperate with and provide commercially reasonable assistance to Genzyme and any approved Third Party manufacturer, including by transferring relevant Know-How in accordance with Section 5.4 (Know-How Transfer).

6.3.2.Assignment of Agreements With Third Parties.  At Genzyme’s written request in connection with the transfer of responsibility for manufacture, Isis will use commercially reasonable efforts to promptly assign and transfer to Genzyme any existing supply or other agreements solely related to the manufacture of the Products.  Concurrent with the Execution of this Agreement, Isis will assign and transfer to Genzyme its agreement with [**] related to the preparation and packaging of drug product.  If the terms of any of the agreements referred to in the previous two sentences require the consent of the other party thereto to effect such assignment, then upon Genzyme’s request for an assignment, until Isis is able to obtain such consent and effect such assignment, Isis will exercise its rights under such agreements for the benefit of Genzyme and as reasonably requested by Genzyme.  In the event of any assignment to Genzyme under this Section 6.3.2, Genzyme will assume full responsibility for satisfying all obligations of Isis under any assigned agreement to the extent arising after such assignment and assumption, and Isis will remain responsible for satisfying all obligations under any assigned agreement to the extent arising prior to such assignment and assumption.

6.4.Isis Safety Database.  Isis maintains a database that includes information regarding the

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

31

tolerability of its drug compounds, individually and as a class, including information discovered during pre-clinical and clinical development (the “Isis Database”).  In an effort to maximize understanding of the safety profile and pharmacokinetics of Isis’ drug compounds, Genzyme will reasonably cooperate in providing information to Isis to populate the Isis Database by providing Isis with copies of toxicology, pharmacokinetic and serious adverse event final reports related to the Product, as well as any supporting data reasonably requested by Isis.  Genzyme’s obligation under this Section 6.4 will be subject to Applicable Law, any necessary informed consents and obligations to Third Parties.

6.5.Safety Reporting.  Each Party will designate a primary contact person for the receipt of all reports called for in this Section 6.5 (the “Primary Safety Contact Person”) and promptly notify the other Party of such designation or any change thereto.  Each Party will notify the other Party’s Primary Safety Contact Person of (a) all available information concerning any serious adverse event (SAE) occurring in patients treated with the Product, for any indication, (b) any information, regardless of source, which is relevant to known or potential human safety risks associated with the Product, (c) signals of human risk including information from in vitro or animal studies which may suggest a significant hazard to humans, including any findings from tests in laboratory animals that suggest a significant risk to human beings, including reports of mutagenicity, teratogenicity or carcinogenicity, and (d) information related to other products that are chemically similar to the Product or that have a pharmacologically similar mechanism of action (e.g., antisense oligonucleotides) that suggests a significant hazard for humans related to the Product.  For purposes of this Section 6.5, a “serious adverse event (SAE)” is one which has an outcome which (i) is fatal or life threatening, (ii) requires or prolongs in-patient hospitalization, (iii) is a persistent or significant disability/incapacity, (iv) is a congenital anomaly/birth defect, or (v) is an important medical event, e.g., required medical or surgical intervention to prevent one of the other serious outcomes listed above.  Each Party will promptly (but no later than twenty-four (24) hours after it becomes aware of the serious adverse event (SAE) or such other information and as necessary for compliance with regulatory requirements) provide the other Party with all such safety information through the receiving Party’s Primary Safety Contact Person.  Isis will conduct all safety reporting for the Product in accordance with Genzyme standard operating procedures communicated to Isis in writing.  Upon transfer of the IND(s) to Genzyme and assumption by Genzyme of regulatory responsibilities under the IND(s), Genzyme will assume responsibility for the global safety database related to the Product.  Genzyme will be solely responsible for reporting to Regulatory Authorities in accordance with the Applicable Law for expeditable adverse events and for periodic safety reporting relating to the safety of the Product and will furnish copies of such reports to Isis.

6.6.Commercial Forecasts & Plans.

6.6.1.In addition to the reports required under Section 8.6 (Periodic Reporting and Reconciliation), beginning on the last year in which the JDC is in place and each calendar year thereafter (1) not later than October 1st of the applicable year, Isis

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

32

will provide Genzyme with a non-binding, good-faith forecast of Isis’ aggregate Program Costs for the following calendar year if any; and (2)  not later than November 15th of the applicable year (i) Genzyme will provide Isis with a non-binding, good-faith forecast of Genzyme’s aggregate Program Costs for the following calendar year, (ii) Isis will provide Genzyme with an updated non-binding, good-faith forecast of Isis’ aggregate Program Costs for the following calendar year, if any, and (iii) based upon the Parties’ non-binding forecasts of aggregate Program Costs, Genzyme will provide Isis with a non-binding, good-faith forecast of the Net Sales, Net Revenue and Net Profit for such year.  Each Party’s forecasts will include sufficient supporting detail to allow the other Party an opportunity to review and understand the forecasts.

6.6.2.Prior to the initial commercial launch of the Product and on an annual basis thereafter, Genzyme will provide Isis with a reasonably detailed written summary of its marketing plan and budget and will consider in good faith all comments and suggestions provided by Isis on such plans and budgets.

Article 7.
RESEARCH RELATED TO THE PRODUCT

7.1.Research Programs.  The Parties will agree to conduct research programs related to the Product that may include, but are not limited to, the following research topics:  (a) [**], (b) [**], (c) [**] and (d) [**]  (collectively, the “Research Programs”).  The nature and scope of the Research Programs will be determined within sixty (60) days of the Execution Date by a subcommittee to be appointed the JDC.

7.2.Research Funding.  Isis will fund all external research expenses incurred in calendar years [**] in connection with the Research Programs.  Genzyme will fund all external research expenses incurred in connection with the Research Programs in calendar year [**].  Thereafter, the Parties will agree upon allocation of any external research expenses incurred in connection with the Research Programs.  Each Party will be responsible for their own internal research expenses incurred in connection with the Research Programs, and, unless otherwise agreed in writing by the Parties, internal and external research expenses incurred in connection with the Research Program will not be included as Program Costs.  For the purposes of this Section 7.2, “internal research expenses” means costs and expenses incurred in connection with the Research Programs attributable to the internal costs of base salary plus a factor for reasonable and customary employee benefits and payroll taxes for those employees directly responsible for performing the research activity plus G&A Costs and other overhead expenses reasonably required to support the activities of the Parties under the Research Programs as allocated consistent with the methodologies agreed to under Section 8.7.2.  Meanwhile, “external research expenses” means expenses incurred in connection with the Research Programs other than internal research expenses.

7.3.Research Efforts.  If at any time during the Term no Product has received Approval in any Major Market Country and no Product is being developed pursuant to a Development

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

33

Plan, Genzyme will use Commercially Reasonable Efforts to conduct research activities designed to advance a Product to the stage where it can be developed pursuant to a Development Plan.

Article 8.

FINANCIAL PROVISIONS

8.1.Upfront License Fee.  Genzyme will pay to Isis a non-refundable, non-creditable license fee of one hundred and seventy-five million dollars ($175,000,000) within five (5) days after the Execution Date.

8.2.Milestones.

8.2.1.Development Milestones.

(a)           Mipomersen in FH.  Within thirty (30) days after the achievement of the following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme will pay Isis the following development milestone payments:

Milestone Event	Milestone Payment
NDA Filing for the use of Mipomersen to treat homozygous FH and/or patients who would be eligible under then-approved FDA labeling to receive low-density lipoprotein apheresis	$[**]
NDA Approval for the use of Mipomersen to treat patients who have homozygous FH and/or who would be eligible under then-approved FDA labeling to receive low-density lipoprotein apheresis	$[**]
MAA Approval for the use of Mipomersen to treat patients who have heterozygous FH or an otherwise comparably sized eligible patient population	$[**]

(b)           Mipomersen in Other Indications.  Within thirty (30) days after the achievement of the following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme will pay Isis the following development milestone payments:

Milestone Event*	Milestone Payment
NDA Approval for the use of Mipomersen to treat patients who have polygenic hypercholesterolemia or any patient population of a size comparable to the patient population deemed to be at “high risk” as determined in accordance with the National Cholesterol Education Program’s clinical practice guidelines on cholesterol management with LDL-C greater than or equal to [**] mg/dL	$[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

34

MAA Approval for the use of Mipomersen to treat patients who have polygenic hypercholesterolemia or any patient population of a size comparable to the patient population deemed to be at “high risk” as determined in accordance with the National Cholesterol Education Program’s clinical practice guidelines on cholesterol management with LDL-C greater than or equal to [**] mg/dL

$[**]

Approval of a Japanese New Drug Application for the use of Mipomersen to treat patients who have polygenic hypercholesterolemia or any patient population of a size comparable to the patient population deemed to be at “high risk” as determined in accordance with the National Cholesterol Education Program’s clinical practice guidelines on cholesterol management with LDL-C greater than or equal to [**] mg/dL

$[**]

The Parties acknowledge that the current Development Plan contemplates [one or more] Pivotal Trials, that, if successful, are currently intended to achieve the milestones set forth in Section 8.2.1(b).  To minimize the likelihood of any disagreement between the Parties around whether an Approval based upon a successful Pivotal Trial is sufficient to satisfy any of the milestones set forth in Section 8.2.1(b), the Parties agree to adopt the following process:

(1)Prior to final approval of any Pivotal Trial protocol or any material change to the protocol of an ongoing Pivotal Trial by the JDC, Genzyme will notify the JDC in writing if Genzyme believes, were a Regulatory Authority to grant an Approval for the treatment of a patient population that is co-extensive with the patient population(s) included for enrollment in such Pivotal Trial, that such approval will not qualify to meet the milestones set forth in Section 8.2.1(b).

(2)If Genzyme fails to provide the JDC with the notice contemplated by subsection (1) above, an Approval in the relevant jurisdiction for the treatment of a patient population that is co-extensive with the patient population(s) included for enrollment in the Pivotal Trial will be deemed to satisfy the applicable milestone in Section 8.2.1(b).

(3)In addition, in the event a Regulatory Authority proposes a limitation that would, in Genzyme’s view, preclude the achievement of one of the milestones in Section 8.2.1(b), Genzyme will notify the JDC and in good faith attempt to avoid such restriction, to the extent practical under the circumstances. In such event, Genzyme will also reasonably consult with Isis regarding the best strategy to attempt to avoid such restrictions.

(c)           Follow-On Compound.  Within thirty (30) days after the achievement of the following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme will pay Isis the following development milestone payments:

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

35

Milestone Event	Milestone Payment
NDA Approval for the Follow-On Compound	$[**]
MAA Approval for the Follow-On Compound	$[**]
Approval of a Japanese New Drug Application for the Follow-On Compound	$[**]

8.2.2.Commercial Milestones.  Within thirty (30) days after the achievement of the following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme will pay Isis the following commercial milestone payments:

Milestone Event	Milestone Payment
Annual Net Revenues for all Products equals or exceeds three billion dollars ($3,000,000,000) in each of any two consecutive calendar years	$	250,000,000
Annual Net Revenues for all Products equals or exceeds four billion dollars ($4,000,000,000) in each of any two consecutive calendar years	$	250,000,000
Annual Net Revenues for all Products equals or exceeds five billion dollars ($5,000,000,000) in each of any two consecutive calendar years	$	250,000,000

In the event that more than one of the above commercial milestones is achieved simultaneously, Genzyme will make only one milestone payment, which will be for the milestone requiring the highest Annual Net Revenues.  The Annual Net Revenues in any calendar year may be counted toward only one consecutive two calendar year period, except that if Annual Net Revenues for all Products equals or exceeds five billion dollars ($5,000,000,000) in any calendar year, that year may be counted as both the last year of one two consecutive year period and the first year of a second two consecutive year period.  For the purpose of illustration, it will require at least five (5) years before Genzyme has been required to pay Isis the total of the seven hundred and fifty million dollars ($750,000,000) in milestone payments pursuant to this Section 8.2.2 (Commercial Milestone) unless Annual Net Revenue exceeds five billion dollars ($5,000,000,000) for three (3) or more consecutive years, in which case it would require four (4) years (assuming there was at least three billion dollars ($3,000,000,000) in sales in the first or fourth year during the four year period).

8.2.3.Hybrid Milestones.  Within thirty (30) days after the achievement of the following indicated events by Genzyme, its Affiliate or its Sublicensee, Genzyme will pay Isis the following milestone payments:

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

36

Milestone Event*	Milestone Payment
The earlier to occur of (A) NDA Approval for the use of Mipomersen to treat patients who have heterozygous FH or an otherwise comparably sized eligible patient population; or (B) annual Net Revenues for all Products equals or exceeds two hundred and fifty million dollars ($250,000,000) in any calendar year	$[**]
The earlier to occur of (A) NDA Approval for the use of Mipomersen to treat patients who have heterozygous FH or an otherwise comparably sized eligible patient population; or (B) annual Net Revenues for all Products equals or exceeds five hundred million dollars ($500,000,000) in any calendar year	$[**]

* For purposes of clarification, if the first hybrid milestone above had not already been payable, and annual Net Revenues for all Products equals or exceeds five hundred million dollars ($500,000,000) in a calendar year, then both hybrid milestones would be triggered.

8.2.4.Milestones Payable Only Once.  Once Genzyme has made any particular milestone payment under this Section 8.2, Genzyme will not be obligated to make any payment under this Section 8.2 with respect to the re-occurrence of same milestone, whether or not such re-occurrence is with respect to a different or the same Product or indication.

8.2.5.Indications of Mipomersen Approval.  If Mipomersen receives an Approval for a label indication that is sufficiently broad to include the entire patient population contemplated by one or more development milestone(s) set forth in Sections 8.2.1(a) (Mipomersen in FH) or 8.2.1(b) (Mipomersen in Other Indications) or 8.2.3 (Hybrid Milestones), then Genzyme will pay Isis the milestone payment(s) for such development milestone(s), even though the indication for which Mipomersen is approved is not identical to the indication(s) of such development milestone(s).

8.3.Financial Provisions Relating to Development Activities.

8.3.1.Isis Funding of External Development Expenses.

(a)           Subject to Section 5.2.1 (Clinical Trials), Isis will fund the clinical studies described as “Isis Funded” in the Development Budget.

(b)           In addition to its funding obligations under Section 8.3.1(a) above, Isis will fund the first one hundred and twenty-five million dollars ($125,000,000) of the External Development Expenses for the Product that will be incurred by the Parties in accordance with the Development Plan starting as of January 1, 2008, including expenses for (a) the clinical studies described as “Non Isis Funded” in the Development Budget, (b) future clinical studies undertaken in accordance with the Development Plan, (c) toxicology studies undertaken in accordance with the Development Plan (except for those described as “Isis Funded” in the Development Budget), (d) pharmacokinetic studies undertaken in accordance with

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

37

the Development Plan, (e) the manufacturing of API, as well as the packaging and distribution of the final Product and (f) the scientific advisory board and drug safety monitoring board.  Any External Development Expenses that are recouped by Isis pursuant to Section 8.4 (Sharing of Net Revenue) will not be counted toward the fulfillment of this $125 million funding commitment.  For purposes of clarity, in the event that Net Profit is achieved prior to the exhaustion of the Isis $125 million funding commitment set forth in this section 8.3.1, then for so long as Net Profit is maintained, Isis will not be obligated to fund External Development Expenses and the provisions of Section 8.5 (Sharing of Net Profits) will apply.

8.3.2.Shared Funding of External Development Expenses.  After one hundred and twenty-five million dollars ($125,000,000) of External Development Expenses for the Product have been funded as described in Section 8.3.1(b) above, and after the sharing of Net Revenue in accordance with Section 8.4 (Sharing of Net Revenue), the Parties will share equally (on a 50/50 basis) all remaining External Development Expenses in any calendar year in which Net Profit is not achieved.  In any calendar year in which Net Profit is achieved, the External Development Expenses will be included as Program Costs.

8.3.3.Internal Development Expenses.  Each Party will be responsible for their own Internal Development Expenses with respect to development of the Product in any calendar year in which Net Profit is not achieved.  In any calendar year in which Net Profit is achieved, the Parties’ Internal Development Expenses will be included as Program Costs.

8.4.Sharing of Net Revenue.  In any calendar year in which there is not a Net Profit, the Parties will share Net Revenue as follows:

8.4.1.Costs of Goods.   Net Revenue first will be allocated between the Parties to reimburse them for the Fully Absorbed Cost of Goods incurred by the Parties in such calendar year.

8.4.2.External Sales & Marketing Expenses.  Once the Parties have each been fully reimbursed for the Fully Absorbed Cost of Goods, Net Revenue next will be allocated between the Parties to reimburse them for External Sales & Marketing Expenses incurred by the Parties in such calendar year.

8.4.3.Internal Sales & Marketing Expenses.  Once the Parties have each been fully reimbursed for the Fully Absorbed Cost of Goods and External Sales & Marketing Expenses, Net Revenue next will be allocated between the Parties to compensate them for Internal Sales & Marketing Expenses incurred by the Parties in such calendar year.

8.4.4.External Development Expenses. Once the Parties have each been fully reimbursed for the Fully Absorbed Cost of Goods, External Sales & Marketing Expenses and Internal Sales & Marketing Expenses, Net Revenue next will be

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

38

allocated between the Parties to compensate them for External Development Expenses incurred by the Parties in such calendar year (other than Fully Absorbed Cost of Goods already reimbursed under Section 8.4.1 above).

8.4.5.Internal Development Expenses.  Once the Parties have each been fully reimbursed for the Fully Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses and External Development Expenses, Net Revenue next will be allocated between the parties to compensate them for Internal Development Expenses incurred by the Parties in such calendar year.

8.4.6.Revenue Sharing Proportional to Expenses. For each category of cost or expense set forth in this Section 8.3, if Net Revenue is sufficient to only partially compensate the Parties for particular category of cost or expense, then the Parties will allocate the Net Revenue that may be allocated for such category between the Parties on a pro rata basis in proportion to the relative amounts of such category of cost or expense incurred by each Party.

8.5.Sharing of Net Profits.

8.5.1.Responsibility for Net Loss.  Except as set forth in Section 8.4 (Sharing of Net Revenue), in any calendar year in which there is a Net Loss, Genzyme’s share of Net Revenue will be one hundred percent (100%) and, subject to Section 8.3 (Financial Provisions Related to Development Activities), Genzyme will be solely responsible for all Program Costs.  Isis will not be required to compensate Genzyme for any Net Loss.

8.5.2.Sharing of Net Profits.  In any calendar year in which there is a Net Profit, the Parties will share such Net Profit in accordance with the following allocation based on Net Revenue for such calendar year:

Annual Net Revenue	Genzyme Percentage	Isis Percentage
$1 to < $200 M	70%	30%
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
[**]	[**]	[**]
>$2 B	50%	50%

Notwithstanding the foregoing, in any calendar year in which Net Profits are generated in an amount greater than or equal to [**] of Net Revenue, Isis’ share of

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Net Profits will not fall below an amount equal to [**] of Net Revenue.

8.6.Periodic Reporting and Reconciliation.

8.6.1.Reports.  Within thirty (30) days after the end of each Calendar Quarter during the Term (a “Reporting Period”), each Party will submit a written report to the other Party setting forth in reasonable detail the following, as applicable: (a) External Development Expenses incurred by Isis in accordance with Section 8.3.1 (Isis Funding of External Development Expenses) for each month during such Reporting Period, if any; (b) Fully Absorbed Costs of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External Development Expenses, and Internal Development Expenses incurred by each Party for each month during such Reporting Period (if any); (c) actual Net Revenues, Net Sales and Program Costs incurred by or on behalf of the reporting Party for each month during such Reporting Period, if any, and (d) forecasts for the next four (4) Reporting Periods of Program Costs attributable to such Party (including, for each Party, the Fully-Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External Development Expenses, and Internal Development Expenses) and, for Genzyme, Genzyme’s estimate of Net Revenues.  Such written reports will provide supporting detail for actual Net Revenues, Net Sales and Program Costs.  The Parties recognize that the forecasts provided pursuant to subsection (d) are estimates only, and the Party providing such forecasts for the next Reporting Period will have no liability to the other Party based thereon.  The Parties agree to consider in good faith the utilization of more rapid and detailed reporting mechanisms in order to meet the reporting requirements of the Parties.  Development Expenses reported pursuant to this Section 8.5.1 will be included in Program Costs for determining Net Profits or Net Losses (and any revenue sharing or resulting funding obligations under Sections 8.3 and 8.4), as applicable, only to the extent made or incurred in accordance with the Development Plan and to the extent that they do not exceed the amount budgeted for such expense in the then-current Development Budget (if any) by more than [**] for a calendar year or as otherwise approved by the JDC.  Costs and expenses included in Program Costs, as well as the deductions taken from Net Sales, will not be double counted (i.e., any item of expense included in any expense category will not also be included in any other expense category).

8.6.2.Reconciliation.

