| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
33-0336973
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Large accelerated filer
|
Accelerated filer
|
Non-accelerated filer
|
Smaller reporting company
|
(Do not check if a smaller reporting company)
|
PART I
|
FINANCIAL INFORMATION
|
|
ITEM 1:
|
Financial Statements:
|
|
Condensed Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014
|
3
|
|
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014 (unaudited)
|
4
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2015 and 2014 (unaudited)
|
5
|
|
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 (unaudited)
|
6
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
7
|
|
ITEM 2:
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
22
|
Results of Operations
|
25
|
|
Liquidity and Capital Resources
|
30
|
|
Risk Factors
|
32
|
|
ITEM 3:
|
Quantitative and Qualitative Disclosures about Market Risk
|
38
|
ITEM 4:
|
Controls and Procedures
|
38
|
PART II
|
OTHER INFORMATION
|
38
|
ITEM 1:
|
Legal Proceedings
|
38
|
ITEM 2:
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
39
|
ITEM 3:
|
Default upon Senior Securities
|
39
|
ITEM 4:
|
Mine Safety Disclosures
|
39
|
ITEM 5:
|
Other Information
|
39
|
ITEM 6:
|
Exhibits
|
40
|
SIGNATURES
|
41
|
June 30,
2015
|
December 31,
2014
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
119,487
|
$
|
142,998
|
||||
Short-term investments
|
635,447
|
585,834
|
||||||
Contracts receivable
|
3,264
|
3,903
|
||||||
Inventories
|
6,782
|
6,290
|
||||||
Investment in Regulus Therapeutics Inc.
|
60,604
|
81,881
|
||||||
Other current assets
|
29,868
|
15,691
|
||||||
Total current assets
|
855,452
|
836,597
|
||||||
Property, plant and equipment, net
|
89,692
|
88,958
|
||||||
Licenses, net
|
1,753
|
2,690
|
||||||
Patents, net
|
19,060
|
17,186
|
||||||
Deposits and other assets
|
10,301
|
10,378
|
||||||
Total assets
|
$
|
976,258
|
$
|
955,809
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
10,954
|
$
|
17,984
|
||||
Accrued compensation
|
7,915
|
12,302
|
||||||
Accrued liabilities
|
23,753
|
30,451
|
||||||
Current portion of long-term obligations
|
1,225
|
2,882
|
||||||
Current portion of deferred contract revenue
|
58,285
|
51,713
|
||||||
Total current liabilities
|
102,132
|
115,332
|
||||||
Long-term deferred contract revenue
|
108,128
|
127,797
|
||||||
1 percent convertible senior notes
|
337,158
|
327,486
|
||||||
2¾ percent convertible senior notes
|
49,160
|
48,014
|
||||||
Long-term obligations, less current portion
|
7,392
|
7,669
|
||||||
Long-term financing liability for leased facility
|
71,968
|
71,731
|
||||||
Total liabilities
|
675,938
|
698,029
|
||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 119,881,615 and 118,442,726 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
|
120
|
118
|
||||||
Additional paid-in capital
|
1,269,452
|
1,224,509
|
||||||
Accumulated other comprehensive income
|
18,411
|
39,747
|
||||||
Accumulated deficit
|
(987,663
|
)
|
(1,006,594
|
)
|
||||
Total stockholders’ equity
|
300,320
|
257,780
|
||||||
Total liabilities and stockholders’ equity
|
$
|
976,258
|
$
|
955,809
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Revenue:
|
||||||||||||||||
Research and development revenue under collaborative agreements
|
$
|
119,658
|
$
|
56,628
|
$
|
181,551
|
$
|
76,177
|
||||||||
Licensing and royalty revenue
|
770
|
448
|
1,461
|
9,060
|
||||||||||||
Total revenue
|
120,428
|
57,076
|
183,012
|
85,237
|
||||||||||||
|
||||||||||||||||
Expenses:
|
||||||||||||||||
Research, development and patent expenses
|
68,007
|
59,264
|
132,454
|
112,712
|
||||||||||||
General and administrative
|
7,775
|
4,462
|
15,241
|
8,842
|
||||||||||||
Total operating expenses
|
75,782
|
63,726
|
147,695
|
121,554
|
||||||||||||
|
||||||||||||||||
Income (loss) from operations
|
44,646
|
(6,650
|
)
|
35,317
|
(36,317
|
)
|
||||||||||
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||
Investment income
|
917
|
671
|
1,761
|
1,328
|
||||||||||||
Interest expense
|
(9,127
|
)
|
(4,961
|
)
|
(18,148
|
)
|
(9,904
|
)
|
||||||||
Gain (loss) on investments, net
|
1
|
(260
|
)
|
1
|
137
|
|||||||||||
|
||||||||||||||||
Income (loss) before income tax (expense) benefit
|
36,437
|
(11,200
|
)
|
18,931
|
(44,756
|
)
|
||||||||||
|
||||||||||||||||
Income tax (expense) benefit
|
(789
|
)
|
(881
|
)
|
—
|
1,395
|
||||||||||
|
||||||||||||||||
Net income (loss)
|
$
|
35,648
|
$
|
(12,081
|
)
|
$
|
18,931
|
$
|
(43,361
|
)
|
||||||
|
||||||||||||||||
Basic net income (loss) per share
|
$
|
0.30
|
$
|
(0.10
|
)
|
$
|
0.16
|
$
|
(0.37
|
)
|
||||||
Diluted net income (loss) per share
|
$
|
0.29
|
$
|
(0.10
|
)
|
$
|
0.15
|
$
|
(0.37
|
)
|
||||||
Shares used in computing basic net income (loss) per share
|
119,742
|
117,588
|
119,348
|
117,359
|
||||||||||||
Shares used in computing diluted net income (loss) per share
|
127,779
|
117,588
|
124,061
|
117,359
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
|
||||||||||||||||
Net income (loss)
|
$
|
35,648
|
$
|
(12,081
|
)
|
$
|
18,931
|
$
|
(43,361
|
)
|
||||||
Unrealized (losses) gains on securities, net of tax
|
(28,703
|
)
|
(4,456
|
)
|
(21,336
|
)
|
3,806
|
|||||||||
Reclassification adjustment for realized losses (gains) included in net income (loss)
|
—
|
175
|
—
|
(167
|
)
|
|||||||||||
|
||||||||||||||||
Comprehensive income (loss)
|
$
|
6,945
|
$
|
(16,362
|
)
|
$
|
(2,405
|
)
|
$
|
(39,722
|
)
|
Six Months Ended
June 30,
|
||||||||
2015
|
2014
|
|||||||
Operating activities:
|
||||||||
Net income (loss)
|
$
|
18,931
|
$
|
(43,361
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
3,406
|
3,141
|
||||||
Amortization of patents
|
648
|
543
|
||||||
Amortization of licenses
|
937
|
941
|
||||||
Amortization of premium on investments, net
|
3,377
|
3,847
|
||||||
Amortization of debt issuance costs
|
555
|
272
|
||||||
Amortization of 2¾ percent convertible senior notes discount
|
1,146
|
3,366
|
||||||
Amortization of 1 percent convertible senior notes discount
|
9,672
|
—
|
||||||
Amortization of long-term financing liability for leased facility
|
3,327
|
3,306
|
||||||
Stock-based compensation expense
|
26,910
|
14,777
|
||||||
Gain on investments, net
|
(1
|
)
|
(137
|
)
|
||||
Non-cash losses related to patents, licensing and property, plant and equipment
|
166
|
325
|
||||||
Tax benefit from other unrealized gains on securities
|
—
|
(1,395
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Contracts receivable
|
639
|
(30,839
|
)
|
|||||
Inventories
|
(492
|
)
|
257
|
|||||
Other current and long-term assets
|
(14,628
|
)
|
(695
|
)
|
||||
Accounts payable
|
(8,197
|
)
|
1,991
|
|||||
Accrued compensation
|
(4,387
|
)
|
(5,738
|
)
|
||||
Deferred rent
|
167
|
69
|
||||||
Accrued liabilities
|
(6,698
|
)
|
1,965
|
|||||
Deferred contract revenue
|
(13,097
|
)
|
(18,978
|
)
|
||||
Net cash provided by (used in) operating activities
|
22,381
|
(66,343
|
)
|
|||||
Investing activities:
|
||||||||
Purchases of short-term investments
|
(240,570
|
)
|
(179,196
|
)
|
||||
Proceeds from the sale of short-term investments
|
187,522
|
175,777
|
||||||
Purchases of property, plant and equipment
|
(3,940
|
)
|
(3,100
|
)
|
||||
Acquisition of licenses and other assets, net
|
(1,749
|
)
|
(1,791
|
)
|
||||
Proceeds from the sale of strategic investments
|
—
|
737
|
||||||
Net cash used in investing activities
|
(58,737
|
)
|
(7,573
|
)
|
||||
Financing activities:
|
||||||||
Proceeds from equity awards
|
18,035
|
13,416
|
||||||
Principal payments on debt and capital lease obligations
|
(5,190
|
)
|
(5,392
|
)
|
||||
Net cash provided by financing activities
|
12,845
|
8,024
|
||||||
Net decrease in cash and cash equivalents
|
(23,511
|
)
|
(65,892
|
)
|
||||
Cash and cash equivalents at beginning of period
|
142,998
|
159,973
|
||||||
Cash and cash equivalents at end of period
|
$
|
119,487
|
$
|
94,081
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Interest paid
|
$
|
3,377
|
$
|
2,920
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Amounts accrued for capital and patent expenditures
|
$
|
1,166
|
$
|
453
|
1. | Basis of Presentation |
2. | Significant Accounting Policies |
| The exclusive license we granted to Bayer to develop and commercialize ISIS-FXIRx for the treatment of thrombosis; |
| The development services we agreed to perform for ISIS-FXIRx; and |
| The initial supply of API. |
| Estimated future product sales; |
| Estimated royalties on future product sales; |
| Contractual milestone payments; |
| Expenses we expect to incur; |
| Income taxes; and |
| The number of internal hours we will spend performing these services; |
| The estimated cost of work we will perform; |
| The estimated cost of work that we will contract with third parties to perform; and |
| The estimated cost of drug product we will use. |
| $91.2 million to the ISIS-FXIRx exclusive license; |
| $4.3 million for ongoing development services; and |
| $4.5 million for the delivery of API. |
| We recognized the portion of the consideration attributed to the ISIS-FXIRx license immediately because we delivered the license and earned the revenue; |
| We will recognize the amount attributed to the API supply when we deliver it to Bayer. |
| In January 2012, we entered into a collaboration agreement with Biogen to develop and commercialize ISIS-SMNRx for spinal muscular atrophy, or SMA. As part of the collaboration, we received a $29 million upfront payment and we are responsible for global development of ISIS-SMNRx through completion of Phase 2/3 clinical trials. |
| In June 2012, we entered into a second and separate collaboration agreement with Biogen to develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible for global development of the drug through the completion of a Phase 2 clinical trial. |
|
In December 2012, we entered into a third and separate collaboration agreement with Biogen to discover and develop antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we received $30 million upfront payment and we are responsible for the discovery of a lead antisense drug for each of three targets.
|
| In September 2013, we entered into a fourth and separate collaboration agreement with Biogen to leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen exclusive rights to the use of our antisense technology to develop therapies for neurological diseases as part of this broad collaboration. We received a $100 million upfront payment and we are responsible for discovery and early development through the completion of a Phase 2 clinical trial for each antisense drug identified during the six year term of this collaboration, while Biogen is responsible for the creation and development of small molecule treatments and biologics. |
| Designation of a development candidate. Following the designation of a development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete; |
| Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete; |
| Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; |
| Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete. |
| Filing of regulatory applications for marketing approval such as a New Drug Application, or NDA, in the United States or a Marketing Authorization Application, or MAA, in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings. |
| Marketing approval in a major market, such as the United States, Europe or Japan. Generally it takes one to two years after an application is submitted to obtain approval from the applicable regulatory agency. |
| First commercial sale in a particular market, such as in the United States or Europe. |
| Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. |
| Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; |
| The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on our performance or the occurrence of a specific outcome resulting from our performance; |
| The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items; |
| There is no future performance required to earn the milestone; and |
| The consideration is reasonable relative to all deliverables and payment terms in the arrangement. |
| Dilutive stock options; |
| Unvested restricted stock units; |
| Employee Stock Purchase Plan, or ESPP; |
| 2¾ percent convertible senior notes; and |
| 1 percent convertible senior notes. |
Three Months Ended June 30, 2015
|
Income
(Numerator)
|
Shares (Denominator)
|
Per-Share Amount
|
|||||||||
Income available to common shareholders
|
$
|
35,648
|
119,742
|
$
|
0.30
|
|||||||
Effect of diluted securities:
|
||||||||||||
Shares issuable upon exercise of stock options
|
3,974
|
|||||||||||
Shares issuable upon restricted stock award issuance
|
376
|
|||||||||||
Shares issuable related to our ESPP
|
4
|
|||||||||||
Shares issuable related to our 2¾ percent notes
|
1,047
|
3,683
|
||||||||||
Income available to common shareholders, plus assumed conversions
|
$
|
36,695
|
127,779
|
$
|
0.29
|
Six Months Ended June 30, 2015
|
Income (Numerator)
|
Shares (Denominator)
|
Per-Share Amount
|
|||||||||
Income available to common shareholders
|
$
|
18,931
|
119,348
|
$
|
0.16
|
|||||||
Effect of diluted securities:
|
||||||||||||
Shares issuable upon exercise of stock options
|
4,310
|
|||||||||||
Shares issuable upon restricted stock award issuance
|
399
|
|||||||||||
Shares issuable related to our ESPP
|
4
|
|||||||||||
Shares issuable related to our 2¾ percent notes
|
—
|
—
|
||||||||||
Income available to common shareholders, plus assumed conversions
|
$
|
18,931
|
124,061
|
$
|
0.15
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||||||||||||
|
2015
|
2014
|
2015
|
2014
|
||||||||||||
Beginning balance accumulated other comprehensive income
|
$
|
47,114
|
$
|
29,000
|
$
|
39,747
|
$
|
21,080
|
||||||||
Unrealized (losses) gains on securities, net of tax (1)
|
(28,703
|
)
|
(4,456
|
)
|
(21,336
|
)
|
3,806
|
|||||||||
Amounts reclassified from accumulated other comprehensive income (2)
|
—
|
175
|
—
|
(167
|
)
|
|||||||||||
Net current period other comprehensive (loss) income
|
(28,703
|
)
|
(4,281
|
)
|
(21,336
|
)
|
3,639
|
|||||||||
Ending balance accumulated other comprehensive income
|
$
|
18,411
|
$
|
24,719
|
$
|
18,411
|
$
|
24,719
|
(1) | Other comprehensive loss for the three months ended June 30, 2015 includes income tax benefit of $5.1 million, compared to $2.9 million for the same period in 2014. For the six months ended June 30, 2014 other comprehensive income includes income tax expense of $2.5 million. There was no tax expense or benefit for the six months ended June 30, 2015. |
(2) | Included in gain on investments, net on our condensed consolidated statement of operations. |
Six Months Ended
June 30,
|
|||||
2015
|
2014
|
||||
Risk-free interest rate
|
1.5%
|
1.6%
|
|||
Dividend yield
|
0.0%
|
0.0%
|
|||
Volatility
|
53.6%
|
50.6%
|
|||
Expected life
|
4.5 years
|
4.6 years
|
Six Months Ended
June 30,
|
|||||
2015
|
2014
|
||||
Risk-free interest rate
|
0.1%
|
0.1%
|
|||
Dividend yield
|
0.0%
|
0.0%
|
|||
Volatility
|
56.2%
|
59.0%
|
|||
Expected life
|
6 months
|
6 months
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Research, development and patent expenses
|
$
|
10,465
|
$
|
6,401
|
$
|
20,951
|
$
|
12,274
|
||||||||
General and administrative
|
3,140
|
1,307
|
5,959
|
2,503
|
||||||||||||
Total
|
$
|
13,605
|
$
|
7,708
|
$
|
26,910
|
$
|
14,777
|
3. | Investments |
One year or less
|
54%
|
After one year but within two years
|
29%
|
After two years but within three and a half years
|
17%
|
Total
|
100%
|
Gross Unrealized
|
Other-
Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||||||||
June 30, 2015
|
Cost
|
Gains
|
Losses
|
Loss
|
Fair Value
|
||||||||||||||||||||
Available-for-sale securities (1):
|
|||||||||||||||||||||||||
Corporate debt securities
|
|
$
|
189,487
|
|
$
|
37
|
|
$
|
(90
|
)
|
|
$
|
—
|
|
$
|
189,434
|
|||||||||
Debt securities issued by U.S. government agencies
|
81,639
|
5
|
(11
|
)
|
—
|
81,633
|
|||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (2)
|
59,835
|
22
|
(58
|
)
|
—
|
59,799
|
|||||||||||||||||||
Total securities with a maturity of one year or less
|
330,961
|
64
|
(159
|
)
|
—
|
330,866
|
|||||||||||||||||||
Corporate debt securities
|
234,088
|
52
|
(848
|
)
|
—
|
233,292
|
|||||||||||||||||||
Debt securities issued by U.S. government agencies
|
28,002
|
10
|
(3
|
)
|
—
|
28,009
|
|||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
62,203
|
32
|
(189
|
)
|
—
|
62,046
|
|||||||||||||||||||
Total securities with a maturity of more than one year
|
324,293
|
94
|
(1,040
|
)
|
—
|
323,347
|
|||||||||||||||||||
Total available-for-sale securities
|
|
$
|
655,254
|
|
$
|
158
|
|
$
|
(1,199
|
)
|
|
$
|
—
|
|
$
|
654,213
|
|||||||||
Equity securities:
|
|||||||||||||||||||||||||
Regulus Therapeutics Inc.
|
|
$
|
12,477
|
|
$
|
48,127
|
|
$
|
—
|
|
$
|
—
|
|
$
|
60,604
|
||||||||||
Securities included in other current assets
|
880
|
—
|
—
|
(880
|
)
|
—
|
|||||||||||||||||||
Total equity securities
|
|
$
|
13,357
|
|
$
|
48,127
|
|
$
|
—
|
|
$
|
(880
|
)
|
|
$
|
60,604
|
|||||||||
Total available-for-sale and equity securities
|
|
$
|
668,611
|
|
$
|
48,285
|
|
$
|
(1,199
|
)
|
|
$
|
(880
|
)
|
|
$
|
714,817
|
Gross Unrealized
|
Other-
Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||||||||
December 31, 2014
|
Cost
|
Gains
|
Losses
|
Loss
|
Fair Value
|
||||||||||||||||||||
Available-for-sale securities (1):
|
|||||||||||||||||||||||||
Corporate debt securities (2)
|
|
$
|
219,856
|
|
$
|
89
|
|
$
|
(89
|
)
|
|
$
|
—
|
|
$
|
219,856
|
|||||||||
Debt securities issued by U.S. government agencies
|
47,496
|
7
|
(27
|
)
|
—
|
47,476
|
|||||||||||||||||||
Debt securities issued by the U.S. Treasury (2)
|
19,008
|
9
|
—
|
—
|
19,017
|
||||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (2)
|
45,196
|
19
|
(53
|
)
|
—
|
45,162
|
|||||||||||||||||||
Total securities with a maturity of one year or less
|
331,556
|
124
|
(169
|
)
|
—
|
331,511
|
|||||||||||||||||||
Corporate debt securities
|
152,730
|
16
|
(600
|
)
|
—
|
152,146
|
|||||||||||||||||||
Debt securities issued by U.S. government agencies
|
62,530
|
—
|
(151
|
)
|
—
|
62,379
|
|||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
60,073
|
32
|
(234
|
)
|
—
|
59,871
|
|||||||||||||||||||
Total securities with a maturity of more than one year
|
275,333
|
48
|
(985
|
)
|
—
|
274,396
|
|||||||||||||||||||
Total available-for-sale securities
|
|
$
|
606,889
|
|
$
|
172
|
|
$
|
(1,154
|
)
|
|
$
|
—
|
|
$
|
605,907
|
|||||||||
Equity securities:
|
|||||||||||||||||||||||||
Regulus Therapeutics Inc.
|
|
$
|
12,477
|
|
$
|
69,404
|
|
$
|
—
|
|
$
|
—
|
|
$
|
81,881
|
||||||||||
Securities included in other current assets
|
880
|
—
|
—
|
(880
|
)
|
—
|
|||||||||||||||||||
Total equity securities
|
|
$
|
13,357
|
|
$
|
69,404
|
|
$
|
—
|
|
$
|
(880
|
)
|
|
$
|
81,881
|
|||||||||
Total available-for-sale and equity securities
|
|
$
|
620,246
|
|
$
|
69,576
|
|
$
|
(1,154
|
)
|
|
$
|
(880
|
)
|
|
$
|
687,788
|
(1) | Our available-for-sale securities are held at amortized cost. |
(2) | Includes investments classified as cash equivalents on our condensed consolidated balance sheet. |
Less than 12 months of
temporary impairment
|
More than 12 months of
temporary impairment
|
Total temporary
impairment
|
||||||||||||||||||||||||||
Number of
Investments
|
Estimated
Fair Value
|
Unrealized
Losses
|
Estimated
Fair Value
|
Unrealized
Losses
|
Estimated
Fair Value
|
Unrealized
Losses
|
||||||||||||||||||||||
Corporate debt securities
|
254
|
$
|
296,493
|
$
|
(894
|
)
|
$
|
9,263
|
$
|
(44
|
)
|
$
|
305,756
|
$
|
(938
|
)
|
||||||||||||
Debt securities issued by U.S. government agencies
|
12
|
62,116
|
(14
|
)
|
—
|
—
|
62,116
|
(14
|
)
|
|||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
49
|
51,616
|
(178
|
)
|
6,229
|
(69
|
)
|
57,845
|
(247
|
)
|
||||||||||||||||||
Total temporarily impaired securities
|
315
|
$
|
410,225
|
$
|
(1,086
|
)
|
$
|
15,492
|
$
|
(113
|
)
|
$
|
425,717
|
$
|
(1,199
|
)
|
4. | Fair Value Measurements |
At
June 30,
2015
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Cash equivalents (1)
|
$
|
89,072
|
$
|
89,072
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (2)
|
422,726
|
—
|
422,726
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (2)
|
109,642
|
—
|
109,642
|
—
|
||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (3)
|
121,845
|
—
|
121,845
|
—
|
||||||||||||
Investment in Regulus Therapeutics Inc.
|
60,604
|
60,604
|
—
|
—
|
||||||||||||
Total
|
$
|
803,889
|
$
|
149,676
|
$
|
654,213
|
$
|
—
|
At
December 31,
2014
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Cash equivalents (1)
|
$
|
104,680
|
$
|
104,680
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (4)
|
372,002
|
—
|
372,002
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (2)
|
109,855
|
—
|
109,855
|
—
|
||||||||||||
Debt securities issued by the U.S. Treasury (5)
|
19,017
|
19,017
|
—
|
—
|
||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (6)
|
105,033
|
—
|
105,033
|
—
|
||||||||||||
Investment in Regulus Therapeutics Inc.
|
81,881
|
—
|
—
|
81,881
|
||||||||||||
Total
|
$
|
792,468
|
$
|
123,697
|
$
|
586,890
|
$
|
81,881
|
(1) | Included in cash and cash equivalents on our condensed consolidated balance sheet. |
(2) | Included in short-term investments on our condensed consolidated balance sheet. |
(3) | $18.8 million included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
(4) | $0.8 million included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
(5) | $10 million included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
(6) | $9.3 million included in cash and cash equivalents on our condensed consolidated balance sheet, with the difference included in short-term investments on our condensed consolidated balance sheet. |
Beginning balance of Level 3 investments (at December 31, 2014)
|
$
|
81,881
|
||
Total gain included in accumulated other comprehensive income (loss)
|
22,377
|
|||
Transfers out of Level 3 investments
|
(104,258
|
)
|
||
Ending balance of Level 3 investments (at June 30, 2015)
|
$
|
—
|
(i)
|
a floating rate equal to the one-month London Interbank Offered Rate, or LIBOR, in effect plus 1.25 percent per annum;
|
(ii)
|
a fixed rate equal to LIBOR plus 1.25 percent for a period of one, two, three, four, six, or twelve months as elected by us; or
|
(iii)
|
a fixed rate equal to the LIBOR swap rate during the period of the loan.
|
6. | Collaborative Arrangements and Licensing Agreements |
| AstraZeneca may terminate the agreement or any program at any time by providing written notice to us; |
| AstraZeneca may terminate the agreement or any program by providing written notice if we undergo a change of control with a third party; and |
| Either we or AstraZeneca may terminate the agreement or any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent. |
| Bayer may terminate the agreement or any program at any time by providing written notice to us; |
| Either we or Bayer may terminate the agreement or any program by providing written notice to the other party upon the other party’s uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent. |
| Biogen may terminate the agreement or any program at any time by providing written notice to us; |
| Under specific circumstances, if we are acquired by a third party with a product that directly competes with a compound being developed under the agreement, Biogen may terminate the affected program by providing written notice to us; |
| If, within a specified period of time, any required clearance of a transaction contemplated by an agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is not received, then either we or Biogen may terminate the affected program by providing written notice to the other party; and |
| Either we or Biogen may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
| GSK may terminate any program, other than the ISIS-TTRRx program, at any time by providing written notice to us; |
| GSK may terminate the ISIS-TTRRx program by providing written notice to us after reviewing specific data from the Phase 3 study for the program; and |
| Either we or GSK may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
| Roche may terminate the agreement at any time by providing written notice to us; |
| Either we or Roche may terminate the agreement by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement or if the other party becomes insolvent; and |
| Either we or Roche may terminate the brain shuttle program if at least one development candidate is not designated under such program by a mutually agreed deadline. |
7. | Segment Information and Concentration of Business Risk |
Three Months Ended June 30, 2015
|
Isis Core
|
Akcea Therapeutics
|
Total
|
|||||||||
Revenue:
|
||||||||||||
Research and development
|
$
|
119,658
|
$
|
—
|
$
|
119,658
|
||||||
Licensing and royalty
|
770
|
—
|
770
|
|||||||||
Total segment revenue
|
$
|
120,428
|
$
|
—
|
$
|
120,428
|
||||||
Income (loss) from operations
|
$
|
53,588
|
$
|
(8,942
|
)
|
$
|
44,646
|
Six Months Ended June 30, 2015
|
Isis Core
|
Akcea Therapeutics
|
Total
|
|||||||||
Revenue:
|
||||||||||||
Research and development
|
$
|
181,551
|
$
|
—
|
$
|
181,551
|
||||||
Licensing and royalty
|
1,461
|
—
|
1,461
|
|||||||||
Total segment revenue
|
$
|
183,012
|
$
|
—
|
$
|
183,012
|
||||||
Income (loss) from operations
|
$
|
51,357
|
$
|
(16,040
|
)
|
$
|
35,317
|
Three Months Ended June 30, 2014
|
Isis Core
|
Akcea Therapeutics
|
Total
|
|||||||||
Revenue:
|
||||||||||||
Research and development
|
$
|
56,628
|
$
|
—
|
$
|
56,628
|
||||||
Licensing and royalty
|
448
|
—
|
448
|
|||||||||
Total segment revenue
|
$
|
57,076
|
$
|
—
|
$
|
57,076
|
||||||
Loss from operations
|
$
|
(1,042
|
)
|
$
|
(5,608
|
)
|
$
|
(6,650
|
)
|
Six Months Ended June 30, 2014
|
Isis Core
|
Akcea Therapeutics
|
Total
|
|||||||||
Revenue:
|
||||||||||||
Research and development
|
$
|
76,177
|
$
|
—
|
$
|
76,177
|
||||||
Licensing and royalty
|
9,060
|
—
|
9,060
|
|||||||||
Total segment revenue
|
$
|
85,237
|
$
|
—
|
$
|
85,237
|
||||||
Loss from operations
|
$
|
(26,653
|
)
|
$
|
(9,664
|
)
|
$
|
(36,317
|
)
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
||||||||
|
2015
|
|
2014
|
|
2015
|
|
2014
|
||||
Partner A
|
|
76 %
|
|
|
0 %
|
|
|
50 %
|
|
|
0 %
|
Partner B
|
|
15 %
|
|
|
60 %
|
|
|
31 %
|
|
|
52 %
|
Partner C
|
|
4 %
|
|
|
6 %
|
|
|
11 %
|
|
|
8 %
|
Partner D
|
1 %
|
27 %
|
1 %
|
22 %
|
8. | Subsequent Event |
ITEM 2 | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
| GSK- We are developing five drugs, including ISIS-TTRRx, which is in Phase 3 development. |
| Janssen- We are discovering and developing antisense drugs that can be locally administered, including oral delivery, to treat autoimmune disorders in the GI tract. |
| Roche- We are discovering and developing antisense drugs to treat Huntington's disease. |
| Biogen- We have four collaborations with Biogen to discover and develop antisense drugs to treat neurologic diseases, including ISIS-SMNRx, which is in Phase 3 development. We currently have four drugs we are advancing through these collaborations, ISIS-SMNRx, ISIS-DMPKRx, ISIS-BIIB3Rx and ISIS BIIB4Rx. Through our broad strategic partnership with Biogen, we are capitalizing on Biogen's extensive resources and expertise in neurological diseases to create a franchise of novel treatments for neurological disorders. |
| AstraZeneca- We recently expanded our relationship with AstraZeneca with a strategic collaboration to discover and develop antisense therapies for cardiovascular, metabolic and renal diseases. The new collaboration builds on our broad existing relationship and supports AstraZeneca’s strategic approach in these therapeutic areas using novel RNA-targeted treatments. It also enables us to extend our use of our antisense technology to diseases of the kidney. This recent transaction adds to our existing collaboration to discover and develop antisense drugs to treat cancer and our drug delivery collaboration. |
| We licensed ISIS-FXIRx to Bayer to develop and commercialize ISIS-FXIRx for the prevention of thrombosis. |
o
|
We generated a $100 million upfront payment from Bayer and are eligible to earn up to $275 million in additional payments, including a $55 million milestone payment upon advancement of the program following completion of the planned Phase 2 study.
|
o
|
We are eligible to receive tiered royalties in the low to high 20 percent range on gross margins of ISIS-FXIRx.
|
| We and AstraZeneca formed a multi-year collaboration to discover and develop novel antisense drugs primarily focused on treating cardiovascular, metabolic and kidney diseases. |
o
|
In total, we have the potential to earn up to more than $4 billion in license fees and milestone payments.
|
| We will receive a $65 million upfront payment from AstraZeneca and we are eligible to earn substantial development and regulatory milestone payments and license fees. We are eligible to earn a payment of $25-30 million under this collaboration next year upon identification of the first drug candidate to move into development. |
| We are also eligible to earn tiered royalties up to the low teens on annual net sales for each of the programs. |
| This transaction is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act. |
| To date this year, we have generated nearly $300 million in payments from our partners. |
| We reported positive clinical results from KYNAMRO, ISIS-SMNRx and ISIS-TTRRx. These data exemplify the broad applicability and potential for antisense drugs to provide therapeutic benefit for many different diseases. |
o
|
We reported that the FOCUS FH study evaluating KYNAMRO in patients with severe heterozygous familial hypercholesterolemia met its primary endpoint with a statistically significant reduction of LDL-Cholesterol. We and Genzyme plan to report the full data from this study at an upcoming medical meeting.
|
o
|
We presented positive results based on an April 17, 2015 data analysis from the ongoing open-label Phase 2 clinical study of ISIS-SMNRx in infants with Type I spinal muscular atrophy. The data reported showed continued increases in median event-free survival and muscle function scores as well as achievement of developmental milestones.
|
o
|
We provided an update based on a May 15, 2015 data analysis in children with spinal muscular atrophy who have completed the open-label, Phase 2 multiple-dose study of ISIS-SMNRx and are continuing to receive treatment in an open-label extension study. Consistent with earlier observations, increases in muscle function scores and additional motor function tests were observed in children treated with ISIS-SMNRx.
|
o
|
Dr. Merrill Benson, an investigator of ISIS-TTRRx, reported positive data from an investigator-initiated study in patients with TTR amyloid-related cardiomyopathy. In this study, Dr. Benson observed apparent stabilization of cardiac disease after six months of treatment with ISIS-TTRRx with no progression of cardiac disease. Patients also experienced up to 88 percent reduction in TTR after nine months of dosing compared to baseline.
|
o
|
We reported positive results from an ongoing open-label extension study of ISIS-TTRRx in patients with familial amyloid polyneuropathy, or FAP. In the open-label study after thirteen weeks of treatment with ISIS-TTRRx, TTR protein was reduced up to 92 percent with a median reduction of 78 percent in patients with FAP compared to their baseline TTR levels at entry into the Phase 3 study.
|
o
|
We reported positive Phase 2 data for ISIS-GCCRRx in patients with type 2 diabetes. In this study after six weeks of treatment with ISIS-GCCRRx, patients achieved improvements in multiple measures of glucose control with trends toward improvements in insulin sensitivity.
|
| We published clinical data from our novel lipid drugs, volanesorsen and ISIS-APO(a)Rx, in the New England Journal of Medicine and The Lancet, respectively, two prestigious medical journals. These data highlight the significant interest from the medical community in our lipid drugs and the significance of the clinical data from these programs. |
| Volanesorsen was granted orphan drug designation from the US FDA for the treatment of patients with FCS. |
| We continued to advance our pipeline of drugs. |
o
|
We initiated a Phase 1/2 study of ISIS-HTTRx in patients with Huntington’s disease (HD). ISIS-HTTRx has been granted orphan drug designation by the European Medicines Agency for the treatment of patients with HD.
|
o
|
We initiated a Phase 2 study to evaluate the safety and activity of ISIS-FGFR4Rx in patients who are obese.
|
| Assessing the propriety of revenue recognition and associated deferred revenue; |
| Determining the proper valuation of investments in marketable securities and other equity investments; |
| Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities; and |
| Estimating our net deferred income tax asset valuation allowance. |
| Assessing the recoverability of long-lived assets, including property and equipment, intellectual property and licensed technology; and |
| Determining the fair value of convertible debt without the conversion feature. |
| $41 million from Biogen for advancing ISIS-SMNRx in late-stage clinical development, for advancing ISIS-BIIB4Rx into development and for validating two new undisclosed targets for neurological disorders; and |
| $15 million from GSK for advancing the Phase 3 study of ISIS-TTRRx. |
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
54,188
|
$
|
50,410
|
$
|
106,256
|
$
|
97,113
|
||||||||
Akcea Therapeutics
|
7,989
|
5,608
|
14,529
|
9,664
|
||||||||||||
Non-cash compensation expense related to equity awards
|
13,605
|
7,708
|
26,910
|
14,777
|
||||||||||||
Total operating expenses
|
$
|
75,782
|
$
|
63,726
|
$
|
147,695
|
$
|
121,554
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Research, development and patent expenses
|
$
|
57,542
|
$
|
52,863
|
$
|
111,503
|
$
|
100,438
|
||||||||
Non-cash compensation expense related to equity awards
|
10,465
|
6,401
|
20,951
|
12,274
|
||||||||||||
Total research, development and patent expenses
|
$
|
68,007
|
$
|
59,264
|
$
|
132,454
|
$
|
112,712
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
50,531
|
$
|
47,427
|
$
|
98,750
|
$
|
91,123
|
||||||||
Akcea Therapeutics
|
7,011
|
5,436
|
12,753
|
9,315
|
||||||||||||
Non-cash compensation expense related to equity awards
|
10,465
|
6,401
|
20,951
|
12,274
|
||||||||||||
Total research, development and patent expenses
|
$
|
68,007
|
$
|
59,264
|
$
|
132,454
|
$
|
112,712
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Antisense drug discovery expenses
|
$
|
10,654
|
$
|
10,759
|
$
|
21,314
|
$
|
19,855
|
||||||||
Non-cash compensation expense related to equity awards
|
2,935
|
1,844
|
5,854
|
3,530
|
||||||||||||
Total antisense drug discovery
|
$
|
13,589
|
$
|
12,603
|
$
|
27,168
|
$
|
23,385
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
KYNAMRO
|
$
|
1,067
|
$
|
620
|
$
|
2,321
|
$
|
2,417
|
||||||||
ISIS-TTRRx
|
4,380
|
2,028
|
7,612
|
4,409
|
||||||||||||
ISIS-SMNRx
|
6,211
|
5,473
|
12,331
|
7,436
|
||||||||||||
Volanesorsen
|
3,816
|
1,957
|
6,187
|
3,011
|
||||||||||||
Other antisense development products
|
10,330
|
12,909
|
19,466
|
23,690
|
||||||||||||
Development overhead costs
|
8,429
|
7,157
|
17,101
|
15,580
|
||||||||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards
|
34,233
|
30,144
|
65,018
|
56,543
|
||||||||||||
Non-cash compensation expense related to equity awards
|
3,657
|
2,325
|
7,371
|
4,402
|
||||||||||||
Total antisense drug development
|
$
|
37,890
|
$
|
32,469
|
$
|
72,389
|
$
|
60,945
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
27,584
|
$
|
25,278
|
$
|
53,197
|
$
|
48,396
|
||||||||
Akcea Therapeutics
|
6,649
|
4,866
|
11,821
|
8,147
|
||||||||||||
Non-cash compensation expense related to equity awards
|
3,657
|
2,325
|
7,371
|
4,402
|
||||||||||||
Total antisense drug development
|
$
|
37,890
|
$
|
32,469
|
$
|
72,389
|
$
|
60,945
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Manufacturing and operations
|
$
|
6,350
|
$
|
5,226
|
$
|
11,983
|
$
|
10,992
|
||||||||
Non-cash compensation expense related to equity awards
|
1,172
|
750
|
2,344
|
1,449
|
||||||||||||
Total manufacturing and operations
|
$
|
7,522
|
$
|
5,976
|
$
|
14,327
|
$
|
12,441
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
6,180
|
$
|
4,815
|
$
|
11,441
|
$
|
10,111
|
||||||||
Akcea Therapeutics
|
170
|
411
|
542
|
881
|
||||||||||||
Non-cash compensation expense related to equity awards
|
1,172
|
750
|
2,344
|
1,449
|
||||||||||||
Total manufacturing and operations
|
$
|
7,522
|
$
|
5,976
|
$
|
14,327
|
$
|
12,441
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Personnel costs
|
$
|
2,387
|
$
|
2,385
|
$
|
5,062
|
$
|
4,948
|
||||||||
Occupancy
|
1,887
|
1,819
|
3,720
|
3,554
|
||||||||||||
Patent expenses
|
466
|
706
|
1,064
|
1,080
|
||||||||||||
Depreciation and amortization
|
549
|
578
|
1,092
|
1,149
|
||||||||||||
Insurance
|
326
|
300
|
638
|
594
|
||||||||||||
Other
|
690
|
946
|
1,612
|
1,723
|
||||||||||||
Total R&D support costs, excluding non-cash compensation expense related to equity awards
|
6,305
|
6,734
|
13,188
|
13,048
|
||||||||||||
Non-cash compensation expense related to equity awards
|
2,701
|
1,482
|
5,382
|
2,893
|
||||||||||||
Total R&D support costs
|
$
|
9,006
|
$
|
8,216
|
$
|
18,570
|
$
|
15,941
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
6,113
|
$
|
6,575
|
$
|
12,798
|
$
|
12,761
|
||||||||
Akcea Therapeutics
|
192
|
159
|
390
|
287
|
||||||||||||
Non-cash compensation expense related to equity awards
|
2,701
|
1,482
|
5,382
|
2,893
|
||||||||||||
Total R&D support costs
|
$
|
9,006
|
$
|
8,216
|
$
|
18,570
|
$
|
15,941
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
General and administrative expenses
|
$
|
4,635
|
$
|
3,155
|
$
|
9,282
|
$
|
6,339
|
||||||||
Non-cash compensation expense related to equity awards
|
3,140
|
1,307
|
5,959
|
2,503
|
||||||||||||
Total general and administrative expenses
|
$
|
7,775
|
$
|
4,462
|
$
|
15,241
|
$
|
8,842
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Isis Core
|
$
|
3,657
|
$
|
2,983
|
$
|
7,506
|
$
|
5,990
|
||||||||
Akcea Therapeutics
|
978
|
172
|
1,776
|
349
|
||||||||||||
Non-cash compensation expense related to equity awards
|
3,140
|
1,307
|
5,959
|
2,503
|
||||||||||||
Total general and administrative expenses
|
$
|
7,775
|
$
|
4,462
|
$
|
15,241
|
$
|
8,842
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Development expenses
|
$
|
7,011
|
$
|
5,436
|
$
|
12,753
|
$
|
9,315
|
||||||||
General and administrative expenses
|
978
|
172
|
1,776
|
349
|
||||||||||||
Total operating expenses, excluding non-cash compensation expense related to equity awards
|
7,989
|
5,608
|
14,529
|
9,664
|
||||||||||||
Non-cash compensation expense related to equity awards
|
953
|
—
|
1,511
|
—
|
||||||||||||
Total Akcea Therapeutics operating expenses
|
$
|
8,942
|
$
|
5,608
|
$
|
16,040
|
$
|
9,664
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
2¾ percent notes:
|
||||||||||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
$
|
626
|
$
|
1,832
|
$
|
1,237
|
$
|
3,638
|
||||||||
Interest expense payable in cash
|
421
|
1,383
|
842
|
2,767
|
||||||||||||
1 percent notes:
|
||||||||||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
5,118
|
—
|
10,136
|
—
|
||||||||||||
Interest expense payable in cash
|
1,249
|
—
|
2,499
|
—
|
||||||||||||
Non-cash interest expense for long-term financing liability
|
1,665
|
1,654
|
3,327
|
3,306
|
||||||||||||
Other
|
48
|
92
|
107
|
193
|
||||||||||||
Total interest expense
|
$
|
9,127
|
$
|
4,961
|
$
|
18,148
|
$
|
9,904
|
Payments Due by Period (in millions)
|
||||||||||||||||||||
Contractual Obligations
(selected balances described below)
|
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
After
5 years
|
|||||||||||||||
1 percent Notes (principal and interest payable)
|
$
|
532.5
|
$
|
5.0
|
$
|
10.0
|
$
|
10.0
|
$
|
507.5
|
||||||||||
2¾ percent Notes (principal and interest payable)
|
$
|
68.8
|
$
|
1.7
|
$
|
3.4
|
$
|
63.7
|
$
|
—
|
||||||||||
Facility Rent Payments
|
$
|
128.6
|
$
|
6.4
|
$
|
13.3
|
$
|
14.0
|
$
|
94.9
|
||||||||||
Equipment Financing Arrangements (principal and interest payable)
|
$
|
1.2
|
$
|
1.1
|
$
|
0.1
|
$
|
—
|
$
|
—
|
||||||||||
Other Obligations (principal and interest payable)
|
$
|
1.3
|
$
|
0.1
|
$
|
0.1
|
$
|
0.1
|
$
|
1.0
|
||||||||||
Capital Lease
|
$
|
0.1
|
$
|
0.1
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||
Operating Leases
|
$
|
25.2
|
$
|
1.8
|
$
|
3.5
|
$
|
3.0
|
$
|
16.9
|
||||||||||
Total
|
$
|
757.7
|
$
|
16.2
|
$
|
30.4
|
$
|
90.8
|
$
|
620.3
|
|
1 Percent
Notes
|
2¾ Percent
Notes
|
||||||
Outstanding principal balance
|
$
|
500.0
|
$
|
61.2
|
||||
Issue date
|
November 2014
|
August 2012
|
||||||
Maturity date
|
November 2021
|
October 2019
|
||||||
Interest rate
|
1 percent
|
2¾ percent
|
||||||
Conversion price per share
|
$
|
66.81
|
$
|
16.63
|
||||
Total shares of common stock subject to conversion
|
7.5
|
3.7
|
(i)
|
a floating rate equal to the one-month London Interbank Offered Rate, or LIBOR, in effect plus 1.25 percent per annum;
|
(ii)
|
a fixed rate equal to LIBOR plus 1.25 percent for a period of one, two, three, four, six, or twelve months as elected by us; or
|
(iii)
|
a fixed rate equal to the LIBOR swap rate during the period of the loan.
|
| receipt and scope of regulatory approvals; |
| establishment and demonstration in the medical and patient community of the efficacy and safety of our drugs and their potential advantages over competing products; |
| cost and effectiveness of our drugs compared to other available therapies; |
| patient convenience of the dosing regimen for our drugs; and |
| reimbursement policies of government and third-party payors. |
| priced lower than our drugs; |
| safer than our drugs; |
| more effective than our drugs; or |
| more convenient to use than our drugs. |
| KYNAMRO is approved in the United States as an adjunct to lipid-lowering medications and diet to reduce low density lipoprotein-cholesterol, apolipoprotein B, total cholesterol, and non-high density lipoprotein-cholesterol in patients with HoFH; |
| the KYNAMRO label contains a Boxed Warning citing a risk of hepatic toxicity; and |
| KYNAMRO is available only through a Risk Evaluation and Mitigation Strategy called the KYNAMRO REMS. |
| fund some of our development activities for KYNAMRO; |
| seek and obtain regulatory approvals for KYNAMRO; and |
| successfully commercialize KYNAMRO. |
| the clinical study may produce negative or inconclusive results; |
| regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements; |
| we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a drug on subjects in the trial; |
| we may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies; |
| enrollment in our clinical studies may be slower than we anticipate; |
| the cost of our clinical studies may be greater than we anticipate; and |
| the supply or quality of our drugs or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed. |
| conduct clinical studies; |
| seek and obtain regulatory approvals; and |
| manufacture, market and sell our drugs. |
| pursue alternative technologies or develop alternative products that may be competitive with the drug that is part of the collaboration with us; |
| pursue higher-priority programs or change the focus of its own development programs; or |
| choose to devote fewer resources to our drugs than it does for its own drugs. |
| additional marketing approvals and successful commercial launch of KYNAMRO; |
| changes in existing collaborative relationships and our ability to establish and maintain additional collaborative arrangements; |
| continued scientific progress in our research, drug discovery and development programs; |
| the size of our programs and progress with preclinical and clinical studies; |
| the time and costs involved in obtaining regulatory approvals; |
| competing technological and market developments, including the introduction by others of new therapies that address our markets; and |
| the profile and launch timing of our drugs, including volanesorsen, ISIS-SMNRx and ISIS-TTRRx. |
| interruption of our research, development and manufacturing efforts; |
| injury to our employees and others; |
| environmental damage resulting in costly clean up; and |
| liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULT UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
a. | Exhibits |
Exhibit Number
|
Description of Document
|
|
3.1
|
Amended and Restated Bylaws. Filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the SEC on July 2, 2015 and incorporated herein by reference.
|
|
10.1
|
License Agreement between the Registrant and Bayer Pharma AG dated May 1, 2015. Portions of this exhibit have been omitted and separately filed with the SEC.
|
|
10.2
|
Line of Credit Agreement between the Registrant and Morgan Stanley Private Bank, National Association dated June 16, 2015.
|
|
31.1
|
Certification by Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
|
Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101
|
The following financial statements from the Isis Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in Extensive Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive loss, (iv) condensed consolidated statements of cash flows and (v) notes to condensed consolidated financial statements (detail tagged).
|
Signatures
|
Title
|
Date
|
||
/s/ Stanley T. Crooke
|
Chairman of the Board, President, and Chief Executive Officer
|
|||
Stanley T. Crooke, M.D., Ph.D.
|
(Principal executive officer)
|
August 4, 2015
|
||
/s/ Elizabeth L. Hougen
|
Senior Vice President, Finance and Chief Financial Officer
|
|||
Elizabeth L. Hougen
|
(Principal financial and accounting officer)
|
August 4, 2015
|
Confidential
|
Execution Copy
|
1.1. | The Strategic Plan for ISIS-FXIRx. Subject to and in accordance with the terms of this Agreement, Bayer will use Commercially Reasonable Efforts to Develop and Commercialize ISIS-FXIRx for an indication in [***] (the “First Indication”) and, if it is commercially reasonable to do so, Bayer will use Commercially Reasonable Efforts to Develop and Commercialize ISIS-FXIRx in Additional Indications, in each case in accordance with a global strategic development and commercialization plan (the “Strategic Plan”). |
(i) | The objectives of the Strategic Plan and estimated timelines; |
(ii) | Indications for ISIS-FXIRx (including the First Indication Bayer will pursue for ISIS-FXIRx) and the indications for the other Products, if any (which indications will be added to and/or refined over time); |
(iii) | The estimated timing and launch sequence of initial and subsequent indications for ISIS-FXIRx and the other Products; |
(iv) | The key Clinical Studies, [***]; |
(v) | Key elements of the manufacturing planning and strategy to support Development, Product Approvals and Commercialization; and |
(vi) | Key elements of the global Commercialization strategy for each Product [***], including – each on a high level basis – [***], which shall be updated [***] for a rolling [***] months outlook and [***] a year for a rolling [***] months outlook. |
1.2. | Initial Strategic Plan. The Parties expect the initial Strategic Plan (attached hereto as Appendix 2) agreed to by the Parties as of the Execution Date and as further updated under this Section 1.2 will not contain all of the items and level of detail listed above in items (i) through (vi) of Section 1.1, but rather will contain the items and level of detail appropriate as of the Execution Date consistent with the level of detail Bayer uses generally for its other products at similar stages of development, [***]. Within [***] days after the Effective Date, Bayer will deliver to Isis a proposed updated Strategic Plan in accordance with Section 1.1, as applicable at an appropriate level of detail for a product in [***], and Bayer will finalize such updated Strategic Plan at the appropriate level of detail Bayer generally uses for a product in [***] within [***] days after Isis’ receipt of such proposed updated plan using the process described in Section 1.3 below. |
1.3. | Updating the Strategic Plan. The initial Development activities performed by Bayer and Isis under the Strategic Plan will be designed to support market Approval and Commercialization of the First Indication of ISIS-FXIRx. |
1.3.1. | Bayer will review and update the Strategic Plan every [***] months and the Parties will meet with one another or hold a telephone conference to review such updates. In addition, the Parties may meet or hold a telephone conference more often as mutually agreed on an ad-hoc basis to address any urgent matters that arise with respect to Products. Each Party will ensure that its representatives at such meetings are senior development and/or commercial executives or have similar experience and expertise. Bayer will be primarily responsible for coordinating and scheduling such meetings or telephone conferences, and the Parties will mutually determine the location of meetings. Each Party will be responsible for the costs of its own representatives attending such meetings. At such meeting or telephone conference, as applicable, the Parties will discuss inter alia: |
(i) | any available new data and results from ongoing or completed Clinical Studies and non-clinical studies; |
(ii) | available updates regarding the progress of ongoing Clinical Studies and any New Drug Option Programs; |
(iii) | technology advancements potentially relevant to the Products; |
(iv) | changes proposed by either Party to the Strategic Plan; |
(v) | upcoming scientific, development or commercial events that may impact the Products; |
(vi) | publication plan (including the strategy for scientific publications and presentations at medical meetings); and |
(vii) | the evolving competitive landscape [***] and its impact on the Products and strategy. |
1.3.2. | Material Changes to the Strategic Plan. Bayer has primary responsibility for preparing each proposed updated Strategic Plan and the agenda for each meeting or telephone conference, and will submit such proposed updated plan and agenda to Isis at least [***] days prior to the date of the Parties’ next scheduled meeting or telephone conference, as applicable. Any changes to the Strategic Plan materially changing [***] (each, a “Material Change”) shall be treated in accordance with Schedule 1.3.2. |
1.4. | Development of Additional Indications. If Isis decides to request Bayer to Develop and Commercialize an Additional Indication for ISIS-FXIRx that Bayer is not then currently Developing or Commercializing, Isis and Bayer shall discuss such request in good faith and either Party shall have the opportunity to conduct the commercially reasonable analysis to decide if the Development and Commercialization of such Additional Indication shall be pursued. If, after the end of such discussions and analysis, Isis and Bayer do not mutually agree that Bayer shall Develop and Commercialize such Additional Indication, Isis may formally request Bayer in writing to Develop and Commercialize such an Additional Indication for ISIS-FXIRx. If Bayer does not confirm to Isis in writing that Bayer will initiate the Clinical Study required for the Development of such Additional Indication for ISIS-FXIRx within [***] Business Days following Bayer’s receipt of Isis’ request under this Section 1.4, then Isis shall have the right to conduct the Development of such Additional Indication for ISIS-FXIRx, unless Bayer reasonably believes in good faith and delivers a written objection to Isis detailing that [***], provided however, that Bayer has provided Isis with reasonable evidence documenting such issue or concern. If the prerequisites under this Section 1.4 are fulfilled and in the event the Clinical Study regarding such Additional Indication for ISIS-FXIRx [***], then Bayer shall exert Commercially Reasonable Efforts to Commercialize ISIS-FXIRx in such Additional Indication in the same countries Bayer is Commercializing ISIS-FXIRx, and shall [***]. Nothing in this Section 1.4 limits or otherwise relieves Bayer of its obligations under Section 1.1 or Section 1.6, provided however, that Isis [***]. |
1.5. | Clinical Study Data Sharing. |
1.5.1. | Advance Notice of Upcoming SAP Data. On or about [***] days before the date a Party estimates that the data generated based on the primary database lock under the statistical analysis plan will be available for a Clinical Study such Party is conducting, such Party will provide the other Party with a written notice of such Clinical Study data event date (and a copy of any material event-related documentation), so that the Parties may prepare for their next meeting to discuss such data and plan for any potential disclosures in accordance with Section 12.4.4 or Section 12.4.5 (as applicable). |
1.5.2. | SAP Data Sharing. The Party conducting a Clinical Study will notify the other Party within [***] Business Days after the data generated based on the primary database lock under the statistical analysis plan is available for such Clinical Study (and, together with such notice, will provide the other Party with such available data), and the Parties will discuss the need for any potential disclosure in accordance with Section 12.4.4, and as soon as reasonably practicable (but no later than [***] days), will meet or hold a telephone conference to review and discuss such data and analyze any impact on the Strategic Plan; provided, however, that this Section 1.5.2 will not prevent either Party from fulfilling its disclosure obligations required under Applicable Law (including under Section 1.8 below). |
1.6. | Bayer Diligence. |
1.6.1. | Generally. Bayer’s obligations under ARTICLE 1 (including conducting Bayer’s activities set forth in the Strategic Plan), will be to use Commercially Reasonable Efforts to Develop and Commercialize Products. Bayer will [***] regarding [***] so long as such [***] are consistent with the Strategic Plan and Bayer’s obligations under Section 1.6.2. Unless specifically set forth otherwise in this Agreement, Isis shall reasonably support and provide Bayer with all information and records requested by Bayer that are necessary or useful to Develop or Commercialize Products to the extent reasonably available to Isis and not already provided to Bayer with respect to Bayer’s obligations under ARTICLE 1. |
1.6.2. | Specific Performance Milestone Events. Bayer will use Commercially Reasonable Efforts to achieve the specific performance milestone events set forth in Schedule 1.6.2 (“Specific Performance Milestone Events”); provided, however, [***]. In addition, the Parties acknowledge that each of the Specific Performance Milestone Events for a given Product [***], each time the Strategic Plan is modified in accordance with this Agreement. |
1.7. | Isis Completion Activities for ISIS-FXIRx. In partial consideration for the up-front payment to Isis under Section 7.1, Isis will use Commercially Reasonable Efforts to complete the ongoing activities expressly set forth on Schedule 1.7 for ISIS-FXIRx (the “Isis Completion Activities”), in accordance with the timelines specified therein. Isis will [***] regarding [***] so long as such [***] are consistent with Schedule 1.7. Isis only obligations regarding Development of ISIS-FXIRx will be to use Commercially Reasonable Efforts to complete the Isis Completion Activities. Except for the Isis Completion Activities, Bayer will be solely responsible for the Development and Commercialization of ISIS-FXIRx. On a study-by-study basis, within [***] days after Isis completes a study within the Isis Completion Activities, Isis will provide Bayer [***]. |
1.8. | Safety Reporting; Regulatory Coordination. The Parties agree that Bayer shall apply for and remain the IND-holder in the United States and in any other jurisdiction in which Bayer will conduct Clinical Studies for ISIS-FXIRx. Isis shall fully support Bayer in its application of such IND and as IND-holder in such jurisdictions and provide Bayer with all required or useful available documentation and information, including a copy of Isis’ IND filed in Canada for ISIS-FXIRx and the investigator brochure related to ISIS-FXIRx no later than [***] days following Bayer’s written request thereof. In addition, upon Bayer’s reasonable request, Isis will transfer to Bayer Isis’ then current global safety database established and maintained sufficient for regulatory submissions for ISIS-FXIRx in an electronic (i.e., ARGUS) or written format in which Isis stores such database. The Parties agree that it is important that Isis and Bayer coordinate their respective ISIS-FXIRx Clinical Studies and pre-clinical, and regulatory activities, including the collection and reporting of adverse events involving ISIS-FXIRx. Upon import of Isis’ then current global safety database for ISIS-FXIRx into Bayer’s safety database, Bayer will assume responsibility for the global safety database related to Clinical Studies of ISIS-FXIRx. Furthermore, Bayer will be responsible for reporting to the competent Regulatory Authorities, ethics committees and investigators in accordance with the Applicable Law for expeditable adverse events and for periodic safety reporting relating to the safety of ISIS-FXIRx in all applicable jurisdictions where Bayer holds an IND, Clinical Trial Application (CTA) or equivalent. Isis will continue to fulfill all sponsor obligations related to Isis’ sponsored Clinical Studies, including but not limited to expedited reporting to Regulatory Authorities, ethics committees and investigators in all applicable jurisdictions where Isis holds an IND, CTA or equivalent. |
1.8.1. | In furtherance of the safety reporting, coordination and cooperation under this Section 1.8, as soon as reasonably practicable after the Effective Date (but in any case before Bayer Initiates a Clinical Study of ISIS-FXIRx), the Parties will develop and agree in writing on a drug safety information agreement (the “Drug Safety Information Agreement”) that will include safety data exchange procedures governing the collection, investigation, reporting, and delivery of information between Bayer and Isis concerning any adverse experiences, and any product quality and product complaints involving adverse experiences related to ISIS-FXIRx, sufficient to enable both Parties to comply with their legal and regulatory obligations and internal processes and consistent with the terms of this Agreement. |
1.8.2. | Following the Effective Date and until the Drug Safety Information Agreement is executed by the Parties, Isis will promptly report to Bayer (and provide documentation to Bayer related to) any serious adverse events (SAEs), suspected unexpected serious adverse reactions (SUSARs), and any other information Bayer reasonably requires to comply with its legal and regulatory requirements inter alia as future IND-holder or sponsor of any Clinical Study conducted by or on behalf of Bayer for ISIS-FXIRx. In addition, unless explicitly set forth otherwise in the Drug Safety Information Agreement, Isis will provide Bayer with [***] updates regarding adverse events and lab findings under any Clinical Study for ISIS-FXIRx being conducted by or on behalf of Isis. |
1.9. | Manufacturing and Supply. |
1.9.1. | ISIS-FXIRx API and Finished Drug Product Manufacturing Transition Strategy. Within the first [***] days after the Effective Date and thereafter upon request of a Party, the Parties will discuss and mutually agree on a strategy to transition API and Finished Drug Product Manufacturing for ISIS-FXIRx to a Third Party CMO or Bayer’s own manufacturing site. Bayer will compensate Isis in accordance with Section 7.13 for Isis’ technology transfer activities associated with such transfer under a plan mutually agreed by the Parties. |
1.9.2. | Supplies under the Strategic Plan. |
(a) | Supplies for Bayer’s Activities. Bayer shall provide, [***], all API and Finished Drug Product sufficient to support Bayer’s activities under the Strategic Plan, except Isis will supply Bayer the following: |
(i) | API Supply. Upon Bayer’s written request delivered to Isis during the first [***] months after the Effective Date, in partial consideration for the up-front payment to Isis under Section 7.1 [***], Isis will (on its own or through a CMO) supply to Bayer by a reasonable delivery date mutually agreed by the Parties (i) [***] of API (the “Initial Supply”) ([***]) using Isis’ standard form of quality agreement with such changes as mutually agreed by the Parties and in a quality complying with the provisions set forth in such quality agreement, and (ii) [***] of [***] oligonucleotides to support the activities under the Strategic Plan. |
(ii) | Finished Drug Product Supply. To support the first [***] Bayer will conduct under the Strategic Plan, upon Bayer’s written request, Isis will use Commercially Reasonable Efforts to have its CMO supply Finished Drug Product (using API made by Isis or Isis’ CMO) to Bayer in a quantity, quality and by a delivery date mutually agreed by the Parties that is reasonably sufficient for such [***], on the commercial terms applicable to Finished Drug Product set forth in Schedule 1.9.2(a). Isis shall ensure that the supply of Finished Drug Product is accompanied by all information and documents reasonably requested by Bayer, including the analytical release data. |
(b) | Supplies for the Isis Completion Activities. Isis will provide, [***], API and Finished Drug Product sufficient to support the Isis Completion Activities. |
1.9.3. | After Isis Completes the Isis Completion Activities. After Isis completes the Isis Completion Activities set forth on Schedule 1.7 for ISIS-FXIRx, in addition to the Initial Supply and such Finished Drug Product under Section 1.9.2, [***]. |
2.1. | Requests to Initiate a New Drug Discovery Program. During the first [***] years after the Effective Date, so long as Bayer is using Commercially Reasonable Efforts to Develop and/or Commercialize at least one Product under this Agreement, Bayer may deliver to Isis a written request (each, a “Drug Discovery Request Notice”) with the commencement fee set forth in Section 7.2 to initiate either or both of the drug discovery program(s) described below; provided the commencement fee for each such program is only paid once: |
2.1.1. | The ISIS-FXIRx-2 Option. A request for Isis to initiate a drug discovery program to identify a follow-on Development Candidate targeting Factor XI incorporating Isis’ then current antisense technology (such follow-on Development Candidate, “ISIS-FXIRx-2” and such program, the “ISIS-FXIRx-2 Program”); and/or |
2.1.2. | The [***] Option. A request for Isis to initiate a drug discovery program to identify a Development Candidate targeting [***] incorporating Isis’ then current antisense technology (such Development Candidate, “[***]” and such program, the “[***] Program”). |
2.2. | New Drug Option Program Activities. |
2.2.1. | Development Candidate Identification Plans. After Bayer delivers a Drug Discovery Request Notice to Isis under Section 2.1, the Parties will discuss [***]. For each New Drug Option Program, Isis will provide Bayer an initial draft plan to identify a Development Candidate under the applicable New Drug Option Program (the “Development Candidate Identification Plan”). Bayer will review such plan with Isis and the Parties will agree on a final Development Candidate Identification Plan for such New Drug Option Program. Isis will use Commercially Reasonable Efforts to complete the activities for each New Drug Option Program set forth in the applicable Development Candidate Identification Plan [***] in a manner consistent with its internal practices for other gene targets with the goal of identifying a Development Candidate for the applicable New Drug Option Program as soon as possible. If the Parties cannot mutually agree on a final Development Candidate Identification Plan for a given New Drug Option Program, Isis will perform such New Drug Option Program under a plan consistent with Isis’ other plans to create Development Candidates for other gene targets in Isis’ own internal programs. Bayer may propose changes to the Development Candidate Identification Plan, and Isis will consider Bayer’s comments and proposals in good faith [***] regarding the conduct of the Development Candidate Identification Plan so long as [***]. |