(a)           Within forty-five (45) days following the exchange of the reports under Section 8.6.1 (Reports), Genzyme will send to Isis a written report setting forth the calculation of any net amount owed by Genzyme to Isis (or by Isis to Genzyme), in order to ensure that (i) Isis fulfills its funding obligations under Section 8.3 (Financial Provisions Relating to Development Activities) and (ii) the Parties share Net Revenue as specified in Section 8.4 (Sharing of Net Revenue) or Net Profits as specified in Section 8.5.2 (Sharing of Net Profits).  The Parties will

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

40

use the most recent forecasts for Annual Net Revenue and Net Profit provided pursuant to Section 8.6.1 (Reports) to determine the applicable Net Profit share in any given Calendar Quarter (other than in the final Calendar Quarter of any calendar year).  The Parties will use the actual Annual Net Revenue and Net Profit for the calendar year to determine the applicable Profit Share percentage for the last Calendar Quarter in any calendar year.

(b)           This reconciliation report will, among other things, contain (i) a tally of Isis’ fulfillment of its funding obligations under Section 8.3 (Financial Provisions Relating to Development Activities), which tally will include any necessary adjustments, (ii) appropriate retroactive adjustments for prior Calendar Quarters in the same calendar year to take into account increases (or decreases) in Isis’ share of Net Profits or Isis’ fulfillment of its funding obligations under Section 8.3 (Financial Provisions Relating to Development Activities) and (iii) appropriate credit for Program Costs directly incurred by Isis.

8.6.3.Payments.  If the reconciliation conducted under Section 8.6.2 (Reconciliation) results in a payment being owed by Genzyme to Isis, then the net amounts payable will be paid by Genzyme to Isis within forty-five (45) days of Genzyme receiving confirmation from Isis that Genzyme’s report required by Section 8.6.2 (Reconciliation) is accurate.  If the reconciliation conducted under Section 8.6.2 (Reconciliation) results in a payment being owed by Isis to Genzyme, then the net amounts payable will be paid by Isis within forty-five (45) days of its receipt of the reconciliation report.

8.6.4.Disputes.  In the event of a dispute regarding any amount reported by a Party pursuant to Section 8.6.1 (Reports) or the amount owed under Section 8.6.2 (Reconciliation), the Parties will promptly meet and negotiate in good faith a resolution to such dispute.  In the event that the Parties are unable to resolve such dispute within sixty (60) days after notice by the disputing Party, the Parties will (a) use commercially reasonable efforts to reach agreement on the appointment of one internationally-recognized independent accounting firm to determine the matter or (b) if the Parties cannot reach agreement on such accounting firm, then each Party will appoint one internationally-recognized accounting firm and such firms will choose a third internationally-recognized independent accounting firm to make the final determination.  Interest will be payable on any disputed amounts determined to be due in the same manner as provided for in Section 8.10 (Interest on Late Payments), with interest accruing from the end of the thirty (30) day period during which such payment should have been made.

8.7.Accounting and Allocation Methods.

8.7.1.Accounting.  To the extent possible in accordance with the terms and conditions of this Agreement, the Parties will account for all amounts required to be determined under this Agreement (including Net Profits, Net Revenues, Program Costs, and all elements of any of the foregoing) in accordance with GAAP,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

41

consistently applied.  Where more than one accounting treatment is possible consistent with the terms and conditions of this Agreement and GAAP, each Party will account for amounts in a manner that is consistent with the manner in which such Party accounts for similar amounts for the purposes of its publicly reported financial statements.

8.7.2.Allocation Methods.  Promptly upon the execution of this Agreement and before the start of each successive fiscal year of the Term, the Parties will agree upon a consistently applied methodology for determining and allocating to Program Costs (including Development Expenses and Sales and Marketing Expenses) for such year an appropriate portion of each of their respective (i) costs and expenses that relate both to the Product and any of the Parties’ other products or programs and (ii) G&A Costs and other overhead attributable to this Agreement.

8.8.Audits and Interim Reviews.  Each Party will maintain accurate books and records regarding Program Costs, Fully-Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External Development Expenses, and Internal Development Expenses, Net Revenues and Net Sales, as applicable, sufficient to enable the calculation of amounts payable hereunder to be verified, and will retain such books and records for each quarterly period for three (3) years after submission of the corresponding report pursuant to this Agreement.  Either Party will have the right to request that an independent certified public accountant selected by it (but excluding its own accountant) and reasonably acceptable to the other Party perform an audit, not more than once in any four (4) consecutive Calendar Quarters during the Term, but including one post-termination audit and, if any such audit results in a material restatement of records (i.e., a discrepancy of 5% or more for any calendar year), such Party will be permitted an additional examination within such four (4) quarter period, of the other Party’s books of accounts covering the preceding three (3) year period for the sole purpose of verifying compliance with the payment provisions of this Agreement.  Such audits will be conducted at the expense of the requesting Party at reasonable times during regular business hours and upon at least twenty (20) business days’ prior notice.  Audit results will be shared with both Parties, subject to Article 12 (Confidentiality); provided, however, that the accounting firm may not disclose copies of the audited Party’s books of accounts (or excerpts thereof) to the other Party.  Any accounting firm conducting such an audit will enter into a confidentiality agreement with both Parties containing restrictions substantially similar to the confidentiality provisions of Article 12 (Confidentiality) limiting the disclosure and use of information contained in such books and records for the purposes expressly permitted by this Section 8.8.  Any inspection or audit pursuant to this Section 8.8 will be at the expense of the Party initiating the audit; provided, however, that if the Party’s accountants reasonably determine that Net Profits or Net Revenues have been understated or Program Costs (including associated labor costs, reimbursable costs and expenses) or Fully-Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External Development Expenses, and Internal Development Expenses have been overstated by an amount equal to or greater than five percent (5%), for any calendar year, the audited Party will pay the reasonable fees of such accountants for such audit, in addition to remitting the Net Profits

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

42

or refund of Net Losses, Program Costs, Fully-Absorbed Cost of Goods, External Sales & Marketing Expenses, Internal Sales & Marketing Expenses, External Development Expenses, or Internal Development Expenses with interest thereon computed in accordance with Section 8.10 (Interest on Late Payments).

8.9.Withholding Taxes.  If Applicable Law requires that taxes be withheld from payments made hereunder, or from Net Revenue or Net Profits, the Party making such payments or otherwise responsible for such withholding (the “Withholding Party”) will (a) deduct such taxes from any payments to which they relate or in the case of taxes withheld from the other Party’s share of Net Revenues or Net Profits account for such taxes as amounts paid on behalf of the other Party, (b) timely pay such taxes to the proper authority and (c) send written evidence of payment to the Party with respect to which such taxes were withheld or paid within sixty (60) days after payment.  Taxes withheld from payments made hereunder will be treated as amounts received by the Party with respect to which such taxes were withheld for all purposes under this Agreement.  If the Withholding Party is required to withhold and pay over taxes on the other Party’s share of Net Revenues or Net Profits, the other Party will promptly reimburse or otherwise make whole the Withholding Party for any amounts so withheld upon receipt of written evidence of the payment of such taxes.  Any taxes paid (excluding income taxes) by the Withholding Party on the other Party’s share of Net Revenues or Net Profits for which the Withholding Party has not been reimbursed or otherwise made whole within thirty (30) days after the end of each Reporting Period will be treated as an amount received by the other Party (and not by the Withholding Party) for purposes of determining amounts owed under Section 8.6.2 (Reconciliation).  Each Party will assist the other Party or Parties in claiming tax refunds, deductions or credits at such other Party’s request and will cooperate to minimize any withholding tax as permitted by Applicable Law.

8.10.Interest on Late Payments.  Any payments to be made hereunder that are not paid on or before the date such payments are due under this Agreement will bear interest at a rate per annum equal to the lesser of (x) the rate announced by Bank of America (or its successor) as its prime rate in effect on the date that such payment would have been first due plus one percent (1%) or (y) the maximum rate permissible under applicable law.

8.11.Currency; Payment.  All amounts payable under this Agreement will be paid in United States dollars in immediately available funds, and will be directly deposited to a bank account designated for this purpose from time to time by the Party to receive payment.  Isis will provide the necessary bank account information to Genzyme no later than the Execution Date and may update such information from time to time by written notice.  The Parties may vary the method of payment set forth herein at any time upon mutual agreement, consistent with Applicable Law.  As applicable, Net Sales, Net Sales Adjustments, and other elements of Net Revenue and Program Costs will be translated into United States dollars at the exchange rate used by Genzyme for public financial accounting purposes in accordance with GAAP.  If, due to restrictions or prohibitions imposed by national or international authority, payments cannot be made as provided in this Article 8 (Financial Provisions) with respect to sales occurring outside of the United States, the Parties will consult with a view to finding a prompt and acceptable solution,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

43

and Genzyme will deal with such monies as Isis may lawfully direct.

8.12.Material Safety Warnings.  Notwithstanding the financial provisions contained in this Article 8 (Financial Provisions), in the event that the approved label for the Product [**], which is not anticipated by the Parties as of the Effective Date, the Parties will discuss in good faith (without obligation) the extent to which such [**] change the [**] for the Product.

Article 9.
INTELLECTUAL PROPERTY MATTERS

9.1.Product-Specific Patents.

9.1.1.Assignment of Product-Specific Patents.  Isis will assign and transfer, and hereby does assign and transfer, to Genzyme, all rights, title, and interests in and to the Product-Specific Patents and all claims and causes of action arising from or relating to the Product-Specific Patents, including all rights to recovery for damages from infringement arising prior to, on or after the Execution Date.  Simultaneously with the execution of this Agreement, Isis will execute and deliver a confirmatory assignment relating to all Product-Specific Patents in existence on the Execution Date in the form attached to this Agreement as Exhibit E.

9.1.2.Disclosure of Future Product-Specific Patents.  Upon becoming aware of any potentially patentable invention Controlled by Isis that would, if patented, be included within the definition of Product-Specific Patents or Licensed Patents, Isis will promptly disclose such invention to Genzyme in writing in reasonable detail.

9.1.3.Covenants in Support of Assignment.  Isis will provide all further cooperation which Genzyme reasonably determines is necessary to accomplish the complete transfer of the Product-Specific Patents and all associated rights to Genzyme, and to ensure Genzyme the full and quiet enjoyment of the Product-Specific Patents including executing and delivering further assignments, consents, releases and other commercially reasonable documentation, and providing good faith testimony by affidavit, declaration, deposition, in-person or other proper means and otherwise assisting Genzyme in support of any effort by Genzyme to establish, perfect, defend or enforce its rights in the Product-Specific Patents through filing and prosecution of Product-Specific Patents, interferences, oppositions, other regulatory proceedings, litigation, or other means.  Isis will obtain the cooperation of the individual inventors of any inventions disclosed in the Assigned Product Specific Patents, including (a) obtaining signatures of such inventors on any patent applications or other documentation reasonably necessary to obtain patent protection for such inventions and (b) procuring (at Genzyme’s expense) such inventors’ good faith testimony by affidavit, declaration, deposition in-person or other proper means in support of Genzyme’s efforts in establishing,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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perfecting, defending or enforcing patent rights to such inventions.  To the extent Isis cannot transfer and assign the Product-Specific Patents, or any portion thereof, as of the Execution Date, then Isis will transfer and assign such Product-Specific Patents to Genzyme at its first opportunity to do so and pending such transfer and assignment such Product-Specific Patents will be deemed to be Licensed Patents for the purposes of Section 2.1 (Product License).  To the extent further transfer or assignment of the Product-Specific Patents is required or permitted and Isis has not executed and returned to Genzyme the form of assignment reasonably requested by Genzyme within ten (10) business days of the delivery of such assignment to Isis at the address for notices set forth in Section 14.5 (Notices), then Isis hereby irrevocably appoints Genzyme as its attorney-in-fact with the right, authority and ability to execute and enter into such assignment on behalf of Isis.  Isis stipulates and agrees that such appointment is a right coupled with an interest and will survive the unavailability of Isis at any future time.

9.1.4.Grant-Back License.  Subject to the terms and conditions of this Agreement, Genzyme hereby grants Isis a non-exclusive, non-transferable license (with no right to sublicense) under the Product-Specific Patents to the extent necessary to perform Isis’ obligations under this Agreement and the Supply Agreement.

9.2.Program IP.

9.2.1.Ownership.  Unless prohibited by Applicable Law, inventorship and authorship will be determined in accordance with U.S. patent and copyright law.  Genzyme will own all Genzyme Program IP .  Subject to the terms and conditions of this Agreement including Section 2.1 (Product License) and Section 9.1 (Product-Specific Patents), Isis will own all Isis Program IP, and Isis and Genzyme will jointly own all Joint Program IP.  Subject to the terms and conditions of this Agreement including Section 2.1 (Product License), Section 9.1 (Product-Specific Patents), 9.2.3 (No Encumbrances) and Article 3 (Exclusivity), each Party will have the right to practice and license the Joint Program IP without consent of the other Party (where consent is required by law, such consent is deemed hereby granted) and without a duty of accounting to the other Party; provided, however that Isis will not grant a license to a Third Party under Joint Program IP to develop or commercialize any nucleic acid molecule whose primary purpose at the time of the license or primary therapeutic benefit at the time of commercialization is to cause the [**], without Genzyme’s prior written consent.  Notwithstanding the foregoing, Isis will not be in breach of the preceding sentence if, despite exercising commercially reasonable efforts, it inadvertently licenses Joint Know-How to such a Third Party without Genzyme’s prior written consent, unless, prior to Isis disclosing such Joint Know-How to such a Third Party licensee, Genzyme provides Isis with a written summary description of such Joint Know-How that clearly indicates it is Joint Know-How under this Agreement.  Subject to the terms and conditions of this Agreement, each Party will cooperate with the other Party’s efforts to establish, perfect, defend and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

45

enforce its rights in its Program IP in the Territory.  This Section 9.2.1 will be subject to the terms and conditions of Section 9.3.2 (Terms of Sharing Arrangement).

9.2.2.Cooperation/Compensation of Employees.  Each Party represents and agrees that (a) all of its employees and all of its Affiliates’ employees acting under its or its Affiliates’ authority in the performance of this Agreement or pursuant to the Product License will be obligated under a binding written agreement or established corporate policy to assign to such Party, or as such Party will direct, all Technology and Patents discovered, made, conceived by such employee as a result of such employee’s employment, and (b) both it and its Affiliates have taken all appropriate actions under the Applicable Law in the Territory to ensure proper compensation to any employee for the assignment of such Technology and Patents as contemplated hereunder.  In the case of all others acting in the performance of the Development Program or Research Programs or pursuant to the Product License, such as consultants, subcontractors, licensees, sublicensees, outside contractors, clinical investigators, agents, or non-employees working for non-profit academic institutions, such others will also be obligated under an agreement that meets the criteria of the preceding sentences, unless otherwise approved by the Parties.  The Parties agree reasonably to undertake to enforce the agreements referenced in this Section 9.2.2 (including, where appropriate, by legal action) considering, among other things, the commercial value of such Technology and Patents.

9.2.3.No Encumbrances.  Except as expressly provided in this Agreement, neither Party will sell, transfer, assign, mortgage, pledge, lease, grant a security interest in (e.g., as collateral for a loan or other financing) or otherwise encumber in the Territory any Joint Program IP necessary or useful for the research, development, manufacture or commercialization of the Product in the Territory without the prior written consent of the other Party; provided, however, that nothing contained in this Section 9.2.3 will prohibit an assignment permitted by Section 14.7 (Binding Effect; Assignment) or a license permitted by Section 9.2.1 (Ownership).

9.3.Manufacturing Improvements.

9.3.1.Background.  As part of its collaborations with other pharmaceutical partners, Isis has an arrangement where Isis can share manufacturing technology improvements made by such pharmaceutical partners with other third parties so long as such third parties similarly agree to share their manufacturing technology improvements.  After reviewing the proposed terms of such arrangement, Genzyme is willing to participate in the arrangement only with the clarifications and under the terms set forth in this Section 9.3 (Manufacturing Improvements).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

46

9.3.2.Terms of Sharing Arrangement.

(a)           During the period beginning on the Effective Date and ending [**] (the “Sharing Period”), the Parties will meet at least annually to review Manufacturing Improvements developed by either of the Parties during the Sharing Period during and in connection with the conduct of the Development Program or the Research Programs or commercializing the Product and, in the case of Isis, any Manufacturing Improvements made by or on behalf of Isis or any Participating Isis Partners and disclosed to Isis pursuant to a Sharing Agreement.  The Parties will disclose all Manufacturing Improvements Controlled by such Party (including, in the case of Isis, Manufacturing Improvements made by other Participating Isis Partners and disclosed to Isis pursuant to a Sharing Agreement) in reasonable detail as to enable the other Party to use such Manufacturing Improvements in the manufacture of ASO Products.  All such disclosures will be subject to appropriate confidentiality obligations.  Isis will have the right to disclose and sublicense any Manufacturing Improvements Controlled by Genzyme only to Third Parties that are licensees of Isis with respect to the commercialization of one or more ASO Products and are Participating Isis Partners and only in accordance with Section 9.3.2(b).

(b)           Without limiting the generality of Section 9.2.1 (Ownership), all rights, title, and interests in and to all Manufacturing Improvements developed or invented during the Sharing Period during and in connection with the conduct of the Development Program or the Research Programs or commercializing the Product solely by Genzyme’s employees or Third Parties acting on Genzyme’s behalf (“Genzyme Manufacturing Improvements”) will be the sole and exclusive property of Genzyme.  Genzyme hereby grants Isis a worldwide, royalty-free, perpetual, non-exclusive license to practice under Genzyme’s rights to any Know-How in or Patent Covering such Genzyme Manufacturing Improvements Controlled by Genzyme to make and have made ASO Products other than the Product.  The license granted under this Section 9.3.2(b) is sublicensable by Isis to Participating Isis Partners solely in connection with a license to develop, make, use, import, offer for sale and sell an ASO Product developed or commercialized by a Participating Isis Partner.  Such Participating Isis Partners may not further disclose or sublicense Genzyme Manufacturing Improvements except in connection with a sublicense of the ASO Product being developed or commercialized under license from Isis.  The license granted under this Section 9.3.2(b) will survive the termination of this Agreement with respect to any Genzyme Manufacturing Improvements made prior to such termination.

(c)           Without limiting the generality of Section 9.2.1 (Ownership), all rights, title, and interests in and to all Manufacturing Improvements developed or invented during the Sharing Period solely by Isis’s employees or Third Parties acting on Isis’ behalf (“Isis Manufacturing Improvements”) will be the sole and exclusive property of Isis.  Without limiting the rights granted to Genzyme in Article 2, Isis hereby grants Genzyme a worldwide, royalty-free, perpetual, non-exclusive license to practice under Isis’ rights to any Know-How in or Patent Covering any Manufacturing Improvements Controlled by Isis (including any

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Manufacturing Improvements made by or on behalf of any Participating Isis Partners) to make and have made the Product and other ASO Products developed or commercialized by Genzyme.  The license granted under this Section 9.3.2(c) is sublicensable by Genzyme solely in connection with a license to develop, make, use, import, offer for sale and sell an ASO Product developed or commercialized by Genzyme under license from Isis (including the Product).  The license granted under this Section 9.3.2(c) will survive the termination of this Agreement or any Sharing Agreement with respect to any Manufacturing Improvements (including any Manufacturing Improvements made by Participating Isis Partners) made prior to such termination.

(d)           Notwithstanding Section 9.2.1 (Ownership) and subject to Section 9.1 (Product-Specific Patents), all rights, title, and interests in and to all Manufacturing Improvements developed or invented during the Sharing Period jointly by Isis’ and Genzyme’s employees or Third Parties acting on Isis’ and Genzyme’s behalf will be the joint property of Isis and Genzyme with each party having an undivided joint interest in such Manufacturing Improvements.  Each Party may license its rights under such Manufacturing Improvements for its own account and without the consent of the other Party (where consent is required by law, such consent is deemed hereby granted) and without a duty of accounting to the other Party, subject in all cases to the licenses granted to Genzyme under Article 2 (Licenses).

9.3.3.[**].

9.3.4.[**] Manufacturing Improvements.  If Isis does not [**] of the Execution Date, Isis will [**].  In such event, Isis will be solely responsible for all costs and expenses associated with such development effort and will reimburse Genzyme for any such costs and expenses incurred by Genzyme.  Failure of Isis to reimburse Genzyme for such costs and expenses will be deemed to be a material breach of this Agreement entitling Genzyme to setoff such amounts pursuant to Section 11.4.2 (Genzyme’s Right of Setoff).

9.3.5.Representations Regarding [**].  Isis represents and warrants to Genzyme as follows:

(a)           [**], Isis will Control all Know-How [**] that is [**] the manufacture, development or commercialization of Mipomersen, including the [**] Manufacturing Improvements and will have the sufficient legal and/or beneficial title and ownership or rights to grant the Product License to Genzyme under such Know-How and the grant of such license to Genzyme does not violate the terms of any Third Party Agreement or any other agreement Isis has with a Third Party [**].

(b)           If [**], Isis will Control all Know-How [**] that is [**] the manufacture, development or commercialization of Mipomersen as of such date and will have

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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the sufficient legal and/or beneficial title and ownership or rights to grant the Product License to Genzyme under such Know-How and the grant of such license to Genzyme does not violate the terms of any Third Party Agreement or any other agreement Isis has with a Third [**].

9.3.6.[**] Sharing Agreement.  Isis will use reasonable efforts to [**].

9.3.7.Cooperation.  Genzyme will provide reasonable cooperation with Isis’ efforts to [**].  In no event, however, will Genzyme be required to enter into any agreement that (i) [**] in any way or (ii) imposes any material obligations, liabilities or constraints on Genzyme except those contemplated by this Agreement.

9.4.Filing, Prosecution and Maintenance of Patents.

9.4.1.Responsibility.

(a)           Product-Specific Patents and Genzyme Program Patents.  Genzyme, through counsel of its choosing and at its sole expense, will be responsible for and have control over obtaining, prosecuting (including any interferences, reissue proceedings, re-examinations and oppositions), and maintaining throughout the Territory the Product-Specific Patents and Genzyme Program Patents in Genzyme’s name and Isis will cooperate with Genzyme in regard thereto.  Without limiting the generality of the foregoing, Genzyme may, in its sole discretion, elect not to pursue patent protection for any Product-Specific Patent(s) and Genzyme Program Patent(s) in one or more countries in the Territory.  Genzyme will consider input from the JPC regarding prosecution strategy for the Product-Specific Patents and Genzyme Program Patents, but will make all decisions relating to the prosecution and maintenance of Product-Specific Patents and Genzyme Program Patents.

(b)           Licensed Product Patents.

(i)Primary Responsibility.  Subject to Section 9.4.2(a) (Election Not to Continue Prosecution; Abandonment) and this Section 9.4.1(b), Genzyme, through counsel of its choosing and at its sole expense, will have primary responsibility for and control over obtaining, prosecuting (including any interferences, reissue proceedings, re-examinations and oppositions), and maintaining throughout the Territory the Licensed Product Patents and Isis will cooperate with Genzyme in regard thereto; provided, however that Genzyme will prosecute such Licensed Product Patents such that they do not claim (x) [**] other than apoB, or (y) methods of using such nucleic acids as a therapeutic or [**] other than apoB.  Genzyme will consider input from Isis regarding prosecution strategy for the Licensed Product Patents, but will make all decisions relating to the prosecution and maintenance of Licensed Product Patents.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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(ii)Prosecution Strategy.  In prosecuting Licensed Product Patents, the Parties will avoid filing patent applications that both claim (a) [**] apoB, (b) the [**] of apoB, (c) the specific composition of matter of a Product, or (d) methods of using Product as a therapeutic, methods of using Product to modulate apoB, or methods of using the Product to inhibit expression of apoB, and also claim (x) [**] other than apoB, or (y) methods of using such nucleic acids as a therapeutic or [**] other than apoB.

(c)           Isis Core Technology Patents and the Isis Manufacturing and Analytical Patents.  Subject to Section 9.4.2(b) (Election Not to Continue Prosecution; Abandonment), Isis, through counsel of its choosing and at its sole expense, will have primary responsibility for and control over obtaining, prosecuting (including any interferences, reissue proceedings, re-examinations and oppositions), and maintaining throughout the Territory the Isis Core Technology Patents and the Isis Manufacturing and Analytical Patents (in each case, other than Joint Patents), and Genzyme will cooperate with Isis in regard thereto.  Isis will consider input from the JPC regarding prosecution strategy for the Isis Core Technology Patents, Isis Manufacturing and Analytical Patents (in each case, other than Joint Patents) and will consult with Genzyme before taking any action that would have an adverse impact on the scope of claims within the Special Isis Core Technology Patents (other than Joint Patents).  However, Isis will make all decisions relating to the prosecution and maintenance of the Isis Core Technology Patents and Isis Manufacturing and Analytical Patents (in each case, other than Joint Patents).  For clarity, this Section 9.4.1(c) will not apply to Joint Patents that are Isis Core Technology Patents or Isis Manufacturing and Analytical Patents, which will be governed Section 9.4.1(d) below.

(d)           Joint Patents.  Subject to Section 9.4.1(a) (Product-Specific Patents and Genzyme Program Patents) and Section 9.4.1(b) (Licensed Product Patents), with respect to any Joint Patent (other than Product-Specific Patents and Licensed Product Patents), the JPC will designate one Party (the “Responsible Party”) who will have primary responsibility for the preparation, filing, prosecution and maintenance of any such Joint Patent in the Territory (in both Genzyme’s and Isis’ name), using patent counsel selected by the JPC or otherwise agreed by the Parties.  If the JPC has disbanded, the Parties will mutually agree on a Responsible Party.  Each Party will assist the Responsible Party in the preparation, filing, prosecution and maintenance of such Joint Patents.  The Responsible Party will consult with and keep the other Party (through the JPC if possible) informed of important issues relating to the preparation, filing, prosecution and maintenance of the Joint Patents (other than Product-Specific Patents or Licensed Product Patents) and will furnish the other Party (through the JPC if possible) with copies of documents relevant to such preparation, filing, prosecution or maintenance in sufficient time prior to filing such document or making any payment due thereunder to allow for review and comment by the other Party and, to the extent possible in the reasonable exercise of its discretion,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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the Responsible Party will incorporate all such comments.  If the Responsible Party decides to discontinue the preparation, filing, prosecution or maintenance of a Joint Patent (other than a Product-Specific Patent or Licensed Product Patent), the Responsible Party will notify the other Party at least sixty (60) days prior to any deadline that, if missed, would materially prejudice the Joint Patent, and the other Party will have the right to prepare, file, prosecute and maintain such Patent.  The Parties will share equally the reasonable costs and expenses of the preparation, filing, prosecution and maintenance of such Joint Patents (other than Product-Specific Patents and Licensed Product Patents), and such costs and expenses will be considered Program Costs.  Neither Party will make any statements or omissions or take any other action during prosecution or enforcement of any Joint Patent (other than Product-Specific Patents and Licensed Product Patents) which admits or concedes that any of the Licensed Patents (or any Product-Specific Patent) is invalid or unenforceable, which adversely affects or limits the scope of any claims in any such Patent, or which adversely affects the other Party’s rights under this Agreement in any way, without the prior written consent of the other Party.  For clarity, this Section 9.4.1(d) does not apply to Joint Patents that are Product-Specific Patents or Licensed Product Patents, which are governed by Section 9.1 (Product-Specific Patents) and Section 9.4.1(a) and Section 9.4.1(b) above, but does apply to Joint Patents that are Isis Core Technology Patents or Isis Manufacturing and Analytical Patents.

9.4.2.Election Not to Continue Prosecution; Abandonment.

(a)           If Genzyme elects not to file for or continue the prosecution (including any interferences, oppositions, reissue proceedings and re-examinations) or maintenance of a Licensed Product Patent in a particular country in the Territory, then Genzyme will notify Isis promptly in writing of its intention in good time to enable Isis to meet any deadlines by which an action must be taken to establish or preserve any such rights in such Patent in such country and Isis will have the right, but not the obligation, to file for or continue the prosecution or maintenance of such Patent in such country, and Genzyme will cooperate with Isis in regard thereto.  In such event, Isis’ expenses incurred in connection with the prosecution or maintenance of such Patent in such country will be Program Costs.

(b)           If Isis elects not to file for or continue the prosecution (including any interferences, oppositions, reissue proceedings and re-examinations) or maintenance of a Special Isis Core Technology Patent (other than Joint Patents), then, Isis will notify Genzyme promptly in writing of its intention in good time to enable Genzyme to meet any deadlines by which an action must be taken to establish or preserve any such rights in such Patent in such country and Genzyme will have the right, but not the obligation, to file for or continue the prosecution or maintenance of such Patent in such country, and Isis will cooperate with Genzyme in regard thereto.  In such event, Genzyme’s expenses incurred in connection with the prosecution or maintenance of such Patent in such country will be Program Costs.  For clarity, this Section 9.4.2(b) will not apply to Joint

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Patents that are Special Isis Core Technology Patents, which will be governed Section 9.4.1(d) (Joint Patents).

9.4.3.Cooperation.  Each Party hereby agrees: (a) to make its employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent prosecution as contemplated by this Agreement; (b) to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to Patents that are subject to this Agreement; and (c) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the prosecution and maintenance of the other Party’s patent applications that are subject to this Agreement.

9.5.Enforcement of Patents and Know-How.

9.5.1.Notification.  Each Party will promptly report in writing to the other Party during the Term any (a) known or suspected Third Party infringement of any Product-Specific Patents, Licensed Product Patents, Special Isis Core Technology Patent, or (b) known or suspected Third Party infringement of any Isis Core Technology Patents or Isis Manufacturing and Analytical Patents to the extent the infringement relates to a product that contains a nucleic acid that hybridizes to a nucleic acid molecule encoding apoB, or (c) unauthorized use or misappropriation of any Product Know-How or other Confidential Information by a Third Party of which it becomes aware, and will provide the other Party with all available evidence supporting such infringement or unauthorized use or misappropriation.

9.5.2.Rights to Enforce.

(a)           Genzyme First Right.  Genzyme will have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop activities in the Territory infringing the Product-Specific Patents, Licensed Product Patents or the use without proper authorization of any Product Know-How or the infringement of any Isis Core Technology Patent by a Third Party product that contains a [**] encoding apoB, including (i) initiating or prosecuting an infringement or other appropriate suit or action against or (ii) granting adequate rights and licenses necessary for continuing such activities in the Territory to any Third Party who at any time has infringed, or is suspected of infringing, any Product-Specific Patents or Licensed Product Patents or has used or is suspected of using without proper authorization the Product Know-How.  If Genzyme desires to assert an Isis Core Technology Patent pursuant to this Section 9.5.2(a) and the infringing product is also Covered by a Product-Specific Patent, then Genzyme will assert both the Product-Specific Patent and the Isis Core Technology Patent, unless it obtains Isis’ written consent to assert only the Isis Core Technology Patent.  In such a case, at Genzyme’s request Isis’ representatives will meet with Genzyme’s representatives to discuss whether it

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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would be advisable to assert an Isis Core Technology Patent without also asserting a Product-Specific Patent.

(b)           Isis First Right.  Subject to Section 9.5.2(a) (Genzyme First Right to Enforce), Isis will have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop activities in the Territory infringing the Isis Core Technology Patents or Isis Manufacturing and Analytical Patents  (in each case, other than Joint Patents) or the use without proper authorization of any Isis Manufacturing and Analytical Know-How (other than Joint Know-How), including (i) initiating or prosecuting an infringement or other appropriate suit or action against or (ii) granting a Permitted License to any Third Party who at any time has infringed, or is suspected of infringing, any Isis Core Technology Patents or Isis Manufacturing and Analytical Patents (other than Joint Patents) or has used or is suspected of using without proper authorization the Isis Manufacturing and Analytical Know-How (other than Joint Know-How).  For clarity, this Section 9.5.2(b) will not apply to Joint Patents that are Isis Core Technology Patents or Isis Manufacturing and Analytical Patents, which will be governed Section 9.5.2(c) (Joint Patents and Know-How).

(c)           Joint Patents and Know-How.  Subject to Section 9.5.2(a) (Genzyme First Right to Enforce), Isis and Genzyme will confer and may agree jointly to take any reasonable measures they deem appropriate to stop activities in the Territory infringing the Joint Patents (other than Product-Specific Patents and Licensed Product Patents) or the use without proper authorization of any Joint Know-How and any expenses of taking such measures will be included as Program Costs.  If the Parties do not agree on whether or how to proceed with enforcement activity within either (i) sixty (60) days following the notice of alleged infringement or (ii) ten (10) days before the time limit to respond, if any, set forth in the Applicable Law for the filing of such actions, whichever comes first, then either Party may commence litigation with respect to the alleged or threatened infringement at its own expense.  In the event a Party brings an infringement action, the other Party will cooperate reasonably at the litigating Party’s expense, including being joined as a party-plaintiff and providing good faith testimony.  The other Party will have the right, at its expense, to retain its own counsel to monitor such litigation, and the costs associated with such monitoring will not be Program Costs.  Neither Party will have the right to settle any patent infringement or Know-How misappropriation litigation under this Section in a manner that diminishes the rights or interests of the other Party without the express written consent of such other Party.  For purposes of clarification, the grant of a license under a Joint Patent to a Third Party that would not otherwise result in a breach under this Agreement will not be considered to diminish the rights or interests of the other Party.  Notwithstanding the foregoing, this Section 9.5.2(c) will not apply to Joint Patents that are Product-Specific Patents or Licensed Product Patents or to the infringement of any Joint Patent that is a Isis Core Technology Patent by a Third Party product that [**] encoding apoB, each of which will be governed by Section 9.5.2(a) (Genzyme First Right to Enforce) above.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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9.5.3.Election Not to Enforce.

(a)           Isis Second Right.  In the event that Genzyme elects not to take action pursuant to Section 9.5.2(a) (Genzyme First Right to Enforce), Genzyme will so notify Isis in writing of its intention within ninety (90) days of Genzyme’s notice of such infringement activities to enable Isis to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Isis will have the right, but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.  Notwithstanding the foregoing, Genzyme will have the exclusive right to bring actions with respect to infringement of Product-Specific Patents or Licensed Product Patent.  Accordingly, Genzyme will not be required to notify Isis with respect to any election not to take action with respect to a Product-Specific Patent, and Isis will have no right to take reasonable measure to stop any infringement of Product-Specific Patents.

(b)           Genzyme Second Right.  In the event that Isis elects not to take action pursuant to Section 9.5.2(b) (Isis First Right to Enforce), Isis will so notify Genzyme in writing of its intention within ninety (90) days of Isis’ notice of such infringement activities to enable Genzyme to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Genzyme will have the right, but not the obligation, to take any such reasonable measures to stop any such infringing activities that involves a product that causes the [**].   If Genzyme desires to assert an Isis Core Technology Patent pursuant to this Section 9.5.3(b) and the infringing product is also Covered by a Product-Specific Patent, then Genzyme will assert both the Product-Specific Patent and the Isis Core Technology Patent, unless it obtains Isis’ written consent to assert only the Isis Core Technology Patent.

(c)           Due Consideration.  In any event, if one Party has elected not to take action pursuant to Section 9.5.2 (Right to Enforce), then it will explain its reasons for such decision to the other Party, and the other Party will consider these reasons in good faith prior to determining whether to exercise its second right to take action.

9.5.4.Procedures and Expenses.

(a)           The Party having the right to initiate any infringement suit under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce) above will have the sole and exclusive right to select counsel for any such suit and will pay all expenses of the suit, including attorneys’ fees and court costs and reimbursement of the other Party’s reasonable out-of-pocket expenses in rendering assistance requested by the initiating Party.  If required under Applicable Law in order for the initiating Party to initiate and/or maintain such suit, or if either Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case,

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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the other Party will join as a party to the suit and will execute and cause its Affiliates to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action.  In addition, at the initiating Party’s request, the other Party will provide reasonable assistance to the initiating Party in connection with an infringement suit at no charge to the initiating Party except for reimbursement by the initiating Party of reasonable out-of-pocket expenses incurred in rendering such assistance.  The non-initiating Party will have the right to participate and be represented in any such suit by its own counsel at its own expense.

(b)           If the Parties have mutually agreed that a Party should initiate an infringement action or take such other reasonable measures it deems appropriate to stop infringing activities under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce), then any expenses incurred by such Party to take such action will be included in Program Costs.

9.5.5.Recoveries.  If the Parties obtain from a Third Party infringer, in connection with such suit, any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation), such amounts will be allocated as follows:

(a)           If the Parties mutually agreed that such Third Party infringer should be pursued under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce) and the expenses incurred in connection with such action were included in Program Costs, then any amounts recovered by either Party will be included as Net Revenues.  In such case, the Party pursuing the Third Party infringer under Section 9.5.2 or 9.5.3 will bear all payments awarded against or agreed to be paid by such Party pursuant to such action, including any costs or expenses incurred that exceed the amounts recovered by such Party, but such payments, costs and expenses will be included as Program Costs.

(b)           If the Parties did not mutually agree that such Third Party infringer should be pursued under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce) and the expenses incurred in connection with such action were not included in Program Costs, then any amounts recovered by either Party will be used to reimburse the Parties for their reasonable costs and expenses, including attorneys’ fees incurred in making such recovery (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses), with any remainder to be retained by the Party initiating action under Section 9.5.2 (Rights to Enforce) or Section 9.5.3 (Election Not to Enforce).  In such case, such initiating Party will bear all payments awarded against or agreed to be paid by such Party pursuant to such action, including any costs or expenses incurred that exceed the amounts recovered by such Party, and such payments will not be included as Program Costs.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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9.6.Claimed Infringement of Third Party Rights.

9.6.1.Notice.  In the event that a Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, any Party, or any of such Party’s respective Affiliates or sublicensees, claiming infringement of its patent rights or unauthorized use or misappropriation of its know-how, based upon the development, manufacture or commercialization of the Product in the Territory (“Infringement Claim”), such Party will promptly notify the other Party of the Infringement Claim or the commencement of such action, suit or proceeding, enclosing a copy of the Infringement Claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

9.6.2.Defense of Infringement Claim; Declaratory Judgment Actions.

(a)           Genzyme will have the first right, but not the obligation, to control the defense of any Infringement Claim brought against either Party or any of its Affiliates or sublicensees arising out of the development, manufacture or commercialization of the Product in the Territory.  Isis will have the second right, but not the obligation to control the defense of an Infringement Claim in the event Genzyme fails to exercise its right to assume such defense within thirty (30) days following written notice from the other Party of such Infringement Claim.  In addition, if applicable prior to the initiation of an Infringement Claim, Genzyme will have the exclusive right, but not the obligation, to bring a declaratory judgment action relating to any Patent that a Third Party has alleged is infringed by the development, manufacture or commercialization of the Product in the Territory.  Genzyme will not settle any such claims or suits in a manner that admits the invalidity or unenforceability of any Isis Core Technology Patent or Isis Manufacturing and Analytical Patent or that agrees to any injunction or other equitable remedy binding Isis without obtaining the prior written consent of Isis.  Similarly, Isis will not settle any such claims or suits in a manner that admits the invalidity or unenforceability of any Product-Specific Patent or Licensed Product Patent or that agrees to any injunction or other equitable remedy binding Genzyme without obtaining the prior written consent of Genzyme.  All litigation costs and expenses incurred in connection with such Infringement Claim or declaratory judgment action, and all damages, payments and other amounts awarded against, or payable by, either Party, including under any settlement with such Third Party, will be included as Program Costs.

(b)           The Party controlling the defense of an Infringement Claim or bringing such declaratory judgment action will have the sole and exclusive right to select counsel for any Infringement Claim; provided, however, that it will consult with the other Party with respect to selection of counsel for such defense.  The Party controlling the defense of an Infringement Claim or bringing such declaratory judgment action will keep the other Party informed, and will from time to time

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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consult with the other party regarding the status of any such claims and will provide the other party with copies of all documents filed in, and all written communications relating to, any suit brought in connection with such claims.  The other Party will also have the right to participate and be represented in any such claim or related suit, at its own expense.

9.6.3.Other Challenges.  If the JPC determines (or if after the JPC disbands, the Parties mutually agree) that a Patent owned by a Third Party is or could potentially or arguably be infringed by the development, manufacture or commercialization of the Product in the Territory, then the Parties will discuss the matter and agree upon a strategy relating to such Third Party Patent; provided, however, that if the Parties fail to agree upon such a strategy, then subject to Section 9.3 (Filing, Prosecution and Maintenance of Patents) and Section 9.5 (Enforcement of Patents and Know-How), Genzyme will determine the appropriate strategy in its reasonable discretion.  If, consistent with such strategy, either or both Parties challenge such Third Party Patent through opposition, re-examination, nullity or revocation proceeding, or other available administrative mechanism, then all costs and expenses incurred by the Parties in connection with such challenge will be included as Program Costs.

9.7.Other Infringement Resolutions.  In the event of a dispute or potential dispute that has not ripened into a demand, claim or suit of the types described in Section 9.5 (Enforcement of Patents and Know-How) and Section 9.6 (Claimed Infringement of Third Party Rights) (e.g., actions seeking declaratory judgments and revocation proceedings), the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute (including sharing in and allocating the payment or receipt of damages, license fees, royalties and other compensation) will apply.  Each Party will immediately notify the other Party of any certification of which it becomes aware filed pursuant to 21 U.S.C. § 355(b)(2)(A) or      § 355(j)(2)(A)(vii) (or any amendment or successor statute thereto) or declaratory judgment action filed by a Third Party claiming that a Product-Specific Patent, Licensed Product Patent, Special Isis Core Technology Patent is invalid or that infringement of such Patent will not arise from the development, manufacture, use or sale of any product by a Third Party.  The provisions of Section 9.5 (Enforcement of Patents and Know-How) will thereafter apply as if such Third Party were an infringer or suspected infringer; provided, however, that in the event that Genzyme elects not to take action, Genzyme will so notify Isis in writing of its intention within ten (10) days of Genzyme’s notice of such infringement activities to enable Isis to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights.