2.2.2. | Third Party Obligations Applicable to Development Candidates. While the Parties are reviewing technology options for the Development Candidate to be used under a Development Candidate Identification Plan, the Parties will discuss any Third Party Obligations they believe apply to such technology. Isis will disclose to Bayer any Third Party Obligations known by Isis that apply to technology under consideration by the Parties, [***]. Any Third Party Obligations arising under agreements Isis has with Third Parties covering [***] that Bayer agrees to incorporate into the Development Candidate under the Development Candidate Identification Plan, will be [***] (such technology, collectively “Bayer Opt-In Technology”). All other Third Party Obligations that [***] as a result of technology that is not Bayer Opt-In Technology used in a Development Candidate under the applicable Development Candidate Identification Plan will be [***]. Isis will update Appendix 4 to reflect any additional agreements Isis has with Third Parties covering such Bayer Opt-In Technology. |
2.2.3. | New Drug Option Program Development Candidate Selection. Isis will notify Bayer in writing promptly after Isis has designated a Lead Candidate for a given New Drug Option Program and, together with such notice, Isis will provide Bayer [***]. Bayer will then have the opportunity to determine, by the Option Deadline, whether the Lead Candidate [***] will be selected as the Development Candidate. |
2.3. | New Drug Option Program Term. The period during which Isis will perform the activities under a New Drug Option Program will begin on the date Isis receives the applicable Drug Discovery Request Notice and will end on the earlier of the date (i) Isis completes the activities Isis agreed to perform under the applicable Development Candidate Identification Plan, or (ii) the Parties [***] (such period, a “New Drug Option Program Term”). |
2.4. | Options. On a New Drug Option Program-by-New Drug Option Program basis, beginning on the date Isis receives the applicable Drug Discovery Request Notice under Section 2.1 and ending on or before 5:00 p.m. (Eastern Time) on the later of (y) the [***] day (each, an “Option Deadline”) following Bayer’s receipt of [***] for such New Drug Option Program or – if applicable – (z) [***] Business Days following the date on which antitrust clearance for the exercise of the Option (as defined below) has been obtained (using the process described in Section 13.6, mutatis mutandis, under which the Parties will make the appropriate filings under the HSR Act within [***] days after Bayer’s receipt of [***] for such New Drug Option Program), Bayer will have an exclusive option (each, an “Option”) to obtain from Isis the license set forth in Section 5.1.2 or Section 5.1.3 (as applicable); provided, however, [***]. Bayer will determine whether to select the Lead Candidate [***] as the Development Candidate, and will notify Isis whether Bayer is exercising its Option to license the applicable Development Candidate from such New Drug Option Program by notifying Isis in writing on or before the applicable Option Deadline. |
2.4.1. | If, by the Option Deadline, Bayer (i) notifies Isis in writing that Bayer has selected a Development Candidate and is exercising the Option for a particular New Drug Option Program, and (ii) pays Isis – subject to prior antitrust clearance (if applicable) – the license fee in accordance with Section 7.3 for the applicable New Drug Option Program, Isis will, and hereby does, grant to Bayer the license set forth in Section 5.1.2 or Section 5.1.3 (as applicable). |
2.4.2. | If, by the Option Deadline for a particular New Drug Option Program, Bayer has not both (i) selected a Development Candidate and provided Isis a written notice stating that Bayer is exercising the Option, and (ii) paid Isis the license fee in accordance with Section 7.3 for the applicable New Drug Option Program, then Bayer’s Option with respect to such New Drug Option Program will expire. In such a case, subject to Section 4.1, Bayer will have no further rights to (and Isis will have no further obligations with respect to) such New Drug Option Program (including all Compounds included in the applicable New Drug Option Program). |
2.5. | Expiration of New Drug Option Program Term. |
2.5.1. | Effects of Expiration of New Drug Option Program Term. On a New Drug Option Program-by-New Drug Option Program basis, if by the expiration of the applicable New Drug Option Program Term, Isis has not – after having consulted with Bayer – designated in good faith a Lead Candidate under a particular New Drug Option Program, then, subject to Section 2.5.2, the Option will expire and such program will no longer be a New Drug Option Program under this Agreement. Following expiration of any unexercised Option for a New Drug Option Program, subject to Section 2.5.2 and to Isis’ exclusivity covenants under Section 4.1, (i) Isis will own any Compounds discovered under such New Drug Option Program and will be free to Develop and Commercialize such Compounds on its own or with a Third Party; (ii) Isis will own all data, results, Patent Rights and information generated under the New Drug Option Program and Bayer will upon Isis’ request promptly transfer to Isis all such data, results, Patent Rights and information in Bayer’s possession; and; (iii) the Parties’ will no longer have an obligation to perform any activities under this ARTICLE 2 with respect to such New Drug Option Program. |
2.5.2. | Carryover Development Candidates. If, by the expiration of the applicable New Drug Option Program Term for a particular New Drug Option Program, Isis has not designated a Lead Candidate for such New Drug Option Program in accordance with Section 2.5.1, and at any time during the [***]-month period after the end of the applicable New Drug Option Program Term Isis designates an ASO discovered by Isis that is designed to bind to the RNA that encodes the Exclusive Target for such New Drug Option Program as a development candidate (such ASO, a “Carryover Development Candidate”), then, Isis will notify Bayer and will provide Bayer with [***], and Bayer will have an exclusive option (“Carryover Option”) to obtain from Isis the license under Section 5.1.2 or Section 5.1.3 (as applicable) [***], except the applicable option deadline will be deemed extended such that it begins on the date Bayer receives [***] and ends at 5:00 p.m. (Eastern Time) on the [***] Business Day thereafter (such period, the “Carryover Option Deadline”). The Carryover Option Deadline may be extended, if requested by Bayer, in the same manner as the Option Deadline as described in Section 2.4. |
2.6. | New Drug Option Program Development Plans – After Option Exercise. With respect to each Development Candidate for which Bayer has exercised its Option in accordance with Section 2.4 or Section 2.5.2 above, the Parties will promptly integrate such Development Candidate into the Strategic Plan in accordance with Section 1.3 above at the next scheduled meeting or telephone conference of the Parties following such Option exercise. The components of the Strategic Plan applicable to such Development Candidate will be consistent with Section 1.1 and Bayer’s Specific Performance Milestone Events and estimated timelines set forth in Schedule 1.6.2. |
3.1. | Alliance Managers; Meeting Participation. If the Parties mutually agree that it would be beneficial to progress the activities under this Agreement, each Party may appoint a representative to act as its alliance manager (each, an “Alliance Manager”). Each Alliance Manager will be responsible for performing the activities listed in Schedule 3.1. Except as set forth in Section 6.2 (if requested by the other Party to so attend the meeting), Section 8.1.3(c) (if the Parties mutually agreed to establish a JPC) or in Schedule 1.3.2, Isis has the right, but not the obligation, to attend any meetings described in this Agreement (including the meetings described in ARTICLE 1), and may discontinue attending such meetings at any time after providing written notice to Bayer. For clarity, Isis shall not be entitled to attend any Bayer internal meetings (including internal meetings with Bayer’s Sublicensees or contractors). |
3.2. | Records and Quality; Inspections; Materials Transfer. |
3.2.1. | Records. Each Party will maintain records consistent with its own practice of all work such Party performs under this Agreement and all results, data, inventions and developments made in the performance of such work. Such records will be in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Upon prior written notice, a Party will provide the other Party with copies of all requested records, to the extent reasonably required for the performance of a Party’s rights and obligations under this Agreement. |
3.2.2. | Inspections. Each Party will cooperate in good faith with respect to the conduct of any inspections by any Regulatory Authority of a Party’s site or a Party’s contractor’s site and facilities if such inspection concerns work being performed under this Agreement. Each Party will be given the opportunity to attend any inspections by any Regulatory Authority of the other Party’s or such Party’s contractor’s site and facilities with one of its representatives if such inspections concern work being performed under this Agreement, and the summary (or wrap up) meeting with a Regulatory Authority at the conclusion of such site inspection unless the Regulatory Authority expresses its preference that such other Party should not participate in such meetings. If, during that inspection of the Party’s facilities, a Regulatory Authority finds such facilities to be non-compliant with one or more GLP, GMP, GCP or current standards for pharmacovigilance practice compliance standards and such facilities are being used to conduct work under this Agreement, such Party will promptly notify the other Party of such finding and will submit a proposed recovery/corrective action plan, including a time line for implementation of the plan, within [***] days of such notification of non-compliance. |
3.2.3. | Materials Transfer. In order to facilitate the activities under this Agreement, either Party may provide to the other Party certain materials for use by the other Party in furtherance of the activities to be performed under this Agreement. Unless agreed otherwise between the Parties, all such materials will be used by the receiving Party in accordance with the terms and conditions of this Agreement solely for purposes of exercising its rights and performing its obligations under this Agreement, and the receiving Party will not transfer such materials to any Third Party unless expressly contemplated by this Agreement or upon the written consent of the supplying Party. Except as expressly agreed in writing between the Parties before or after the Effective Date, SUCH MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY. |
3.3. | Program Costs. |
3.3.1. | Isis Completion Activities. |
(a) | Except as otherwise provided under Section 3.3.1(b), Isis will be responsible for all costs associated with [***], including any costs associated with [***]. |
(b) | If Bayer requests any changes to the Isis Completion Activities which are [***] and Isis agrees to implement such changes, then [***]. Isis and Bayer will update Schedule 1.7 with any such revised activities. |
3.3.2. | Strategic Plan. Bayer will be responsible for all costs associated with [***] under the Strategic Plan. |
3.3.3. | Development Candidate Identification Plan Costs. |
(a) | Isis Activities. Isis will be responsible for all costs associated with the activities Isis agrees to perform under each Development Candidate Identification Plan; provided, since Factor XI [***] as of the Execution Date, if the Parties mutually agree [***] under Isis’ plans to create development candidates for other previously validated gene targets in Isis’ own internal programs, Bayer will [***] in accordance with [***]. |
(b) | Bayer Activities. Bayer will be responsible for any costs associated with [***] under each Development Candidate Identification Plan. |
4.1. | Exclusivity Covenants. |
4.1.1. | Isis’ and Bayer’s Exclusivity Covenants. Isis and Bayer each acknowledge and agree that, during the Agreement Term, and subject to the exclusivity granted in Section 5.1, each Party may, independently or for or with any of its Affiliates (including with Third Party academic collaborators and other independent contractors for the sole benefit of such Party or its Affiliate), conduct Research with an ASO that is designed to bind to the RNA that encodes Factor XI or [***]. Except in the performance of its obligations or exercise of its rights under this Agreement and except as set forth in Section 4.1.2, Section 4.1.3 or Section 4.2, Isis [***] will not work independently or for or with any of its Affiliates or any Third Party (including the grant of any license to any Third Party) with respect to: |
(a) | The Drug Discovery, Development or Commercialization of an ASO that is designed to bind to the RNA that encodes Factor [***], until the [***] anniversary of the Effective Date; and |
(b) | After the [***] anniversary of the Effective Date, on a country-by-country basis, Commercializing an ASO that is designed to bind to the RNA that encodes Factor XI [***], so long as Bayer is Developing or Commercializing a Product under this Agreement [***]; |
4.1.2. | Isis-Products. Notwithstanding the provisions of Section 4.1.1, on a New Drug Option Program-by-New Drug Option Program basis, if (A) Bayer does not ask Isis to identify a Development Candidate for such New Drug Option Program under Section 2.1 by the [***] anniversary of the Effective Date, or (B) Bayer timely asks Isis to identify a Development Candidate for such New Drug Option Program under Section 2.1 but either (a) no Lead Candidate has been designated by the end of the New Drug Option Program Term in accordance with Section 2.5.1, or (b) Bayer either does not (X) timely exercise its Option with respect to such Development Candidate, or (Y) use Commercially Reasonable Efforts to continue to Develop and Commercialize such Development Candidate, then, subject - in the case of [***] - to Section 4.2, (i) each Party (for itself or with or for a Third Party) will be permitted to conduct Research, Drug Discovery and Develop an ASO (and, solely in the case of Isis, such Development Candidate) designed to bind to the RNA that encodes such Exclusive Target that is not the Product being developed by Bayer (an “Isis-Product”), (ii) after expiration of the Full Royalty Period for ISIS-FXIRx in a country, Isis will be permitted to Commercialize an Isis-Product that encodes Factor XI in such country, and (iii) after expiration of the Full Royalty Period for [***] (if any) in a country, Isis will be permitted to Commercialize an Isis-Product that encodes [***] in such country. |
4.1.3. | Limitations and Exceptions to Isis’ Exclusivity Covenants. Notwithstanding anything to the contrary in this Agreement, Isis’ practice of the following will not violate ARTICLE 4: |
(i) | Any activities pursuant to the Prior Agreements as in effect on the Effective Date as described on Appendix 8; |
(ii) | The granting of, or performance of obligations under, Permitted Licenses; and |
(iii) | Any activities pursuant to Section 4.2 below. |
4.2. | Isis’ Right to Initiate a New Drug Option Program for [***]. Notwithstanding any provision to the contrary in this Agreement, if Isis intends to initiate a program to conduct Drug Discovery and Develop an ASO that is designed to bind to the RNA that encodes [***] (“[***]” and such program, the “[***] Program”) before the date Bayer delivers Isis a Drug Discovery Request Notice under Section 2.1, then the following provisions shall apply: |
(a) | Promptly after Isis has designated a [***] as a lead candidate ready to start [***] in accordance with the principles for the Lead Candidate set forth in ARTICLE 2, Isis will provide written notice to Bayer of such designation and together with such notice shall provide Bayer with documentation corresponding in content and detail to [***]. Upon receipt of such documentation, Bayer shall have [***] days to decide whether it wishes to participate in the [***] Program, and if Bayer chooses [***] to participate in such [***] Program, the provisions regarding [***] shall apply as if Bayer had submitted a Drug Discovery Request Notice under Section 2.1.2 with respect to [***] (and after Option exercise, such [***] shall constitute [***] under this Agreement); |
(b) | If Bayer does not timely notify Isis under Section 4.2(a) above of Bayer's decision to participate in the [***] Program, Isis may proceed with the Drug Discovery and Development of the [***] subject to the terms of this Section 4.2; |
(c) | During the course of such Drug Discovery and Development activities with the [***], Isis shall provide Bayer with periodic (at least [***]) updates of progress of such Drug Discovery and Development; |
(d) | If Isis conducts any Clinical Studies of the [***] before the date Bayer delivers to Isis a Drug Discovery Request Notice under Section 2.1 or exercises its Option pursuant to Section 4.2(e) then, in addition to the periodic updates provided for in Section 4.2(c), Isis shall, within [***] days following Completion of each such Clinical Study provide Bayer with the data generated based on the primary database lock under the statistical analysis plan for such Clinical Study in order to assist Bayer with its decision of whether to exercise its Option to the [***]. In addition, Isis shall provide Bayer with any additional information and data in Isis' possession that Bayer reasonably requests; |
(e) | Unless Bayer’s Option to [***] has already expired unexercised under Section 2.4, at any time until 5:00 pm (Eastern Time) on the [***] anniversary of the Effective Date, Bayer may exercise its Option to the [***]; |
(f) | If Bayer timely exercises its Option to the [***] and timely pays Isis the license fee for the [***] in accordance with Section 7.3.2, then Isis will grant Bayer the license set forth in Section 5.1.3. In addition, within [***] days after such Option exercise (and Bayer's receipt of an invoice from Isis), Bayer shall pay Isis [***] of the total amount of [***] that Isis incurred in Developing the [***] up to the date of such Option exercise; provided, however, that [***]; |
(g) | If Bayer does not timely exercise its Option to the [***] in accordance with Section 2.4 or this Section 4.2, then, Isis shall have the right to further Develop and Commercialize the [***] and, subject to Section 4.2(h), Bayer will have no further rights to (and Isis will have no further obligations with respect to) the [***] (including all Compounds included in the applicable New Drug Option Program); |
(h) | For the avoidance of doubt, none of the foregoing affects (A) Bayer's obligation to pay Isis any payments with respect to [***] that [***] Option exercise under this Section 4.2, including the license fee under Section 7.3.2, the milestone payments under Section 7.6 and Section 7.7.3, and royalties under Section 7.9, or (B) Bayer's rights to deliver to Isis a Drug Discovery Request Notice to request initiation of a [***] Program pursuant to Section 2.1 of this Agreement. |
(i) | Isis hereby covenants as of the Effective Date that it will not during the Agreement Term grant any right or license to any Third Party that would conflict with the rights granted to Bayer under this Section 4.2 and that it will not take any action that would conflict with or adversely affect its obligations to Bayer under this Section 4.2. |
4.3. | Effect of Exclusivity on Indications. The Compounds and Products are designed to bind to the RNA that encodes Factor XI or [***] in the Field, which are known to play a role in [***]. Isis and Bayer are subject to exclusivity obligations under Section 4.1.1; however, the Parties acknowledge and agree that each Party (on its own or with a Third Party) may continue to discover, research, develop, manufacture and commercialize products which are not covered by the exclusivity obligations under Section 4.1.1, including ASOs that are designed to bind to the RNA that encodes a gene that is not an Exclusive Target for any indication, even if such products are designed to treat [***]. |
5.1. | License Grants to Bayer. |
5.1.1. | ISIS-FXIRx Development, Manufacture and Commercialization License. Subject to the terms and conditions of this Agreement, Isis hereby grants to Bayer a worldwide, exclusive, royalty-bearing license under the Licensed Technology to Research, Develop, Manufacture, have Manufactured and Commercialize ISIS-FXIRx in the Field. |
5.1.2. | ISIS-FXIRx-2 Development, Manufacture and Commercialization License. Subject to the terms and conditions of this Agreement, effective upon Bayer’s exercise of the Option for ISIS-FXIRx-2 in accordance with Section 2.4, or Section 2.5.2, Isis grants to Bayer a worldwide, exclusive, royalty-bearing license under the Licensed Technology to Research, Develop, Manufacture, have Manufactured and Commercialize ISIS-FXIRx-2 in the Field. |
5.1.3. | [***] Development, Manufacture and Commercialization License. Subject to the terms and conditions of this Agreement, effective upon Bayer’s exercise of the Option for [***] in accordance with Section 2.4, Section 2.5.2, or Section 4.2 Isis grants to Bayer a worldwide, exclusive, royalty-bearing license under the Licensed Technology to Research, Develop, Manufacture, have Manufactured and Commercialize [***] in the Field. |
5.1.4. | Sublicense Rights. Bayer may only grant sublicenses under the licenses granted to Bayer in Section 5.1 as expressly permitted by this Section 5.1.4. |
(a) | Right to Grant Sublicenses. Bayer acknowledges that the licenses under Section 5.1 are personal to Bayer and are granted to Bayer due to Bayer’s strong development and commercialization experience with therapeutics to treat [***]. Therefore, to help ensure that a partner of similar quality and experience as Bayer will continue to diligently Develop and Commercialize the Products, Bayer will only have the right to grant sublicenses under the licenses granted under Section 5.1.1, Section 5.1.2 and Section 5.1.3 above: |
(i) | under the Licensed Technology to an Affiliate of Bayer to Research, Develop, Manufacture, have Manufactured and Commercialize a Product in the Field; or |
(ii) | under the Licensed Technology to a Bayer alliance partner for purposes of further Development, Manufacturing and Commercialization of a Product in the Field [***] if [***], provided Bayer gives Isis [***] days advance written notice of such sublicense; or |
(iii) | under the Isis Core Technology Patents, Isis Product-Specific Patents, Isis Manufacturing and Analytical Patents and Isis Manufacturing and Analytical Know-How solely to [***]; or |
(iv) | in all other cases with Isis’ prior written consent (which consent will not be unreasonably withheld, conditioned or delayed), under the Licensed Technology to a Third Party solely for purposes of further Research, Manufacturing, Development and Commercialization of a Product in the Field; |
(b) | Enforcement of Sublicense Agreements. If, within [***] days after first learning of any breach of the terms of any such sublicense agreement, Bayer fails to take any action to enforce the sublicense terms of a sublicense granted pursuant to this Section 5.1.4, which failure would cause a material adverse effect on Isis, Bayer will cooperate with and support Isis (which cooperation will be at Bayer’s sole reasonable expense and will include, Bayer joining any action before a court or administrative body filed by Isis against such Sublicensee if and to the extent necessary for Isis to have legal standing before such court or administrative body) in connection with enforcing such terms. Bayer will provide Isis with a copy of any sublicense granted pursuant to this Section 5.1.4 within [***] days after the execution thereof; provided, however, Bayer may redact any information in such sublicense that does not pertain to Products. |
(c) | CMO Agreements. In connection with Bayer’s selecting and engaging one or more CMOs to supply API or Finished Drug Product for Development or Commercialization, Isis will grant, at Bayer’s request, a [***] license from Isis to [***] under the [***] to the extent necessary for [***], provided however, [***]. Isis shall use Commercially Reasonable Efforts to conclude a respective license agreement with [***] within [***] days following Bayer’s request thereof. If and to the extent [***] requires further sublicenses under the Licensed Technology to Manufacture API or Finished Drug Product for the Development or Commercialization of Product, any prior written approval required by Bayer under Section 5.1.4(a)(iv) shall be deemed received upon conclusion of a license agreement between Isis and [***]. In addition, if Bayer intends to [***], then Isis will [***]. Isis and Bayer shall use Commercially Reasonable Efforts to [***] within [***] days following [***]. |
(d) | Effect of Termination on Sublicenses. If this Agreement terminates for any reason, any Sublicensee will, from the effective date of such termination, automatically become a direct licensee of Isis with respect to the rights sublicensed to the Sublicensee by Bayer; so long as (i) such Sublicensee is not in breach of its sublicense agreement, (ii) such Sublicensee agrees in writing to comply with all of the terms of this Agreement to the extent applicable to the rights originally sublicensed to it by Bayer, and (iii) such Sublicensee agrees to pay directly to Isis such Sublicensee’s payments under this Agreement to the extent applicable to the rights sublicensed to it by Bayer. Bayer agrees that it will confirm clause (i) of the foregoing in writing at the request and for the benefit of Isis or if requested by the Sublicensee. |
5.1.5. | Consequence of Natural Expiration of this Agreement. If this Agreement naturally expires in accordance with Section 11.1 then, in addition to the terms set forth in Section 11.3.1(c), Section 11.3.1(e), Section 11.3.1(g) and Section 11.3.1(h), Isis will and hereby does grant to Bayer a perpetual, nonexclusive, worldwide, royalty-free license under the Licensed Know-How to Research, Develop, Manufacture, have Manufactured and Commercialize the Product that is the subject of such expiration. |
5.1.6. | No Implied Licenses. All rights in and to Licensed Technology not expressly licensed to Bayer under this Agreement are hereby retained by Isis or its Affiliates. All rights in and to Bayer Technology not expressly licensed or assigned to Isis under this Agreement, are hereby retained by Bayer or its Affiliates. Except as expressly provided in this Agreement, no 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. |
5.1.7. | License Conditions; Limitations. Subject to Section 7.11, the licenses granted under Section 5.1.1, Section 5.1.2 and Section 5.1.3 and the sublicense rights under Section 5.1.4 are subject to and limited by (i) the Prior Agreements and (ii) the Isis In-License Agreements, in each case to the extent the provisions of such obligations or agreements are specifically disclosed to Bayer in this Agreement, including its Schedules (x) prior to the Execution Date, with respect to ISIS-FXIRx and/or the Licensed Patents Covering ISIS-FXIRx, or (y) in writing prior to Bayer’s exercise of the applicable Option, with respect to ISIS-FXIRx-2 or [***] and/or the Licensed Patents Covering ISIS-FXIRx-2 or [***]. |
5.1.8. | Trademark and Domain Names |
(a) | Bayer shall be solely responsible for the selection, registration and maintenance of the Trademarks which it employs in connection with the Commercialization of the Products. Bayer shall own and control the Trademarks and pay all relevant costs related thereto. |
(b) | Isis recognizes the exclusive ownership by Bayer of any proprietary Bayer Marks, logotype, Trademarks or Trade Dress furnished by Bayer (e.g. the name “Bayer” and the “Bayer Cross”) for use in connection with the Commercialization of the Products. Isis shall not, either during the Agreement Term, or at any time thereafter, register, use or challenge or assist others to challenge the Trademark, the Bayer Marks, logotype and trade dress furnished by Bayer or attempt to obtain any right in or to any such name, logotype, Trademarks or Trade Dress confusingly similar for the marketing of the Product or any other goods and products, irrespective of the fact that such goods or products have a different use or are dissimilar to the Product. |
(c) | Only Bayer will be authorized to initiate at its own discretion legal proceedings against any infringement or threatened infringement of the Trademarks. |
(d) | Bayer shall be responsible for the registration, hosting, maintenance and defense of the Domain Names under all generic Top Level Domains (gTLDs) and under all relevant country code Top Level Domains (ccTLD). For the avoidance of doubt Bayer is allowed to register such Domain Names in its own name, to host on its own servers, maintain and defend the Domain Names and use them for websites. |
5.1.9. | Subsequently Acquired Formulation Technology or Delivery Devices. On a Product-by-Product basis, if Isis Controls any Formulation Technology or delivery device that would be useful with a Product, Isis will notify Bayer of such technology and will discuss in good faith with Bayer the terms under which Isis would be willing to grant Bayer a license under such technology for use with such Product. |
5.2. | Assignment of Certain Licensed Patents; Grant Back to Isis. |
5.2.1. | Certain Licensed Patents Covering ISIS-FXIRx. With respect to ISIS-FXIRx, when Bayer pays Isis the milestone payment for Completion of the CS IV Study, following Bayer’s written request and review and consideration by each Party’s patent representatives and, except as otherwise provided in Section 5.2.3, Isis will assign to Bayer, Isis’ ownership interest in (i) all Isis Product-Specific Patents Covering ISIS-FXIRx that are owned by Isis (whether solely owned or jointly owned with one or more Third Parties), and (ii) all Jointly-Owned Program Patents Covering ISIS-FXIRx, and thereafter, except as otherwise provided in Section 8.2.3, Bayer will be fully responsible for the Prosecution and Maintenance of such Isis Product-Specific Patents and such Jointly-Owned Program Patents and Bayer will use Commercially Reasonable Efforts to Prosecute and Maintain such Patent Rights. The assignment of Patent Rights assigned in this Section 5.2.1 will occur within [***] days after Bayer’s request. |
5.2.2. | Certain Licensed Patents Covering ISIS-FXIRx-2 and/or [***]. If Bayer (a) exercises its Option for ISIS-FXIRx-2 or [***] (as applicable), and (b) together with such Option exercise notice, elects to have Isis commence the assignment under this Section 5.2.2, then following the review and consideration by each Party’s patent representatives and, except as otherwise provided in Section 5.2.3, Isis will assign to Bayer, Isis’ ownership interest in (i) all Isis Product-Specific Patents Covering such Product that are owned by Isis (whether solely owned or jointly owned with one or more Third Parties), and (ii) all Jointly-Owned Program Patents Covering such Product, and thereafter, except as otherwise provided in Section 8.2.3, Bayer will be fully responsible for the Prosecution and Maintenance of such Isis Product-Specific Patents and such Jointly-Owned Program Patents and Bayer will use Commercially Reasonable Efforts to Prosecute and Maintain such Patent Rights. The assignment of Patent Rights assigned in this Section 5.2.2 will occur within [***] days after Bayer’s written notice to Isis under Section 7.3 of Bayer’s election to have Isis commence such assignment. |
5.2.3. | Notwithstanding the foregoing, if either Party reasonably determines that the assignment contemplated under Section 5.2.1 or Section 5.2.2 would be likely to adversely affect the applicable Licensed Patent (including diminishing the scope, term, validity or enforceability of such Licensed Patent), or otherwise at Bayer’s request (and on payments made pursuant to Section 7.3), then, in lieu of such assignment, Bayer will retain its exclusive license to such Licensed Patent under Section 5.1. |
5.2.4. | Bayer grants to Isis a fully-paid, royalty-free (except to the extent Section 7.10 requires a royalty on a Discontinued Product), worldwide, non-exclusive, sublicensable license under any Isis Product-Specific Patents and Jointly-Owned Program Patents assigned to Bayer under Section 5.2.1 and Section 5.2.2, (i) for [***], (ii) to complete the Isis Completion Activities and any activities under a New Drug Option Program, and (iii) to conduct the activities permitted by Section 4.1.2 or Section 4.2. |
5.2.5. | For purposes of clarification, any Isis Product-Specific Patents and Jointly-Owned Program Patents assigned to Bayer under Section 5.2.1 and Section 5.2.2 are royalty-bearing and will still be considered Licensed Patents Covering the applicable Product for determining the royalty term and applicable royalty rates under ARTICLE 7. |
5.3. | Subcontracting. Subject to the terms of this Section 5.3, each Party may engage Third-Party subcontractors to perform its obligations under this Agreement. Any subcontractor engaged by a Party will meet the qualifications typically required by such Party for the performance of work similar in scope and complexity to the subcontracted activity and will enter into such Party’s standard nondisclosure agreement consistent with such Party’s standard practices. Any Party engaging such a subcontractor will remain responsible for such activities and will not grant rights that interfere with the other Party’s rights under this Agreement. Notwithstanding the foregoing sentence, each Party shall at all times have the right to engage its Affiliates to perform its obligations under this Agreement. |
5.4. | Technology and Information Transfer. Isis will (i) promptly, but no later than [***] days following the date (y) Bayer pays Isis the milestone payment for [***], in the case of the Licensed Know-How licensed to Bayer under Section 5.1.1, or (z) on a New Drug Option Program-by-New Drug Option Program basis, the license under Section 5.1.2 or Section 5.1.3 (as applicable) is granted to Bayer with respect to the Development Candidate for such New Drug Option Program, and (ii) during the Agreement Term promptly following Bayer’s reasonable request deliver to Bayer the following Licensed Know-How: |
5.4.1. | Licensed Know-How - Generally. Copies of Licensed Know-How (other than the Isis Manufacturing and Analytical Know-How) in the Field in Isis’ possession that has not previously been provided hereunder, for use solely in accordance with the licenses granted under Section 5.1.1, Section 5.1.2 or Section 5.1.3, as the case may be, to Bayer, which includes, for ISIS-FXIRx, (i) the information included in the IND, and (ii) the data from the Phase 1 Clinical Trials and Phase 2 Clinical Trials conducted by Isis, together with all regulatory documentation. |
5.4.2. | Isis Manufacturing and Analytical Know-How. Solely for use by Bayer, its Affiliates or a Third Party acting on Bayer’s behalf to Manufacture API in Bayer’s own [***] manufacturing facility, copies of the Isis Manufacturing and Analytical Know-How relating to Products in Isis’ possession that has not previously been provided hereunder, which is necessary for the exercise by Bayer, [***] of the Manufacturing rights granted under Section 5.1.1, Section 5.1.2 or Section 5.1.3, as the case may be. |
5.4.3. | Isis Assistance. If requested by Bayer, Isis will provide Bayer with a timely and reasonable level of assistance in connection with such Licensed Know-How under Section 5.4.1 and Section 5.4.2, and Bayer will reimburse Isis for its time incurred in providing such assistance in accordance with Section 7.13. |
5.5. | Cross-Licenses under Program Technology. |
5.5.1. | Enabling Patent Licenses from Bayer to Isis. Subject to the terms and conditions of this Agreement (including Isis’ exclusivity obligations under Section 4.1 and without limiting the license(s) granted to Bayer under Section 5.1), Bayer hereby grants Isis a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicensable license under any Bayer Program Technology (excluding any Product-Specific Patents) to Research, Develop, manufacture, have manufactured and Commercialize [***]; provided, however, that Isis will not have the right to use or grant a sublicense to a Third Party under any [***] or [***] included within such Bayer Program Technology for any Bayer Excluded Indication. For purposes of this Section 5.5.1, “Bayer Excluded Indication” means [***] (such notification to be in writing together with a list of such Bayer Excluded Indications). |