9.8.Patent Term Extensions.  The Parties will use commercially reasonable efforts to obtain all available supplementary protection certificates (“SPC”) and other extensions of Licensed Patents and Product-Specific Patents (including those available under the Hatch-Waxman Act).  The Parties will cooperate with each other in gaining patent term restorations, extensions and/or SPCs wherever applicable to Licensed Patents and Product-Specific Patents.  If more than one patent is eligible for extension or patent term

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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restoration, Genzyme will determine, in its sole discretion, a strategy that will be designed to maximize patent protection and commercial value for the Product, and the Parties will seek patent term restorations in accordance with that strategy.  The Party who is responsible under this Agreement for prosecution and maintenance of the relevant Patent will make the filings for such extensions and certificates as directed by Genzyme.  Each Party will execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions.

9.9.Orange Book Listings.  At least fifteen (15) business days prior to the expiration of the time period under 21 C.F.R. § 314.53, or any successor regulation, for submitting patent information pertaining to Product-Specific Patents, Licensed Product Patents, Isis Core Technology Patents or Isis Manufacturing and Analytical Patents with respect to the Product, Genzyme will submit to Isis any such draft submission, including any forms such as Form FDA 3542, Form FDA 3542a or any equivalent thereof, for Isis’ review and comment.  Genzyme will consider in good faith any comments made by Isis pursuant to this Section.  In the event that the Parties, after good faith discussions, cannot agree with respect to any decision to be made concerning such submission of patent information, Genzyme will make such decision.

9.10.Cooperative Research and Technology Act Acknowledgement.  The Parties acknowledge and agree that this Agreement is a joint research agreement for the purposes of Section 35 U.S.C. 103(c).

9.11.Common Interest.  All information exchanged between the Parties representatives regarding the preparation, filing, prosecution, maintenance, or enforcement of the Product-Specific Patents and Licensed Patents will be deemed Confidential Information.  In addition, the Parties acknowledge and agree that, with regard to such preparation, filing, prosecution, maintenance, and enforcement of the Product-Specific Patents and Licensed Patents, the interests of the Parties as collaborators and licensor and licensee are to obtain the strongest patent protection possible, and as such, are aligned and are legal in nature.  The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning the Product-Specific Patents and the Licensed Patents, including privilege under the common interest doctrine and similar or related doctrines.

9.12.Product Trademarks.  Genzyme will select and own the Product Trademarks for the Product and will be solely responsible for applying for and maintaining registrations the Product Trademarks in the Territory (including payment of costs associated therewith), and all goodwill associated therewith will inure to the benefit of Genzyme.  All costs incurred by Genzyme to apply for and maintain Product Trademarks, will be included as Program Costs.  Genzyme will assume full responsibility, at its sole cost and expense, for any infringement of a Product Trademark by a Third Party, and will defend and indemnify Isis for and against any claims of infringement of the rights of a Third Party by the use of a Product Trademark in connection with the Product in accordance with Section 10.3 (Indemnification).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Article 10.

REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

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

10.1.1.it is a duly organized and validly existing corporation under the laws of its jurisdiction of incorporation;

10.1.2.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;

10.1.3.the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder do not conflict with or violate any requirement of Applicable Law or any provision of its articles of incorporation or similar organizational documents, its bylaws, or the terms or provisions of any agreement or other instrument to which it is a party or by which it is bound, or any order, award, judgment or decree to which it is a party or by which it is bound; and

10.1.4.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.

10.2.Isis’ Representations and Warranties.  Isis represents and warrants to Genzyme that the statements contained in this Section 10.2 are true and correct as of the Execution Date with each such representation and warranty subject only to such exceptions, if any, as are set forth in the particular section in the Disclosure Schedule attached hereto as Exhibit F that corresponds to the particular section number in this Agreement:

10.2.1.Schedule 1.52, Schedule 1.56 and Schedule 1.99 set forth true, correct and complete lists of all Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, and Product-Specific Patents, respectively, and all Licensed Patents used in the development or commercialization of Mipomersen and existing as of the Execution Date and indicates whether each such Patent is owned by Isis or licensed by Isis from a Third Party and if so, identifies the licensor or sublicensor from which the Patent is licensed.

10.2.2.A true, correct and complete list of any Third Party Agreements related to Mipomersen and a true and accurate calculation of the royalty burden for Mipomersen (as it exists on the Execution Date) is set forth on Schedule 10.2.2.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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10.2.3.	With respect to the Licensed Patents and all Know-How that is developed by Isis or received by Isis under an agreement with a Third Party that is used in the development or commercialization of Mipomersen [**], Isis has the sufficient legal and/or beneficial title and ownership or rights to grant the Product License to Genzyme under such Licensed Patents and Know-How and the grant of such license to Genzyme does not violate the terms of any Third Party Agreement or any other agreement Isis has with a Third Party.
10.2.4.	Isis exclusively owns all rights, title, and interests in, and has good and marketable title to, (a) the Product-Specific Patents and the [**]Patent (b) any other Patent identified on Schedule 1.52 or Schedule 1.56 as being owned by Isis, free of any lien, encumbrance, restriction, or other right or interest granted to any Third Party. Isis owns or Controls all Know-How developed by Isis or received by Isis under an agreement with a Third Party that is used in the development or commercialization of Mipomersen [**].
10.2.5.	Each of the Product-Specific Patents, and each of the Licensed Patents used in the development or commercialization of Mipomersen properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Patent is issued or such application is pending.
10.2.6.	With respect to all Product-Specific Patents owned by Isis, and all Licensed Patents owned by Isis and used in the development or commercialization of Mipomersen, (a) each person who has or has had any rights in or to each of such Patents has executed an agreement assigning his, her or its entire right, title and interest in and to such Patents to Isis and (b) to the best of Isis’ knowledge, each such inventor has complied in all material respects with all applicable duties of candor and good faith in dealing with any patent office, including the duty to disclose to any applicable patent office all information known to be material to patentability.
10.2.7.	To the best of Isis’ knowledge, no circumstances or grounds exist that would invalidate, reduce or eliminate, in whole or in part, the enforceability, validity or scope of any Product-Specific Patent or any Licensed Patent used in the development or commercialization of Mipomersen.
10.2.8.	Isis is not aware of any Patents or Know-How owned or Controlled by a Third Party that would be infringed by Genzyme during the development or commercialization of Mipomersen in its current form. To the best of Isis’ knowledge, Isis has not misappropriated from any Third Party any Know-How used in the development or commercialization of Mipomersen.
10.2.9.	To the best of Isis’ knowledge, no actions, suits, claims, disputes or proceedings concerning the Licensed Patents are currently pending or are threatened, that if determined adversely to Isis would have a material adverse effect on or would impair Genzyme’s rights under the Product License.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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10.2.10.	Isis is not subject to any agreement with any Third Party or to any outstanding order, judgment or decree of any court or administrative agency that restricts it in any way from granting to Genzyme the Product License.
10.2.11.	Isis has not granted, or permitted to be attached, and it will not grant or permit to be attached, any lien, security interest or other encumbrance with respect to any Product-Specific Patent, or any Licensed Patent or Know-How used in the development or commercialization of Mipomersen which would adversely affect the rights granted to Genzyme hereunder.
10.2.12.	Each Third Party Agreement related to Mipomersen is in full force and effect, and Isis, and to the best of Isis’ knowledge, each counterparty thereto, is in compliance in all material respects with all such Third Party Agreements and no circumstances or grounds exist that would reasonably be expected to give rise to a claim of material breach or right of rescission, termination, revision or amendment of such Third Party Agreements.
10.2.13.	Isis has not assigned, licensed, sublicensed, granted any interest in or options to, or entered into an agreement with respect to the Licensed IP with a Third Party that would adversely impair Genzyme’s exclusive rights under this Agreement, except for the agreements identified on Schedule 2.1.
10.2.14.	Isis has not received any claim alleging that Isis’ development of Mipomersen or use of any Product-Specific Patent or any Licensed Patent or Know-How used in the development or commercialization of Mipomersen interferes with, infringes, or misappropriates any intellectual property rights of any Third Party (including any claim that Isis must license or refrain from using any intellectual property rights of any Third Party in order to develop, make, use, sell or offer for sale Mipomersen or any product or technology using or incorporating the Licensed IP), and to the best of Isis’ knowledge, the development and commercialization of Mipomersen and the use of any Product-Specific Patent or any Licensed IP used in the development or commercialization of Mipomersen will not interfere with, infringe or misappropriate the intellectual property rights of any Third Party. To the best of Isis’ knowledge, no Third Party has interfered with, infringed upon or misappropriated the Licensed IP in the making, using or selling of a lipid lowering product.
10.2.15.	Isis holds, and is operating in material compliance with, such exceptions, permits, licenses, franchises, authorizations and clearances of any governmental entity required in connection with the current development of Mipomersen. Isis has not received any warning letters or written correspondence from any governmental entity requiring the termination, suspension or modification of any clinical or pre-clinical studies or tests with respect to Mipomersen. Isis has conducted and required its contractors to conduct all clinical studies related to Mipomersen in accordance with cGCP, cGLP and Applicable Law.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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10.2.16.	As of the Execution Date, Isis has prepared, maintained and retained all Regulatory Materials required to be maintained or reported pursuant to and in accordance with Applicable Law and the Regulatory Materials do not contain any materially false or misleading statements.
10.2.17.	Except for the agreements identified on Schedule 2.1, Isis has not granted to any Third Party rights under the Licensed IP to research, develop or commercialize any nucleic acid that hybridizes to a nucleic acid molecule encoding apoB.

10.3.Indemnification.

10.3.1.Indemnification by Genzyme.  Genzyme will indemnify, hold harmless, and defend Isis, its Affiliates, and their respective directors, officers, employees and agents (“Isis Indemnitees”) from and against any and all action, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees) arising from a claim, suit, proceeding or other action of a Third Party (collectively, “Losses”) arising out of or resulting from, (a) any breach of, or inaccuracy in, any representation or warranty made by Genzyme in this Agreement, or any breach or violation of any covenant or agreement of Genzyme in or pursuant to this Agreement, and (b) the gross negligence or willful misconduct by or of Genzyme, its Affiliates and their respective directors, officers, employees and agents.  This indemnification excludes Losses arising out of Third Party Infringement Claims resulting from Genzyme’s exercise in accordance with the terms of this Agreement of any intellectual property rights granted by Isis hereunder, including Genzyme’s exercise of its rights under the Product-Specific Patents.  Furthermore, Genzyme will have no obligation to indemnify the Isis Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Isis in this Agreement, or any breach or violation of any covenant or agreement of Isis in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Isis Indemnitees.

10.3.2.Indemnification by Isis.  Isis will indemnify, hold harmless, and defend Genzyme, its Affiliates and their respective directors, officers, employees and agents (“Genzyme Indemnitees”) from and against any and all Losses arising out of or resulting from, (a) any breach of, or inaccuracy in, any representation or warranty made by Isis in this Agreement, or any breach or violation of any covenant or agreement of Isis in or pursuant to this Agreement, (b) actions taken by Isis with respect to Mipomersen, the Product, the Licensed IP or the Product-Specific Patents prior to the Execution Date, and (c) the gross negligence or willful misconduct by Isis, its Affiliates, and their respective directors, officers, employees and agents.  Isis will have no obligation to indemnify the Genzyme Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Genzyme in this Agreement, or any breach or violation of any covenant or

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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agreement of Genzyme in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Genzyme Indemnitees.

10.3.3.Special Indemnification for Manufacturing Defects.  Each Party will indemnify, hold harmless, and defend the other Party and its Affiliates and their respective directors, officers, employees and agents from and against any and all Losses arising out of or resulting from product liability claims resulting from the failure of any API or Product manufactured by such Party (or a Third Party on behalf of such Party) to conform to the applicable specifications or any failure of such Party (or a Third Party on behalf of such Party) to meet the standards of cGMP for the API or Product.  Neither Party will have any obligation to indemnify the other Party and its related indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by the other Party in this Agreement, or any breach or violation of any covenant or agreement of the other Party in or pursuant to this Agreement, or the gross negligence or willful misconduct by or of any of the other Party or its related indemnitees.  Notwithstanding the foregoing, the indemnification obligations of each Party set forth in this Section 10.3.3 (Special Indemnification for Manufacturing Defects) will only apply to the extent that there would be a Net Loss if such Damages were included in Program Costs in the applicable calendar year.  In other words, the manufacturing Party will be required to indemnity the other Party under this Section 10.3.3 only to the extent there are insufficient Net Revenue in the applicable calendar year to permit such Damages to be fully credited as Program Costs.

10.3.4.Damages that are Program Costs.  The indemnification obligations of each Party set forth in Section 10.3.1 (Indemnification by Genzyme) and 10.3.2 (Indemnification by Isis) will exclude any Losses resulting from Damages to the extent that the Indemnitee has been reimbursed for such Damages by virtue of the inclusion of such Damages in Program Costs.

10.3.5.Indemnification Procedure.  In the event of any claim, suit, proceeding or action of a Third Party (a “Third Party Claim”) giving rise to an indemnification obligation under this Section 10.3, the person or entity entitled to indemnification under this Section 10.3 (individually, an “Indemnitee”), will promptly notify the Party from whom indemnification is sought (the “Indemnifying Party”), in writing of the Third Party Claim (it being understood and agreed, however, that the failure by an Indemnitee to give notice of a Third Party Claim as provided in this Section 10.3 will not relieve the Indemnifying Party of its indemnification obligation under this Agreement, except and only to the extent that such Indemnifying Party is actually prejudiced as a result of such failure to give notice).  The Indemnifying Party will manage and control, at its sole expense, the defense of the claim and its settlement.  Within thirty (30) days after delivery of such notification, the Indemnifying Party may, upon written notice to the Indemnitee, assume control of the defense of such Third Party Claim with counsel reasonably satisfactory to the Indemnitee.  The Indemnitee may participate therein

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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at its own expense; provided, however, that if the Indemnifying Party assumes control of such defense and the Indemnitee reasonably concludes, based on advise from counsel, that the Indemnifying Party and the Indemnitee have conflicting interests with respect to such Third Party Claim, the Indemnifying Party will be responsible for the reasonable fees and expenses of counsel to the Indemnitee solely in connection therewith; provided further, however, that in no event will the Indemnifying Party be responsible for the fees and expenses of more than one counsel in any one jurisdiction for all Indemnified Parties.  If the Indemnifying Party does not assume control of the defense of the Third Party Claim within thirty (30) days after delivery of Indemnitee’s notice of such claim and request for indemnification, the Indemnitee(s) may defend such Third Party Claim. Each Party will keep the other Party advised of the status of such Third Party Claim and the defense thereof, and the Indemnifying Party will consider recommendations made by the other Party with respect thereto.  If the Indemnifying Party does assume control of the defense of the Third Party Claim, the Indemnifying Party will not agree to any settlement of such Third Party Claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnitee from all liability with respect thereto or that imposes any liability or obligation on the Indemnitee without the prior written consent of the Indemnitee.  The Indemnifying Party will not be obligated to indemnify the Indemnitee(s) for any Third Party Claim settled by the Indemnitee(s) without the Indemnifying Party’s prior written consent, which consent will not be unreasonably withheld, delayed or conditioned.

10.4.Insurance.  The parties will obtain by the Execution Date and maintain at all times during the term of this Agreement, Products Liability Insurance, including Clinical Trial coverage, with reputable and financially secure insurance carriers each having an A.M. Best rating of [**] or better, to cover their respective indemnification obligations under Section 10.3 (Indemnification), with limits of not less than [**] dollars [**] per occurrence and [**] dollars [**] in the aggregate.  Each party will provide the other with a Certificate of Insurance evidencing this coverage within thirty (30) days after the Execution Date.  Genzyme will have the right to maintain self-insurance with respect to all or a part of its insurance obligations under this Section 10.4.

Article 11.

TERM AND TERMINATION

11.1.Term.  The term of this Agreement (the “Term”) commences on the Effective Date and, unless earlier terminated in accordance with the provisions of this Article 11, will continue in perpetuity.

11.2.Termination.

11.2.1.Genzyme Right to Terminate.  At any time during the Term, but following payment by Genzyme of the upfront license fee under Section 8.1, Genzyme will be entitled to terminate this Agreement by providing written notice to Isis of such

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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termination.

11.2.2.Termination for Material Breach.

(a)           If either Party believes that the other Party is in material breach of this Agreement (other than with respect to Genzyme’s failure to use Commercially Reasonable Efforts under Section 5.2.2 (Performance of the Development Program) or Section 6.1 (Commercialization Responsibilities) or Section 7.3 (Research Efforts), which is governed by Section 11.2.3 below), 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, however, 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 ninety (90) 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 ninety (90) 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 (a) cure such breach within the ninety (90) day or thirty (30) day period, as applicable, or (b) use Commercially Reasonable Efforts to carry out the plan and cure the breach, the non-breaching Party may terminate this Agreement 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 ninety (90) day period or such other reasonable cure period, as applicable, the Other Party will not have the right to terminate this Agreement in accordance with this Section 11.2.2 unless and until it has been determined in accordance with Article 13 (Dispute Resolution) that this Agreement was materially breached by the allegedly breaching Party and that Party fails to cure such breach within the allowed cure period following such determination.  It is understood and acknowledge that during the pendency of such dispute, all 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 11.2.2 will be subject to and will not limit the provisions of Section 11.2.3 (Termination by Isis for Failure of Genzyme to Use Commercially Reasonable Efforts) and Section 11.3 (Consequences of Termination).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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11.2.3.Termination by Isis for Failure of Genzyme to Use Commercially Reasonable Efforts.

(a)           Subject to Sections 11.2.3(b) and 11.2.3(c) below, Isis will have the right to terminate this Agreement on (i) a Major Market Country-by-Major Market Country basis if Genzyme is in material breach of its obligations to use Commercially Reasonable Efforts (A) under Section 5.2.2 (Performance of the Development Program) to develop the Product in such Major Market Country or (B) under Section 6.1 (Commercialization Responsibilities) to commercialize the Product in such Major Market Country and (ii) in its entirety if Genzyme is in material breach of its obligations to use Commercially Reasonable Efforts (A) under Section 5.2.2 (Performance of the Development Program) to develop the Product in all Major Market Countries or (B) under Section 6.1 (Commercialization Responsibilities) to commercialize the Product in all Major Market Countries or (C) under Section 7.3 (Research Efforts) to conduct research activities designed to advance a Product to the stage where it can be developed pursuant to a Development Plan.  Notwithstanding the foregoing, the Agreement will not so terminate (in its entirety or in any particular Major Market Country) unless (x) Genzyme is given ninety (90) days prior written notice by Isis of Isis’ intent to terminate, stating the reasons and justification for such termination and recommending steps which Genzyme should take and (y) Genzyme or its Sublicensee has not used good faith Commercially Reasonable Efforts in such Major Market Country(ies) during the ninety (90) day period following such notice to diligently pursue the development and/or commercialization of the Product.

(b)           It is understood and acknowledged that if Genzyme (by itself or through its Affiliates or Sublicensees) uses Commercially Reasonable Efforts to research, develop or commercialize a Product in each and every Major Market Country, Genzyme will be deemed to be in compliance with its obligation under Section 5.2.2 (performance of Development Program), Section  6.1 (Commercialization Responsibilities) and Section 7.3 (Research Efforts) to use Commercially Reasonable Efforts to research, develop and commercialize a Product with respect to all countries in the world.

(c)           If Genzyme disputes in good faith the existence or materiality of an alleged breach specified in a notice provided by Isis pursuant to Section 11.2.3(a) above, and provides notice to Isis of such dispute within the ninety (90) day period following such notice provided by Isis, Isis will not have the right to terminate this Agreement unless and until the existence of such material breach or failure by Genzyme has been determined in accordance with Article 13 and Genzyme fails to cure such breach within ninety (90) days following such determination.  It is understood and acknowledged that during the pendency of such dispute, all the terms and conditions of this Agreement will remain in effect and the Parties will continue to perform all of their respective obligations hereunder.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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(d)           This Section 11.2.3 and Section 11.3 (Consequences of Termination) set forth Isis’ sole and exclusive remedy for Genzyme’s breach of its obligation to use Commercially Reasonable Efforts under Section 5.2.2 (Performance of the Development Program) or Section 6.1 (Commercialization Responsibilities) or Section 7.3 (Research Efforts).

11.3.Consequences of Termination.  The following terms will apply on termination of this Agreement:

11.3.1.Licenses.  Upon termination of this Agreement by either Party pursuant to this Article 11, the Product License will terminate and Genzyme, its Affiliates and Sublicensees will cease selling the Product.

11.3.2.Return of Information and Materials.  Upon termination of this Agreement by either Party pursuant to this Article 11, 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.

11.3.3.Accrued Rights. Termination 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, (a) no milestone payments under Section 8.2 (Milestones) and (b) no payments under Section 8.5.2 (Sharing of Net Profits) will be payable by Genzyme following termination of this Agreement, except to the extent that the milestone event was achieved (in the case of milestone payments) or the Net Profits were achieved (in the case of net profit sharing) prior to such termination.