5.5.2. | Enabling Patent Licenses from Isis to Bayer. Subject to the terms and conditions of this Agreement (including Bayer’s exclusivity obligations under Section 4.1 and without limiting the license(s) granted to Bayer under Section 5.1), Isis hereby grants Bayer a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicensable license under any Isis Program Technology (excluding any Product-Specific Patents) to Research, Develop, manufacture, have manufactured and Commercialize [***]; provided, however, that Bayer will not have the right to use or grant a sublicense to a Third Party under any [***] or [***] included within such Isis Program Technology for any Isis Excluded Indication. For purposes of this Section 5.5.2, “Isis Excluded Indication” means [***] (such notification to be in writing together with a list of such Isis Excluded Indications). |
6.1. | Investigator’s Brochure. Bayer will keep Isis reasonably informed with respect to the status, activities and progress of Development of Products licensed by Bayer hereunder by providing updated versions of the investigator’s brochure to Isis [***] and when Development of the Products results in any substantive change to the safety or risk to the Products. |
6.2. | Participation in Regulatory Meetings. Prior to any scheduled meeting with a Regulatory Authority regarding a Product [***] (i) the Parties will discuss the timing and objectives for such meeting, and (ii) the Party who is the IND-holder will provide the other Party with an opportunity to discuss the strategy for such meeting with the IND-holder it being understood that the IND-holder shall have the right to set the timeline for such discussions between the Parties and that the IND-holder shall have the final decision-making authority regarding [***]. In addition, the IND-holder will allow the other Party to participate [***] in any such meeting with a Regulatory Authority [ ***] as an [***] unless the Regulatory Authority expresses its preference that such other Party should not participate in such meeting. Upon request of the IND-holder the respective other Party shall participate in any meetings with the Regulatory Authority and at all times support the IND-holder in a timely manner with respect to its obligations under this Section 6.2. |
6.3. | Regulatory Communications. The Party who is the IND-holder will provide the other Party with a draft of all material correspondence with and submissions to any Regulatory Authority [***], sufficiently in advance of providing such correspondence or submission to the applicable Regulatory Authority to enable the other Party [***]. The contents of such correspondence or submission to any Regulatory Authority will reflect the applicable aspects of the Strategic Plan. The IND-holder will have the final decision-making authority regarding the contents of all such correspondence or submissions but [***]. Upon request of the IND-holder the respective other Party shall timely support the IND-holder at all times with respect to its obligations under this Section 6.3. |
6.4. | Class Generic Claims. To the extent Bayer intends to make any claims in a Product label or regulatory filing that are class generic to ASOs, Isis’ generation 2.0 or 2.5 chemistry platform(s), Conjugate Technology, or any other Isis technology included in a Product, Bayer will provide such claims and regulatory filings to Isis in advance and will consider in good faith any proposals and comments made by Isis. |
6.5. | Applicable Laws. Each Party will perform its activities pursuant to this Agreement (and will use reasonable efforts to require Third Parties to perform any such activities) in compliance with good laboratory practices (GLP), good clinical practices (GCP), and good manufacturing practices (GMP), in each case as applicable under the laws and regulations of the country and the state and local government wherein such activities are conducted or which are otherwise affected, in particular through the Commercialization of Products. |
6.6. | The Isis Internal ASO Safety Database. |
(a) | Isis maintains an internal database that includes information regarding the tolerability of its drug compounds, individually and as a class, including information discovered during pre-clinical and clinical development (the “Isis Internal ASO Safety Database”). In an effort to maximize understanding of the safety profile and pharmacokinetics of Isis compounds, Bayer will reasonably cooperate in connection with populating the Isis Internal ASO Safety Database. To the extent collected by Bayer and in the form in which Bayer stores such information for its own purposes, Bayer will provide Isis with information concerning toxicology, pharmacokinetics, safety pharmacology study(ies) and adverse events related to Products licensed by Bayer under this Agreement within a reasonable period of time. In connection with any reported serious adverse event, Bayer will provide Isis all serious adverse event reports. In addition, with respect to Products, Bayer will provide Isis with copies of Annual safety updates filed with each IND and the safety sections of any final Clinical Study reports within [***] days following the date such information is filed, as applicable. Furthermore, Bayer will provide in a timely manner to Isis any supporting data reasonably related to such safety information provided by Bayer under this Section 6.6(a) and answer any follow-up questions reasonably requested by Isis to the extent such data and answers are reasonably available to Bayer. All such information disclosed by Bayer to Isis will be Bayer Confidential Information; provided, however, that so long as Isis does not disclose the identity of a Product or Bayer’s identity, Isis may disclose any such Bayer Confidential Information to (i) Isis’ other partners pursuant to Section 6.6(b) below if such information is regarding class generic properties of ASOs, (ii) any Third Party (other than a Regulatory Authority) that [***], or (iii) a Regulatory Authority. Bayer will deliver all such information to Isis for the Isis Internal ASO Safety Database to Isis Pharmaceuticals, Inc., 2855 Gazelle Court, Carlsbad, California 92010, Attention: Chief Medical Officer (or to such other address/contact designated in writing by Isis). Bayer will also cause its Affiliates to comply with this Section 6.6(a), and will cause its Sublicensees to comply with this Section 6.6(a) with respect to all major Clinical Studies conducted by or on behalf of such Sublicensee. |
(b) | From time to time, Isis utilizes the information in the Isis Internal ASO Safety Database to conduct analyses to keep Isis and its partners informed regarding class generic properties of ASOs, including with respect to safety. As such, if and when Isis identifies safety or other related issues that may be relevant to a Product (including any potential class-related toxicity), Isis will inform Bayer in a timely manner of such issues and, if requested, provide the data supporting Isis’ conclusions. |
(c) | [***], Bayer may submit written requests to Isis for Isis to run queries of the Isis Internal ASO Safety Database relevant to Products licensed to Bayer under this Agreement, and Isis will use Commercially Reasonable Efforts to promptly run such queries and deliver to Bayer the results of such queries. Any information disclosed between the Parties under this Section 6.6(c) will be treated as Confidential Information in accordance with ARTICLE 12 below. |
7.1. | Up-Front Fee. Within 10 Business Days after the Effective Date and following Bayer’s receipt of an invoice from Isis (not to be sent to Bayer prior to the Effective Date), Bayer will pay Isis an up-front fee equal to $100,000,000 as follows: |
(a) | [***] in consideration for the exclusive license granted to Bayer under the Licensed Patents and Licensed Know-How for ISIS-FXIRx; |
(b) | [***] in consideration for Isis’ agreement to [***]; and |
(c) | [***] in consideration for the [***] of API and [***] oligonucleotides Isis agrees to supply to Bayer under Section 1.9.2(a)(i). |
7.2. | New Drug Option Program Commencement Fees. If Bayer delivers a Drug Discovery Request Notice to Isis under Section 2.1 stating that Bayer requests Isis to initiate a drug discovery program to identify a Development Candidate for a New Drug Option Program in accordance with this Agreement, then within [***] days following Bayer’s receipt of an invoice from Isis (such invoice not to be sent prior to Isis’ receipt of such Drug Discovery Request Notice) Bayer will pay Isis: |
7.2.1. | a fee of [***] if such Drug Discovery Request Notice is to initiate such New Drug Option Program for ISIS-FXIRx-2; and |
7.2.2. | a fee of [***] if such Drug Discovery Request Notice is to initiate such New Drug Option Program for [***]. |
7.3. | New Drug Option Program License Fees. |
7.3.1. | License Fee for ISIS-FXIRx-2. If Bayer timely delivers written notice to Isis under Section 2.4 or Section 2.5.2 (as applicable) that Bayer is exercising the Option for ISIS-FXIRx-2 and (if applicable) antitrust clearance for ISIS-FXIRx-2 has been obtained (using the process described in Section 13.6, mutatis mutandis), then within [***] days following Bayer’s receipt of an invoice from Isis, Bayer will pay Isis a license fee of [***]. Bayer will include in such written notice whether or not Bayer elects under Section 5.2.2 to have all Isis Product-Specific Patents and all Jointly-Owned Program Patents for ISIS-FXIRx-2 assigned to Bayer in accordance with Section 5.2.2. If Bayer does not provide Isis such a written notice that Bayer elects to have Isis assign such Patent Rights to Bayer in accordance with Section 5.2.2, then within [***] days following Bayer’s receipt of an invoice from Isis, Bayer will pay Isis a fee of [***] as consideration for the Maintenance and Prosecution of such Isis Product-Specific Patents and Jointly-Owned Program Patents for ISIS-FXIRx-2. |
7.3.2. | License Fee for [***]. If Bayer timely delivers written notice to Isis under Section 2.4, Section 2.5.2 or Section 4.2 (as applicable) that Bayer is exercising the Option for [***] and (if applicable) antitrust clearance for [***] has been obtained (using the process described in Section 13.6, mutatis mutandis), then within [***] days following Bayer’s receipt of an invoice from Isis, Bayer will pay Isis a license fee of [***]. Bayer will include in such written notice whether or not Bayer elects under Section 5.2.2 to have all Isis Product-Specific Patents and all Jointly-Owned Program Patents for [***] assigned to Bayer in accordance with Section 5.2.2. If Bayer does not provide Isis such a written notice that Bayer elects to have Isis assign such Patent Rights to Bayer in accordance with Section 5.2.2, then within [***] days following Bayer’s receipt of an invoice from Isis, Bayer will pay Isis a fee of [***] as consideration for the Maintenance and Prosecution of such Isis Product-Specific Patents and Jointly-Owned Program Patents for [***]. |
7.4. |
Milestone Payments for Achievement of Development Milestone Events by ISIS-FXIRx. Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, the milestone payments as set forth in Table 1 below when a development milestone event listed in Table 1 is first achieved by ISIS-FXIRx:
|
Table 1
|
|
Development Milestone Event
|
Milestone Event Payment
|
45 days following Bayer’s receipt of the Completion Notice regarding Completion of the CS IV Study and Bayer not having delivered a notice of termination to Isis under Section 11.2.1 during such 45-day period.
|
$55,000,000
|
[***]
|
[***]
|
7.5. | Milestone Payments for Achievement of Development Milestone Events by ISIS-FXIRx-2. Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, the milestone payments as set forth in Table 2 below when a development milestone event listed in Table 2 is first achieved by ISIS-FXIRx-2: |
Table 2
|
|
Development Milestone Event
|
Milestone Event Payment
|
[***]
|
[***]
|
[***]
|
[***]
|
7.6. | Milestone Payments for Achievement of Development Milestone Events by [***]. Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, the milestone payments as set forth in Table 3 below when a development milestone event listed in Table 3 is first achieved by [***]: |
Table 3
|
|
Development Milestone Event
|
Milestone Event Payment
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
7.7. | Milestone Payments for Achievement of First Commercial Sale Milestone Events by a Product. |
7.7.1. | ISIS-FXIRx or ISIS-FXIRx-2. Upon the earlier to occur of (i) First Commercial Sale of ISIS-FXIRx [***], or (ii) First Commercial Sale of ISIS-FXIRx-2 [***], Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, a one-time milestone payment equal to [***]. |
7.7.2. | ISIS FXIRx-2. Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, a one-time milestone payment equal to [***], if (i) ISIS-FXIRx achieves First Commercial Sale [***], and (ii) ISIS-FXIRx-2 achieves First Commercial Sale [***]. |
7.7.3. | [***]. Bayer will pay to Isis within [***] days following Bayer’s receipt of an invoice from Isis, a one-time milestone payment equal to [***], upon achievement of First Commercial Sale of [***]. |
7.8. | Limitations on Milestone Payments; Exceptions; Notice. |
7.8.1. | Each milestone payment set forth in Table 1, Table 2, Table 3 and Section 7.7 above will be paid only once upon the first achievement of the milestone event by the applicable Product regardless of how many times such Product achieves such milestone event. |
7.8.2. | If a particular milestone event is not achieved by a Product, then upon achievement of a later milestone event by such Product the milestone event payment applicable to such earlier milestone event will also be due. |
7.8.3. | If a particular milestone event is achieved by a Product contemporaneously with or in connection with another milestone event by such Product, then both milestone events will be deemed achieved and the milestone payments for both milestone events are due. |
7.8.4. | Each time a milestone event is achieved under this ARTICLE 7, Bayer will send Isis, or Isis will send Bayer, as the case may be, a written notice thereof within [***] Business Days following the date of achievement of such milestone event. Bayer will use good faith efforts to provide Isis advanced notice orally or in writing (including email) of any anticipated achievement of a milestone event under this ARTICLE 7. |
7.9. | Royalty Payments to Isis. As partial consideration for the rights granted to Bayer hereunder, subject to the provisions of this Section 7.9 (including the minimum royalty required under Section 7.9.3(f)(ii)), Bayer will pay to Isis royalties on the Annual worldwide Gross Margin of Products sold by Bayer, its Affiliates or Sublicensees, on a country-by-country basis in accordance with this Section 7.9. On a country-by-country basis, for each Calendar Quarter during the Full Royalty Period, royalties will be calculated as follows: |
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
|
|
7.9.1. | Bayer Base Royalty Rate. The Bayer Base Royalty Rate will be used to calculate the royalty payment based on Gross Margin derived from Annual worldwide Net Sales of Products according to Table 4 below (the “Bayer Base Royalty Rate”): |
Table 4
|
||
Royalty
Tier
|
Annual Worldwide Net Sales of Products
|
Bayer
Base
Royalty
Rate
|
1
|
For the portion of Annual Worldwide Net Sales
< [***]
|
[***]%
|
2
|
For the portion of Annual Worldwide Net Sales
> [***] but < [***]
|
[***]%
|
3
|
For the portion of Annual Worldwide Net Sales
> [***] but < [***]
|
[***]%
|
4
|
For the portion of Annual Worldwide Net Sales
> [***]
|
[***]%
|
(a) | Annual worldwide Net Sales will be calculated by taking the aggregate sum of Net Sales of all Products for all countries worldwide. For example, if Annual worldwide Net Sales of Products are [***], then the Bayer Base Royalty Rate would be [***]. As an additional example, if Annual worldwide Net Sales of Products are [***], then the Bayer Base Royalty Rate would be [***]. |
(b) | Bayer will pay Isis royalties on Gross Margin of Products arising from pre-Approval sales, including named patient and other similar programs under Applicable Laws where Bayer, its Affiliate or Sublicensee sells such Product to a Third Party, and Bayer will provide reports and payments to Isis consistent with Section 7.14.2. No royalties are due on Gross Margin of Products arising from compassionate use and other programs providing for the delivery of Product at no cost. The sales of Products arising from named patient or other similar programs will not be considered a First Commercial Sale for purposes of calculating the Full Royalty Period or determining whether a milestone event is achieved in Section 7.7 above. |
7.9.2. | Regional Adjustment. A specific adjustment (each, a “Regional Adjustment”) will be used for each of the following four regions (each, a “Region”) to calculate the actual royalty rate (each, a “Regional Royalty Rate”) Bayer will pay Isis on Gross Margin of Products sold by Bayer, its Affiliates or Sublicensees in countries within such Region: the Region consisting of the [***] (the “[***] Region”), the Region consisting of [***] (the “[***] Region”), the Region consisting of [***] (the “[***] Region”), and the Region consisting of [***] (the “[***] Region”). |
(a) | [***] Region. The Regional Adjustment for the [***] equals [***]% such that there is no [***]; and |
(b) | [***] Region, [***] Region and the [***] Region. On a Calendar Quarter-by-Calendar Quarter basis, the Regional Adjustment for the [***] Region, the [***] Region and the [***] Region is calculated by using the following formula: [***](the “Average Regional Price”), [***] (the “Average [***] Price”) [***]. The foregoing calculation is illustrated as follows: |
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
[***]
|
(i) | In no event will the Regional Adjustment for such [***] Region, [***] Region and the [***] Region be greater than [***]% or less than [***]%; |
(ii) | If, in a given Calendar Quarter, the Average Regional Price in the [***] Region, the [***] Region or the [***] Region for Product is higher than [***], then the Regional Adjustment for such [***] Region, [***] Region or the [***] Region (as applicable) for such Calendar Quarter will be [***]%; and |
(iii) | If, in a given Calendar Quarter, there are Product sales in the [***] Region, the [***] Region or the [***] Region but not in the [***] Region, then the Regional Adjustment for such [***] Region, [***] Region or the [***] Region (as applicable) for such Calendar Quarter will be [***]% until there are sales of such Product in the [***] Region. |
7.9.3. | Application of Royalty Rates. All royalties set forth under Section 7.9 are subject to the provisions of this Section 7.9.3, and are payable as follows: |
(a) | Full Royalty Period. Except as otherwise set forth in Section 7.9.3(b), Bayer’s obligation to pay Isis the Regional Royalty Rates above with respect to a Product will continue on a country-by-country and Product-by-Product basis from the date of First Commercial Sale (except as stated in Section 7.9.1(b)) of such Product until the later of the date of expiration (i) of the last Valid Claim within the Orange Book Patents (or the foreign equivalent or counterpart of such Orange Book Patents) exclusively licensed by Isis to Bayer under Section 5.1 (but excluding any Jointly-Owned Program Patents that are not Product-Specific Patents) Covering such Product in the country in which such Product is made, used or sold, (ii) of the data exclusivity period conferred by the applicable Regulatory Authority in such country with respect to such Product, and (iii) in consideration for the valuable Licensed Know-How exclusively licensed to Bayer under Section 5.1 and Isis’ exclusivity covenants in Section 4.1, the [***] anniversary of the First Commercial Sale of such Product in such country (such royalty period, the “Full Royalty Period”). |
(b) | Competition from Generic Products for Products. On a Generic Country-by-Generic Country and Product-by-Product basis, if at any time after [***], a Generic Product is sold in such Generic Country, then Bayer may deliver written notice to Isis electing to use the Generic Product reduced royalty adjustment set forth in this Section 7.9.3(b) for a given Generic Country in lieu of the applicable Regional Adjustment applicable to such country. If Bayer delivers such a written notice to Isis then in lieu of the applicable Regional Adjustment applicable to such country, (i) Bayer will pay Isis royalties on the Gross Margin of Products sold by Bayer, its Affiliates and Sublicensees in such Generic Country equal to [***]. |
(c) | Reduced Royalty. Bayer acknowledges that Isis’ contribution (and the value Bayer is deriving) under this Agreement is not limited to the exclusive licenses granted to Bayer under the Licensed Patent Rights, but also includes exclusive licenses to the Licensed Know-How, which contains critically valuable Know-How created and compiled by Isis from its antisense platform technology and over 25 years of experience discovering, researching, and developing ASOs, including important pre-clinical data, clinical data, and, in the case of ISIS-FXIRx, a robust Phase 2 clinical data package, the broad exclusivity covenants Isis is providing under Section 4.1, and (upon Bayer’s request) the assignment of certain Licensed Patents to Bayer under Section 5.2.1 and Section 5.2.2. Therefore, subject to Section 7.9.3(f) and subject to Bayer’s right to calculate royalties in accordance with the Generic Royalty Quotient in a Generic Country in lieu of calculating royalties using the Royalty Quotient under this Section 7.9.3(c), on a country-by-country basis, after the expiration of the Full Royalty Period and until the end of the Reduced Royalty Period, in lieu of the applicable full Regional Royalty Rate for such country, Bayer will pay Isis royalties (the “Bayer Reduced Royalty”) on Gross Margin of Products where the applicable royalty rate is calculated on a Calendar Year-by-Calendar Year basis by [***]; provided, however, that the Bayer Reduced Royalty rate in each country will in no event exceed the [***]. |
(d) | End of Royalty Obligation for Products. On a country-by-country basis, other than [***], Bayer’s obligation to make royalty payments hereunder for Products in such country will end on the expiration of the Reduced Royalty Period in such country. “Reduced Royalty Period” means, on a country-by-country basis, the period commencing upon the expiration of the [***] for Products in such country and ending when [***]. |
(e) | Royalty Examples. Schedule 7.9.3(e) attached hereto contains examples of how royalties will be calculated under this Section 7.9. |
(f) | Limitation on Aggregate Reduction for Bayer Royalties. |
(i) | In no event will the aggregate royalty reductions under Section 7.9.2(b), Section 7.9.3(b), or Section 7.9.3(c) reduce the royalties payable to Isis on Gross Margin of a Product in any given period to an amount that is less than the [***]. |
(ii) | Notwithstanding any provision to the contrary in this Agreement, in no event will the royalties payable to Isis during the Full Royalty Period under this Section 7.9 be less than [***]% of worldwide Net Sales. |
(iii) | In no event will the aggregate offsets under Section 7.11 reduce the royalties payable to Isis on Gross Margin of a Product in any given period to an amount that is less than the greater of [***]. |
7.10. | Reverse Royalty Payments to Bayer for a Discontinued Product. |
7.10.1. | Reverse Royalty for a Discontinued Product. If Isis or any of its Affiliates or Sublicensees Commercializes a Discontinued Product, then following the First Commercial Sale of such Discontinued Product by Isis or its Affiliates or Sublicensees, Isis will pay Bayer a royalty of [***]% of Annual worldwide Net Sales of such Discontinued Product (“Reverse Royalties”). Isis’ obligation to pay Bayer Reverse Royalties will [***]. |
7.10.2. | Applicable Royalty Provisions. In addition to this Section 7.10, the definition of “Net Sales” in Appendix 1 and the other provisions contained in this ARTICLE 7 governing payment of royalties from Bayer to Isis will govern the payment of Reverse Royalties from Isis to Bayer under this Section 7.10, mutatis mutandis, including the provisions of Sections 7.9.3, 7.11, 7.14, 7.15, 7.16, and 7.17. |
7.11. | Third Party Payment Obligations. Other than Bayer Opt-In Technology, any Third Party Obligations that become payable by Isis or Bayer under an agreement such Party has entered into to license or otherwise acquire Third Party Patent Rights will be paid by a Party or shared by the Parties as expressly set forth in this Section 7.11. |
7.11.1. | Existing In-License Agreements. |
(a) | Isis’ Existing In-License Agreements. Certain of the Licensed Technology Controlled by Isis as of the Effective Date licensed to Bayer under Section 5.1.1 or that may be licensed to Bayer under Section 5.1.2 or Section 5.1.3, as the case may be, are in-licensed or were acquired by Isis under the agreements with Third Party licensors or sellers listed on Appendix 4 (such license or purchase agreements being the “Isis In-License Agreements”), and certain milestone, royalty payments, license maintenance fees and other payments may become payable by Isis to such Third Parties under the Isis In-License Agreements based on the Development or Commercialization of a Product by Bayer, its Affiliate or Sublicensee under this Agreement. Any payment obligations arising under the Isis In-License Agreements for Third Party Patent Rights that would be considered: |
(i) | Isis Core Technology Patents or Isis Manufacturing and Analytical Patents hereunder, will be paid by [***] as [***], and |
(ii) | Isis Product-Specific Patents hereunder, will be [***] as [***] and [***]. |
(b) | Bayer’s Existing In-License Agreements. [***] will be solely responsible for any Third Party Obligations that become payable by Bayer to Third Parties under any agreements or arrangements Bayer has with such Third Parties as of the Effective Date, based on the Development or Commercialization of a Product by Bayer, its Affiliate or Sublicensee under this Agreement. Any such payment obligations will be paid by [***] as [***]. |
7.11.2. | New In-Licensed Isis Core Technology Patents, Isis Manufacturing and Analytical Patents or Isis Product-Specific Patents. |
(a) | New In-Licensed Isis Core Technology Patents. If after the Effective Date, Isis obtains Third Party Patent Rights necessary to Develop, Manufacture or Commercialize a Product that would have been considered an Isis Core Technology Patent or an Isis Manufacturing and Analytical Patent had Isis Controlled such Patent Rights on the Effective Date, Isis will include such Third Party Patent Rights in the license granted to Bayer under Section 5.1.1 for ISIS-FXIRx, under Section 5.1.2 for ISIS-FXIRx-2 or Section 5.1.3 for [***] and any and all costs arising under such Third Party agreement as they apply to Product will be paid solely by [***] as [***]. |
(b) | New In-Licensed Isis Product-Specific Patents. If after the Effective Date, Isis obtains Third Party Patent Rights necessary to Develop, Manufacture or Commercialize a Product that would have been considered an Isis Product-Specific Patent had Isis Controlled such Patent Rights on the Effective Date, Isis will include such Third Party Patent Rights in the license granted to Bayer under Section 5.1.1 for ISIS-FXIRx under Section 5.1.2 for ISIS-FXIRx-2 or Section 5.1.3 for [***] and any and all costs arising under such Third Party agreement as they apply to Product will be [***]. |
7.11.3. | Additional Core IP In-License Agreements. |
(a) | Bayer will promptly provide Isis written notice of any Additional Core IP Bayer believes it has identified and Isis will have the first right, but not the obligation, to negotiate with, and obtain a license from the Third Party Controlling such Additional Core IP. If Isis obtains such a Third Party license, Isis will include such Additional Core IP in the license granted to Bayer under Section 5.1.1, Section 5.1.2, or Section 5.1.3 (as applicable), and [***] will pay any financial obligations under such Third Party agreement as [***]. |
(b) | If, however, Isis elects not to obtain such a license to such Third Party intellectual property, Isis will so notify Bayer, and Bayer may obtain such a Third Party license and Bayer may offset an amount equal to [***]% of any [***] paid by Bayer under such Third Party license against any [***]. |
(c) | If it is unclear whether certain intellectual property identified by Bayer pursuant to Section 7.11.3(a) is Additional Core IP under Section 7.11.3(b), Isis will send written notice to such effect to Bayer, and the Parties will engage a mutually agreed upon independent Third Party intellectual property lawyer with expertise in the patenting of oligonucleotides, and appropriate professional credentials in the relevant jurisdiction, to determine the question of whether or not such Third Party intellectual property is Additional Core IP. The determination of the Third Party expert engaged under the preceding sentence will be binding on the Parties solely for purposes of determining whether Bayer is permitted to [***]. The costs of any Third Party expert engaged under this Section 7.11.3(c) will be paid by the Party against whose position the Third Party lawyer's determination is made. |
7.12. | Other Third Party Payments. |
7.12.1. | Isis’ Third Party Agreements. Except as otherwise expressly agreed to by Bayer under Section 7.11.1 or Section 7.11.2, after Bayer is granted the applicable license under Section 5.1 for a particular Product, Bayer will be responsible for paying [***]% of the [***] arising under any Third Party agreements entered into by Isis where [***], [***]. |
7.12.2. | Bayer’s Third Party Agreements. Without limiting any applicable [***] under Section 7.11.3(b), Bayer will be responsible for paying [***]% of the [***] arising under any Third Party agreements entered into by Bayer as they apply to Products. |
7.13. | Invoices. If the Parties explicitly refer to this Section 7.13, for any mutually agreed work performed by Isis at Bayer’s request under this Agreement (other than the Isis Completion Activities) after the first [***] hours of Isis’ time, Bayer will pay Isis as a lump sum within [***] days from the date an invoice is received by Bayer; provided that any invoiced costs are for fees or services that have been rendered by Isis plus out-of-pocket costs incurred by Isis. Isis’ invoices will include Isis’ good faith estimate of the FTE cost incurred by Isis in performing the services and the amount of any out-of-pocket costs incurred and charged by Isis. Before Isis commences work, Bayer and Isis will agree to a budget for the work Bayer requests Isis to perform that will include Isis’ good faith estimate of the FTE cost plus any out-of-pocket costs. |
7.14. | Payments. |
7.14.1. | Commencement. Beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, Bayer will make royalty payments to Isis under this Agreement based on the Preliminary Royalty Report for the applicable Calendar Quarter within [***] days following Bayer’s receipt of an invoice from Isis. |
7.14.2. | Reports. After the First Commercial Sale of a Product, within [***] days after the end of the most recently completed Calendar Quarter, Bayer will provide Isis with both the preliminary report and the reconciled report as described in greater detail below: |
(a) | Bayer shall send to Isis a preliminary royalty report summarizing Gross Margin for Products during the most recently completed Calendar Quarter on a country-by-country and Product-by-Product basis and the calculation of royalties due thereon, including sales price, Gross Margin, Bayer’s Cost of Goods Sold, the exchange rate used, total sales, total units sold, if applicable the calculation of the Regional Adjustment used for each Region and any adjustment made in a Generic Country (including the calculation used for such Generic Country adjustment and all components of such calculation), or an estimate of any portions of the items set forth in the first sentence of this Section 7.14.2(a) where actuals are not known as of such time (the “Preliminary Royalty Report”). If no royalties are payable in respect of a given Calendar Quarter, Bayer will submit a written royalty report to Isis so indicating. In addition, beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, within [***] Business Days following the end of each such Calendar Quarter, Bayer will provide Isis a [***] report estimating the Gross Margin and total Net Sales of, and royalties payable to Isis for, Products sold for such Calendar Quarter. |
(b) | Bayer shall send to Isis a reconciled royalty report summarizing Gross Margin for Products during the Calendar Quarter prior to the most recently completed Calendar Quarter on a country-by-country and Product-by-Product basis and the calculation of royalties due thereon, including sales price, Gross Margin, Bayer’s Cost of Goods Sold, the exchange rate used, total sales, total units sold, if applicable the calculation of the Regional Adjustment used for each Region and any adjustment made in a Generic Country (including the calculation used for such Generic Country adjustment and all components of such calculation) (the “Reconciled Royalty Report”). In addition, following the royalty payments made by Bayer to Isis on the basis of the respective Preliminary Royalty Reports, the Reconciled Royalty Report shall state any payments due by one Party to the other Party. If the royalty payments made by Bayer to Isis on the basis of a Preliminary Royalty Report is less than the royalty payments owed by Bayer to Isis according to the applicable Reconciled Royalty Report for the applicable Calendar Quarter, Bayer shall pay to Isis the difference between such amounts as part of Bayer’s next payment to Isis, and if the royalty payments made by Bayer to Isis on the basis of a Preliminary Royalty Report is more than the royalty payments owed by Bayer to Isis according to the applicable Reconciled Royalty Report for the applicable Calendar Quarter, Bayer will have a credit against any royalties due to Isis in an amount equal to the difference between such amounts (or to the extent there will be no future royalties due, then in lieu of such credit, Isis will make a payment to Bayer in an amount equal to the overpaid amount). The Parties acknowledge and agree that the Reconciled Royalty Report for the fourth Calendar Quarter in a given Calendar Year will reconcile the actual Gross Margin for Products as compared to the estimated Gross Margin for Products for both such fourth Calendar Quarter and for such entire Calendar Year. |
7.14.3. | Mode of Payment. All payments under this Agreement will be (i) payable in full in U.S. dollars, regardless of the country(ies) in which sales are made, (ii) made by wire transfer of immediately available funds to an account designated by Isis in writing, and (iii) non-creditable (except as otherwise provided in Sections 7.14.2(b) and 7.15), irrevocable and non-refundable. Gross Margin in currencies other than USD will be converted into USD using the average exchange rate for the applicable month as for Bayer’s internal accounting and reporting process, consistently applied across Bayer’s business for Bayer’s pharmaceutical products. |
7.14.4. | Payment Rule. If the terms for a particular payment are not otherwise set out in this Agreement, such payment shall be made by Bayer according to the following rule: If invoices are received by Bayer at the address set forth in this Section 7.14.4 by the [***] day of the current month, then payments shall be made by the [***] day of the [***]. If invoices are received by Bayer at the below address after the [***] day [***], then payments shall be made by the [***] day of the [***]. For example, if Isis submits an invoice to Bayer and such invoice is received by Bayer on [***], then Bayer will pay such invoice by [***]. All invoices referred to in this ARTICLE 7 shall be made in compliance with Applicable Law. |
7.14.5. | Bank Account. All payments made by Bayer to Isis under the Agreement shall be made by wire transfer to the following bank account of Isis, or such other United States bank account as notified by Isis to Bayer in a timely manner from time to time: |
7.14.6. | Records Retention. Commencing with the First Commercial Sale of a Product, Bayer will keep complete and accurate records pertaining to the sale of Products for a period of [***] months after the year in which such sales occurred, and in sufficient detail to permit Isis to confirm the accuracy of the Gross Margin or royalties paid by Bayer hereunder. |
7.15. | Audits. No more frequently than [***] during [***] during the Agreement Term and for a period of [***] months thereafter, at the request and expense of Isis, Bayer will permit an independent certified public accountant of nationally recognized standing appointed by Isis (to whom Bayer has no reasonable objection), and with at least [***] days advance notice, during normal business hours, accompanied by a Bayer representative at all times, to examine such records as are necessary to verify the calculation and reporting of Gross Margin and the correctness of any royalty payment made under this Agreement for any period within the preceding [***] months – [***] (except in the case of fraud, in which case Isis may audit earlier periods to the extent the relevant records are available) -including, on a Region-by-Region and Product-by-Product basis, the calculation of the applicable Regional Adjustment and any adjustment due to a Generic Product entering a Generic Country, and information relevant to total sales, total units sold, average price in the Region versus average price in the United States and the applicable royalty rate used in such Region. As a condition to examining any records of Bayer, such auditor will sign a nondisclosure agreement reasonably acceptable to Bayer. Any records of Bayer examined by such accountant will be deemed Bayer’s Confidential Information. Upon completion of the audit, the accounting firm will provide both Parties with a written report disclosing whether the royalty payments made by Bayer are correct or incorrect and the specific details concerning any discrepancies (“Audit Report”). If the Audit Report shows that Bayer’s payments under this Agreement were less than the royalty amount that should have been paid, then Bayer will pay Isis the difference between such amounts to eliminate any discrepancy revealed by said inspection within [***] Business Days of receiving the Audit Report and following Bayer’s receipt of an invoice from Isis, with interest calculated under Section 7.17. If the Audit Report shows that Bayer’s payments under this Agreement were greater than the royalty amount that should have been paid, then [***]. Isis will pay for such audit, except that if Bayer is found to have underpaid Isis by more than [***]% of the amount that should have been paid, Bayer will reimburse Isis’ reasonable costs of the audit. |
7.16. | Taxes. |
7.16.1. | Taxes on Income. Each Party will be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the activities of the Parties under this Agreement. |
7.16.2. | VAT. The prices set forth in this ARTICLE 7, including its Schedules do not include Value Added Tax. If Value Added Tax is legally owed by Isis, Value Added Tax applies and will be invoiced additionally by Isis and has to be paid by Bayer to Isis after receipt of a correct invoice, which meets all legal requirements according to the Applicable Law. Any refunds of such Value Added Tax shall be to the account of Bayer and Isis shall provide all reasonable assistance as requested by Bayer in obtaining any such refunds. |
7.16.3. | Withholding Tax. The Parties agree to cooperate with one another and use reasonable efforts to lawfully avoid or reduce tax withholding or similar obligations in respect of royalties, milestone payments, and other payments made by the paying Party to the receiving Party under this Agreement. To the extent the paying Party is required to deduct and withhold taxes, interest or penalties on any payment, the paying Party will pay the amounts of such taxes to the proper governmental authority for the account of the receiving Party and remit the net amount to the receiving Party in a timely manner. The paying Party will furnish the receiving Party with proof of payment of such taxes in due course. Any withheld tax shall be treated as having been paid by paying Party to receiving Party for all purposes of this Agreement. If documentation is necessary in order to secure an exemption from, or a reduction in, any withholding taxes, the Parties will provide such documentation to the extent they are entitled to do so. |
7.16.4. | Tax Cooperation. Isis will provide Bayer with any and all tax forms that may be reasonably necessary in order for Bayer to lawfully not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Following Bayer’s timely receipt of such tax forms from Isis and the confirmation of German tax authorities for tax exemption (if necessary), Bayer will not withhold tax or will withhold tax at a reduced rate under an applicable bilateral income tax treaty, if appropriate under the Applicable Law. Isis will provide any such tax forms to Bayer upon request and in advance of the due date. Each Party will provide the other with reasonable assistance to determine if any taxes are applicable to payments under this Agreement and to enable the recovery, as permitted by Applicable Law, of withholding taxes resulting from payments made under this Agreement, such recovery to be for the benefit of the Party who would have been entitled to receive the money but for the application of withholding tax under this Section 7.16. |
7.17. | Interest. Any payments due under this Agreement shall be due on such date as specified in the Agreement. Any failure by Bayer to make a payment within ten (10) days after the date when due shall obligate Bayer to pay interest on the due payment to Isis. The interest period shall commence on the due date (inclusive) and end on the payment date (exclusive). Interest shall be calculated based on the actual number of days in the interest period divided by 360. The interest rate per annum shall be equal to the one (1) month US Libor rate, currently published on Reuters screen <LIBOR01>, fixed two Business Days prior to the due date and reset to the prevailing one (1) month US Libor rate in monthly intervals thereafter, plus a premium of [***], or shall be equal to an interest rate according to Law, whatever is lower. |
8.1. | Ownership. |
8.1.1. | Isis Technology and Bayer Technology. As between the Parties, Isis will own and retain all of its rights, title and interest in and to the Licensed Know-How and Licensed Patents and Bayer will own and retain all of its rights, title and interest in and to the Bayer Know-How and Bayer Patents, subject to any assignments, rights or licenses expressly granted by one Party to the other Party under this Agreement. |
8.1.2. | Agreement Technology. As between the Parties, Bayer is the sole owner of any Know-How discovered, invented or created solely by or on behalf of Bayer or its Affiliates in connection with the Manufacture, Development or Commercialization of a Product under this Agreement (“Bayer Program Know-How”) and any Patent Rights that claim or cover Bayer Program Know-How (“Bayer Program Patents” and together with the Bayer Program Know-How, the “Bayer Program Technology”), and will retain all of its rights, title and interest thereto, subject to any rights or licenses expressly granted by Bayer to Isis under this Agreement. As between the Parties, Isis is the sole owner of any Know-How discovered, invented or created solely by or on behalf of Isis or its Affiliates in connection with the Manufacture, Development or Commercialization of a Product under this Agreement (“Isis Program Know-How”) and any Patent Rights that claim or cover such Know-How (“Isis Program Patents” and together with the Isis Program Know-How, the “Isis Program Technology”), and will retain all of its rights, title and interest thereto, subject to any assignment, rights or licenses expressly granted by Isis to Bayer under this Agreement. Any Know-How discovered, invented or created jointly in connection with the Manufacture, Development or Commercialization of a Product under this Agreement by or on behalf of both Parties or their respective Affiliates or Third Parties acting on their behalf (“Jointly-Owned Program Know-How”), and any Patent Rights that claim or cover such Jointly-Owned Program Know-How (“Jointly-Owned Program Patents”, and together with the Jointly-Owned Program Know-How, the “Jointly-Owned Program Technology”), are owned jointly by Bayer and Isis on an equal and undivided basis, including all rights, title and interest thereto, subject to any rights or licenses expressly granted by one Party to the other Party under this Agreement. Except as expressly provided in this Agreement, neither Party will have any obligation to account to the other for profits with respect to, or to obtain any consent of the other Party to license or exploit, Jointly-Owned Program Technology by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such consent or accounting. Each Party will promptly disclose to the other Party in writing, and will cause its Affiliates to so disclose, the discovery, invention or creation of any Bayer Program Technology, Isis Program Technology or Jointly-Owned Program Technology. The Bayer Program Patents, Isis Program Patents and Jointly-Owned Program Patents are collectively referred to herein as the “Program Patents.” |
8.1.3. | Joint Patent Committee. |
(a) | If the Parties mutually agree, the Parties may establish a “Joint Patent Committee” or “JPC.” If such a JPC is formed, the JPC will serve as the primary contact and forum for discussion between the Parties with respect to intellectual property matters arising under this Agreement, and will cooperate with respect to the activities set forth in this Section 8.1.3. If the JPC is not formed or it dissolves, each Party may designate a patent attorney who will be responsible for intellectual property matters under this Agreement. A strategy will be discussed with regard to (i) prosecution and maintenance, defense and enforcement of Isis Product-Specific Patents that would be or are licensed to Bayer under Section 5.1 in connection with a Product and Bayer Product-Specific Patents, (ii) defense against allegations of infringement of Third Party Patent Rights, (iii) licenses to Third Party Patent Rights or Know-How, and (iv) the timing and subject matter of any potential publications regarding a Product, in each case to the extent such matter would be reasonably likely to have a material impact on the Agreement or the licenses granted hereunder, which strategy will be considered in good faith by the Party entitled to prosecute, enforce and defend such Patent Rights, as applicable, hereunder, but will not be binding on such Party. |
(b) | In addition, any Joint Patent Committee (or the Parties’ respective patent representatives if no JPC exists) will be responsible for the assessment of inventorship of Program Patents in accordance with United States patent laws. In case of a dispute in the Joint Patent Committee (or otherwise between Isis and Bayer) over inventorship of Program Patents, if the Joint Patent Committee (or the Parties’ respective patent representatives if no JPC exists) cannot resolve such dispute, such dispute will be resolved by independent patent counsel not engaged or regularly employed in the past two years by either Party and reasonably acceptable to both Parties. The decision of such independent patent counsel will be binding on the Parties. Expenses of such patent counsel will be shared equally by the Parties. |
(c) | If the Parties form a JPC, it will comprise an equal number of at most three members from each Party. The Joint Patent Committee will meet as often as agreed by them (and at least semi-Annually), to discuss matters arising out of the activities set forth in this Section 8.1.3. The JPC will determine the JPC operating procedures at its first meeting, including the JPC’s policies for replacement of JPC members, and the location of meetings, which will be codified in the written minutes of the first JPC meeting. The Parties may escalate issues to the Executives for input and resolution pursuant to Section 13.1. Each Party’s representatives on the Joint Patent Committee will consider comments and suggestions made by the other in good faith. Each Party will bear their own cost of participation on the JPC. |
8.2. | Filing, Prosecution and Maintenance of Patents. |
8.2.1. | Patent Filings. Subject to Section 8.2.2(c), the Party responsible for Prosecution and Maintenance of any Patent Rights as set forth in this Section 8.2 will endeavor to obtain patent protection for the Product as it Prosecutes and Maintains its other patents Covering products in development, using counsel of its own choice in such countries as the responsible Party sees fit. |
8.2.2. | Licensed Patents and Bayer Patents. |
(a) | Isis Core Technology Patents and Isis Manufacturing and Analytical Patents. During the Agreement Term, Isis will control and be responsible for all aspects of the Prosecution and Maintenance of the Isis Core Technology Patents, the Isis Manufacturing and Analytical Patents and the Isis Program Patents. |
(b) | Isis Product-Specific Patents and Jointly-Owned Program Patents Covering ISIS-FXIRx. So long as Bayer has not exercised its right under Section 5.2.1, subject to the obligation to provide information and cooperate, and the step-in rights, under Section 8.2.3 and Section 8.4.3 respectively, Isis will control and be responsible for all aspects of the Prosecution and Maintenance of Isis Product-Specific Patents and Jointly-Owned Program Patents Covering ISIS-FXIRx using the same level of judgment and diligence (and in the same countries) as Isis uses to Prosecute and Maintain product-specific patents for Isis’ own internal drug products. Isis will consider in good faith any comments or instructions Bayer timely provides Isis related to the Prosecution and Maintenance of such Isis Product-Specific Patents and Jointly-Owned Program Patents. Isis will have final decision making authority regarding the Prosecution and Maintenance of such Isis Product-Specific Patents and Jointly-Owned Program Patents. In addition, Isis will Prosecute and Maintain such Isis Product-Specific Patents and Jointly-Owned Program Patents in countries that are in addition to the countries in which Isis Prosecutes and Maintains product-specific patents for Isis’ own internal drug products so long as (i) Bayer pays the costs of such Prosecution and Maintenance in such additional countries, and (ii) Bayer provides its written request to Isis for such additional countries with a sufficient amount of time in advance of the applicable filing deadline in such countries. Isis may use the legal counsel Isis normally uses to Prosecute and Maintain its other Patent Rights in the relevant country; provided, if Isis does not have its own legal counsel in such country Isis will, subject to a conflicts check, use the legal counsel Bayer uses in such country to Prosecute and Maintain Bayer’s own Patent Rights in such country. |
(c) | Isis Product-Specific Patents and Jointly-Owned Program Patents Covering ISIS-FXIRx-2 or [***]. Prior to and after the exercise of an Option and so long as Bayer has not exercised its right under Section 5.2.2, subject to the obligation to provide information and cooperate, and the step-in rights, under Section 8.2.3 and Section 8.4.3 respectively, Isis will control and be responsible for all aspects of the Prosecution and Maintenance of all Isis Product-Specific Patents and Jointly-Owned Program Patents that are the subject of such Option using the same level of judgment and diligence (and in the same countries) as Isis uses to Prosecute and Maintain product-specific patents for Isis’ own internal drug products. Isis will consider in good faith any comments or instructions Bayer timely provides Isis related to the Prosecution and Maintenance of such Isis Product-Specific Patents and Jointly-Owned Program Patents. Isis will have final decision making authority regarding the Prosecution and Maintenance of such Isis Product-Specific Patents and Jointly-Owned Program Patents. In addition, Isis will Prosecute and Maintain such Isis Product-Specific Patents and Jointly-Owned Program Patents in countries that are in addition to the countries in which Isis Prosecutes and Maintains product-specific patents for Isis’ own internal drug products so long as (i) Bayer pays the costs of such Prosecution and Maintenance in such additional countries, and (ii) Bayer provides its written request to Isis for such additional countries with a sufficient amount of time in advance of the applicable filing deadline in such countries. Isis may use the legal counsel Isis normally uses to Prosecute and Maintain its other Patent Rights in the relevant country; provided, if Isis does not have its own legal counsel in such country Isis will, subject to a conflicts check, use the legal counsel Bayer uses in such country to Prosecute and Maintain Bayer’s own Patent Rights in such country. |
(d) | Bayer Patents. Bayer will control and be responsible for all aspects of the Prosecution and Maintenance of all Bayer Patents, subject to Section 8.2.3. |
(e) | Isis Product-Specific Patents Arising From Prosecution of Isis Core Technology Patents. If each Party’s patent representatives believe an Isis Core Technology Patent contains claimable subject matter that, if prosecuted under a separate patent application, could become an Isis Product-Specific Patent, then upon Bayer’s written request (and at Bayer’s expense) Isis will use Commercially Reasonable Efforts to prosecute such Isis Core Technology Patent in a manner that would result in a separate patent application meeting the requirements of an Isis Product-Specific Patent. Once Isis has prosecuted such Isis Core Technology Patent in a manner that results in a separate patent application meeting the requirements of an Isis Product-Specific Patent, Bayer will have the right but not the obligation to request assignment of such separate Isis Product-Specific Patent under Section 5.2; provided, that Bayer will not have the right to (and Isis will not be required to) prosecute such Patent Right to include claims that are (i) directed to subject matter applicable to ASOs in general, (ii) directed to an ASO, the sequence of which targets an RNA that does not encode an Exclusive Target, or (iii) directed to an RNA that is not an Exclusive Target. |
8.2.3. | Other Matters Pertaining to Prosecution and Maintenance of Patents. |
(a) | Each Party will keep the other Party informed through the Joint Patent Committee (or through the other Party’s patent representative if no JPC exists) as to material developments with respect to the filing, Prosecution and Maintenance of the Product-Specific Patents or Jointly-Owned Program Patents for which such Party has responsibility for Prosecution and Maintenance pursuant to Section 8.2.2, or this Section 8.2.3, including by providing copies of material data as it arises, any office actions or office action responses or other correspondence that such Party provides to or receives from any patent office, including notice of all interferences, reissues, re-examinations, oppositions or requests for patent term extensions, and all patent-related filings, and by providing the other Party the timely opportunity to have reasonable input into the strategic aspects of such Prosecution and Maintenance. |
(b) | If Bayer elects (i) not to file and prosecute patent applications for the Jointly-Owned Program Patents or Isis Product-Specific Patents that have been assigned to Bayer under this Agreement or the Bayer Product-Specific Patents (“Bayer-Prosecuted Patents”) in a particular country, (ii) not to continue the prosecution (including any interferences, oppositions, reissue proceedings, re-examinations, and patent term extensions, adjustments, and restorations) or maintenance of any Bayer-Prosecuted Patent in a particular country, or (iii) not to file and prosecute patent applications for the Bayer-Prosecuted Patent in a particular country following a written request from Isis to file and prosecute in such country, then Bayer will so notify Isis promptly in writing of its intention (including a reasonably detailed rationale for doing so) in good time to enable Isis to meet any deadlines by which an action must be taken to establish or preserve any such Patent Right in such country; and Isis will have the right, but not the obligation, to file, prosecute, maintain, enforce, or otherwise pursue such Bayer-Prosecuted Patent in the applicable country at its own expense with counsel of its own choice. In such case, Bayer will cooperate with Isis to file for, or continue to Prosecute and Maintain or enforce, or otherwise pursue such Bayer-Prosecuted Patent in such country in Isis’ own name, but only to the extent that Bayer is not required to take any position with respect to such abandoned Bayer-Prosecuted Patent that would be reasonably likely to adversely affect the scope, validity or enforceability of any of the other Patent Rights being prosecuted and maintained by Bayer under this Agreement. Notwithstanding anything to the contrary in this Agreement, if Isis assumes responsibility for the Prosecution and Maintenance of any such Bayer-Prosecuted Patent under this Section 8.2.3(b), Isis will have no obligation to notify Bayer if Isis intends to abandon such Bayer-Prosecuted Patent. |
(c) | If, during the Agreement Term, Isis intends to abandon any Isis Product-Specific Patent or Jointly-Owned Program Patents for which Isis is responsible for Prosecution and Maintenance without first filing a continuation or substitution, then Isis will notify Bayer of such intention at least [***] days before such Patent Right will become abandoned, and Bayer will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense (subject to Section 8.3.1) with counsel of its own choice. Notwithstanding anything to the contrary in this Agreement, if Bayer assumes responsibility for the Prosecution and Maintenance of any such Isis Product-Specific Patent under this Section 8.2.3(c), Bayer will have no obligation to notify Isis if Bayer intends to abandon such Isis Product-Specific Patent. Section 8.2.3(c) shall not apply for Isis Product-Specific Patents and Jointly-Owned Program Patents Covering ISIS-FXIRx-2 or [***] if the applicable Option Deadline has passed and Bayer has not exercised its Option as provided under Section 2.4. For clarity, if Bayer assumes responsibility for any such Isis Product-Specific Patent under this Section 8.2.3(c), such Isis Product-Specific Patent shall not be taken into account in determining the Full Royalty Period. |
(d) | The Parties, through the Joint Patent Committee (or the Parties’ patent representatives if no JPC exists), will cooperate in good faith to determine if and when any divisional or continuation applications will be filed with respect to any Jointly-Owned Program Patents or Product-Specific Patents, and where a divisional or continuation patent application filing would be practical and reasonable, then such a divisional or continuation filing will be made. |
(e) | If the Party responsible for Prosecution and Maintenance pursuant to Section 8.2.2 intends to abandon such Jointly-Owned Program Patent without first filing a continuation or substitution, then such Party will notify the other Party of such intention at least [***] days before such Jointly-Owned Program Patent will become abandoned, and such other Party will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense (subject to Section 8.3.1) with counsel of its own choice, in which case the abandoning Party will, and will cause its Affiliates to, assign to the other Party (or, if such assignment is not possible, grant a fully-paid exclusive license in) all of their rights, title and interest in and to such Jointly-Owned Program Patents. If a Party assumes responsibility for the Prosecution and Maintenance of any such Jointly-Owned Program Patents under this Section 8.2.3(e), such Party will have no obligation to notify the other Party of any intention of such Party to abandon such Jointly-Owned Program Patents. |
(f) | In addition, the Parties will consult, through the Joint Patent Committee (or the Parties’ patent representatives if no JPC exists), and take into consideration the comments of the other Party for all matters relating to interferences, reissues, re-examinations and oppositions with respect to those Patent Rights in which such other Party (i) has an ownership interest, (ii) has received a license thereunder in accordance with this Agreement, or (iii) may in the future, in accordance with this Agreement, obtain a license or sublicense thereunder. |
8.3. | Patent Costs. |
8.3.1. | Jointly-Owned Program Patents. Unless the Parties agree otherwise, Isis and Bayer will share equally the Patent Costs associated with the Prosecution and Maintenance of Jointly-Owned Program Patents; provided that, either Party may decline to pay its share of costs for filing, prosecuting and maintaining any Jointly-Owned Program Patents in a particular country or particular countries, in which case the declining Party will, and will cause its Affiliates to, assign to the other Party (or, if such assignment is not possible, grant a fully-paid exclusive license in) all of their rights, titles and interests in and to such Jointly-Owned Program Patents. |
8.3.2. | Licensed Patents and Bayer Patents. Except as set forth in Section 8.3.1, each Party will be responsible for all Patent Costs incurred by such Party prior to and after the Effective Date in all countries in the Prosecution and Maintenance of Patent Rights for which such Party is responsible under Section 8.2. |
8.4. | Defense of Claims Brought by Third Parties; Oppositions. |
8.4.1. | ISIS-FXIRx-2 [***] – Prior to Option Exercise. If a Third Party initiates a Proceeding claiming a Patent Right owned by or licensed to such Third Party is infringed by the Development, Manufacture or Commercialization of ISIS-FXIRx-2 or [***] being researched or Developed under a New Drug Option Program with respect to which Bayer has not yet exercised its Option, Isis will have the first right, but not the obligation, to defend against any such Proceeding at its sole cost and expense. If Isis elects to defend against such Proceeding, then Isis will have the sole right to direct the defense and to elect whether to settle such claim. Bayer will reasonably assist Isis in defending such Proceeding and cooperate in any such litigation at the request and expense of Isis. Isis will provide Bayer with prompt written notice of the commencement of any such Proceeding that is of the type described in this Section 8.4, and Isis will keep Bayer apprised of the progress of such Proceeding. If Isis elects not to defend against such a Proceeding, then Isis will so notify Bayer in writing within [***] days after Isis first receives written notice of the initiation of such Proceeding, and Bayer will have the right, but not the obligation, to defend against such Proceeding at its sole cost and expense and thereafter Bayer will have the sole right to direct the defense thereof, including the right to settle such claim (but only with the prior written consent of Isis, which consent will not be unreasonably withheld, delayed or conditioned). In any event, the Party not defending such Proceeding will reasonably assist the other Party and cooperate in any such litigation at the request and expense of the Party defending such Proceeding. Each Party may at its own expense and with its own counsel join any defense initiated or directed by the other Party under this Section 8.4. Each Party will provide the other Party with prompt written notice of the commencement of any such Proceeding under this Section 8.4, and such Party will promptly furnish the other Party with a copy of each communication relating to the alleged infringement that is received by such Party. |
8.4.2. | Products Licensed to Bayer. If a Third Party initiates a Proceeding claiming a Patent Right owned by or licensed to such Third Party is infringed by the Development, Manufacture or Commercialization of any Product being Developed or Commercialized by Bayer under this Agreement, then Bayer will have the first right, but not the obligation, to defend against any such Proceeding at its sole cost and expense. If Bayer elects to defend against such Proceeding, then Bayer will have the sole right to direct the defense and to elect whether to settle such claim. Isis will reasonably assist Bayer in defending such Proceeding and cooperate in any such litigation at Bayer’s request and expense. Bayer will provide Isis with prompt written notice of the commencement of any such Proceeding that is of the type described in this Section 8.4, and Bayer will keep Isis apprised of the progress of such Proceeding. If Bayer elects not to defend against a Proceeding, then Bayer will so notify Isis in writing within [***] days after Bayer first receives written notice of the initiation of such Proceeding, and Isis shall not have the right to defend against such a Proceeding unless Isis is a defendant under such Proceeding in which event Isis shall have the right to defend against such a Proceeding at its sole cost and expense. Thereafter, Isis will have the sole right to direct the defense of such Proceeding, including the right to settle such claim (but only with the prior written consent of Bayer, which consent will not be unreasonably withheld, delayed or conditioned). In any event, the Party not defending such Proceeding will reasonably assist the other Party and cooperate in any such litigation at the request and expense of the Party defending such Proceeding. Each Party may at its own expense and with its own counsel join any defense initiated or directed by the other Party under this Section 8.4. Each Party will provide the other Party with prompt written notice of the commencement of any such Proceeding under this Section 8.4, and such Party will promptly furnish the other Party with a copy of each communication relating to the alleged infringement that is received by such Party. |
8.4.3. | Interferences, Reissues, Re-Examinations and Oppositions. If a Third Party initiates a Proceeding related to an interference, reissue, re-examination or opposition of an Isis Product-Specific Patent, Bayer will by written notice to Isis either (i) control the defense of such Proceeding at Bayer’s expense, or (ii) have Isis control the defense of such Proceeding at Bayer’s expense, provided if Bayer makes no such election within a reasonable period of time, then Isis will have the right, but not the obligation, to control the defense of such Proceeding and Isis and Bayer will evenly split the cost of such defense. |
8.5. | Enforcement of Patents Against Competitive Infringement. |
8.5.1. | Duty to Notify of Competitive Infringement. If either Party learns of an infringement, unauthorized use, misappropriation or threatened infringement by a Third Party with respect to any Product-Specific Patents by reason of the development, manufacture, use or commercialization of a product directed against the RNA that encodes an Exclusive Target (“Competitive Infringement”), such Party will promptly notify the other Party in writing and will provide such other Party with available evidence of such Competitive Infringement; provided, however, that for cases of Competitive Infringement under Section 8.5.6 below, such written notice will be given within 10 days. |
8.5.2. | Control of Competitive Infringement Proceedings. For any Competitive Infringement with respect to a particular Product for which Bayer is Developing or Commercializing under this Agreement, so long as part of such Proceeding Bayer also enforces any Orange Book Patents Controlled by Bayer being infringed that Cover the Product, then Bayer will have the first right, but not the obligation, to institute, prosecute, and control a Proceeding to enforce the Isis Product-Specific Patents with respect thereto by counsel of its own choice at its own expense, and Isis will have the right, at its own expense, to be represented in that action by counsel of its own choice, however, Bayer will have the right to control such litigation. If Bayer fails to initiate a Proceeding within a period of 90 days after receipt of written notice of such Competitive Infringement (subject to a 90-day extension to conclude negotiations, if Bayer has commenced good faith negotiations with an alleged infringer for elimination of such Competitive Infringement within such 90 day period), Isis will have the right to initiate and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice, and Bayer will have the right to be represented in any such action by counsel of its own choice at its own expense. Isis will at all times have the sole right to institute, prosecute, and control any Proceeding under this Section 8.5.2 to the extent involving Isis Core Technology Patents or Isis Manufacturing and Analytical Patents. |
8.5.3. | Joinder; Cooperation. |
(a) | If a Party initiates a Proceeding in accordance with this Section 8.5, the other Party agrees to be joined as a party plaintiff upon request of the first Party and to give the first Party reasonable assistance and authority to file and prosecute the Proceeding. Subject to Section 8.5.4, each Party bears its own cost and expense incurred pursuant to this Section 8.5.3(a). |
(b) | If one Party initiates a Proceeding in accordance with this Section 8.5.3, the other Party may join such Proceeding as a party plaintiff where necessary for such other Party to seek lost profits with respect to such infringement. |
(c) | If a Third Party asserts in writing or in any legal proceeding that any of the Licensed Patents are unenforceable based on any term or condition of this Agreement, the Parties will amend this Agreement as may reasonably be required to effect the original intent of the Parties, including preserving the enforceability of such Licensed Patents. |
8.5.4. | Share of Recoveries. Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to this Section 8.5 will be shared as follows: |
(a) | the amount of such recovery will first be applied to the Parties’ reasonable out-of-pocket costs incurred in connection with such Proceeding (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses); then |
(b) | any remaining proceeds will be allocated [***]% to [***]% in favor of the Party initiating the Proceeding pursuant to Section 8.5. |
8.5.5. | Settlement. Notwithstanding anything to the contrary in this ARTICLE 8, neither Party may enter a settlement, consent judgment or other voluntary final disposition of a suit under this ARTICLE 8 that disclaims, limits the scope of, admits the invalidity or unenforceability of, or grants a license, covenant not to sue or similar immunity under a Patent Right Controlled by the other Party or admits any fault or liability on the part of the other Party without first obtaining the written consent of the Party that Controls the relevant Patent Right which shall not be unreasonably withheld, delayed or conditioned. |
8.5.6. | 35 USC 271(e)(2) Infringement. Notwithstanding anything to the contrary in this Section 8.5, solely with respect to Licensed Patents that have not been assigned to Bayer under this Agreement, for a Competitive Infringement under 35 USC 271(e)(2), the time period set forth in Section 8.5 during which a Party will have the initial right to bring a Proceeding will be shortened to a total of 25 days, so that, to the extent the other Party has the right, pursuant to such Section to initiate a Proceeding if the first Party does not initiate a Proceeding, such other Party will have such right if the first Party does not initiate a Proceeding within 25 days after such first Party’s receipt of written notice of such Competitive Infringement. |
8.6. | Other Infringement. |
8.6.1. | Jointly-Owned Program Patents. With respect to the infringement of a Jointly-Owned Program Patent, the Parties will cooperate in good faith to bring suit together against such infringing party or the Parties may decide to permit one Party to solely bring suit. Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to this Section 8.6.1 will be shared as follows: (i) the amount of such recovery will first be applied to the Parties’ reasonable out-of-pocket costs incurred in connection with such Proceeding (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses); (ii) (A) if the Parties jointly initiate a Proceeding pursuant to this Section 8.6.1, [***]; and (B) if only one Party initiates the Proceeding pursuant to this Section 8.6.1, any damages or other monetary awards will be allocated [***]% to [***]% in favor of the Party initiating the Proceeding pursuant to this Section 8.6.1. |