11.3.4.Survival.  The following provisions of this Agreement will survive the expiration or termination of the Agreement:  Section 6.5 (Safety Reporting), Section 8.8 (Audits and Interim Reviews), Section 9.3.2 (Terms of Sharing Agreement), Section 10.3 (Indemnification), Section 11.3 (Consequences of Termination), Section 11.4 (Remedies for Isis’ Material Breach), Article 12 (Confidentiality), Article 13 (Dispute Resolution), and Article 14 (Miscellaneous).

11.3.5.Reversion.

(a)           Isis Reversion Rights.  If (a) Genzyme terminates the Agreement under Section 11.2.1 (Genzyme Right to Terminate) or (b) Isis terminates the Agreement under Section 11.2.2 (Termination for Material Breach) or Section 11.2.3 (Termination by Isis for Failure of Genzyme to Use Commercially Reasonable Efforts), Genzyme will:

(i)grant to Isis a non-exclusive, sublicensable, worldwide license to

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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any Product Trademarks, Genzyme Program Patents and other Patents owned or Controlled by Genzyme as of the date of termination that Cover the Product;

(ii)transfer to Isis, for Isis’ use with respect to the development and commercialization of the Product, any data, results, Regulatory Materials and files in Genzyme’s possession as of the date of termination that relate solely to the Product; and

(iii)re-assign to Isis the Product-Specific Patents assigned to Genzyme pursuant to Section 9.1.1 (Assignment of Product-Specific Patents) using a form of assignment substantially similar to the one attached as Exhibit E hereto (collectively with clauses (i) and (ii) above, the “Reversion”).

(b)           Limitation.  Isis hereby agrees and acknowledges that it may only use the license granted and the materials transferred pursuant to clauses (a)(i) and (a)(ii) of Section 11.3.5(a) in connection with the development and commercialization of the Product for therapeutic purposes.

(c)           Consideration for Reversion Rights.

(i)In consideration for the rights granted and materials transferred by Genzyme to Isis under Section 11.3.5(a) above, Isis will pay to Genzyme a royalty on Net Revenue as follows: (a) [**] of Net Revenue if the Reversion occurs prior to [**], (b) [**] of Net Revenue if the Reversion occurs after the [**] but prior to the [**] and (c) [**] of Net Revenue if the Reversion occurs after the [**] and at the time of or after the [**].

(ii)Such payments will be governed by the financial provisions in Sections 8.6 (Periodic Reporting and Reconciliation), 8.7 (Audits and Interim Reviews), 8.9 (Withholding Taxes) and 8.10 (Interest on Late Payments).  In addition, the definition of Net Sales will apply to Isis in the same way as they applied to Genzyme prior to such termination of the Agreement.

(iii)Notwithstanding the foregoing, in no event will the total royalty payable to Genzyme exceed the aggregate amount of Program Costs that Genzyme has contributed to the Product, with interest thereon at ten percent (10%) per calendar year, compounded monthly, net of any amounts paid for by Isis or covered by Net Revenue.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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11.4.Remedies for Isis’ Material Breach.

11.4.1.Termination of Committees and Information Sharing.  If Isis materially breaches this Agreement and fails to cure such breach within the time periods provided under Section 11.2.2 (Termination for Material Breach) and Genzyme does not wish to terminate this Agreement in its entirety, then, in addition to any other remedies Genzyme may have under this Agreement or otherwise, Genzyme will have the right to do any or all of the following in Genzyme’s discretion: (a) terminate Isis’ right to participate in the JDC and JPC and any other subcommittees or working groups established pursuant to this Agreement, each of which will be disbanded; (b) terminate the participation of Isis in any ongoing research and development programs and Genzyme’s funding obligations associated therewith, (c) make all decisions required to be made by such committees or the Parties collectively under this Agreement in connection with the development and commercialization of the Product, (d) exclude Isis from all discussions with Regulatory Authorities regarding Isis Products, (e) require Isis to assign to Genzyme all of Isis’ right, title and interests in any IND or other Regulatory Materials then held by Isis pertaining to Products and any agreements with Third Parties related solely to the development or supply of the Product; (f) require Isis to enable Genzyme or a Third Party manufacturer to manufacture clinical and initial commercial quantities of the Product in lieu of Isis, with such transition occurring on a commercially reasonable timetable; (g) terminate Genzyme’s obligation to make further disclosures of Know-How or other information to Isis pursuant to this Agreement (including pursuant to Section 5.4.2 (Transfer from Genzyme to Isis) and Section 6.4 (Isis Safety Database)), other than reports required by Section 8.6 (Periodic Reporting and Reconciliation) and as reasonably required to permit Isis to perform its remaining obligations under this Agreement.  In addition, if Isis has not completed the development activities that are its responsibility under this Agreement, then Genzyme may, but will not be obligated to, assume all responsibility for all such development activities that would have otherwise been Isis’ responsibility under the Agreement.  Isis will cooperate with the foregoing and provide to Genzyme and its Third Party contractors all Know-How, assistance, assignments and other support reasonably requested to assist Genzyme in assuming complete responsibility for the development and manufacture of the Product in an efficient and orderly manner.

11.4.2.Genzyme’s Right of Setoff.  If Isis materially breaches this Agreement and fails to cure such breach within the time periods provided under Section 11.2.2 (Termination for Material Breach) and Genzyme does not wish to terminate this Agreement in its entirety, then, in addition to any other remedies Genzyme may have under this Agreement or otherwise (an “Isis Breach Event”), Genzyme may setoff against any amounts owed to Isis pursuant to Article 8 (Financial Provisions) its good faith estimate of the amount of any losses, damages and expenses incurred by Genzyme as a result of Isis’ breach of this Agreement (the “Setoff Amount”).  If Genzyme exercises its setoff right under this Section 11.4.2, Genzyme will provide Isis with a written certificate, signed by Genzyme’s Chief Financial Officer, certifying that the amount setoff by Genzyme represents

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Genzyme’s good faith estimate of such losses, damages and expenses.  Notwithstanding the foregoing, if Isis notifies Genzyme in writing that it disputes Genzyme’s assertion that Isis is in material breach of this Agreement or the amount setoff by Genzyme, then (a) Genzyme will initiate the dispute resolution process set forth in Article 13 (Dispute Resolution), and (b) pending the Parties’ agreement regarding the appropriate setoff (if any) or a determination by the mediator of the proper amount that Genzyme may setoff (if any) in accordance with Section 13.2 (Mediation), Genzyme will pay the Setoff Amount into an interest-bearing escrow account established for the purpose at a bank.  If the Parties cannot settle their dispute by mutual agreement, then, in accordance with Section 13.2.2 (Mediation of Setoff Disputes) the mediator will determine (1) the amount (if any) that Genzyme may setoff against future payments to Isis going forward, and (2) whether any portion of the escrow account should be released to Isis.  In the event that it is finally determined pursuant to Article 13(Dispute Resolution) by a court of competent jurisdiction that Genzyme has setoff an amount that exceeds the amount of losses, damages and expenses actually incurred by Genzyme as a result of Isis’ breach of this Agreement, then Genzyme will promptly pay Isis the amount of such excess, plus interest on such amount as provided for in Section 8.10 (Interest on Late Payments), with interest accruing from the time Genzyme applied such excess setoff.

Article 12.
CONFIDENTIALITY; PUBLIC DISCLOSURE

12.1.Non-Disclosure.  Genzyme and Isis agree that all information relating to the Licensed IP, the terms and conditions of this Agreement, or any activities conducted in connection with or pursuant to this Agreement and disclosed by either Party in accordance with this Agreement (“Confidential Information”) will be used and disclosed by the receiving Party only to perform its obligations and exercise its rights under this Agreement.  Information relating to the development of the Product, the Licensed IP and the terms and conditions of this Agreement will be considered the Confidential Information of both Parties under the Agreement, as if both Parties were receiving Parties.  Notwithstanding the foregoing, “Confidential Information” will not include information that the receiving Party can establish:

(a)           was already known by the receiving Party (other than under an obligation of confidentiality) at the time of disclosure by the disclosing Party;

(b)           was generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving Party;

(c)           became generally available to the public or otherwise part of the public domain after its disclosure or development, as the case may be, other than through any act or omission of the receiving Party or any of its Affiliates;

(d)           was disclosed to the receiving Party, other than under an obligation of

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

70

confidentiality, by a Third Party who had no obligation to the disclosing Party not to disclose such information to others; or

(e)           was independently discovered or developed by or on behalf of the receiving Party without the use of any Confidential Information belonging to the disclosing Party.

12.2.Authorized Disclosure and Use.  Notwithstanding the foregoing provisions of Section 12.1, each Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is reasonably necessary to:

(a)           prosecute or defend litigation,

(b)           comply with applicable governmental laws and regulations (including the rules and regulations of the Securities and Exchange Commission); or

(c)           make filings and submissions to, or correspond or communicate with, any government authority.

In the event a Party deems it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to clauses (a), (b) and (c) of this Section 12.2, the disclosing Party will to the extent possible give reasonable advance notice of such disclosure to the other Party and take reasonable measures to ensure confidential treatment of such information.  Each Party will promptly notify the other Party upon becoming aware of any misappropriation or unauthorized disclosure or use of the other Party’s Confidential Information.

12.3.Terms of Agreement.  The Parties agree that the terms of this Agreement are confidential and will not be disclosed by either Party to any Third Party (except to a Party’s professional advisors, including, without limitation, accountants, financial advisors, and attorneys) without prior written permission of the other Party; provided, however, that (a) either Party may make any filings of this Agreement required by Applicable Law in any country so long as such Party uses its reasonable efforts to obtain confidential treatment for portions of this Agreement as available, consults with the other Party, and permits the other Party to participate, to the greatest extent practicable, in seeking a protective order or other confidential treatment; (b) either Party may disclose this Agreement on a confidential basis to potential Third Party investors or acquirers or, in the case of Genzyme, to potential Sublicensees, in each case in connection with due diligence or similar investigations; and (c) a Party may publicly disclose, without regard to the preceding requirements of this Article 12 (Confidentiality), information that was previously publicly disclosed in compliance with such requirements.

12.4       Public Disclosures.

(a)           The Parties have agreed upon, and from time to time will agree upon updates to, a communication strategy document containing detailed substantive messaging and a detailed fact sheet with respect to the development, regulatory

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

71

Approval process, manufacturing and commercialization of the Product (the “Communications Plan”).  The Communication Plan will identify agreed spokespeople according to subject matter and will include a calendar detailing events (investor and medical meetings, earnings dates, etc) and anticipated new Product disclosures warranting press releases, updates to any slide presentation or other communication materials.  If the Parties are unable to agree upon the content of a particular disclosure in any update to the Communications Plan, then the Party to whom the Agreement assigns primary responsibility over the subject matter of the disclosure will have the right to decide upon the appropriate content.  Accordingly, in the event of such a disagreement, Isis will have the right to decide upon the appropriate disclosure on scientific matters, and Genzyme will have the right to decide upon the appropriate disclosure for pre-clinical and clinical development, regulatory, and commercial matters.  If any spokesperson identified in the Communications Plan leaves the employ of a Party or changes roles such that it is no longer appropriate for him or her to serve as a spokesperson, the Party who employs such spokesperson may designate a replacement.

(b)In addition, from time to time the JDC will approve a scientific and medical publication plan (the “Scientific Publication Plan”).  The Parties will refrain from making any public communications or disclosures regarding the Product other than those set forth in the Communications Plan or as expressly contemplated by the Scientific Publication Plan.  Without limiting the generality of the foregoing, except for the specific disclosures set forth in the Communication Plan or as otherwise expressly contemplated by the Scientific Publication Plan, each Party will refrain from making any public disclosures concerning (i) the status of any Approval, (ii) any application for any Approval, or (iii) any communication with or from any Regulatory Authority.  Isis will refer to Genzyme, in its capacity as holder of the IND, NDA or other Approval (as applicable) for the Product, any questions it may receive concerning these matters that call for information beyond that provided in the Communications Plan.

(c)To the extent that either Party proposes to make any public disclosure that deviates from the Communications Plan, it will submit to the other Party an initial draft of any press release, slide presentation or other public communication for review and comment at least five (5) Business Days in advance of such proposed public communication.  In such event, each Party will not make any public communication unless and until the Parties revise the Communications Plan in accordance with Section 12.4(a) so as to include the disclosure included in such proposed public communication.  For public disclosures that do not deviate from the Communications Plan, each Party will submit to the other Party a draft of any such public communication for review and comment at least forty-eight (48) hours in advance of such public disclosure.  Notwithstanding any other provision of this Agreement, however, each Party may at any time make any press release or other public communication as it determines, based upon the advice of counsel, to be necessary to comply with any public disclosure obligations under Applicable Laws (including securities laws), so long as the announcing Party

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

72

provides the other Party at least some advance notice (which will be at least forty-eight (48) hours whenever possible) regarding the proposed public disclosure.  Genzyme may satisfy its notice obligation under this Section 12.4 by emailing and telephoning either Isis’ Chief Executive Officer or Chief Operating Officer, and Isis may satisfy its notice obligation under this Section 12.4 by emailing and telephoning either the Genzyme Senior Vice President, Cardiovascular or the Genzyme Senior Vice President of Corporate Affairs.

(d)Each Party will promptly notify (and provide as much advance notice as possible to) the other of any event materially related to Products (including any regulatory Approval) so that the Parties may, subject to the provisions of subsections (a) and (b) of this Section 12.4, analyze the need to or desirability of publicly disclosing or reporting such event.

(e)In accordance with Section 2.7 (Third Party Agreements), Isis will promptly provide Genzyme with any draft publication relating to the Product submitted to it for review pursuant to any agreement with any Third Party and will exercise its rights under any such agreement to comment on such publication in consultation with and as reasonably requested by Genzyme.  Isis will not enter into any agreement after the Execution Date that grants any Third Party the right to make public statements regarding the Product unless the form of such agreement is approved in advance by Genzyme.

(f)Unless otherwise contemplated by the Scientific Publication Plan, Genzyme will serve as the principal point of contact for any Third Party author intending to publish a scientific or medical publication on matters with respect to which Genzyme is assigned primary responsibility under this Agreement, and Isis will serve as the principal point of contact for any such author on matters with respect to which Isis is assigned primary responsibility under this Agreement.

Article 13.
DISPUTE RESOLUTION

13.1.Escalation.  In the event of any dispute (other than a dispute regarding the construction, validity or enforcement of either Party’s Patents, which disputes will be resolved pursuant to Section 13.3 (Jurisdiction; Venue; Service of Process)) arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement that cannot be resolved by the Parties (each, a “Dispute”), either Party may make a written request that the Dispute be referred for resolution to the chief executive officers of each Party (or their designees) (the “Executives”).  Within sixty (60) days of either Party’s written request that the Dispute be referred to the Executives, the Executives will meet in person at a mutually acceptable time and location or by means of telephone or video conference to negotiate a settlement of a Dispute.  Each Party may elect to have such Party’s JDC representatives participate in such meeting, if desired, provided that it provides the other Party with reasonable

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

73

advance notice of such intent so as to enable the other Party to have its JDC representatives also participate in such meeting, if desired.  If the Executives fail to resolve the Dispute within such sixty (60) day period and the Dispute concerns any matter that this Agreement delegates to the JDC for determination, then Genzyme will be entitled to resolve the Dispute in its sole discretion. For all other Disputes, in the event that the Executives fail to resolve the Dispute within such sixty (60) day period the Dispute will be referred to mediation under Section 13.2 (Mediation).

13.2.Mediation.

13.2.1.Mediation Generally.  If a Dispute cannot be resolved pursuant to Section 13.1 (Escalation), the Parties agree to try in good faith to resolve any such Dispute by non-binding mediation administered by JAMS End Dispute in accordance with its commercial mediation rules.  The mediation will be conducted by a single mediator appointed by agreement of the Parties who will have previous judicial experience, or failing such agreement by JAMS End Dispute in accordance with its commercial mediation rules.  Unless otherwise mutually agreed upon by the Parties, the mediation proceedings will be conducted in Chicago.  The Parties agree that they will share equally the cost of the mediation, including filing and hearing fees, and the cost of the mediator(s).  Each Party will bear its own attorneys’ fees and associated costs and expenses.

13.2.2.Mediation of Setoff Dispute.

(a)If Genzyme has exercised its setoff right under Section 11.4.2 (Genzyme’s Right of Setoff) and there is a Dispute regarding whether Isis is in material breach of the Agreement or the proper amount of the setoff that the Parties are unable to resolve in mediation pursuant to Section 13.2.1 (Mediation Generally), then at the completion of such mediation the mediator will decide the following issues, which decision will be binding on the Parties pending final resolution of the Dispute by a court of competent jurisdiction:

(i)Whether the amount placed in escrow by Genzyme pursuant to Section 11.4.2 exceeds the mediator’s objective good faith estimate of the amount of any losses, damages and expenses incurred or likely to be incurred by Genzyme as a result of Isis’ breach of this Agreement;

(ii)What amount (if any) may Genzyme setoff against future payments to Isis under Section 11.4.2, which amount will represent the mediator’s objective good faith estimate of the amount of any losses, damages and expenses incurred or likely to be incurred by Genzyme as a result of Isis’ breach of this Agreement.

(b)If the mediator determines that the amount placed in escrow by Genzyme pursuant to Section 11.4.2 exceeds the mediator’s objective good faith estimate of he amount of any losses, damages and expenses incurred or likely to be incurred

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

74

by Genzyme as a result of Isis’ breach of this Agreement, the Parties will promptly cause the escrow agent to release to Isis the amount of such excess, plus interest accruing on such amount in the escrow account.  The Parties will promptly cause the remaining amount in the account to be returned to Genzyme.

(c)If the mediator determines an appropriate amount that Genzyme may setoff against future payments to Isis under Section 11.4.2, Genzyme may setoff such amount directly, and will not be required to pay such amounts into any escrow account.

(d)The decisions rendered by mediator with respect to the distribution of funds from the escrow account and amount Genzyme may setoff going forward will be binding on the Parties pending resolution of the Dispute by the agreement of the Parties or by a court of competent jurisdiction in accordance with this Agreement.

13.2.3.Legal Remedies.  If the Parties fail to reach an amicable agreement pursuant to the non-binding mediation process set forth in Section 13.2 (Mediation) within sixty (60) days of the matter being referred to Mediation, then either Party may pursue a legal remedy in accordance with Section 13.3 (Jurisdiction, Venue, Service of Process).

13.3.Jurisdiction; Venue; Service of Process.

13.3.1.Jurisdiction.  Each Party by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court located in Chicago, Illinois for the purpose of any Dispute arising between the Parties in connection with this Agreement (each, an “Action”) and (b) hereby waives to the extent not prohibited by Applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such Action, any claim that it is not subject personally to the jurisdiction of the above-named court, that its property is exempt or immune from attachment or execution, that any such Action brought in the above-named court should be dismissed on grounds of forum non conveniens, should be transferred or removed to any court other than the above-named court, or should be stayed by reason of the pendency of some other proceeding in any other court other than the above-named court, or that this Agreement or the subject matter hereof may not be enforced in or by such court and (c) hereby agrees not to commence any such Action other than before the above-named court.  Notwithstanding the previous sentence a Party may commence any Action in a court other than the above-named court solely for the purpose of enforcing an order or judgment issued by the above-named court.

13.3.2.Venue.  Each Party agrees that for any Action between the Parties arising in whole or in part under or in connection with this Agreement, such Party bring Actions only in the federal courts of the United States of America located in Chicago, Illinois and any appellate court having jurisdiction over appeals from

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

75

such courts.  Each Party further waives any claim and will not assert that venue should properly lie in any other location within the selected jurisdiction.

13.3.3.Service of Process.  Each Party hereby agrees that service of process made by registered or certified mail, return receipt requested, at its address specified pursuant to Section 14.5 (Notices), will constitute good and valid service of process in any such Action and (c) waives and agrees not to assert (by way of motion, as a defense, or otherwise) in any such Action any claim that service of process made in accordance with clause (a) or (b) does not constitute good and valid service of process.

Article 14.
MISCELLANEOUS

14.1.Change of Control of Isis.

14.1.1.Termination of Committees and Information Sharing.  In the event of a Change of Control of Isis, Genzyme will have the right, exercisable by written notice to Isis or its successor in interest within ninety (90) days of the public announcement of the completion of such Change of Control, to do any or all of the following in Genzyme’s discretion: (a) terminate Isis’ right to participate in the JDC and JPC and any other subcommittees or working groups established pursuant to this Agreement, each of which will be disbanded; (b) terminate the participation of the successor to Isis in any ongoing research and development programs and Genzyme’s funding obligations associated therewith, (c) make all decisions required to be made by such committees or the Parties collectively under this Agreement in connection with the development and commercialization of the Product, (d) exclude Isis or its successor from all discussions with Regulatory Authorities regarding Isis Products, (e) require Isis to assign to Genzyme all of Isis’ right, title and interests in any IND or other Regulatory Materials then held by Isis pertaining to Products and any agreements with Third Parties related to the development or supply of the Product; (f) require Isis to enable Genzyme or a Third Party manufacturer to manufacture clinical and initial commercial quantities of the Product in lieu of Isis, with such transition occurring on a commercially reasonable timetable; (g) terminate Genzyme’s obligation to make further disclosures of Know-How or other information to Isis pursuant to this Agreement (including pursuant to Section 5.4.2 (Transfer from Genzyme to Isis) and Section 6.4 (Isis Safety Database)), other than reports required by Section 8.6 (Periodic Reporting and Reconciliation) and as reasonably required to permit Isis to perform its remaining obligations under this Agreement.  In addition, if Isis has not completed the development activities that are its responsibility under this Agreement, then Genzyme may, but will not be obligated to, assume all responsibility for all such development activities and setoff against amounts payable by Genzyme to Isis under this Agreement any expense incurred by Genzyme in connection with such development activities that would have been Isis’ responsibility under the Agreement had the Change of Control not occurred. 