8.6.2. | Patents Solely Owned by Isis. Unless agreed otherwise between the Parties in this ARTICLE 8, Isis will retain all rights to pursue an infringement of any Patent Right solely owned by Isis and Isis will retain all recoveries with respect thereto. |
8.6.3. | Patents Solely Owned by Bayer. Unless agreed otherwise between the Parties in this ARTICLE 8, Bayer will retain all rights to pursue an infringement of any Patent Right solely owned by Bayer and Bayer will retain all recoveries with respect thereto. |
8.7. | Patent Listing. Bayer will promptly, accurately and completely list, with the applicable Regulatory Authorities during the Agreement Term, all applicable Orange Book Patents. Prior to such listings, the Parties will meet, through the Joint Patent Committee (or between the Parties if no Joint Patent Committee exists), to evaluate and identify all applicable Patent Rights, and Bayer will have the right to review, where reasonable, original records relating to any invention for which Patent Rights are being considered by the Joint Patent Committee (or the Parties) for any such listing. Notwithstanding the preceding sentence, Bayer will retain final decision-making authority as to the listing of all applicable Orange Book Patents for such Product (excluding Isis Core Technology Patents), regardless of which Party owns such Orange Book Patent. |
8.8. | Joint Research Agreement under the Leahy-Smith America Invents Act. If a Party intends to invoke its rights under 35 U.S.C. § 102(c) of the Leahy-Smith America Invents Act, once agreed to by the other Party, it will notify the other Party and the Parties will use reasonable efforts to cooperate and coordinate their activities with such Party with respect to any submissions, filings or other activities in support thereof. The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in 35 U.S.C. § 100(h). |
8.9. | Obligations to Third Parties. Notwithstanding any of the foregoing, each Party’s rights and obligations with respect to Licensed Technology under this ARTICLE 8 will be subject to the restrictions set forth in Section 5.1.7, provided, however, that, to the extent that Isis has a non-transferable right to prosecute, maintain or enforce any Patent Rights licensed to Bayer hereunder and, this Agreement purports to grant any such rights to Bayer, Isis will act in such regard with respect to such Patent Rights at Bayer’s direction. |
8.10. | Additional Rights and Exceptions. Notwithstanding any provision of this ARTICLE 8, Isis retains the sole right to Prosecute and Maintain Isis Core Technology Patents and Isis Manufacturing and Analytical Patents during the Agreement Term and to control any enforcement of Isis Core Technology Patents and Isis Manufacturing and Analytical Patents, and will take the lead on such enforcement solely to the extent that the scope or validity of any Patent Rights Controlled by Isis and Covering the Isis Core Technology Patents or Isis Manufacturing and Analytical Patents is at risk. |
8.11. | Patent Term Extension. The Parties will cooperate with each other in gaining patent term extension for Isis Product-Specific Patents wherever applicable to a Product. After Bayer is granted the applicable license under Section 5.1 with respect to the applicable Isis Product-Specific Patents, Bayer will determine which such relevant Isis Product-Specific Patents will be extended. |
8.12. | Rights in Bankruptcy. All rights and licenses granted under or pursuant to any Section of this Agreement are and will otherwise be deemed to be for purposes of Section 365(n) of Title 11, United States Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined in Section 101(56) of the Bankruptcy Code. The Parties will retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party will further be entitled to a complete duplicate of, or complete access to, any such intellectual property, and such, if not already in its possession, will be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects in writing to continue, and continues, to perform all of its obligations under this Agreement. |
8.13. | Patent Challenge. If, during the Agreement Term, with respect to rights to the Licensed Patents that are included in a license granted to Bayer under Section 5.1.1, Section 5.1.2 or Section 5.1.3, Bayer, its Affiliates or Sublicensees, in the United States or any other country: |
(a) | commence or otherwise voluntarily determine to participate in (other than as may be necessary or reasonably required to assert a cross-claim or a counter-claim or to respond to a court request or order or administrative law request or order) any action or proceeding, challenging or denying the enforceability or validity of any claim within an issued patent or patent application within such Licensed Patents, or |
(b) | direct, support or actively assist any other Person (other than as may be necessary or reasonably required to assert a cross-claim or a counter-claim or to respond to a court request or order or administrative law request or order) in bringing or prosecuting any action or proceeding challenging or denying the validity of any claim within an issued patent or patent application within such Licensed Patents, |
9.1. | Representations and Warranties of Both Parties. Each Party hereby represents and warrants as of both the Execution Date and the Effective Date to the other Party that: |
9.1.1. | it has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and that it has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; |
9.1.2. | this Agreement has been duly executed and delivered on behalf of such Party and constitutes a legal, valid and binding obligation of such Party and is enforceable against it in accordance with its terms subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights and judicial principles affecting the availability of specific performance and general principles of equity, whether enforceability is considered a proceeding at law or equity; |
9.1.3. | all necessary consents, approvals and authorizations of all Regulatory Authorities and other parties required to be obtained by such Party in connection with the execution and delivery of this Agreement and the performance of its obligations hereunder have been obtained; |
9.1.4. | the execution and delivery of this Agreement and the performance of such Party’s obligations hereunder (a) do not conflict with or violate any requirement of Applicable Law or any provision of the certificate of incorporation, bylaws or any similar instrument of such Party, as applicable, in any material way, and (b) do not conflict with, violate, or breach or constitute a default or require any consent not already obtained under, any contractual obligation or court or administrative order by which such Party is bound; and |
9.1.5. | all employees, consultants, or (sub)contractors (except academic collaborators or Third Parties under material transfer agreements) of such Party or Affiliates performing development activities hereunder on behalf of such Party will be obligated to assign all right, title and interest in and to any inventions developed by them, whether or not patentable, to such Party or Affiliate, respectively, as the sole owner thereof. |
9.2. | Representations and Warranties of Isis. Isis hereby represents and warrants to Bayer as of the Execution Date and the Effective Date, that: |
9.2.1. | Isis is the owner of, or otherwise has the right to grant all rights and licenses it purports to grant to Bayer with respect to the Licensed Technology under this Agreement for ISIS-FXIRx as it exists on the Execution Date and the Effective Date; |
9.2.2. | all Licensed Patents that are owned by Isis (“Isis Owned Patents”) have been filed and maintained properly and correctly in all material respects; |
9.2.3. | Isis has not previously entered into any agreement, whether written or oral, with respect to, or otherwise assigned, transferred, licensed, conveyed or otherwise encumbered its right, title or interest in or to, the Licensed Technology (including by granting any covenant not to sue with respect thereto) in such a way as to make the representation set forth in Section 9.2.1 not true; |
9.2.4. | each of the Isis Owned Patents that are Isis Product-Specific Patents properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Patent Right is issued or such application is pending; |
9.2.5. | to Isis’ Knowledge, each of the Isis Owned Patents that are Isis Core Technology Patents properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Patent Right is issued or such application is pending; |
9.2.6. | Isis has not received any written claim alleging that any of the Licensed Technology is invalid or unenforceable, including any Isis Owned Patents required in order for Isis to perform the Isis Completion Activities; |
9.2.7. | Isis has not received any written claim alleging that any of Isis’ activities relating to ISIS-FXIRx infringes any intellectual property rights of a Third Party; |
9.2.8. | to Isis’ Knowledge, (i) the licenses granted to Isis under the Isis In-License Agreements are in full force and effect, (ii) Isis has not received any written notice, and is not aware, of any breach by any party to the Isis In-License Agreements, and (iii) Isis’ performance of its obligations under this Agreement (including the Strategic Plan as it exists on the Execution Date) will not constitute a breach of Isis’ obligations under the Isis In-License Agreements and the licenses granted to Isis thereunder; |
9.2.9. | to Isis’ Knowledge, in respect of the pending United States patent applications included in the Isis Owned Patents, Isis has submitted all material prior art of which it is aware in accordance with the requirements of the United States Patent and Trademark Office; |
9.2.10. | to Isis’ Knowledge, neither Isis nor its Affiliates owns or Controls any Patent Rights or Know How covering formulation or delivery technology as of the Execution Date or the Effective Date that would be necessary in order for Bayer to further Develop or Commercialize ISIS-FXIRx contemplated under the Strategic Plan as it exists on the Execution Date; |
9.2.11. | except for the activities Isis is obligated to conduct under the Prior Agreements as in effect on the Execution Date and the Effective Date, Isis does not conduct any activities which would violate ARTICLE 4; |
9.2.12. | to Isis’ Knowledge, Bayer’s performance of its rights and obligations under this Agreement does not infringe any of Isis’ or Third Party’s Patent Rights, Know-How or other intellectual property rights; provided, Bayer cannot assert a claim against Isis for breach of this Section 9.2.12 related to any Third Party Patent Rights Bayer has Knowledge of as of the Execution Date or the Effective Date; |
9.2.13. | all preclinical and clinical studies and trials conducted by Isis on ISIS-FXIRx, have been conducted in accordance with Applicable Law and, as applicable, GLP and GCP, and to Isis’ Knowledge no claim for injury, loss or damage has been initiated or received in respect of any such studies or trials; and |
9.2.14. | to Isis’ Knowledge, Isis has not employed or otherwise used in any capacity the services of any person or entity debarred under Section 21 U.S.C. § 335a for purposes of conducting the preclinical and clinical studies and trials on ISIS-FXIRx. |
9.3. | DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 9, BAYER AND ISIS MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND BAYER AND ISIS EACH SPECIFICALLY DISCLAIM ANY WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENT RIGHTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. |
10.1. | Indemnification by Bayer. Bayer agrees to defend Isis, its Affiliates and their respective directors, officers, employees and their respective successors, heirs and assigns (collectively, the “Isis Indemnitees”), and will indemnify and hold harmless the Isis Indemnitees, from and against any liabilities, losses, costs, damages, fees or expenses payable to a Third Party, and reasonable attorneys’ fees and other legal expenses with respect thereto (collectively, “Losses”) arising out of any claim, action, lawsuit or other proceeding by a Third Party (collectively, “Third Party Claims”) brought against any Isis Indemnitee and resulting from or occurring as a result of: (a) any activities conducted by a Bayer employee, consultant, Affiliate, Sublicensee, or (sub)contractor in the performance of the activities Bayer agrees to perform under this Agreement, including, the Manufacture, Development or Commercialization of any Product, or (b) any breach by Bayer of any of its representations, warranties or covenants pursuant to this Agreement; except in any such case to the extent such Losses result from: (i) the negligence or willful misconduct of any Isis Indemnitee, (ii) any breach by Isis of any of its representations, warranties, covenants or obligations pursuant to this Agreement, or (iii) any breach of Applicable Law by any Isis Indemnitee. |
10.2. | Indemnification by Isis. Isis agrees to defend Bayer, its Affiliates and their respective directors, officers, employees and their respective successors, heirs and assigns (collectively, the “Bayer Indemnitees”), and will indemnify and hold harmless the Bayer Indemnitees, from and against any Losses arising out of Third Party Claims brought against any Bayer Indemnitee and resulting from or occurring as a result of: (a) any activities that an Isis employee, consultant, Affiliate, Sublicensee, or (sub)contractor has undertaken in respect of Products either prior to the Effective Date or outside the scope of this Agreement, or in the performance of the activities Isis agreed to perform under this Agreement, including, the Manufacture, Development or Commercialization of any Product or Discontinued Product, or (b) any breach by Isis of any of its representations, warranties or covenants pursuant to this Agreement; except in any such case to the extent such Losses result from: (i) the negligence or willful misconduct of any Bayer Indemnitee, (ii) any breach by Bayer of any of its representations, warranties, covenants or obligations pursuant to this Agreement, or (iii) any breach of Applicable Law by any Bayer Indemnitee. |
10.3. | Procedure. If a Person entitled to indemnification under Section 10.1 or Section 10.2 (an “Indemnitee”) seeks such indemnification, such Indemnitee will inform the indemnifying Party in writing of a Third Party Claim as soon as reasonably practicable after such Indemnitee receives notice of such Third Party Claim; provided, however, that the failure to so notify the indemnifying Party shall not relieve the indemnifying Party of its obligations hereunder except to the extent such failure shall have actually materially prejudiced the indemnifying Party. |
10.3.1. | Defense of Third Party Claim. |
(a) | Control of the Defense. |
(i) | If (y) both Parties are named as defendants in the Third Party Claim and at least one Party seeks indemnification hereunder, or (z) the Third Party Claim relates to a Product liability claim or a claim for the infringement of Third Party intellectual property by a Product, then, within 30 days after receipt of such notice, the Parties will use good faith efforts to mutually agree on which Party will assume control of the defense of such Third Party Claim. If the Parties cannot agree on which Party will assume such control, then Bayer will assume control of the defense of such Third Party Claim at Bayer’s expense. In all cases at the conclusion of the Third Party Claim, each Party will have the right to seek indemnification from the other Party, including the costs to defend such Third Party Claim, any damages awarded against the Parties from such Third Party Claim, or any settlements made in accordance with Section 10.3.2 from such Third Party Claim. |
(ii) | Unless covered by Section 10.3.1(a)(i) above, if a Party is named as a defendant in the Third Party Claim and seeks indemnification hereunder, then, within thirty (30) days after receipt of such notice, the indemnifying Party may, upon written notice thereof to and prior written approval of the Indemnitee, assume control of the defense of the Third Party Claim. If the Indemnitee does not provide its written approval for the indemnifying Party to assume control of the defense of such Third Party Claim, then the indemnifying Party will be relieved of any obligation under this Agreement to indemnify and defend the Indemnitee for such Third Party Claim, unless both Parties agree in good faith after the final and binding decision of the court or other authority ruling upon such defense of the Third Party Claim, that such defense was duly conducted by the Indemnitee. If the indemnifying Party receives written approval from the Indemnitee to assume control of the defense but does not assume such control, then the Indemnitee shall control such defense and, at the conclusion of the Third Party Claim, will be entitled to recover from the other Party its defense costs, any damages awarded against such Indemnitee from such Third Party Claim, or any settlements made in accordance with Section 10.3.2 from such Third Party Claim. |
(b) | Participation and Cooperation. The Party not controlling any such defense hereunder may participate therein at its own expense. The Party controlling such defense shall keep the other Party advised of the status of such Third Party Claim and the defense thereof and shall consider in good faith reasonable recommendations made by the other Party with respect thereto. The Party not controlling such defense shall, and shall cause each of its Affiliates and each of their respective directors, officers and employees to reasonably cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include reasonable retention by such Party of records and information that are reasonably relevant to such Third Party Claim, and making such Party, its Affiliates and its and their respective directors, officers and employees available on a mutually convenient basis to provide additional information and explanation of any records or information provided, and the Party controlling the defense of such Third Party Claim shall reimburse the respective other Party for all of its related reasonable out-of-pocket expenses. |
10.3.2. | Settlement of Third Party Claim. No Indemnitee shall agree to any settlement of any such Third Party Claim without the prior written consent of the indemnifying Party, which shall not be unreasonably withheld, delayed or conditioned. The indemnifying Party shall 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 which shall not be unreasonably withheld, conditioned or delayed. |
10.4. | Insurance. |
10.4.1. | Isis’ Insurance Obligations. Isis will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement. |
10.4.2. | Bayer’s Insurance Obligations. Bayer will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement in accordance with its internal insurance policy consistently applied. |
10.5. | LIMITATION OF CONSEQUENTIAL DAMAGES. EXCEPT FOR (a) THIRD PARTY CLAIMS THAT ARE SUBJECT TO INDEMNIFICATION UNDER THIS ARTICLE 10, (b) CLAIMS ARISING OUT OF A PARTY’S WILLFUL MISCONDUCT OR FRAUD UNDER THIS AGREEMENT, (c) A PARTY’S BREACH OF ARTICLE 4, (d) ISIS’ BREACH OF EXCLUSIVITY UNDER SECTION 5.1.1 THROUGH SECTION 5.1.3, (e) CLAIMS ARISING OUT OF A PARTY’S BREACH OF ITS CONFIDENTIALITY OBLIGATIONS UNDER THIS AGREEMENT, NEITHER PARTY NOR ANY OF ITS AFFILIATES WILL BE LIABLE TO THE OTHER PARTY TO THIS AGREEMENT OR ITS AFFILIATES FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR OTHER INDIRECT DAMAGES OR LOST OR IMPUTED PROFITS OR ROYALTIES, LOST DATA OR COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, WHETHER LIABILITY IS ASSERTED IN CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT PRODUCT LIABILITY), INDEMNITY OR CONTRIBUTION, AND IRRESPECTIVE OF WHETHER THAT PARTY OR ANY REPRESENTATIVE OF THAT PARTY HAS BEEN ADVISED OF, OR OTHERWISE MIGHT HAVE ANTICIPATED THE POSSIBILITY OF, ANY SUCH LOSS OR DAMAGE. |
11.1. | Agreement Term; Expiration. This Section 11.1, ARTICLE 12 and ARTICLE 13 of this Agreement shall become effective on the Execution Date and the remainder of the Agreement shall become effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this ARTICLE 11, will continue in full force and effect until the expiration of all payment obligations under this Agreement with respect to the last Product (or Discontinued Product) in all countries. The period from the Effective Date until the date of expiration or earlier termination of this Agreement pursuant to this ARTICLE 11 is the “Agreement Term”. If the antitrust clearance required for ISIS-FXIRx in accordance with Section 13.6 is not obtained by December 31, 2015 this Agreement, including this Section 11.1, ARTICLE 12 and ARTICLE 13 shall automatically expire. |
11.2. | Termination of the Agreement. |
11.2.1. | Bayer’s Termination for Convenience. At any time following payment by Bayer of the payment under Section 7.1, subject to Sections 11.3.1, 11.3.2 and 11.3.3 below, Bayer may terminate this Agreement on a Product-by-Product basis for convenience by providing [***] days written notice to Isis of such termination; provided however, that for purposes of this ARTICLE 11 ISIS-FXIRx and ISIS-FXIRx-2 together shall constitute a Product and [***] shall constitute the other Product. |
11.2.2. | Termination for Material Breach. |
(a) | Bayer’s Right to Terminate for Material Breach. If Isis is in material breach of this Agreement (including with respect to a failure to use Commercially Reasonable Efforts under ARTICLE 1 or ARTICLE 2), then Bayer may deliver notice of such material breach to Isis. If the breach is curable, Isis will have [***] days to cure such breach. If Isis fails to cure such breach within the [***] day period (or during a longer period of time if such breach is not reasonably curable within such [***]-day period, so long as Isis is pursuing a cure in good faith), or if the breach is not subject to cure, Bayer may terminate this Agreement in its entirety if such breach relates to this Agreement in its entirety, or in relevant part as such breach relates to the applicable Product, by providing written notice to Isis. |
(b) | Isis’ Right to Terminate for Material Breach. If Bayer is in material breach of this Agreement (including with respect to a failure to use Commercially Reasonable Efforts under ARTICLE 1 or ARTICLE 2), then Isis may deliver notice of such material breach to Bayer. If the breach is curable, Bayer will have [***] days to cure such breach (except to the extent such breach involves the failure to make a payment when due, which breach must be cured within [***] days following such notice). If Bayer fails to cure such breach within the [***] day (or during a longer period of time if such breach is not reasonably curable within such [***]-day period, so long as Bayer is pursuing a cure in good faith) or [***] day period, as applicable, or if the breach is not subject to cure, Isis may terminate this Agreement in its entirety if such breach relates to this Agreement in its entirety, or in relevant part as such breach relates to the applicable Product, by providing written notice to Bayer. |
11.2.3. | Disputes Regarding Material Breach. Notwithstanding the foregoing, if the Breaching Party in Section 11.2.2 disputes the existence, materiality, or failure to cure of any such breach, and provides notice to the Non-Breaching Party of such dispute within such [***]-day or [***]-day period (as applicable), the Non-Breaching Party will not have the right to terminate this Agreement in accordance with Section 11.2.2, unless and until it has been determined in accordance with Section 13.1 that this Agreement was materially breached by the Breaching Party and the Breaching Party fails to cure such breach within [***] days (or during a longer period of time if such breach is not reasonably curable within such [***]-day period, so long as the Non-Breaching Party is pursuing a cure in good faith) 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, including satisfying any payment obligations. In addition, the fact that Bayer is conducting its activities in accordance with the Strategic Plan is not in and of itself dispositive of whether Bayer is or is not using Commercially Reasonable Efforts under this Agreement. |
11.2.4. | Termination for Insolvency. Either Party may terminate this Agreement if, at any time, the other Party files in any court or agency pursuant to any statute or regulation of any state or country a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of substantially all of its assets; or if the other Party proposes a written agreement of composition or extension of substantially all of its debts; or if the other Party will be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition will not be dismissed within 90 days after the filing thereof; or if the other Party will propose or be a party to any dissolution or liquidation; or if the other Party will make an assignment of substantially all of its assets for the benefit of creditors. Notwithstanding any further rights under Applicable Law, upon written request of the other Party, the Party filing for bankruptcy, insolvency or a similar proceeding as set forth in this Section 11.2.4 shall promptly provide to such other Party all information and documents necessary to prosecute, maintain and enjoy its rights under the terms of this Agreement. |
11.3. | Consequences of Expiration or Termination of this Agreement. |
11.3.1. | Consequences of Termination of this Agreement. If this Agreement is terminated by a Party in accordance with this ARTICLE 11 in its entirety or on a Product-by-Product basis at any time and for any reason, the following terms will apply to any such termination, but only to the extent of any such termination (i.e., related to a Product or in its entirety): |
(a) | Licenses. Unless otherwise agreed in writing by the Parties, the licenses granted by Isis to Bayer under this Agreement will terminate and Bayer, its Affiliates and Sublicensees will cease selling Products. |
(b) | Options. Bayer’s Option will terminate with respect to any terminated New Drug Option Program. |
(c) | Exclusivity. Unless otherwise agreed in writing by the Parties, neither Party will have any further obligations under Section 4.1 of this Agreement. |
(d) | Development Candidate Identification Plans. Neither Party will have any further obligations with respect to the terminated Development Candidate Identification Plan(s). |
(e) | Return of Information and Materials. 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 and legal compliance purposes. |
(f) | Return of IND and Documentation. Bayer will transfer to Isis the IND together with all necessary documentation and information, and will take all necessary actions in relation thereto to affect such transfer. |
(g) | 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. Such termination will not relieve a Party from obligations that are expressly indicated to survive the termination of this Agreement. For purposes of clarification, milestone payments under ARTICLE 7 which are achieved before the effective date of termination, accrue as of the date the applicable milestone event is achieved even if the payment is not due at that time. Notwithstanding the foregoing, solely with respect to the Completion of the CS IV Study, if Bayer delivers a notice of termination to Isis under Section 11.2.1 within 45 days after the date Isis delivered the Completion Notice to Bayer regarding Completion of the CS IV Study, then the milestone payment for such milestone event will not be due. |
(h) | Survival. The following provisions of this Agreement will survive the expiration or earlier termination of this Agreement: Section 2.5 (Expiration of New Drug Option Program Term); Section 4.1.2 (Isis-Products); Section 5.1.4(d) (Effect of Termination on Sublicenses); Section 5.1.5 (Consequences of Natural Expiration of this Agreement); Section 5.1.8(b) (Trademark and Domain Names); Section 5.2.4, Section 5.5 (Cross-Licenses Under Program Technology); Section 6.6(c) (The Isis Internal ASO Safety Database), Section 7.14.6 (Records Retention), Section 7.15 (Audits), Section 7.16 (Taxes), Section 8.1.1 (Isis Technology and Bayer Technology), Section 8.1.2 (Agreement Technology), Section 8.12 (Rights in Bankruptcy), Section 11.2.4 (Termination for Insolvency); Section 11.3 (Consequences of Expiration or Termination of this Agreement); ARTICLE 10 (Indemnification; Insurance); ARTICLE 12 (Confidentiality), ARTICLE 13 (Miscellaneous); and Appendix 1 (to the extent definitions are embodied in the foregoing listed Articles and Sections). |
11.3.2. | Special Consequences of Certain Terminations. If (A) Bayer terminates this Agreement under Section 11.2.1 (Bayer’s Termination for Convenience) or (B) Isis terminates this Agreement under Section 11.2.2(b) (Isis’ Right to Terminate for Material Breach) or Section 11.2.4 (Termination for Insolvency), then, in addition to the terms set forth in Section 11.3.1 (Consequences of Termination of this Agreement), the following additional terms will also apply: |
(i) | Bayer will and hereby does grant to Isis a sublicensable, worldwide, non-exclusive license or sublicense, as the case may be, under all Bayer Technology Controlled by Bayer as of the effective date of such termination that Covers the Discontinued Product solely as necessary to Develop, make, have made, use, sell, offer for sale, have sold, import and otherwise Commercialize the Discontinued Product; |
(ii) | Bayer will negotiate with Isis in good faith about a sublicensable, worldwide, non-exclusive license or sublicense, as the case may be, under all Bayer Technology Controlled by Bayer as of the effective date of such termination that Covers any [***] used with the Discontinued Product solely as necessary to Develop, make, have made, use, sell, offer for sale, have sold, import and otherwise Commercialize the Discontinued Product. In addition, upon Isis’ written request, Bayer will provide Isis with an introduction to any Third Party from which Bayer was sourcing any such [***] used with the Discontinued Product and will not interfere with Isis’ or such Third Party’s efforts to enter into a license to such a [***] (which will include Bayer releasing such Third Party from any exclusivity Bayer has with such Third Party to the extent necessary for Isis to obtain such a license); |
(iii) | Bayer will assign back to Isis any Patent Rights that relate to the Discontinued Product previously assigned by Isis to Bayer under this Agreement; |
(iv) | Bayer will transfer to Isis for use with respect to the Development and Commercialization of the Discontinued Product, any Know-How, data, results, regulatory information, filings (including the IND), and files in the possession of Bayer as of the date of such termination or reversion that relate solely to such Discontinued Product, and any other information or material specified in Section 5.4; |
(v) | Bayer will provide Isis with copies of any internal or external market research reports and other market research documentation if related to Product; |
(vi) | Bayer will [***] on a non-exclusive, license under any Trademark that is specific to a Discontinued Product solely for use with such Discontinued Product; provided, however, that in no event will Bayer have any obligation to license to Isis any Trademark used by Bayer in connection with the Product or any other trademarks of Bayer, including any Bayer Marks; |
(vii) | Isis will control and be responsible for all aspects of the Prosecution and Maintenance of all Jointly-Owned Program Patents, and Bayer will provide Isis with (and will instruct its counsel to provide Isis with) all reasonably required information and records in Bayer’s and its counsel’s possession related to the Prosecution and Maintenance of such Jointly-Owned Program Patents; and |
(viii) | upon Isis’ written request pursuant to a mutually agreed supply agreement, Bayer will sell to Isis any bulk API and Finished Drug Product in Bayer’s possession related to the Discontinued Products that are the subject of the termination at the time of such termination, at a price equal to [***] at the time such material is requested by Isis. |
11.3.3. | Termination of Entire Agreement if there is only one Product. Notwithstanding any provision to the contrary in this ARTICLE 11, if at the time a notice of termination is delivered under this ARTICLE 11 (i) there is only one license in effect under Section 5.1.1, Section 5.1.2 or Section 5.1.3 to a Product, and (ii) Isis is not obligated to conduct any drug discovery activities pursuant to a New Drug Option Programs under ARTICLE 2, then such termination notice will terminate this Agreement in its entirety (including any and all of Bayer’s unexercised Options). |
12.1. | Confidentiality; Exceptions. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the Agreement Term and for five years thereafter, the receiving Party (the “Receiving Party”) and its Affiliates will keep confidential and will not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any Confidential Information disclosed by the other Party or its Affiliates (the “Disclosing Party”). |
12.2. | Prior Confidentiality Agreement Superseded. As of the Effective Date, this Agreement supersedes the Amended and Restated Mutual Confidential Disclosure Agreement executed by Isis and Bayer on August 17, 2012 (including any and all amendments thereto). All information exchanged between the Parties under such Confidential Disclosure Agreement will be deemed Confidential Information hereunder and will be subject to the terms of this ARTICLE 12. |
12.3. | Authorized Disclosure. Except as expressly provided otherwise in this Agreement, a Receiving Party or its Affiliates may use and disclose to Third Parties Confidential Information of the Disclosing Party as follows: (i) solely in connection with the performance of its obligations or exercise of rights granted or reserved in this Agreement under confidentiality provisions no less restrictive than those in this Agreement, and (ii) to the extent reasonably necessary to file or prosecute patent, copyright and trademark applications (subject to Section 12.4 below), complying with applicable governmental regulations, obtaining Approvals, conducting Pre-Clinical Studies or Clinical Studies, marketing the Product, or as otherwise required by applicable law, regulation, rule or legal process (including the rules of the SEC and any stock exchange); provided, however, that if a Receiving Party or any of its Affiliates is required by law or regulation to make any such disclosure of a Disclosing Party’s Confidential Information it will, except where impracticable for necessary disclosures, give reasonable advance notice to the Disclosing Party of such disclosure requirement and will use its reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed; (iii) on a need-to-know basis, in communication with actual or potential lenders, investors, consultants, or professional advisors, in each case under confidentiality provisions no less restrictive than those of this Agreement; (iv) to the extent such disclosure is required to comply with existing expressly stated contractual obligations owed to such Party’s or its Affiliates’ licensor with respect to any intellectual property licensed to the other Party under this Agreement; or (v) as mutually agreed to in writing by the Parties. |
12.4. | Press Release; Publications; Disclosure of Agreement. |
12.4.1. | Announcement of Transaction. On or promptly after each of the Execution Date and the Effective Date, the Parties will issue a public announcement of the execution of this Agreement in form and substance mutually agreed by the Parties. |
12.4.2. | Other Disclosures. Except to the extent required to comply with applicable law, regulation, rule or legal process or as otherwise permitted in accordance with this Section 12.4, neither Party nor such Party’s Affiliates will make any public announcements, press releases or other public disclosures concerning a Product, a New Drug Option Program, this Agreement or the terms or the subject matter hereof without the prior written consent of the other, which will not be unreasonably withheld, conditioned or delayed. |
12.4.3. | Use of Name. Except as set forth in Section 12.4.8, neither Party will use the other Party’s name in a press release or other publication without first obtaining the prior consent of the Party to be named. |