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Isis or its successor will cooperate with the foregoing and provide to Genzyme and its Third Party contractors all Know-How, assistance, assignments and other support reasonably requested to assist Genzyme in assuming complete responsibility for the development and manufacture of the Product in an efficient and orderly manner.  For purposes of clarification, all Confidential Information of Genzyme in Isis’ or its successor’s possession following Genzyme’s exercise of its rights under this Section 14.1 (Change of Control of Isis) will continue to be subject to all applicable provisions of this Agreement (including, without limitation, Article 12 (Confidentiality).

14.1.2.Purchase of Product Economics.  In addition to the rights set forth in Section 14.1.1 (Termination of Committees and Information Sharing), in the event of a Change of Control of Isis, Genzyme will have the right to purchase all of Isis’ rights to receive payments under the Agreement.  If Genzyme elects to pursue this right, which election may be made by written notice to Isis or its successor of such election within one hundred and eighty (180) days of the public announcement of the completion of such Change of Control, the Parties will, for a period of sixty (60) days following notice of such election, negotiate in good faith a mutually acceptable fair market value.  If the Parties cannot agree on a purchase price, Genzyme will have the option to have a Third Party determine the then-applicable fair market value of Isis’ rights to receive payments under the Agreement (the “Valuation Price”).  The Parties will select a mutually agreeable independent investment banking firm of national reputation to ascertain the Valuation Price.  If the Parties are unable to agree on such identity of such investment banking firm within a sixty (60) day period, then each Party will select an independent investment banking firm of national reputation and the two designated firms will select a mutually agreeable third investment banking firm who will ascertain the Valuation Price.  If Genzyme elects to purchase all of Isis’ rights to receive payments under the Agreement at the price mutually agreed by the Parties or the Valuation Price, as applicable, such purchase will render the rights granted to Genzyme under this Agreement fully-paid and irrevocable, and the Parties will enter into a mutually satisfactory amendment to this Agreement effecting this simultaneously with the payment of such price.  If Genzyme does not exercise the right to purchase all of Isis’ rights to receive payments under the Agreement under this Section 14.1.2, the successor’s economic rights under this Agreement will be unchanged.

14.2.Specific Performance.  Each Party acknowledges and agrees that, in the event of any breach of this Agreement by such Party or any of its Affiliates, the non-breaching Party may be irreparably and immediately harmed and may not be able to be made whole by monetary damages.  Without prejudice to any rights and remedies otherwise available, and notwithstanding Section 13.1 (Dispute Resolution Mechanism), the non-breaching Party will be entitled to seek equitable relief by way of injunction, specific performance or otherwise if the breaching Party or any of its Affiliates breaches any provision of this Agreement.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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14.3.Governing Law.  This Agreement will be governed by and interpreted in accordance with the laws of the State of New York without reference to its choice of laws or conflicts of laws provisions.

14.4.Waiver; Remedies Cumulative.  The failure by either Party to take any action or assert any right hereunder will in no way be construed to be a waiver of such right, nor in any way be deemed to affect the validity of this Agreement or any part hereof, or the right of a Party to thereafter enforce each and every provision of this Agreement.  Except as expressly provided in this Agreement, the rights and remedies provided for in this Agreement are cumulative and not exclusive, and the exercise of any right or remedy under this Agreement will in no way prejudice or be construed to be a waiver of any other right or remedy a Party may have under this Agreement or otherwise.

14.5.Notices.  Any consent or notice required or permitted to be given or made under this Agreement by one of the Parties hereto to the other will be in writing and delivered by hand or sent by nationally recognized overnight delivery service, prepaid registered or certified air mail, or by facsimile confirmed by prepaid, registered or certified mail letter, and will be deemed to have been properly served to the addressee upon receipt of such written communication, in any event to the following addresses (or any updated address provided to the notifying Party in writing in accordance with this Section 14.5):

If to Genzyme:	Genzyme Corporation
	500 Kendall Street
	Cambridge, Massachusetts 02142
	Attn:       General Manager,
	Cardiovascular Business Unit
	Fax: (617) 252-7553
with a copy to:	Genzyme Corporation
	500 Kendall Street
	Cambridge, Massachusetts 02142
	Attn: General Counsel
	Fax: (617) 252-7553
If to Isis:	Isis Pharmaceuticals, Inc.
	1896 Rutherford Road
	Carlsbad, CA 92008
	Attn: COO and CFO
	Fax: (760) 603-4650
with a copy to:	Isis Pharmaceuticals, Inc.
	1896 Rutherford Road
	Carlsbad, CA 92008
	Attn: General Counsel
	Fax: (760) 268-4922

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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14.6.Entire Agreement.  This Agreement and all Exhibits and Schedules attached hereto (the terms of which are incorporated herein by reference) sets forth all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties hereto with respect to the subject matter hereof and, as of the Execution Date, supersedes and terminates all prior agreements and understandings between the Parties (including the Prior Agreement and the Confidential Disclosure and Standstill Agreement dated as of September 19, 2007) and constitutes the entire agreement between the Parties with respect to the subject matter hereof.  All Exhibits and Schedules referred to herein and other attachments hereto are intended to be, and hereby are, specifically incorporated herein and made a part of this Agreement.  No subsequent alteration, amendment or modification to this Agreement will be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.

14.7.Binding Effect; Assignment.  This Agreement will inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.  Neither Party will assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other Party; provided, however, that (a) either Party may assign this Agreement or its rights or obligations hereunder to any of its Affiliates or to a purchaser or successor of substantially all the assets to which this Agreement relates, and (b) Isis may enter into one or more financial factoring arrangements with Genzyme’s prior written consent, such consent not to be unreasonably withheld, delayed or conditioned.

14.8.Severability.  If any term, covenant or condition of this Agreement or the application thereof to any Party or circumstance, to any extent, is invalid or unenforceable, then (a) the remainder of this Agreement, or the application of such term, covenant or condition to Parties or circumstances other than those as to which it is invalid or unenforceable, will not be affected thereby and each term, covenant or condition of this Agreement will be valid and be enforced to the fullest extent permitted by law; and (b) the Parties hereto covenant and agree to renegotiate any such term, covenant or application thereof in good faith in order to provide a reasonably acceptable alternative to the term, covenant or condition of this Agreement or the application thereof that is invalid or unenforceable, it being the intent of the Parties that the basic purposes of this Agreement are to be effectuated.

14.9.Further Assurances.  Each Party will execute such other instruments, give such further assurances and perform such acts which are or may become necessary or appropriate to effectuate and carry out the provisions and intent of this Agreement.

14.10.Independent Contractors.  The status of the Parties under this Agreement will be that of independent contractors.  No Party will have the right to enter into any agreements on behalf of the other Party, nor will it represent to any Third Party that it has any such right or authority.  Nothing in this Agreement will be construed as establishing a partnership or joint venture relationship between the Parties hereto.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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14.11.Interpretation.  The article and section headings herein are for reference purposes only and will not affect the meaning or interpretation hereof.  The term “including” (or any variation thereof such as “include”) will be without limitation.

14.12.Counterparts.  This Agreement may be executed in one or more counterpart copies, and by facsimile signature, each of which will be deemed an original and all of which taken together will be deemed to constitute one and the same instrument.

14.13.Rights in Bankruptcy.  All rights and licenses now or hereafter granted under or pursuant to this Agreement, including Section 2.1 of this Agreement, are rights to “intellectual property” (as defined in Section 101(35A) of Title 11 of the United States Code, as amended (such Title 11, the “Bankruptcy Code”)).  Isis hereby grants to Genzyme and all Affiliates of Genzyme a right of access and to obtain possession of and to benefit from (a) copies of research data, (b) laboratory samples, (c)  samples of Product, (d) formulas, (e) laboratory notes and notebooks, (f) data and results related to clinical trials, (g) regulatory filings and approvals, (h) rights of reference in respect of regulatory filings and approvals, (i) pre-clinical research data and results, (j) marketing, advertising and promotional materials, all of which constitute “embodiments” of intellectual property pursuant to Section 365(n) of the Bankruptcy Code and (k) all other embodiments of such intellectual property, in each case, solely in connection with Genzyme’s rights under this Agreement, whether any of the foregoing are in Isis’ possession or control or in the possession and control of Third Parties.  Isis agrees not to interfere with Genzyme’s and its Affiliates’ exercise of rights and licenses to intellectual property licensed hereunder and embodiments thereof in accordance with this Agreement and agrees to use Commercially Reasonable Efforts to assist Genzyme and its Affiliates to obtain such intellectual property and embodiments thereof in the possession or control of Third Parties as reasonably necessary or desirable for Genzyme or its Affiliates to exercise such rights and licenses in accordance with this Agreement.  The Parties hereto acknowledge and agree that all payments by Genzyme to Isis under this Agreement, other than the commercial milestones payable pursuant to Section 8.2.2 and the sharing of Net Profits pursuant to Section 8.5.2, do not constitute “royalties” within the meaning of Bankruptcy Code §365(n) or relate to licenses of intellectual property hereunder.

[remainder of page intentionally left blank]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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IN WITNESS WHEREOF, the Parties have caused this License and Co-Development Agreement to be executed by their officers thereunto duly authorized as of the date first written above.

Genzyme Corporation
By:	/s/ Henri A. Termeer
Name:		Henri A. Termeer
Title:		Chairman, President
		and Chief Executive Officer
Isis Pharmaceuticals, Inc.
By:	/s/ B. Lynne Parshall
Name:		B. Lynne Parshall
Title:		Chief Operating Officer and
		Chief Financial Officer

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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SCHEDULE 1.35

ISIS METHODOLOGY FOR DETERMINING ITS COST OF MANUFACTURE

[**]

SCHEDULE 1.49

EXAMPLE CALCULATION OF INTERNAL DEVELOPMENT EXPENSES

[**]

SCHEDULE 1.52

ISIS CORE TECHNOLOGY PATENTS

[**]

SCHEDULE 1.56

ISIS MANUFACTURING & ANALYTICAL PATENTS

[**]

SCHEDULE 1.99

PRODUCT-SPECIFIC PATENTS

[**]

SCHEDULE 1.113

SPECIAL ISIS CORE TECHNOLOGY PATENTS

[**]

SCHEDULE 2.1

LICENSES TO THIRD PARTIES

[**]

SCHEDULE 10.2.2

THIRD PARTY AGREEMENTS

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

EXHIBIT A

DEVELOPMENT PLAN

[**]

EXHIBIT B

DEVELOPMENT BUDGET

[**]

EXHIBIT C

FORM OF SUPPLY AGREEMENT

MANUFACTURING AND SUPPLY AGREEMENT

This Manufacturing and Supply Agreement (the “Supply Agreement”) is entered into as of the 24th day of June, 2008 (the “Effective Date”) by and between Isis Pharmaceuticals, Inc. (“Isis”) and Genzyme Corporation (“Genzyme”).  Genzyme and Isis may each be referred to herein as a “Party” or together as the “Parties”.  Capitalized terms not defined herein will have the meaning given to such terms in the License and Co-Development Agreement between the Parties dated June 24, 2008 (the “Agreement”).  The Parties agree as follows:

WHEREAS, the Parties have entered the Agreement to provide for the further development and commercialization of one or more Products, including Mipomersen;

WHEREAS, the Agreement provides that Isis will be responsible for the manufacture of the active pharmaceutical ingredient (API) of Mipomersen (“API”) for the phase II clinical trials, the Pivotal Trial(s) and the initial commercial launch of Mipomersen;

WHEREAS, the Parties agree that the terms of this Supply Agreement will apply to all manufactured lots of API made and supplied under the Agreement and this Supply Agreement.

NOW, THEREFORE in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree to this Supply Agreement as follows:

1.Scope; Second Manufacturing Suite –  Isis will produce the bulk API for Mipomersen under cGMP conditions and in accordance with the Quality Agreement between the Parties and referencing this Supply Agreement (the “Quality Agreement”), in the amount specified in the applicable Firm Order for use for the phase II clinical trials, the Pivotal Trial(s) and the initial commercial launch of Mipomersen.

Isis will use commercially reasonable efforts to have [**].

2.Supply as of Effective Date.        As of the Effective Date, Isis has in its inventory the quantities of API, placebo, drug product and clinical trial material set forth on Exhibit B attached hereto (the “Existing Material”).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

3.Supply through the end of 2008.  After the Execution date until the [**] in 2008, Isis will manufacture and supply the API consistent with the needs of the Development Plan, which are approximately [**] kilograms (the “2008 API”).

4.Supply after 2008; Forecasting Before NDA Filing.

(a)   After January 1, 2009 until the NDA Filing under the Agreement, Isis and Genzyme will establish an 8 calendar quarter rolling forecast (the “Clinical Rolling Production Forecast”) that sets forth a good faith estimate of the quantity of API for the Mipomersen Genzyme expects to receive from Isis within the following 8 calendar quarter period.  This Clinical Rolling Production Forecast will be updated on the first business day of each subsequent calendar quarter by Genzyme.  The first 4 calendar quarters of the Clinical Rolling Production Forecast constitute a firm order (each “Clinical Firm Order”).  Genzyme will provide one or more purchase orders for Clinical Firm Orders not previously submitted with each new Clinical Rolling Production Forecast.  The fifth (5^th) calendar quarter of any Clinical Rolling Production Forecast shall be binding solely to the extent that Genzyme shall be required to order (and Isis shall only be required to supply) not more than [**]% and not less that [**]% of the API forecast therein once such calendar quarter becomes the first (1^st) calendar quarter for the Clinical Rolling Production Forecast.  Quarters 6 through 8 are estimated quantities to be used for planning purposes only.  Not later than 30 days after the Effective Date, Genzyme will provide Isis with the first Clinical Rolling Production Forecast, which will initially cover the 8 quarter period beginning January 1, 2009.  The quantities set forth in a Clinical Firm Order will be binding on both parties, and Genzyme will be obligated to purchase from Isis, and Isis will be obligated to supply, the specified quantities of API.

(b)   Notwithstanding the foregoing, each Clinical Firm Order is subject to the following conditions:

·Isis will not be required to supply during a calendar quarter more than an aggregate of [**] kilograms of API, unless agreed to in advance by Isis and further that the batch size is no larger than [**] kilograms unless agreed to in advance by Isis.

·The minimum order size is [**] kilograms per calendar quarter unless agreed to in advance by Isis.

(c)   Isis agrees to use commercially reasonable efforts to supply Genzyme, upon request, with quantities in excess of the quantity restrictions described in this Section 4(b) above.

5.Supply; Forecasting After NDA Filing.

(a)   After the NDA Filing under the Agreement, Genzyme will establish an eight (8) calendar quarter rolling forecast (the “Commercial Rolling Production Forecast”) that sets forth a good faith estimate of the quantity of API for the Mipomersen Genzyme expects to receive from Isis within the following eight (8) calendar quarter period.  This Commercial Rolling Production Forecast will be updated not later than the first business day of each subsequent calendar quarter by Genzyme.  The first [**] calendar quarters of the Commercial Rolling Production Forecast will constitute a firm order (“Commercial Firm Order”).  Genzyme will provide one or more purchase orders for Commercial Firm Orders not previously submitted with each new Commercial Rolling Production Forecast.  The [**] and [**] calendar quarters of any Commercial Rolling Production Forecast shall be binding solely to the extent that Genzyme shall be required to order (and Isis shall be required to supply) not more than [**]% and not less than [**]% of the API forecast therein once those calendar quarters become the first [**] quarters for the Commercial Rolling Production Forecast.  Quarters [**] through [**] are estimated quantities to be used for planning purposes only.  Not later than 30 days after the NDA Filing, Genzyme will provide Isis with the first Commercial Rolling Production Forecast.  The quantities set forth in a Commercial Firm Order will be binding on both parties, and Genzyme will be obligated to purchase from Isis, and Isis will be obligated to supply, the specified quantities of API.  Clinical Firm Orders and Commercial Firm Orders may each be referred to herein as “Firm Orders”.

(b)   Notwithstanding the foregoing, each Commercial Firm Order is subject to the following conditions:

·Isis will not be required to supply during a calendar quarter more than an aggregate of 50 kilograms of API, unless agreed to in advance by Isis and further that the batch size is no

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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larger than [**] kilograms unless agreed to in advance by Isis. The minimum order size is [**] kilograms per order.

(c)   Isis agrees to use commercially reasonable efforts to supply Genzyme, upon request, with quantities in excess of the quantity restrictions described in this Section 5(b) above.

6.Delivery

(a)   Isis will deliver the Existing Material and the 2008 API as directed by the JDC.

(b)   Each order submitted in satisfaction of a Firm Order obligation set forth in Section 4 or 5 above shall set forth Genzyme’s proposed delivery date, which date shall not be less than 90 days after the submission of the order in question.  Within 10 business days of receipt of an order from Genzyme, Isis will either (i) confirm Genzyme’s proposed delivery date or (ii) enter into discussions with Genzyme about a mutually agreeable delivery date (each, a “Delivery Date”).  Isis will use commercially reasonable efforts to deliver the API ordered in each Firm Order by the applicable Delivery Date (but in any event Isis will deliver the API within thirty (30) days of the Delivery Date); provided, however, that Isis may deliver any quantities requested in a Firm Order thirty (30) days early. Isis will not be required to supply, nor will Genzyme be required to purchase, API in a quantity exceeding the Firm Order.  The quantity of API specified in each Firm Order, invoiced and paid for will be the as-is gross mass of the API after lyophilization (i.e. including such amounts of water, impurities, salt, heavy metals, etc not exceeding limits permitted in the Specifications).  In addition, so long as Isis supplies the quantity of API specified in the applicable Firm Order for Mipomersen within plus or minus [**]%, Isis will be deemed to have satisfied the amount specified in the Firm Order but Genzyme will nonetheless pay for the quantity of API specified in the Firm Order, whether it is less than or greater than the amount ordered.

7.Shortfall

(a)   In the event that at any time Isis anticipates that it will be unable to supply at least [**]% (as permitted by Section 6 above) of the quantities of API set forth in an agreed-upon Firm Order in satisfaction of its obligation under Section 4 or 5 for any reason, including without limitation force majeure, Isis will notify Genzyme in writing as soon as possible upon the prediction or occurrence of such non-supply.

(b)   If Isis cannot Manufacture as set forth in (a) above, upon written request by Genzyme Isis will transfer to Genzyme all documentation and information, and permit Genzyme to reference and use any regulatory filings, and otherwise fully cooperate with Genzyme to enable Genzyme to make or have made API for use by Genzyme in accordance with the Agreement.

8.Specifications; CofA

(a)   For the API supplied by Isis under this Supply Agreement, Isis and Genzyme will mutually agree on the specifications for such API and will attach and/or reference such specifications in the applicable Firm Order (the “Specifications”).  If no Specifications are attached to or referenced in a Firm Order the Specifications for the Firm Order will be the same Specifications that applied to the previous Firm Order.  The Specifications as of the effective date of this Supply Agreement are attached hereto as Exhibit A and will apply to 2008 API and the API that is part of the Existing Material.

(b)   Prior to shipment of API, Isis shall provide Genzyme with a certificate from Isis’ quality assurance department, or Isis’ equivalent thereof, that includes the results of quality control tests that were performed on each batch of API manufactured in accordance with the Specifications and that indicates that the API contained in the shipment: (i) meets the Specifications and (ii) was manufactured in compliance with cGMPs and all other applicable laws and regulations (a “CofA”).

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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9.API Pricing - The purchase price for API manufactured under this Agreement in 2008 is $[**] per kilogram, except the purchase price for Lot # CA301012-015 will be the [**] $[**] per kilogram and the purchase price set for API manufactured in 2009 under this Section.  The purchase price for API manufactured in each subsequent calendar year in the Term shall be determined as follows: In September of each year, starting September of 2008, Isis will provide Genzyme a nonbinding, good faith estimate of the purchase price for API for the following year.  By November 15 of each year, starting November 15, 2008, Isis will provide Genzyme the final purchase price (each, a “Purchase Price”) applicable to the manufacture and supply of API scheduled for delivery in the following year.  Such Purchase Prices will be binding on both Parties; provided, however, that such price will (i) not exceed $[**] per kilogram of API and (ii) represent Isis’ good faith estimate of its fully-burdened cost to manufacture such API.  This price includes all direct and indirect costs of manufacturing the API, including the cost of analytical work, raw materials, storing stability and retain samples, and, unless otherwise specifically stated in the applicable Firm Order, all other activities specified in the Specifications; provided, however, this price does not include stability testing, CMC work, process validation or other work to support regulatory filings.  All payments are in US Dollars.

10.Terms of Payment –

(a)   On the Execution Date, Isis will apply $[**] towards External Development Expenses under Section 8.3.1 of the Agreement for the Existing Material.

(b)   For the 2008 API, Genzyme shall not be required to pay for the 2008 API, but rather upon transfer of such 2008 API Isis shall report the purchase price for the 2008 API as its Fully Absorbed Cost of Goods in reports submitted to Genzyme in accordance with Section 8.6 of the Agreement and such Fully Absorbed Cost of Goods shall be credited against Isis’s obligations to fund the first one hundred and twenty-five million ($125 million) in External Development Expenses as contemplated by Section 8.3.1(b) of the Agreement.

(c)   Until the earlier of (i) the first calendar quarter in which Net Revenue (as that term is defined in the Agreement) exceeds the aggregate Purchase Price for API in that calendar quarter and (ii) the date Isis has fully satisfied its obligation to fund the first one hundred and twenty-five million dollars ($125 million) of External Development Expenses in accordance with Section 8.3.1(b) of the Agreement, Genzyme shall not be required to pay the Purchase Price for Product ordered and transferred hereunder, but rather Isis shall report such Purchase Price as its Fully Absorbed Cost of Goods in reports submitted to Genzyme in accordance with Section 8.6 of the Agreement and such Fully Absorbed Cost of Goods shall be credited against Isis’s obligations to fund the first one hundred and twenty-five million ($125 million) in External Development Expenses as contemplated by Section 8.3.1(b) of the Agreement.

(d)   Once the condition described in either clause (i) or (ii) of Section 10(c) above has been satisfied, then the following payment terms shall apply to Product supplied hereunder:

·A pre-payment of 50% of the Purchase Price from Genzyme is payable in cash upon delivery of the applicable Firm Order.

·The remaining 50% of the Purchase Price is due in cash to Isis by wire transfer or other customary means within 30 days from the date of receipt of invoice, following title transfer from Isis to Genzyme or its designee of the API (in accordance with Section 12 below).

·In addition to the price stated in this Supply Agreement, Genzyme will pay to Isis all taxes and duties (except income tax) imposed upon Isis, in connection with the API and will reimburse Isis for the insurance and freight expenses discussed in Section 12 below.

11.Term – This Supply Agreement will remain in effect as long as Isis and Genzyme mutually agree for Isis to supply Mipomersen API as described in the Agreement.

12.Title & Transportation for Existing Material:   Title to the Existing Material will transfer to Genzyme EXW (Incoterms 2000) Isis’ facility following Isis’ receipt of an Authorization to Ship letter from the

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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Genzyme’s Quality Assurance Department authorizing shipment of the applicable Existing Material.  Isis will insure against the replacement cost of the Existing Material until title transfers. The Parties will share the Risk of loss related to the Existing Material.

Isis will ship the Existing Material in accordance with the applicable Authorization to Ship letter from Genzyme’s Quality Assurance Department.  Isis will pay all freight for such transportation and include such costs as part of Isis’ Fully Absorbed Cost of Goods.

13.Title & Transportation for other API:   Title to the API supplied under Section 3, 4 or 5 above will transfer to Genzyme upon the earlier of (i) 15 days following the receipt by Genzyme of the CofA, a copy of the batch record and the QC release testing for the applicable order (unless Genzyme initiates formal dispute resolution regarding the API’s failure to meet the warranty set forth in Section 17), (ii) EXW (Incoterms 2000) Isis’ facility following Isis’ receipt of an Authorization to Ship letter from the Genzyme’s Quality Assurance Department authorizing shipment of the applicable API order, and (iii) the date pursuant to the dispute resolution it is determined that the API did meet the warranty set forth in Section 17.  Isis will insure against the replacement cost of the API until title transfers.    Risk of loss passes simultaneously with the title.  Isis may deliver the applicable invoice to Genzyme for API contemporaneously with title transfer.

Isis will ship the API to Genzyme EXW (Incoterms 2000) upon the earlier of (i) the date such API is released by Isis’ Quality Assurance Department and accepted by Genzyme’s Quality Assurance Department via an Authorization to Ship letter, and (ii) 60 days following title transfer of such API.  Transportation arrangements will be made by Isis as specified by Genzyme.  Isis will pay all freight for such transportation and add such costs to the invoice as a separate line item.

14.Intellectual Property: The ownership and treatment of any intellectual property generated in the course of Isis’ performance of this Supply Agreement will be governed by the Agreement.

15.CMC Work, Regulatory Support & Stability Testing –Genzyme will be responsible for all CMC work and regulatory filings associated with the API and drug product.  Isis will not be responsible for CMC work, process validation or other work to support regulatory filings under this Supply Agreement.  If Genzyme wishes to engage Isis to perform such work the Parties will mutually agree upon an appropriate plan and budget for executing such work.

Isis will manage the stability testing of any API manufactured under this Supply Agreement per Isis’ current stability protocol (whether performed by Isis or an independent contractor).  If performed by Isis, the price for the stability testing of the API will be $7,000 per time point per lot of API.  If performed by a contractor, the price fro the stability testing of the API will be the price charged by the contractor.  In either case, the price for the stability testing will be treated as Program Costs under the Agreement.

16.Hazards; Risk Sharing

If Isis encounters any difficulties or hazards during the manufacturing of a batch of API such that the delivery of API to Genzyme from that batch would constitute a breach of this Supply Agreement (including but not limited to the failure of such API to conform to the warranty set forth in Section 17), Isis will use commercially reasonable efforts to manufacture a replacement batch of API, such that Genzyme receives such API as close to the originally-scheduled delivery date as possible.

If the difficulty or hazard that causes the breach was not caused by Isis’ gross negligence, the cost of the manufacture of the replacement batch will be shared by Genzyme and Isis as follows:  Isis will be responsible for the [**] components for such batch of API; and, to the extent not reimbursable under Isis’ insurance policies, Genzyme will be responsible for the [**] component and [**] expenses.  In any year in which Net Profit is achieved under the Agreement, [**] components (and Genzyme’s expenses for [**] and [**] expenses) for such replacement batch of API will be included as Program Costs under the Agreement with [**] included using the methodology referred to in the definition of Fully Absorbed Cost of Goods in the Agreement.  For purposes of clarity and assuming none of the loss is covered

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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by Isis’ insurance, the total price payable for such API will equal the price for such API originally specified above under Section 9 above or quoted in the Firm Order plus the [**] component and [**] expenses attributable to such replacement batch.  However, if the difficulty or hazard that causes the breach was caused by Isis’ gross negligence, the cost of the manufacture of the replacement batch will be solely Isis’ responsibility and the price payable upon delivery of such API will equal the price for such API originally quoted in the Firm Order without any additional costs or expenses required to produce the replacement batch.

17.Limited Warranty:  SUBJECT TO THE LIMITATIONS OF PARAGRAPHS, 18, 19 AND 21, Isis warrants, with respect to all the API, that, at the time of delivery, any API supplied by Isis will (a) meet the Specifications; (b) meet the standards of cGMP (for the API) and the requirements set forth in the Quality Agreement and (c) be conveyed with good title, free from any lawful security interest, lien or encumbrance.

18.Disclaimer Of Warranties:  THE EXPRESS WARRANTIES CONTAINED IN PARAGRAPH 17 OF THIS SUPPLY AGREEMENT (AND THOSE MADE UNDER AND AS OF THE EFFECTIVE DATE OF THE AGREEMENT) ARE THE SOLE WARRANTIES WITH RESPECT TO THE API AND ARE MADE EXPRESSLY IN LIEU OF AND EXCLUDE ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND ALL OTHER EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON LAW OR STATUTE.

19.Limitation Of Remedies: GENZYME’S EXCLUSIVE REMEDY AND ISIS’ TOTAL LIABILITY TO GENZYME UNDER THIS SUPPLY AGREEMENT FOR CLAIMS BASED UPON SUPPLY OF THE API (OR FAILURE TO SUPPLY) (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) IS EXPRESSLY LIMITED TO THE REMEDY SET FORTH IN SECTIONS 7 AND 16 ABOVE.

GENZYME WAIVES ALL OTHER CLAIMS BY GENZYME AGAINST ISIS UNDER THIS SUPPLY AGREEMENT WITH RESPECT TO SUPPLY OF THE API.  NEITHER PARTY WILL BE UNDER ANY LIABILITY TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM THIS SUPPLY AGREEMENT.

THE LIMITATIONS IN THIS SECTION 19 DO NOT APPLY TO ANY CLAIM FOR INDEMNIFICATION UNDER SECTION 23.

20.Quality Systems.  If Genzyme requests changes to Isis’ quality systems or standard operating procedures, Isis and Genzyme will mutually agree on the scope and form of such changes and Genzyme will pay Isis to implement such changes at the then applicable Isis FTE Rate.  Isis will be responsible to implement and pay for any modifications that either a Regulatory Authority requires or the Parties mutually agree are necessary to remain compliant with GMP or applicable ICH guidelines to manufacture API and Genzyme will pay for such modifications specific to the manufacturing of API that are not required by GMP or applicable ICH guidelines.  The costs of implementation will include out of pocket costs as well as for the FTEs to implement such changes at the then applicable Isis FTE Rate.

21.Inspection And Notice Of Claims:  Promptly upon receipt of each shipment of API, Genzyme will inspect and/or test (or cause to be inspected and tested if API is shipped to a third party) such API for any damage, defect or shortage.  ALL CLAIMS (INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF STRICT LIABILITY, BREACH OF WARRANTY AND NEGLIGENCE) BY GENZYME WILL BE DEEMED WAIVED UNLESS MADE BY GENZYME IN WRITING AND RECEIVED BY ISIS WITHIN THIRTY (30) DAYS OF THE RECEIPT OF THE API.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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22.Force Majeure: Neither Party will be liable for failures or delays in performance of any obligation under this Supply Agreement, other than for payment for API already transferred, to the extent that such failure or delay is caused by force majeure, being any event, occurrence or circumstance beyond the control of that Party (a “Force Majeure Event”), including but not limited to the following: failure or delay caused by or resulting from acts of God, strikes, earthquakes, fires, floods, accidents, wars, riots, acts of terrorism, restrictions imposed by any governmental authority (including allocations, priorities, requisitions quotas and price controls).  The Party whose performance is affected by a Force Majeure Event will give prompt notice to the other Party stating the details and expected duration of the event.

23.Indemnity.  Section 10.3 of the Agreement will apply to this Supply Agreement and the matters covered by this Supply Agreement.

24.Assignment:  This Supply Agreement is not assignable or transferable by either Party without the prior written consent of the other Party; provided that a Party may assign the Supply Agreement to its successor in interest pursuant to the acquisition, merger or sale of all or substantially all of the assets of such Party, so long as such successor assumes in writing all of the assigning Party’s obligations under this Supply Agreement.

25.Governing Law:  The interpretation, validity, and performance of this document will be governed by New York law, without regard to any conflict-of-law rules.

26.Termination.  Either Party will have the right to terminate this Supply Agreement if the other Party materially breaches its obligations under this Supply Agreement in accordance with Article 13 of the Agreement.

27.Survival:  Sections 14 through 19, and 21 through 38 will survive expiration or termination of the Agreement.  Any expiration or early termination of this Supply Agreement will be without prejudice to the rights of either Party against the other accrued or accruing under this Supply Agreement prior to termination.  No expiration of this Supply Agreement will relieve a Party of its obligation to pay fees.

28.Inspections.  Genzyme shall have the right to visit and inspect Isis’ facility as further specified in the Quality Agreement. Isis’s quality assurance department, or its equivalent, shall cooperate with Genzyme, as is reasonably necessary and useful at Genzyme’s discretion, in any inspection conducted pursuant to this Section 28.

29.Notices:  Any notice required or permitted to be given under this Supply Agreement by any Party will be in writing and will be (a) delivered personally, (b) sent by registered mail, return receipt requested, postage prepaid, (c) sent by a nationally-recognized courier service guaranteeing next-day or second day delivery, charges prepaid, or (d) delivered by facsimile (with the original promptly sent by any of the foregoing manners), to the addresses or facsimile numbers of the other Parties set forth below, or at such other addresses as may from time to time be furnished by similar notice by any Party. The effective date of any notice under this Supply Agreement will be the date of receipt by the receiving Party.

Notices will be sent to the following addresses or facsimile numbers:

In the case of Isis,

Isis Pharmaceuticals, Inc.

1896 Rutherford Road

Carlsbad, CA 92008

Attention:  VP, Manufacturing/Operations

Facsimile:  760-603-4655

With a copy to:

1.General Counsel (fax:  760.268.4922); and

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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2.Executive Vice President & CFO (fax:  760.603.4650)

In the Case of Genzyme:

Genzyme Corporation

200 Crossing Blvd.

Framingham, MA  01792

Attention:  Senior VP, Materials Management

Facsimile:  (508) 661-8538

With copy to:

Genzyme Corporation

500 Kendall Street

Cambridge, MA  02142

Attn:  General Counsel

Facsimile: (617) 252-7553

30.Waiver:  No waiver of any term, provision or condition of this Supply Agreement whether by conduct or otherwise in any one or more instances will be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Supply Agreement.

31.Counterparts:  This Supply Agreement and any amendment hereto may be executed in any number of counterparts, each of which will for all purposes be deemed an original and all of which will constitute the same instrument. This Supply Agreement will be effective upon full execution by facsimile or original, and a facsimile signature will be deemed to be and will be as effective as an original signature

32.Attachments:  All attachments referred to herein form an integral part of this Supply Agreement and are incorporated into this Supply Agreement by such reference.

33.Inadvertent or Involuntary Omissions:  The Parties acknowledge that they have expended substantial effort in preparing this Supply Agreement and attempting to describe in the Attachments, as thoroughly and precisely as possible, certain specifications and other information. However, despite these efforts, the Parties acknowledge the possibility of involuntary or inadvertent omissions from the Attachments.  The Parties will agree in writing to the changes to be made to the Attachments to add these inadvertent or involuntary omissions and any such written agreement executed by the Parties will serve as an amendment to this Supply Agreement.

34.Construction:  Each Party to this Supply Agreement and its counsel have reviewed and revised this Supply Agreement.  The rule of construction to the effect that any ambiguities are to be resolved against the drafting Party will not be employed in the interpretation of this Supply Agreement or any amendment or Attachment to this Supply Agreement.  Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Agreement.

35.Time:  Time is of the essence in this Supply Agreement.

36.Preference:  Unless otherwise specifically provided for in the Attachment, the terms of this Supply Agreement will prevail in the event of a conflict between this Supply Agreement and any such Attachments or the Quality Agreement.

37.Dispute Resolution: Article 13 of the Agreement will apply to any dispute under this Supply Agreement.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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38.Entire Agreement: This Supply Agreement and the Quality Agreement constitute the full understanding of the Parties, and is the final, complete and exclusive statement of the terms and conditions of their agreement regarding the subject matter hereof.  All representations, offers, and undertakings, of the Parties made prior to the signing of this Supply Agreement are hereby superseded.  All amendments or modifications to this Supply Agreement must be in writing, identified as an Amendment to this Supply Agreement and signed by an authorized representative of each Party.

[remainder of this page intentionally left blank]

The Parties executing this Supply Agreement:

ISIS PHARMACEUTICALS, INC.			GENZYME CORPORATION
NAME:	B. Lynne Parshall		NAME: Henri A. Termeer
TITLE:	Chief Operating Officer and		TITLE: Chairman, President and CEO
	Chief Financial Officer
SIGNATURE:		/s/ B. Lynne Parshall	SIGNATURE:	/s/ Henri A. Termeer

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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EXHIBIT D

FORM OF QUALITY AGREEMENT

QUALITY AGREEMENT

Isis Pharmaceuticals and Genzyme Corporation.

The purpose of this Quality Agreement is to establish, clarify and communicate quality expectations for the manufacture and testing of API performed by Isis Pharmaceuticals, Inc., a Delaware corporation located in Carlsbad, California (“Isis”) for Genzyme Corporation, a Massachusetts corporation with offices in Cambridge, Massachusetts (“Genzyme”) for use in clinical trials or for launch supplies.  For contractual responsibilities, refer to the Manufacturing and Supply Agreement dated June 24, 2008 (the “Supply Agreement”).

WHEREAS, the Parties have signed the Supply Agreement contemporaneous with the present Quality Agreement;

WHEREAS, the Parties agree that the terms of this Quality Agreement will apply to all manufactured lots of active pharmaceutical ingredient (API) made and supplied under the Supply Agreement and this Quality Agreement.   All changes to this Quality Agreement must be documented as an addendum to the original Quality Agreement, reviewed and approved by both parties’ Quality Assurance representatives; and

NOW, THEREFORE in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree to this Agreement as follows:

1.Unless otherwise specified in this Agreement, the terms used in this Agreement shall have the meaning given to such terms in the Supply Agreement.

2.Isis will manufacture, produce and test the API in accordance with U.S. current Good Manufacturing Practices regulations (cGMP), ICH guidelines, and EMEA guidelines, and all such operations will be fully documented.  Specific expectations are detailed in the Responsibility Checklist attached as Schedule 1.  Genzyme will notify Isis if it is conducting a clinical trial that will require API to be manufactured in accordance with international guidelines that are more stringent than or different from cGMP or ICH Guidelines and the Parties will mutually agree on how to manufacture such API in accordance with such more stringent or different standards.

3.Isis will maintain adequately trained staff and appropriate records of training and competence.  Isis will monitor and maintain records respecting its compliance with cGMP, including the process of establishment and implementation of the operating procedures and the training of staff as necessary to assure such compliance.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

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4.Isis will retain, in accordance with cGMP, full records (such as manufacturing batch records, analytical testing methods, analytical test results and appropriate reports) related to the API being manufactured and supplied.

5.Isis will provide approval/audit of the API using routine Quality Assurance (QA) procedures and will keep all appropriate records of such approval/audit processes conducted.

6.Isis will provide Genzyme with a copy of batch records, and a certificate of analysis (COA) which will contain (i) analytical results from Isis and any associated contract laboratories and (ii) a statement of compliance with cGMP, and signed by Isis QA.  Isis will be responsible for the review, approval, and release of the API, and Genzyme retains full responsibility for the final release of the API for use in manufacturing Drug Product for use in clinical trials or commercially.

7.Isis will provide Genzyme with samples of the API including the appropriate documentation, if requested by Genzyme.

8.Original production and laboratory data and records will be retained and made available for review by Genzyme or its designees on-site at Isis.

9.Material changes to master batch records, specifications, test methods, and stability protocols (in each case as they apply to the API) will be agreed and approved by both parties.

10.Any raw material and component, which Isis will use for the production of API, will be tested and released utilizing Isis’ cGMP compliant and approved specifications, sampling, testing and release procedures.

11.Isis will document and notify Genzyme of all significant changes to or deviations from the process or testing procedures and the investigations thereof. Documentation on process changes and deviations will be part of the batch record.  A “Significant” change is understood as anything that deviates from the approved regulatory filing and/or anything reasonably likely to materially affect Safety, Identity, Strength, Purity or Quality (SISPQ).  (This would not include changes such as use of a different but equivalent room, “like for like” equipment changes, etc.).  In the event of an out of specification (OOS) result, Isis will promptly (within 2 business days) notify Genzyme on first confirmation of the OOS result.

12.Isis will ship or will arrange for third parties to ship all API to Genzyme or other designated site(s) in accordance with the Supply Agreement and with appropriate documentation and in suitable, labeled containers.  This will also include the use of temperature monitoring devices if deemed by Genzyme necessary to ensure the quality of the API.

13.Isis will make available to Genzyme at Isis’ facility, copies of all Isis Standard Operating Procedures used by Isis in connection with the manufacture of the API.

14.Isis will be responsible for qualification and routine compliance auditing of suppliers and subcontractors, in accordance with Isis’ current procedures.  Except for the subcontractors listed on Appendix B attached hereto, Isis will discuss with Genzyme in advance if Isis desires to use Subcontractors (Third Party) outside of Isis’ approved list of subcontractors, and Genzyme will assess and approve, in advance, each subcontractor, such approval not to be unreasonably withheld.

15.Isis will inform Genzyme within 2 business days of a notice and result of any regulatory investigation by a Regulatory Authority (including any Genzyme documentation requested)

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-2

relating to any API or service being provided to Genzyme.  Genzyme will have the opportunity to review and give input to the response to such investigations.

16.If Regulatory Authorities audit Genzyme, make investigations at Genzyme or ask questions of Genzyme about the activities conducted at Isis or third parties retained by Isis, then Isis will fully cooperate with Genzyme to provide adequate answers to and documentation for the Regulatory Authorities.  Isis will have the opportunity to review and give input to the response to such investigations.