12.4.4. | Notice of Significant Events; Disclosure of Information Related to Products. Each Party will immediately notify (and provide as much advance notice as possible, but at a minimum two Business Days advance notice to) the other Party of any event materially related to a Product (including in such notice any disclosure of the starting, stopping or clinical hold of a Clinical Study, clinical data or results, material regulatory discussions, filings or Approval or Bayer’s sales projections related to a Product) so the Parties may analyze the need for or desirability of publicly disclosing or reporting such event. If Bayer intends to make a press release or similar public communication disclosing material information regarding a Product licensed by Bayer hereunder, including starting, stopping or clinical hold of a Clinical Study, clinical data or results, material regulatory discussions, filings, Approval or Bayer’s sales projections related to a Product) (i) Bayer will submit such proposed communication to Isis for review at least two Business Days in advance of such proposed public disclosure, (ii) Isis will have the right to review and recommend changes to such communication, and (iii) Bayer will in good faith consider any changes that are timely recommended by Isis. |
12.4.5. | Scientific or Clinical Presentations. The Parties agree to use Commercially Reasonable Efforts to control public scientific disclosures of results of the Development activities under this Agreement to prevent any potential adverse effect of any premature public disclosure of such results. Each Party will first submit to the other Party an early draft of all such publications or presentations, whether they are to be presented orally or in written form, at least 14 days prior to submission for publication including to facilitate the publication of any summaries of Clinical Studies data and results as required on the clinical trial registry of each respective Party. Each Party will review such proposed publication in order to avoid the unauthorized disclosure of a Party’s Confidential Information and to preserve the patentability of inventions arising under this Agreement. If, during such 14 day period, the other Party informs such Party that its proposed publication contains Confidential Information the Parties shall discuss the matter in good faith and use Commercially Reasonable Efforts to resolve the matter. If at any time during such 14-day period, the other Party informs such Party that its proposed publication discloses inventions made by either Party under this Agreement that have not yet been protected through the filing of a patent application, or the public disclosure of such proposed publication could be expected to have a material adverse effect on any Patent Rights or Know-How solely owned or Controlled by such other Party, then such Party will either (i) delay such proposed publication for up to 60 days from the date the other Party informed such Party of its objection to the proposed publication, to permit the timely preparation and first filing of patent application(s) on the information involved or (ii) remove the identified disclosures prior to publication. Nothing in this Section 12.4.5 shall be construed to restrict the right of an academic collaborator to publish clinical trial data in accordance with good publication practices or guidelines. |
12.4.6. | SEC Filings. Each Party will give the other Party a reasonable opportunity to review all material filings with the SEC describing the terms of this Agreement prior to submission of such filings, and will give due consideration to any reasonable comments by the non-filing Party relating to such filing. |
12.4.7. | Subsequent Disclosure. Notwithstanding the foregoing, to the extent information regarding this Agreement or a Product has already been publicly disclosed, either Party (or its Affiliates) may subsequently disclose the same information to the public without the consent of the other Party. |
12.4.8. | Acknowledgment. Bayer will acknowledge in any press release, public presentation or publication regarding a Product, Isis’ role in discovering and developing the Product, that the Product is under license from Isis and otherwise acknowledge Isis’ contributions, and Isis’ stock ticker symbol (Nasdaq: ISIS). Isis may include the Product (and identify Bayer as its partner for the Product) in Isis’ drug pipeline. |
13.1. | Dispute Resolution. |
13.1.1. | General. The Parties recognize that a dispute may arise relating to this Agreement (“Dispute”). Except as set forth in Sections 1.3.2, 7.11.3(c), 8.1.3(b) and 13.1.5, any Dispute between the Parties or its Affiliates will be resolved in accordance with this Section 13.1. |
13.1.2. | Continuance of Rights and Obligations during Pendency of Dispute Resolution. If there are any Disputes in connection with this Agreement, including Disputes related to termination of this Agreement under ARTICLE 11, all rights and obligations of the Parties will continue until such time as any Dispute has been resolved in accordance with the provisions of this Section 13.1. |
13.1.3. | Escalation. Subject to Section 13.1.5, any claim, Dispute, or controversy as to the breach, enforcement, interpretation or validity of this Agreement will be referred to the Head of Development of Bayer Healthcare prior to FDA Approval of a Product and to the Head of the Bayer Pharmaceutical’s Business after FDA Approval of a Product and to the Chief Operating Officer of Isis (the “Executives”) for attempted resolution. If the Executives are unable to resolve such Dispute within 30 days of such Dispute being referred to them, then, upon the written request of either Party to the other Party, the Dispute will be subject to arbitration in accordance with Section 13.1.4, except as expressly set forth in Section 13.1.5 or Section 13.3. |
13.1.4. | Arbitration. |
(a) | If the Parties fail to resolve the Dispute through Escalation, and a Party desires to pursue resolution of the Dispute, any Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by a panel of three arbitrators appointed in accordance with said Rules, provided however, that the third arbitrator, who will act as president of the arbitral tribunal, shall not be appointed by the International Court of Arbitration, but by the two arbitrators which have been appointed by either of the Parties in accordance with Article 12 para 4 of said Rules. |
(b) | The place of arbitration shall be New York, New York and the language to be used in any such proceeding (and for all testimony, evidence and written documentation) shall be English. The IBA Rules on the Taking of Evidence in International Arbitration shall apply on any evidence to be taken up in the arbitration. |
(c) | Without limiting any other remedies that may be available under law, the arbitrators shall have no authority to award consequential damages not permitted to be recovered pursuant to Section 10.5. The Parties agree to select the arbitrator(s) within 45 days of initiation of the arbitration. The hearing will be concluded within six months after selection of the arbitrator(s) and the award will be rendered within 60 days of the conclusion of the hearing, or of any post hearing briefing, which briefing will be completed by both Parties within 45 days after the conclusion of the hearing. If the Parties cannot agree upon a schedule, then the arbitrator(s) will set the Schedule following the time limits set forth above as closely as practical. |
(d) | If the arbitration proceedings have been initiated under this Section 13.1.4 in order to fully or partially terminate this Agreement in accordance with Section 11.2.2 for material breach, both Parties shall – during the pendency of the arbitration proceedings – strive to find an amicable solution to resolve the Dispute with the support of the arbitrators. If through such process Isis and Bayer agree to a remediation plan and to a failure remedy that will apply if such breach is not cured (which may include the non-breaching Party’s right to terminate this Agreement upon written notice to the breaching Party), then if the breaching Party subsequently materially fails to execute such plan within 90 days after the conclusion of the remediation plan (or during a longer period of time if such breach is not reasonably curable within such 90-day period, so long as the breaching Party is pursuing a cure in good faith) the non-breaching Party will have the right to exercise and receive the applicable failure remedy. In such case the Parties will mutually terminate the pending arbitration procedure and, so long as the non-breaching Party has received the applicable failure remedy, the non-breaching Party shall not be entitled to reinitiate the arbitration proceedings to seek the full or partial termination of this Agreement on the same or essentially the same facts. |
(e) | EXCEPT IN THE CASE OF COURT ACTIONS PERMITTED BY SECTION 13.1.5 AND FOR CLAIMS NOT SUBJECT TO ARBITRATION PURSUANT TO SECTION 13.1.4 AS SET FORTH IN SECTION 13.1.5, EACH PARTY HERETO WAIVES: (1) ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY, (2) WITH THE EXCEPTION OF RELIEF MANDATED BY STATUTE, ANY CLAIM TO PUNITIVE, EXEMPLARY, MULTIPLIED, INDIRECT, CONSEQUENTIAL OR LOST PROFITS/REVENUES DAMAGES, AND (3) ANY CLAIM FOR ATTORNEY FEES, COSTS AND PREJUDGMENT INTEREST. |
(f) | Each Party will bear its own attorneys’ fees, costs, and disbursements arising out of the arbitration, and will pay an equal share of the fees and costs of the arbitrators; provided, however, the arbitrators will be authorized to determine whether a Party is the prevailing party, and if so, to award to that prevailing party reimbursement for any or all of its reasonable attorneys’ fees, costs and disbursements (including, for example, expert witness fees and expenses, photocopy charges, travel expenses, etc.), and/or the fees and costs of the administrators and the arbitrators. |
13.1.5. | Injunctive Relief; Court Actions. Notwithstanding anything to the contrary in this Agreement, each Party will be entitled to seek from any court of competent jurisdiction, in addition to any other remedy it may have at law or in equity, injunctive or other equitable relief in the event of an actual or threatened breach of this Agreement by the other Party, without the posting of any bond or other security, and such an action may be filed and maintained notwithstanding any ongoing discussions between the Parties or any ongoing arbitration proceeding. The Parties agree that in the event of a threatened or actual material breach of this Agreement injunctive or equitable relief may be an appropriate remedy. In addition, except as set forth otherwise in Section 7.11.3(c) and Section 8.1.3(b) either Party may bring an action in any court of competent jurisdiction to resolve disputes pertaining to the validity, construction, scope, enforceability, infringement or other violations of Patent Rights or other intellectual property rights, and no such claim will be subject to arbitration pursuant to Section 13.1.4. |
13.2. | Governing Law; Jurisdiction; Venue; Service of Process. This Agreement and any Dispute will be governed by and construed and enforced in accordance with the laws of the State of New York, U.S.A., without reference to conflicts of laws principles. |
13.3. | Recovery of Losses. Neither Party will be entitled to recover any Losses relating to any matter arising under one provision of this Agreement to the extent that such Party has already recovered Losses with respect to such matter pursuant to other provisions of this Agreement (including recoveries under Section 10.1 or Section 10.2, and the offset under Sections 7.11.3(b) and 7.14.2(b)). Except for the offset and credits explicitly set forth in Section 7.15, and Sections 7.11.3(b) and 7.14.2(b), a final and binding decision of the arbitrators in accordance with Section 13.1.4 or by the court of competent jurisdiction in accordance with Section 13.1.5 neither Party will have the right to set off any amount it is owed or believes it is owed against payments due or payable to the other Party under this Agreement. |
13.4. | Assignment and Successors. Neither this Agreement nor any obligation, of a Party hereunder may be assigned by either Party without the consent of the other, which will not be unreasonably withheld, delayed or conditioned, except that each Party may assign this Agreement and the rights, obligations and interests of such Party, in whole or in part, without the other Party's consent, to any of its Affiliates, to any purchaser of all or substantially all of its assets or all or substantially all of its assets to which this Agreement relates or to any successor corporation resulting from any merger, consolidation, share exchange or other similar transaction subject to Section 13.5.1. In addition, Isis may assign or transfer its rights to receive payments under this Agreement (but no liabilities), without Bayer’s consent, to an Affiliate or to a Third Party in connection with a payment factoring transaction. Unless explicitly agreed otherwise in writing between the Parties, if any assignment of this Agreement or of any rights or obligations under this Agreement results in [***]. Any purported assignment or transfer made in contravention of this Section 13.4 will be null and void. This Section 13.4 shall apply to the assignment of Licensed Technology mutatis mutandis. |
13.5. | Change of Control Events. |
13.5.1. | Change of Control Event Involving Bayer. Bayer will provide written notice to Isis within [***] days following the closing of a Change of Control Event involving Bayer, and such notice will identify the Third Party acquiring company (the “Bayer-Acquirer”) and the contact information of the person at the Bayer-Acquirer with whom Isis will work to schedule meetings between the Bayer-Acquirer and Isis. Within [***] days following the closing of such Change of Control Event, Bayer will meet with Isis at a mutually agreed date and time at Isis’ facilities to discuss any possible impacts of the Change of Control Event for this Agreement. |
13.5.2. | Change of Control Event Involving Isis. Isis will provide written notice to Bayer within [***] days following the closing of a Change of Control Event involving Isis, and such notice will identify the Third Party acquiring company (the “Isis-Acquirer”) and the contact information of the person at the Isis-Acquirer with whom Bayer will work to schedule meetings between the Isis-Acquirer and Bayer. If a Change of Control Event occurs involving Isis and the Isis-Acquirer that, at the time of the close of such Change of Control Event, is developing in human clinical trials or commercializing an antithrombotic product that competes or may compete with a Product (“Competing Product”) or, at any time during the Agreement Term after the closing of such Change of Control Event, develops, commercializes or acquires a Competing Product and such Isis-Acquirer has not, within [***] months of either (i) the closing of the Change of Control Event if the Competing Product is being developed in human clinical trials or commercialized as of such closing date or (ii) the date of first development, commercialization or acquisition of such Competing Product (the “Divestiture Period”) divested itself of the Competing Product, or terminated development and commercialization of such Competing Product, [***]. |
13.6. | Antitrust Filing. |
13.6.1. | Each Party agrees to prepare and make or cause to be prepared and made appropriate filings under the HSR Act and any other antitrust requirements relating to this Agreement and the transactions contemplated under this Agreement within 10 Business Days after the Execution Date. Each of the Parties agrees to cooperate in the antitrust clearance process, including by furnishing to the other Party such necessary information and reasonable assistance as the other Party may request in connection with its preparation of any filing or submission that is necessary under the HSR Act and other antitrust requirements, and to furnish promptly with the United States Federal Trade Commission (“FTC”), the Antitrust Division of the United States Department of Justice (“DOJ”) and any other antitrust authority, any information reasonably requested by them in connection with such filings. Each Party shall furnish copies (subject to reasonable redactions for privilege or confidentiality concerns) of, and shall otherwise keep the other Party apprised of the status of any communications with, and any inquiries or requests for additional information from, the FTC, DOJ and any other antitrust authority, and shall comply promptly with any such inquiry or request. Each Party shall give the other Party the opportunity to review in advance, and shall consider in good faith the other Party’s reasonable comments in connection with any proposed filing or communication with the FTC, DOJ or any other antitrust authority. Each Party shall consult with the other Party, to the extent practicable, in advance of participating in any substantive meeting or discussion with the FTC, the DOJ or any other antitrust authority with respect to any filings, investigation or inquiry and, to the extent permitted by such antitrust authority, give the other Party to the opportunity to attend and participate thereat. Neither Party shall withdraw its filing under the HSR Act or agree to delay the Effective Date without the prior written consent of the other Party. The Parties’ rights and obligations hereunder apply only in so far as they relate to the Agreement and to the transactions contemplated under the Agreement. |
13.6.2. | Each Party shall use Commercially Reasonable Efforts to obtain the expiration or early termination of the HSR Act and any other clearance required under other antitrust requirements relating to the Agreement and the transactions contemplated under the Agreement. Commercially Reasonable Efforts as used in this Section 13.6.2 shall not include proposing, negotiating, committing to and effecting, by consent decree, hold separate order, or otherwise, (a) the sale, divestiture, disposition, licensing or sublicensing of any of a Party’s or its Affiliates’ assets, properties or businesses, (b) behavioral limitations, conduct restrictions or commitments with respect to such assets, properties or business, or of any of the rights or obligations of a Party under this Agreement, or (c) defending through litigation any claim asserted in court by any party that would restrain, prevent or delay the Effective Date. |
(i) | Other than the provisions of Sections 11.1, ARTICLE 12 and ARTICLE 13 which shall apply as of the Execution Date, the rights and obligations of the Parties under this Agreement shall not become effective until the waiting period under the HSR Act has been terminated or expired, or any other timeline required by another antitrust authority and there is no proceeding, order, injunction or judgment relating thereto, pending before any governmental authority in which it is sought to restrain or prohibit the transaction(s) contemplated hereby. Upon the occurrence of the Effective Date, all other provisions of the Agreement shall become effective automatically without the need for further action by the Parties. |
13.6.3. | Each Party shall be responsible for its fees and costs associated with the preparation and submission of any required notification and report form under the HSR Act (or to any other antitrust authority), and the provision of any supplemental information to the FTC, DOJ or other antitrust authority, including any legal fees incurred by such Party in connection with such Party’s obligations pursuant to this Section 13.6. |
13.7. | Force Majeure. No Party will be held responsible to the other Party nor be deemed to be in default under, or in breach of any provision of, this Agreement for failure or delay in performing any obligation of this Agreement when such failure or delay is due to force majeure, and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement, force majeure means a cause beyond the reasonable control of a Party, which may include acts of God, war, terrorism, civil commotion, fire, flood, earthquake, tornado, tsunami, explosion or storm; pandemic; epidemic and failure of public utilities or common carriers. In such event the Party so failing or delaying will immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice will be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled for up to a maximum of 90 days, after which time the Parties will negotiate in good faith any permanent or transitory modifications of the terms of this Agreement that may be necessary to arrive at an equitable solution, unless the Party giving such notice has set out a reasonable timeframe and plan to resolve the effects of such force majeure and executes such plan within such timeframe. To the extent possible, each Party will use reasonable efforts to minimize the duration of any force majeure. |
13.8. | Notices. Any notice or request required or permitted to be given under or in connection with this Agreement will be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: |
If to Isis, addressed to:
|
Isis Pharmaceuticals, Inc.
|
2855 Gazelle Court
|
|
Carlsbad, CA 92010
|
|
Attention: Chief Operating Officer
|
|
Fax: 760-918-3592
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|
with a copy to:
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Isis Pharmaceuticals, Inc.
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2855 Gazelle Court
|
|
Carlsbad, CA 92010
|
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Attention: General Counsel
|
|
Fax: 760-268-4922
|
|
If to Bayer, addressed to:
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Bayer Pharma AG
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Muellerstrasse 178
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13353 Berlin
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Attention: Head of Strategic Marketing General Medicine
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Fax: +49 30 468 14086
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|
with a copy to:
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Bayer Pharma AG
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Muellerstrasse 178
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13353 Berlin
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|
Attention: General Counsel
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|
Fax: +49 30 468 14086
|
13.9. | Export Clause. Each Party acknowledges that the laws and regulations of the United States restrict the export and re-export of commodities and technical data of United States origin. Each Party agrees that it will not export or re-export restricted commodities or the technical data of the other Party in any form without the appropriate United States and foreign government licenses. |
13.10. | Waiver. Neither Party may waive or release any of its rights or interests in this Agreement except in writing. The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement will not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition. No waiver by either Party of any condition or term in any one or more instances will be construed as a continuing waiver or subsequent waiver of such condition or term or of another condition or term. |
13.11. | Severability. If any provision hereof should be held invalid, illegal or unenforceable in any jurisdiction, the Parties will negotiate in good faith a valid, legal and enforceable substitute provision that most nearly reflects the original intent of the Parties and all other provisions hereof will remain in full force and effect in such jurisdiction and will be liberally construed in order to carry out the intentions of the Parties hereto as nearly as may be possible. Such invalidity, illegality or unenforceability will not affect the validity, legality or enforceability of such provision in any other jurisdiction. |
13.12. | Entire Agreement; Modifications. This Agreement (including the attached Appendices and Schedules) sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof, and all prior agreements, understanding, promises and representations, whether written or oral, with respect thereto are superseded hereby. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth herein. No amendment, modification, release or discharge will be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties. |
13.13. | Independent Contractors. Nothing herein will be construed to create any relationship of employer and employee, agent and principal, partnership or joint venture between the Parties. Each Party is an independent contractor. Neither Party will assume, either directly or indirectly, any liability of or for the other Party. Neither Party will have the authority to bind or obligate the other Party, and neither Party will represent that it has such authority. |
13.14. | Interpretation. Except as otherwise explicitly specified to the contrary, (a) references to a section, exhibit, Appendix or Schedule means a Section of, or Schedule or exhibit or Appendix to this Agreement, unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) the words “shall” and “will” have the same meaning, (d) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (e) words in the singular or plural form include the plural and singular form, respectively, (f) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement, (g) unless otherwise specified, “$” is in reference to United States dollars, and (h) the headings contained in this Agreement, in any exhibit or Appendix or Schedule to this Agreement are for convenience only and will not in any way affect the construction of or be taken into consideration in interpreting this Agreement. |
13.15. | Books and Records. Any books and records to be maintained under this Agreement by a Party or its Affiliates or Sublicensees will be maintained in accordance with their respective Applicable Law. |
13.16. | Further Actions. Each Party will execute, acknowledge and deliver such further instruments, and do all such other acts, as may be necessary or appropriate in order to carry out the expressly stated purposes and the clear intent of this Agreement. |
13.17. | Construction of Agreement. The terms and provisions of this Agreement represent the results of negotiations between the Parties and their representatives, each of which has been represented by counsel of its own choosing, and neither of which has acted under duress or compulsion, whether legal, economic or otherwise. Accordingly, the terms and provisions of this Agreement will be interpreted and construed in accordance with their usual and customary meanings, and each of the Parties hereto hereby waives the application in connection with the interpretation and construction of this Agreement of any rule of law to the effect that ambiguous or conflicting terms or provisions contained in this Agreement will be interpreted or construed against the Party whose attorney prepared the executed draft or any earlier draft of this Agreement. |
13.18. | Supremacy. In the event of any express conflict or inconsistency between this Agreement and any Schedule or Appendix hereto, the terms of this Agreement will apply. The Parties understand and agree that the Appendices identifying the Licensed Technology are not intended to be the final and complete embodiment of any terms or provisions of this Agreement, and are to be updated from time to time during the Agreement Term, as appropriate and in accordance with the provisions of this Agreement. |
13.19. | Counterparts. This Agreement may be signed in counterparts, each of which will be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies of this Agreement from separate computers or printers. Facsimile signatures and signatures transmitted via electronic mail in PDF format will be treated as original signatures. |
13.20. | Compliance with Laws. Each Party will, and will ensure that its Affiliates will, comply with all relevant laws and regulations in exercising its rights and fulfilling its obligations under this Agreement. |
13.21. | Debarment. Neither Party is debarred under the United States Federal Food, Drug and Cosmetic Act or comparable Applicable Laws and it does not, and will not during the Agreement Term, employ or use the services of any person or entity that is debarred, in connection with the Development, Manufacture or Commercialization of the Products. If either Party becomes aware of the debarment or threatened debarment of any person or entity providing services to such Party, including the Party itself and its Affiliates, which directly or indirectly relate to activities under this Agreement, the other Party will be immediately notified in writing. |
13.22. | Remedies at Law. Without limiting Section 13.3 and except as expressly stated in this Agreement the rights and remedies provided in this Agreement and all other rights and remedies available to either Party at law or in equity are, to the extent permitted by law, cumulative and not exclusive of any other right or remedy now or hereafter available at law or in equity. |
BAYER PHARMA AG
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||
By:
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/s/ Dieter Weinand |
Name:
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Dieter Weinand
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Title:
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Chief Executive Officer |
By:
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/s/ Sebastian Guth |
Name:
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Sebastian Guth
|
Title: | Head of Strategic Marketing General Medicine |
By:
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/s/ B. Lynne Parshall | |
Name: B. Lynne Parshall
|
||
Title: Chief Operating Officer
|
(a) | was in the lawful knowledge and possession of the Receiving Party or its Affiliates prior to the time it was disclosed to, or learned by, the Receiving Party or its Affiliates, or was otherwise developed independently by the Receiving Party or its Affiliates, as evidenced by written records kept in the ordinary course of business, or other documentary proof of actual use by the Receiving Party or its Affiliates; |
(a) | was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party or its Affiliates; |
(b) | became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party or its Affiliates in breach of this Agreement; or |
(c) | was disclosed to the Receiving Party or its Affiliates, other than under an obligation of confidentiality, by a Third Party who had no obligation to the Disclosing Party or its Affiliates not to disclose such information to others. |
(i) | [***] percent ([***]%) of gross amount for transportation, freight insurance, distribution, packing and handling, |
(ii) | sales and excise taxes or customs duties paid by Bayer, its Affiliates or Sublicensees or any other governmental charges imposed upon the sale of a Product and paid by Bayer, its Affiliates or Sublicensees; |
(iii) | rebates and premiums granted or allowed by Bayer, its Affiliates or Sublicensees in connection with the sale of a Product; |
(iv) | allowances or credits granted by Bayer, its Affiliates or Sublicensees to customers on account of governmental requirements, rejections, outdating, returns, billing errors or recalls of a Product; |
(v) | trade, cash and quantity discounts, bonuses or chargebacks granted by Bayer, its Affiliates or Sublicensees in connection with the sale of a Product; |
(vi) | costs of customer programs such as cost effectiveness or patient assistance studies or programs designed to aid in patient compliance with medication schedules in connection with the sales of Products; |
(vii) | [***] percent ([***]%) of gross amount for bad debts; and |
(viii) | any item substantially similar in character and/or substance to the above. |
(a) | Promoting the overall health of the relationship between the Parties; |
(b) | Developing a mutually agreed alliance launch plan covering any major activities and systems that the Parties need to implement within the first 100 days after the Effective Date to support the Strategic Plan; |
(c) | Organizing each meeting of the Parties, including agendas, drafting minutes, and publishing final minutes; |
(d) | Preparing status and progress reports on the above as determined necessary by the Parties; |
(e) | Ensuring compliance in maintaining the Isis Internal ASO Safety Database as outlined in Section 6.6; and |
(f) | Ensuring proper approval of publications prior to submission as required in Section 12.4. |
Page
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ARTICLE I DEFINITIONS, BASIC LOAN AND ACCOUNTING TERMS
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1
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||
Section 1.01
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Certain Defined Terms
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1
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Section 1.02
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Basic Terms, Schedules and Exhibits
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1
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Section 1.03
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Accounting Terms
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1
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ARTICLE II REVOLVING FACILITY
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1
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||
Section 2.01
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The Revolving Facility
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1
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Section 2.02
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Making the Advances
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1
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Section 2.03
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Terms and Repayment
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2
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Section 2.04
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Taxes
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2
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Section 2.05
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Evidence of Debt
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2
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ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING
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3
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||
Section 3.01
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Conditions Precedent to Effectiveness of this Agreement
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3
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|
Section 3.02
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Conditions Precedent to Each Advance under the Revolving Facility
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3
|
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ARTICLE IV REPRESENTATIONS AND WARRANTIES
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4
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||
Section 4.01
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Representations and Warranties of the Borrower
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4
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ARTICLE V COVENANTS OF THE BORROWER
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6
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||
Section 5.01
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Affirmative Covenants
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6
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Section 5.02
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Negative Covenants
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7
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Section 5.03
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Financial Covenants
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8
|
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ARTICLE VI EVENTS OF DEFAULT
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8
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||
Section 6.01
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Events of Default
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8
|
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ARTICLE VII MISCELLANEOUS
|
10
|
||
Section 7.01
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Amendments, Etc.