17.Once every 12 months, a maximum of 3 Genzyme representatives will be entitled to visit and inspect (“audit”) the production, manufacturing, quality control and warehousing facilities Isis is using in connection with the API, including the corresponding documentation.  Such audit may not exceed three (3) business days, unless Genzyme representatives learn of a material deficiency that reasonably warrants an extension of the audit.  Isis agrees to provide Genzyme with the necessary assistance and information. Genzyme will provide Isis with at least 4 weeks advanced notice of a requested inspection.  As necessary, the Parties will mutually agree in good faith to additional inspections.  In addition, with reasonable advance notice to Isis, Genzyme reserves the right to have a Genzyme representative present during manufacture of Genzyme product.  Isis may limit Genzyme’s presence at times when proprietary or confidential information of a Third Party unrelated to the Product could be observed.

18.Subject to applicable law, Isis will inform Genzyme within 2 business days, and vice-versa, on any matter which, in Isis’ reasonable judgment, may have a bearing on drug safety or pharmaceutical quality in relation to the API, and supply all necessary information and cooperation for the investigation of such events.  In cases where patient/subject safety may be concerned, Isis must inform Genzyme by telephone and in writing as soon as practicable, and vice-versa.

19.Isis will retain samples (initially at least 2X the amount needed to run all release testing) for all API produced.

20.Isis will maintain the API stability program in accordance with ICH guidelines and provide Genzyme with copies of all necessary documentation to establish API shelf-life. This includes the requirement to add at least one commercial API lot per year to the ongoing stability program as required under ICH guidelines.

21.In event of an out of specification (OOS) result encountered in release or stability testing, Isis QA shall promptly (within 2 business days of confirmation) notify Genzyme QA.

22.All product complaints, reported either from clinical studies, for example reported by principle investigator entities, clinical monitoring bodies or international authorities (e.g., customs) or product complaints related to commercial batches of Drug Product will be handled principally by Genzyme and supported by Isis in conjunction with Genzyme.  All complaint events will be shared between both parties within 2 business days of receipt.

23.All primary data (or authenticated copies thereof) and result reports will be maintained in the Isis archives through a date specified in writing by Genzyme, which such date will not exceed 2 years after the final expiration date of the drug product in which the API was used.  Thereafter, Genzyme will make arrangements for continued storage of such data at Genzyme’s expense as is necessary.

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-3

24.The names of each responsible contact person(s) as of the Effective Date from Isis and Genzyme are listed in Appendix A.

The Parties Quality Assurance representatives executing this Agreement:

ISIS PHARMACEUTICALS, INC.		GENZYME CORPORATION
NAME: Jeff Jones		NAME: Charles Thyne
TITLE: Executive Vice President		TITLE: Vice President, Quality Operations
SIGNATURE:	/s/ Jeff Jones	SIGNATURE:	/s/ Charles Thyne
DATE: [illegible]		DATE: June 20, 2008

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-4

Appendix A

Key Contacts

Isis

Department	Primary Contact	Secondary Contact
Project Manager	[**], Development Chemistry & Manufacturing Telephone: [**]	[**], Development Operations Telephone: [**]
Analytical Development/Quality Control	[**], ADQC Telephone: [**]	[**], ADQC Telephone: [**]
Quality Assurance/Compliance	[**], QA/C Telephone: [**]	[**], QA/C Telephone: [**]
Regulatory Affairs	[**], RA Telephone: [**]	[**]. RA Telephone: [**]

Genzyme

Department	Primary Contact	Contact Information
Quality Assurance	[**] QA Director
Quality Assurance	[**] Sr. Director CQC	[**]
Regulatory Affairs	[**] Associate Director Regulatory Affairs	[**]
Stability & Statistics	[**] Sr. Director Stability & Statistics	[**]
Project Management	[**] Sr. Project Manager	[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-5

Appendix B

Pre-Approved Subcontractors

API Release

Test	Subcontractor
Bioburden	[**]
Endotoxin	[**]
Metals/Non-metals	[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-6

Schedule 1.  Responsibility Checklist

	Responsibility	Genzyme	Isis
1.0	Regulatory Authorizations & cGMP Requirements
1.1	Maintains all licenses, registrations and other authorizations required to operate a cGMP pharmaceutical manufacturing facility under the Applicable Laws and will inform Genzyme of any changes covering these aspects within two (2) Business Days.		x
1.2	Maintains and operates its Facilities in compliance with cGMPs and other Applicable Laws.		x
1.3	Supplies all agreed upon information related to the manufacture of the API so that Genzyme QA can make the final determination on whether to use the API in Drug Product for clinical trials and commercial use.		x
1.4	Processes the API in accordance with cGMPs and other Applicable Laws.		x
1.5	Complies with the applicable TSE requirements (e.g. EMEA/410/01 in its current version) for starting materials, synthesis materials and reagents.		x
1.6	Operates the facility in a manner to prevent contamination and/or cross-contamination in conformance with cGMPs and other applicable regulations and guidelines (e.g., FDA Guidance for Industry Quality Systems Approach to Pharma cGMPs, Sept 2006).		x
1.7	Meets all Regulatory filing requirements for all API packaging configurations processed at its Facilities.		x
1.8	Performs annual Product Quality Review per applicable regulations	x
1.9	Provides any API and (as applicable) Drug Product data needed to complete the annual Product Quality Review. Provides information to Genzyme in a timely manner, and in a format that facilitates review and inclusion in the Review prior to its due date.		x
1.10	Provides Isis with copies of those portions of the Marketing Applications, Marketing Authorizations and Clinical Trial Applications that are applicable to the API and drug product processing prior to submission and after review and approval from the applicable Regulatory Authority.	x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-7

1.11	Responsible for maintaining those portions of the Marketing Applications, Marketing Authorizations and Clinical Trial Application that are applicable to the Processing of the API at the Facilities for inspectional purposes.	x
2.0	Regulatory Actions & Inspections
2.1	Permits inspections by the Regulatory Authorities of all relevant premises, procedures and documentation.		x
2.2	Notifies the other party’s QA within two (2) business days of the first Day of any FDA or other Regulatory Authority inspection or notice of inspection (or other business, for example sample collection) of the Facilities directly relating to the API.		x
2.3	Notifies the other party’s Quality Assurance department within two (2) business days of any FDA or other Regulatory Authority investigation relating to the API.	x	x
2.4	Reviews any issued regulatory findings that directly relate to the API and reviews formal responses to the Regulatory Agency.	x	x
2.5	Reviews any issued regulatory findings that directly relate to the Isis facility and/or systems and approves formal responses to the Regulatory Agency.		x
2.6	Notifies the other Party within two (2) business days of any incident that causes the API or its labeling to be mistaken for, or applied to, another article or product and any information concerning any contamination or significant chemical, physical or other deterioration of shipped API.	x	x
2.7	Notifies the other party within two (2) business days of any Regulatory Authority request for API samples or API batch records prior to shipment.	x	x
2.8	Notifies the other party of any requests for information, notices of violation or other communication from a Regulatory Authority relating to environmental, occupational health and safety compliance relating directly to the API, within two (2) business days.	x	x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-8

3.0	Audits
3.1	Entitled to conduct one quality audit every 12 months to evaluate manufacturing, quality control and testing processes directly related to the API. Provides the other party with at least 4 weeks advanced notice of a requested inspection.	x
	As necessary, the Parties will mutually agree in good faith to additional inspections.	x
	Reserves the right to conduct additional audits in response to incidents/deviations associated with the manufacture/testing of the API.	x
	Conducts each of the quality audits during normal business hours at mutually agreed upon times and by no more than three (3) audit tracks for three (3) days. Issues an audit report to the other party within 30 days of site audit.	x
	Completes responses to audit findings within 30 days of receiving audit report.
3.2	Conducts internal audits of quality control and testing processes, in accordance with cGMPs and Applicable SOPs.		x
4.0	Compliance of Specifications & Other Pertinent Controlled Documents & Change Control
4.1	Prior to the implementation of any changes which may directly impact product quality and prior to the submission of any such changes to the Regulatory Authorities, submits in writing those proposed changes to the intermediate and final product specifications, validated methods, and master manufacturing batch records to the other party for review and incorporation into their respective quality systems.		x
4.2	For any proposed changes related to the API and directly impacting product quality, approves in writing those changes to the intermediate and final product specifications, validated methods, master manufacturing batch records prior to the implementation of such changes and prior to the submission of any such changes to the Regulatory Authorities.	x	x
4.3	Notifies the other party prior to implementation of any proposed changes to the Facilities or to the processing equipment that directly impacts the API. Example: Introduction of new product sharing common equipment (e.g. freeze dryer).		x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-9

4.4	Acts as a liaison with Regulatory Authorities for the approval, maintenance and updating of API Specifications and other pertinent information regarding applicable Marketing Authorizations.	x
5.0	Safety
5.1	Maintains safety/hazard and handling data on the Raw Materials, intermediates, and API.		x
5.2	Provides safety/hazard and handling data on the Raw Materials, intermediates, and API to Genzyme as requested.		x
6.0	Complaints
6.1	Notifies the other party within two (2) business days of any product complaints associated with manufacturing of the API.	x
6.2	Provides the other party with any information relating to the processing of the API that is necessary to address a product complaint and make any process changes necessary to address the complaint according to the Change Control procedures outlined in this document.		x
6.3	Collects and logs all information relating to product complaints.	x
6.4	Investigates all product complaints.	x	x
6.5	Provides the other party with an investigation or interim report within 30 days of receiving notification of any product complaint associated with manufacturing of the API.		x
6.6	Issues all reports, customer responses and follow-up corrective actions relating to complaints and consults with the other party prior to any Recall or Product Withdrawal, provided Genzyme always maintains the final authority to make the decision.	x
7.0	Recall & Product Withdrawal
7.1	Notifies the other party within 2 business days of any events that could potentially result in a Recall or Product Withdrawal.		x
7.2	Notifies the other party of any Recall or Product Withdrawal which may be attributable to the manufacture of the API.	x
7.3	Initiates and manages Recall or Product Withdrawal.	x
7.4	Notifies appropriate Regulatory Authorities of Recall or Product Withdrawal.	x
8.0	Materials
8.1	Maintains Specifications for procurement of, storage of, sampling of, testing of and release of API Raw Materials and ensures such activities are conducted according to those Specifications.		x
8.2	Keeps retain samples of API Starting Materials for one (1) year beyond last expiration date of drug product manufactured using such API.		x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-10

8.3	Keeps retain samples of API for three (3) years after either the completion of the last clinical trial or formal discontinuation of the last clinical trial in which the material was used.		x
8.4	Disposes of API waste and any regulated waste related to the processing of the API per local, state, and federal guidelines.		x
8.5	Executes a Vendor Qualification program for Raw Materials (including Starting Materials) that qualifies and confirms the Certificates of Analysis being relied upon.		x
8.6	Stores API and Raw Materials in accordance with approved Specifications while at their Facilities.		x
9.0	Production & Validation
9.1	Maintains, qualifies and validates the Facilities, equipment and processes associated with Processing the API, including cleaning validation or verification.		x
9.2	Reviews and approves validation of processes directly associated with manufacturing of the API.	x
9.3	Stores Validation Protocols and Reports, and upon request provides a copy of API related validation documentation to the other party. The other party must be informed before destruction of any Validation Protocols or Reports related to the API.		x
9.4	Manufactures and tests the API at the facilities in accordance with the Product Master Batch Records, the SOPs referenced therein and the Specifications.		x
9.5	Makes the final determination of whether to use the API in clinical trials or commercially.	x
9.6	Uses appropriately validated or qualified analytical methods for routine API testing.		x
9.7	Maintains adequately trained staff and appropriate records of training and competence.		x
9.8	Generates Master Batch Record.		x
9.9	Approves Master Batch Record.	x	x
9.10	Generates Product Specifications.		x
9.11	Approves Product Specifications.	x	x
9.12	Supplies a Certificate of Analysis for the API to the other party reporting results versus the requirements of the Specifications.		x
9.13	Investigates, resolves and documents non-conformances and Deviations from the Master Batch Record directly relating to the API.		x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-11

	Responsibility	Genzyme	Isis
9.14	Informs the other party in writing within 2 business days of occurrence of any Significant Deviation that may affect quality, safety, efficacy, or compliance with any license or Clinical Trial use of the API.		x
9.15	Notifies other party’s QA, in writing of any API investigation and involves other party’s QA in any corrective and preventive actions for Significant Deviations.		x
9.16	Provides copies of investigation reports to other party relating to all Significant Deviations related to the API.		x
9.17	Notifies other party’s QA in writing before implementation of any planned Deviation: major, experimental, temporary or permanent, directly affecting any production of the API that may impact the IND, CTA, NDA or MAA.		x
9.18	Approves in writing any Planned Deviation: major, experimental, temporary or permanent, affecting any production of the API that may impact the IND, CTA, NDA or MAA.	x	x
9.19	Maintains all batch records for at least one (1) year after the expiry date. For APIs with retest dates, records should be retained for at least three (3) years after the batch is completely distributed.		x
9.20	Provides all documentation needed to maintain the Product Specification File in accordance with the applicable Regulatory Authorities for maintenance of the CTA, MAA.		x
9.21	Maintains the Product Specification File in accordance with applicable Regulatory Authorities.	x
9.22	Labels API in accordance with internal procedures and regulatory requirements.		x
10.0	Lot Number Assignment
10.1	Assigns lot numbers using internal procedures and communicates such lot numbers as soon as reasonable to facilitate tracking by the other party, as necessary.		x
11.0	Samples
11.1	Samples API according to cGMPs and internal procedures.		x
11.2	Provides all non-USP reference standards required for testing API and drug product.		x
11.3	Samples for required applicable retain samples per Regulations and approved procedures.		x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-12

11.4	Samples for required stability samples per approved procedures.		x
11.5	Stores all required retain samples per approved procedures while at Isis facilities.		x
11.6	As applicable, coordinates transfer of retain and/or stability samples for storage at other party’s facilities.	x
12.0	Testing & Analysis
12.1	Performs API release and stability testing according to all approved agreements, specifications and party’s applicable procedures.		x
12.2	Within two (2) business days, notifies the other party of any apparent OOS result, which cannot be invalidated by an assignable laboratory cause, generated during release or stability testing.		x
12.3	Provides a plan describing any proposed confirmatory or expanded testing of an apparent OOS result		x
12.4	Within two (2) business days of receiving a confirmatory or expanded testing plan, provides QA authorization to perform such testing.	x	x
12.5	Ensures that any confirmatory or expanded testing is performed according to an approved plan		x
12.6	Investigates all confirmed OOS results according to party’s applicable procedures		x
12.7	Provides complete documentation of OOS investigation to other party, including final reported result(s), within two (2) business days of report completion.		x
13.0	Stability Testing
13.1	Adheres to approved Stability Protocols.		x
13.2	Maintains Stability Program and provides documentation to support storage temperature and shelf-life for the duration of the Product life cycle.		x
13.3	Provides sample storage in temperature controlled stability chambers.		x
13.4	Provides stability data updates for time points as specified in the stability protocol.		x
13.5	Notifies the other party within 2 working days of confirmation of any initial stability failure of the API that has no assignable laboratory cause for the result.		x
13.6	Trends and analyzes all stability data.	x	x
13.7	Reviews stability reports related to the API.	x	x
14.0	Release
14.1	Provides copies of documentation per section 15.0 pertaining to the manufacture of the API.		x
14.2	Authorizes shipment of API upon review and acceptance	x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-13

	of all required documentation and provides other party with written Authorization to Ship.
14.3	Provides all necessary API release documentation to approved designated Third Party.		x
15.0	Records Required for Release
15.1	Provides quality documentation for each batch of API. The list of required documents includes, but is not limited to: -  Certificate of Analysis for API -  Certificate of Conformance for API -  Manufacturing Batch Record(s) for API -  Analytical Forms / Records -  Deviation/Investigation forms as part of the batch record -  Signature of the QA representative who reviewed and approved the documentation and who is aware of any outstanding investigational issues with respect to the batch.		x
15.2	Provides copies of all documentation necessary for the other party to respond to inquiries by Regulatory Authorities.	x	x
16.0	Storage & Transportation
16.1	Stores the API at the Facilities according to the Specifications pending API release.		x
16.2	Will not ship the API to any other location without an Authorization to Ship from other party that may include specific conditions of insurance, packaging or courier service.		x
16.3	Transports under correct transport conditions to other or designated Third Party site.		x
17.0	Training
17.1	Employees engaged in the manufacture, filling, storage and testing of Product shall have education, training and experience or any combination thereof, to enable that person to perform the assigned functions. —Training on the applicable procedures shall be conducted by qualified individuals on a continuing basis and with sufficient frequency to assure that employees remain familiar with requirements applicable to them. —All training will be documented in a training record for each employee. Employees will be trained with respect to data integrity and fraud.		x
18.0	Quality Agreements
18.1	Review Quality Agreements every two (2) years and update as necessary.	x	x

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

D-14

EXHIBIT E

FORM OF PATENT ASSIGNMENT

PATENT ASSIGNMENT

WHEREAS, Isis Pharmaceuticals, Inc. (“Assignor”), a Delaware corporation with an address of 1896 Rutherford Road, Carlsbad, California 92008, is the owner of all rights, title, and interests in and to the patents and patent applications shown on the attached Exhibit 1 (the “Patents”); and

WHEREAS, Genzyme Corporation (“Assignee”), a Massachusetts corporation with an address of 500 Kendall Street, Cambridge, Massachusetts 02142, desires to acquire the entire right, title, and interest in and to the Patents and all the inventions and discoveries disclosed in the Patents (the “Inventions”);

NOW THEREFORE, be it known that effective as of [    ], 2008, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor hereby sells, assigns, transfers, and sets over unto Assignee (1) the entire right, title, and interest in all countries throughout the world in and to said Patents and Inventions, including any renewals, revivals, reissues, reexaminations, extensions, continuations, continuations-in-part, and divisions of said Patents and any substitute applications therefor; (2) the entire right to file patent applications (“New Applications”) in the name of Assignee or its designee, or in the name of Assignor at Assignee’s or its designee’s election, on the aforesaid Inventions in all countries of the world; (3) the entire right, title, and interest in and to any patent which issued and may issue on the Inventions in any country, and any renewals, revivals, reissues, reexaminations, and extensions thereof, and any patents of confirmation, registration, and importation of the same; (4) the right to sue and recover for, and the right to profits or damages due or accrued in connection with, any and all past, present, or future infringements of the Patents and Inventions; and (5) the entire right, title, and interest in all convention and treaty rights of all kinds, including without limitation all rights of priority in any country of the world, in and to the above Patents and Inventions;

AND, Assignor hereby authorizes and requests the competent authorities to grant and to issue any and all patents on the Inventions throughout the world to Assignee, its successors, or assigns, whose rights, title, and interests in such patents are the same as would have been held and enjoyed by Assignor had this assignment, sale, and transfer not been made.

[Remainder of Page Left Blank]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

IN WITNESS WHEREOF, the Assignor has caused this Patent Assignment to be duly executed by its officer thereunto duly authorized as of the [      ] day of [      ], 2008.

ISIS PHARMACEUTICALS, INC.
By:
	Name:
	Title:

STATE OF	)
	: ss.:
COUNTY OF	)

On the        day of         , 200_, before me the undersigned, personally appeared                                                         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

Acknowledgement of Assignee:
GENZYME CORPORATION
By:
	Name:
	Title:

STATE OF	)
	: ss.:
COUNTY OF	)

On the        day of         , 200_, before me the undersigned, personally appeared                                                         , personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Notary Public

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

EXHIBIT F

DISCLOSURE SCHEDULE

[**]

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request.  An unredacted version of this exhibit has been filed separately with the Commission.

EX-31.1

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Exhibit 31.1

Certification Pursuant To
Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

I, Henri A. Termeer, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Genzyme Corporation (the "Registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting.

Date: August 8, 2008 /s/ HENRI A. TERMEER
Henri A. Termeer
Chief Executive Officer

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Exhibit 31.1

EX-31.2

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Exhibit 31.2

Certification Pursuant To
Rules 13a-14(a) And 15d-14(a) Under The Securities Exchange Act Of 1934, As Amended

I, Michael S. Wyzga, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Genzyme Corporation (the "Registrant");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.

The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5.

The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting.

Date: August 8, 2008 /s/ MICHAEL S. WYZGA
Michael S. Wyzga
Chief Financial Officer

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Exhibit 31.2

EX-32.1

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Exhibit 32.1

Certification by the Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Pursuant to 18 U.S.C. Section 1350, I, the undersigned Chief Executive Officer of Genzyme Corporation (the "Company"), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ HENRI A. TERMEER
Henri A. Termeer
Chief Executive Officer
August 8, 2008

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Exhibit 32.1

EX-32.2

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Exhibit 32.2

Certification by the Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

        Pursuant to 18 U.S.C. Section 1350, I, the undersigned Chief Financial Officer of Genzyme Corporation (the "Company"), hereby certify that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2008 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ MICHAEL S. WYZGA
Michael S. Wyzga
Chief Financial Officer
August 8, 2008

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Exhibit 32.2