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10
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Section 7.02
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Notices, Etc.
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10
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Section 7.03
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No Waiver; Remedies
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10
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|
Section 7.04
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Costs and Expenses; Indemnification
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10
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|
Section 7.05
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Right of Setoff
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11
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Section 7.06
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Binding Effect; Successors and Assigns
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11
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Section 7.07
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Governing Law
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11
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Section 7.08
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Execution in Counterparts
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12
|
|
Section 7.09
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Interest Rate Limitation
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12
|
|
Section 7.10
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Jurisdiction, Etc.
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12
|
|
Section 7.11
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Assignments and Participations
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12
|
|
Section 7.12
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WAIVER OF JURY TRIAL
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13
|
|
Section 7.13
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Severability of Provisions
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13
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|
Section 7.14
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Entire Agreement; Jointly Drafted
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13
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|
Section 7.15
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Headings
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13
|
|
Section 7.16
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Conflicts
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14
|
|
Section 7.17
|
Terms Generally
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14
|
|
Section 7.18
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[Reserved]
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14
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|
Section 7.19
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Tax Information
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14
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Section 7.20
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Other Events
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14
|
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Section 7.21
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Capital Adequacy
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15
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Section 7.22
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Survival
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16
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Section 7.23
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Credit Reports
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16
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Section 7.24
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Financial Advisor Disclaimer
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16
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Section 7.25
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Lender Affiliates
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16
|
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Section 7.26
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Other Matters
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17
|
LIST OF SCHEDULES | ||
SCHEDULE I
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CERTAIN DEFINED TERMS
|
|
SCHEDULE 4.01(g)
|
SUBSIDIARIES/MAJOR AFFILIATES
|
|
SCHEDULE 4.01(h)
|
OWNERSHIP
|
|
SCHEDULE 4.01(i)
|
EXISTING LIENS
|
|
LIST OF EXHIBITS | ||
EXHIBIT A
|
SECURITIES ACCOUNT COLLATERAL MAINTENANCE GUIDELINES
|
Note:
|
See Schedule I hereto for certain definitions of terms used in these Basic Terms.
|
Line of Credit
Commitment:
|
A maximum amount of $20,000,000.00, subject to adjustment as set forth under the definition of “Commitment” on Schedule I hereto.
|
Use of Proceeds:
|
The proceeds of the Advances shall be available (and the Borrower agrees that the Borrower shall use such proceeds or cause such proceeds to be used) solely to provide for general working capital non-purpose uses. No proceeds of any Advance will be used (i) to purchase or carry any margin stock (as defined in Regulation U) or other securities or to extend credit to others for the purpose of purchasing or carrying margin stock or other securities, (ii) to repay any loan that was used to purchase or carry margin stock or other securities, or (iii) to repay a loan made by an Affiliate of the Lender.
|
Payments:
|
All payments to the Lender hereunder shall be made by (i) wire transfer to an account specified by the Lender or (ii) check or money order mailed to Morgan Stanley Private Bank, National Association, P.O. Box 60520, City of Industry, California 91716-0520, or to such other address as may be designated by the Lender from time to time in a written notice to the Borrower.
In addition, the Borrower may authorize the Lender to initiate ACH debit entries (“Automatic ACH Payment”) to pay amounts due hereunder from an account to be specified by the Borrower in writing in accordance with requirements established by the Lender. After the Lender receives such authorization from the Borrower in the form determined by the Lender, the authorization shall remain in effect until the Lender receives from the Borrower written notice that such authorization is terminated, and both the Lender and the depository institution holding the account debited by the ACH have sufficient time to act on such notice.
|
Repayment:
|
The Borrower shall pay to the Lender interest on the unpaid principal amount of the Revolving Loan monthly in arrears not later than (i) if paid by ACH, the tenth (10th) day of each month and (ii) if paid by check, money order or wire transfer, the fifteenth (15th) day of each month (in each case, except for interest on LIBO Rate Loans and SWAP Rate Loans, which shall be paid as set forth below), and, in each case, on the Termination Date and on such other date when the Revolving Loan shall be paid in full pursuant to this Agreement and the other Loan Documents.
The Borrower shall pay to the Lender interest on the unpaid principal amount of the Revolving Loan monthly in arrears (i) every thirtieth (30th) day after the commencement of any Interest Period (provided, however, to the extent that the thirtieth (30th) day after the commencement of such Interest Period, or any thirtieth (30th) day thereafter, is not a Business Day, the Borrower shall pay to the Lender interest in accordance with this Section on the first Business Day preceding such thirtieth (30th) day on which interest would otherwise be due) and upon the expiration of the Interest Period for any Revolving Loan that is a LIBO Rate Loan or a SWAP Rate Loan and (ii) on the Termination Date. The Borrower shall pay any outstanding fees, costs, expenses and interest on the unpaid principal amount of the Revolving Loan on the date on which the Revolving Loan shall be paid in full pursuant to this Agreement and the other Loan Documents.
The Borrower shall repay to the Lender on the Termination Date the principal amount of the Revolving Loan then outstanding, together with all fees, costs and expenses and accrued and unpaid interest thereon.
|
Advances:
|
Advances hereunder may be made by wire transfer pursuant to written wire instructions provided by the Borrower to the Lender. Alternatively, Advances hereunder may be made via ACH deposit to the Designated Account per instructions provided to the Lender by the Borrower. Subject to the provisions of Sections 2.02, 3.01 and 3.02 hereof, the Lender shall endeavor to fund requests for Advances received by 1:00 p.m. (Eastern Time) on any Business Day on the same day the request is received (unless the Borrower requests that any such Advance be made as one or more LIBO Rate Loans or SWAP Rate Loans, in which case the provisions of the section below entitled “Fixed LIBO Rate” or “Fixed SWAP Rate”, as applicable, shall apply).
|
Interest:
|
The Revolving Loan, other than any LIBO Rate Loan or SWAP Rate Loan, shall bear interest at a floating rate of interest equal to the Monthly LIBO Rate in effect from time to time plus 1.25% (the “Margin”) per annum, such rate to change when and as the Monthly LIBO Rate changes, payable in arrears monthly in accordance with the Repayment section of these Basic Terms. If for any reason the Monthly LIBO Rate shall cease to be available, interest shall accrue at a rate per annum equal to the Prime Rate plus the Margin.
|
Fixed LIBO Rate:
|
The Borrower shall have the right on prior written notice to the Lender to request that (a) an Advance be made as one or more LIBO Rate Loans or (b) all or a portion of the then outstanding Revolving Loan be converted to one or more LIBO Rate Loans, which request must be received by the Lender by 12:00 noon (Eastern Time) at least two (2) Business Days’ prior to any such Advance being made as a LIBO Rate Loan or any conversion of the Revolving Loan to one or more LIBO Rate Loans, and any such Advance or conversion shall be made in accordance with the terms and procedures provided in this section and shall be in an amount not less than the minimum amount specified in Section 2.02(a)(ii) hereof, in which case the applicable interest rate for the Interest Period selected by the Borrower shall be a per annum rate equal to the LIBO Rate determined by the Lender at approximately 12:00 noon (Eastern Time) two (2) Business Days prior to the commencement of such Interest Period plus the Margin (the “Fixed LIBO Rate”) and not the floating rate described above. The Borrower shall select the requested duration of the applicable Interest Period (which shall be one (1), two (2), three (3), four (4), six (6), or twelve (12) months) by notifying the Lender in writing at least two (2) Business Days before the date of the requested advance or conversion. The Fixed LIBO Rate shall be in effect for the duration of the Interest Period. Upon the Borrower’s request made in accordance with the terms set forth in this section, the requested Advance or Revolving Loan (or portion thereof) will be made or will convert to a LIBO Rate Loan, provided that no Default or Event of Default has occurred or is then continuing. The Borrower will not have any right to change the interest rate on any LIBO Rate Loan until the expiration of the applicable Interest Period and such LIBO Rate Loan shall continue to bear interest at the applicable Fixed LIBO Rate until the end of such Interest Period. Prior to the expiration of any Interest Period, the Borrower may request that a new Interest Period be applied to the applicable LIBO Rate Loan pursuant to the terms and conditions set forth in this section. If the Borrower fails to request a new Interest Period, the LIBO Rate Loan will revert to a Revolving Loan bearing interest at a per annum rate equal to the Monthly LIBO Rate plus the Margin as described above in the paragraph entitled “Interest” upon the expiration of the Interest Period. Notwithstanding the foregoing, the Borrower shall only be permitted to have a maximum of five (5) LIBO Rate Loans and/or SWAP Rate Loans (in the aggregate) outstanding at any given time.
|
Fixed SWAP Rate:
|
The Borrower shall have the right on prior written notice to the Lender to request that (a) an Advance be made as one or more Swap Rate Loans or (b) all or a portion of the then outstanding Revolving Loan be converted to one or more SWAP Rate Loans, which request must be received by the Lender by 12:00 noon (Eastern Time) at least two (2) Business Days’ prior to any such Advance being made as a SWAP Rate Loan or any conversion of the Revolving Loan to one or more SWAP Rate Loans, and any such Advance or conversion shall be made in accordance with the terms and procedures provided in this section and shall be in an amount not less than the minimum amount specified in Section 2.02(a)(ii) hereof, in which case the applicable interest rate for the Interest Period selected by the Borrower shall be a per annum rate equal to the SWAP Rate determined by the Lender at approximately 12:00 noon (Eastern Time) two (2) Business Days prior to the commencement of such Interest Period plus the Margin (the “Fixed SWAP Rate”) and not the floating rate described above. The Borrower shall select the requested duration of the applicable Interest Period (which may extend from the date of the Advance or conversion through the Termination Date) by notifying the Lender in writing at least two (2) Business Days before the date of the requested advance or conversion. The applicable Fixed SWAP Rate shall be in effect for the duration of the Interest Period. Upon the Borrower’s request made in accordance with the terms set forth in this section, the requested Advance or Revolving Loan (or portion thereof) will be made or will convert to a SWAP Rate Loan provided that no Default or Event of Default has occurred or is then continuing. The Borrower will not have any right to change the interest rate on any SWAP Rate Loan until the expiration of the applicable Interest Period and such SWAP Rate Loan shall continue to bear interest at the applicable Fixed SWAP Rate until the end of such Interest Period. Prior to the expiration of any Interest Period, the Borrower may request that a new Interest Period be applied to the applicable SWAP Rate Loan pursuant to the terms and conditions set forth in this section. If the Borrower fails to request a new Interest Period, the SWAP Rate Loan will revert to a Revolving Loan bearing interest at a per annum rate equal to the Monthly LIBO Rate plus the Margin as described above in the paragraph entitled “Interest” upon the expiration of the Interest Period. Notwithstanding anything in the foregoing to the contrary, the Borrower shall only be entitled to elect a SWAP Rate Loan with an Interest Period of five (5) years on the Effective Date.
|
Optional and Mandatory Prepayments:
|
If at any time the aggregate unpaid principal amount of the Revolving Loan exceeds the Commitment, the Borrower shall immediately make a payment in an amount sufficient to reduce such aggregate unpaid principal amount to an amount that is not greater than the Commitment, provided that such prepayment shall be in addition to, not in lieu of, the provisions of the “Collateral Maintenance” section in these Basic Terms. Upon such prepayment by the Borrower, the Lender shall advise the Borrower of, and the Borrower shall immediately pay to the Lender, accrued and unpaid interest at the interest rate set forth herein on the amount of such prepayment of the Revolving Loan to the date of such prepayment. Each prepayment made hereunder shall be applied by the Lender to repayment of the Revolving Loan in such order as the Lender in its sole and absolute discretion shall select.
The Borrower may prepay all or any part of the Revolving Loan (other than any LIBO Rate Loan or SWAP Rate Loan) upon at least two (2) Business Days’ prior written notice to the Lender, stating the proposed date and principal amount of such prepayment, without premium or penalty, together with accrued interest to the date of such prepayment on the principal amount prepaid.
The Borrower may prepay any LIBO Rate Loan or SWAP Rate Loan upon at least five (5) Business Days’ prior written notice to the Lender, stating the proposed date and principal amount of the prepayment. If the notice is given, the Borrower shall prepay such outstanding principal amount of such LIBO Rate Loan or SWAP Rate Loan, together with (a) a Prepayment Premium on the principal amount prepaid and (b) accrued interest to the date of such prepayment on the principal amount prepaid. All calculations and determinations by the Lender of the amount of the Prepayment Premium, if made in accordance with its then standard procedures for so calculating or determining such amount, shall be conclusive absent manifest arithmetic error.
|
Each prepayment of the Revolving Loan (other than any LIBO Rate Loan or SWAP Rate Loan) made hereunder shall be in a minimum principal amount of $100,000.00 and an integral multiple of $100,000.00 in excess thereof.
Each prepayment of LIBO Rate Loans or SWAP Rate Loans made hereunder shall be in a minimum principal amount of $500,000.00 and an integral multiple of $100,000.00 in excess thereof.
If any prepayment is received by the Lender after 1:00 p.m. (Eastern Time) or on any day other than a Business Day, such prepayment shall be deemed to have been made on the next succeeding Business Day.
|
|
Collateral Maintenance:
|
With respect to Collateral held in the Securities Account, if at any time the aggregate unpaid principal amount of the Revolving Loan equals or exceeds the sum of the amounts determined by multiplying the aggregate Market Value of each type of Collateral set forth in Column A of Exhibit A hereto times the corresponding percentage specified in Column C of Exhibit A hereto (a “Curable Shortfall”), then the Borrower shall, within five (5) Business Days, (i) make a payment, (ii) deposit additional Collateral of a type and nature acceptable to the Lender, in its sole and absolute discretion, into the Securities Account, or (iii) make a combination of the payments and deposits specified in clauses (i) and (ii) above, in an amount sufficient to ensure that the aggregate unpaid principal amount of the Revolving Loan is equal to or less than the sum of the amounts determined by multiplying the aggregate Market Value of each type of Collateral set forth in Column A of Exhibit A hereto times the corresponding percentage specified in Column B of Exhibit A hereto (the “Shortfall Cure Amount”). If the Borrower fails to make such payment and/or deposit in respect of the Shortfall Cure Amount within such five (5) Business Day period, the Lender shall have the immediate right, without notice or other action (notwithstanding any prior notice that may have been given in respect of such Curable Shortfall or anything else contained herein), to exercise any or all other remedies available to the Lender herein or under any other Loan Document (including, without limitation, the liquidation of the Collateral held in the Securities Account).
If the Borrower makes a payment to eliminate the Curable Shortfall, the Lender shall apply such payment to reduce the aggregate unpaid principal amount outstanding under the Revolving Loan.
Notwithstanding the foregoing, if at any time the aggregate unpaid principal amount of the Revolving Loan equals or exceeds the sum of the amounts determined by multiplying the aggregate Market Value of each type of Collateral set forth in Column A of Exhibit A hereto times the corresponding percentage specified in Column D of Exhibit A hereto (a “Default Shortfall”; and together with a Curable Shortfall, collectively, a “Shortfall”), then the Borrower must immediately (x) make a payment, (y) deposit additional Collateral of a type and nature acceptable to the Lender, in its sole and absolute discretion, into the Securities Account, or (z) make a combination of the payments and deposits specified in clauses (x) and (y) above, in an amount sufficient to ensure that the aggregate unpaid principal amount of the Revolving Loan is equal to or less than the sum of the amounts determined by multiplying the aggregate Market Value of each type of Collateral set forth in Column A of Exhibit A hereto times the corresponding percentage specified in Column B of Exhibit A hereto (the “Default Shortfall Cure Amount”). If the Borrower fails to immediately make such payment and/or deposit in respect of the Default Shortfall Cure Amount, the Lender shall have the immediate right, without notice or other action (notwithstanding any prior notice given under the preceding paragraph or anything else contained herein), to exercise any or all other remedies available to the Lender herein or under any other Loan Document (including, without limitation, the liquidation of the Collateral held in the Securities Account).
|
Only Collateral in the Securities Account of the specific types indicated in Column A of Exhibit A hereto, and having a per share value equal to or greater than that indicated in Column A of Exhibit A hereto for such type of Collateral, if any, shall be included by the Lender in determining the value of the Collateral in the Securities Account for purposes of ascertaining the amount of the Commitment hereunder from time to time or at any time. Additionally, if, at any time more than 25% of the aggregate value of the Collateral in the Securities Account consists of securities issued by a single issuer of the type specified in row (8) of Exhibit A hereto, all of such securities shall be excluded in ascertaining the amount of the Commitment, or in ascertaining the existence of any Shortfall Cure Amount or Default Shortfall Cure Amount, at such time.
|
|
Payments and Computations:
|
The Borrower shall make each payment hereunder in respect of interest on, principal of, or other amount related to the Revolving Loan not later than 12:00 noon (Eastern Time) on the day when due in United States Dollars in same day funds, with payments being so received by the Lender after such time being deemed to have been made on the next succeeding Business Day.
|
All computations of interest hereunder shall be made by the Lender on the basis of a year of three hundred sixty (360) days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Each determination by the Lender of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest.
|
|
Late Charge:
|
If the Borrower fails to pay any interest or principal payment on the Revolving Loan:
(i) in the case of payments made by ACH debit, within ten (10) days after the same becomes due and payable hereunder, the Borrower shall, at the option of the Lender, pay to the Lender a late charge equal to five percent (5%) of the amount of such payment, payable on the eleventh (11th) day after such payment becomes due and payable hereunder; or
(ii) in the case of payments made by check, wire transfer or money order, within five (5) days after the same becomes due and payable hereunder, the Borrower shall, at the option of the Lender, pay to the Lender a late charge equal to five percent (5%) of the amount of such payment, payable on the sixth (6th) day after such payment becomes due and payable hereunder.
|
Default Rate:
|
In addition to any applicable late charge, upon the occurrence and during the continuance of an Event of Default, the interest on the aggregate unpaid principal amount of the Revolving Loan shall be increased, at the option of the Lender, to a rate equal to the lesser of three percent (3%) per annum above the rate of interest applicable hereunder or the Maximum Rate (the “Default Rate”).
|
Commitment Fee:
|
Commitment fee waived.
|
Other Fees:
|
The Borrower has paid any fees that are outlined in the Letter of Interest.
|
Unused Availability Fee:
|
The Borrower will pay to the Lender an unused availability fee equal to 0.25% per annum of the daily unused portion of the Commitment, which fee shall be payable quarterly, in arrears; provided, however, that such fee shall be waived for this first year of this Revolving Facility.
|
Notices, Etc.:
|
All notices and other communications provided for hereunder shall be in writing (including fax communication and any other method of communication authorized by the Lender) and faxed or sent by a reputable overnight courier or delivery service to the Borrower, at the Borrower’s address at 2855 Gazelle Ct., Carlsbad, CA 92010 or fax number (760) 268-4922, Attention: Steve Smith (with copy to General Counsel fax (760) 268-4922); or if to the Lender, at its address at Morgan Stanley Private Bank, National Association, c/o Morgan Stanley Smith Barney LLC, 2000 Westchester Avenue, Floor 2NE, Purchase, New York 10577, or fax number (914) 225-9110; or, as to the Borrower or the Lender at such other address or fax number as shall be designated by such party in a written notice to the other party or, in the case of a change of the Borrower’s address or fax number, as may be requested by the Borrower by telephonic notice and confirmed in writing by the Lender. All such notices and communications shall, when faxed, be effective upon the faxing thereof or, when sent by reputable overnight courier or delivery system, be effective on the Business Day following the day when the same is sent in such manner, except that notices and communications to the Lender pursuant to Article II shall not be effective until received by the Lender. Delivery by facsimile or other electronic means of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any schedule or exhibit hereto to be executed and delivered hereunder shall be as effective as delivery of an original executed counterpart thereof.
|
ISIS PHARMACEUTICALS, INC.
|
|
By: /s/ Elizabeth L. Hougen
|
|
Name: Elizabeth L. Hougen
|
|
Title: SVP Finance and CFO
|
MORGAN STANLEY PRIVATE BANK, NATIONAL ASSOCIATION
|
|
By: /s/ Jared Livingston
|
|
Name: Jared Livingston
|
|
Title: Authorized Signatory
|
STATE OF
|
||
COUNTY OF
|
Owner
|
Entity
|
Percentage
|
FMR LLC
|
Isis Pharmaceuticals, Inc.
|
15.0%(1)
|
BlackRock, Inc.
|
Isis Pharmaceuticals, Inc.
|
8.0%(1)
|
ClearBridge Investments, LLC
|
Isis Pharmaceuticals, Inc.
|
7.6%(1)
|
The Vanguard Group
|
Isis Pharmaceuticals, Inc.
|
6.1%(1)
|
BB Biotech AG
|
Isis Pharmaceuticals, Inc.
|
5.0%(1)
|
Isis Pharmaceuticals, Inc.
|
Isis USA Limited
|
100%
|
Isis Pharmaceuticals, Inc.
|
PerIsis I Development Corporation
|
100%
|
Isis Pharmaceuticals, Inc.
|
Symphony GenIsis, Inc.
|
100%
|
Isis Pharmaceuticals, Inc.
|
Akcea Therapeutics, Inc.
|
100%
|
· | Beckman Coulter Inc. |
· | General Electric Capital Corporation |
· | Fleet Capital Corporation |
· | Cisco Systems Capital Corporation |
· | RBS Asset Finance, Inc. |
· | Navitas Lease Corp. |
Column A
|
Column
B
|
Column
C
|
Column
D
|
Type of Pledged Collateral
(Note: Any security not specifically listed, and all securities issued by Morgan Stanley or its affiliates, shall be deemed ineligible.)
|
Loanable Value
|
Margin
Call
|
Sell-Out
|
(1) Cash, Cash Equivalents, Commercial Paper and Banker’s Acceptances rated A1 / P1, Money Market Funds, and FDIC-insured, brokered CDs with maturities less than 5yrs
|
97%
|
98%
|
99%
|
(2) Government Obligations (Direct or Guaranteed), US Treasury Bills, Notes, Bonds and Strips, US Government Agencies (e.g FHLB, FFCB) and related MBS/CMO’s, US Treasury Mutual Funds, and Pre-refunded Bonds collateralized by any of these securities
(a) Tenor less than 5 years
(b) Tenor 5-9 years
(c) Tenor 10-19 years
(d) Tenor 20+ years
|
96%
94%
92%
90%
|
96%
94%
93%
91%
|
97%
95%
94%
92%
|
(3) All other US Government Agency Debt (e.g. FNMA, FHLMC):
(a) Tenor less than 5 years
(b) Tenor 5-9 years
(c) Tenor 10-19 years
(d) Tenor 20+ years
|
96%
92%
88%
82%
|
96%
93%
90%
85%
|
97%
95%
92%
89%
|
(4) State and Municipal Obligations with no position > 15% of the current outstanding issuance**
(a) rated* AAA through BBB-
(b) rated* BB+ or BB
|
84%
70%
|
87%
73%
|
89%
76%
|
(5) Non-Convertible Corp Bonds with a price ≥$40, a current outstanding issuance of at least $25 million, and no position >15% of the issue size
(a) rated* AAA through AA-
(b) rated* A+ through BBB-
(c) rated* BB+ or BB
|
89%
84%
70%
|
92%
87%
73%
|
94%
89%
76%
|
(6) Municipal Bond and Corporate Bond Mutual Funds trading >=$4/sha (open end after 30-days and closed end)
|
80%
|
83%
|
86%
|
(7) Convertible Corp Bonds with a price ≥$40, a current outstanding issuance of at least $25 million, and no position >15% of the issue size
|
72%
|
75%
|
78%
|
(8) Diversified Common, Preferred and Convertible Preferred Equities and Unit Investment Trusts trading on a National Securities Exchange as defined by the Securities Exchange Act of 1934:**
(a) >= $10.00/sha
(b) $9.00-$9.99/sha
(c) $8.00-$8.99/sha
(d) $7.00-$7.99/sha
(e) $4.00-$6.99/sha
|
75%
60%
50%
50%
50%
|
78%
65%
60%
55%
53%
|
80%
70%
65%
60%
55%
|
(9) Diversified ADRs trading >= $10/sha on a National Securities Exchange as defined by the Securities Exchange Act of 1934:**
|
75%
|
78%
|
80%
|
(10) Balanced and Diversified Stock Mutual Funds (open end after 30-days and closed end) and Exchange Traded Funds. On-shore funds only.
(a) >=$4/sha
(b) $2.00-$3.99/sha
|
80%
0%
|
83%
70%
|
86%
74%
|
(11) Specialized / Sector and International Mutual Funds and ETFs >=$4/sha. Includes
High Yield, levered or inverse Mutual Funds and ETFs.
|
70%
|
73%
|
76%
|
Dated: August 4, 2015
|
|
|
|
/s/ Stanley T. Crooke
|
|
|
|
Stanley T. Crooke, M.D., Ph.D.
|
|
Chief Executive Officer
|
|
Dated: August 4, 2015
|
|
|
|
/s/ Elizabeth L. Hougen
|
|
|
|
Elizabeth L. Hougen
|
|
Chief Financial Officer
|
|
1. | The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2015, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the period covered by the Periodic Report and the results of operations of the Company for the period covered by the Periodic Report. |
Dated: August 4, 2015
|
|
|
|
|
|
/s/ Stanley T. Crooke
|
|
/s/ Elizabeth L. Hougen
|
Stanley T. Crooke, M.D., Ph.D.
|
|
Elizabeth L. Hougen
|
Chief Executive Officer
|
|
Chief Financial Officer
|
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