|
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 March 31, 2017 (unaudited) and December 31, 2016
|
3
|
|
Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016 (unaudited)
|
4
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2017 and 2016 (unaudited)
|
5
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016 (unaudited)
|
6
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
7
|
|
ITEM 2:
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations:
|
|
Overview
|
21
|
|
Results of Operations
|
23
|
|
Liquidity and Capital Resources
|
29
|
|
Risk Factors
|
30
|
|
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
|
38
|
ITEM 3:
|
Default upon Senior Securities
|
38
|
ITEM 4:
|
Mine Safety Disclosures
|
38
|
ITEM 5:
|
Other Information
|
39
|
ITEM 6:
|
Exhibits
|
39
|
SIGNATURES
|
41
|
March 31,
2017
|
December 31,
2016
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
114,221
|
$
|
84,685
|
||||
Short-term investments
|
746,060
|
580,538
|
||||||
Contracts receivable
|
69,357
|
108,043
|
||||||
Inventories
|
6,801
|
7,489
|
||||||
Other current assets
|
25,933
|
17,177
|
||||||
Total current assets
|
962,372
|
797,932
|
||||||
Property, plant and equipment, net
|
95,439
|
92,845
|
||||||
Patents, net
|
21,175
|
20,365
|
||||||
Deposits and other assets
|
5,010
|
1,325
|
||||||
Total assets
|
$
|
1,083,996
|
$
|
912,467
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
23,237
|
$
|
21,120
|
||||
Accrued compensation
|
8,267
|
24,186
|
||||||
Accrued liabilities
|
30,870
|
36,013
|
||||||
Current portion of long-term obligations
|
56
|
1,185
|
||||||
Current portion of deferred contract revenue
|
108,150
|
51,280
|
||||||
Total current liabilities
|
170,580
|
133,784
|
||||||
Long-term deferred contract revenue
|
115,759
|
91,198
|
||||||
1 percent convertible senior notes
|
508,411
|
500,511
|
||||||
Long-term obligations, less current portion
|
15,043
|
15,050
|
||||||
Long-term financing liability for leased facility
|
72,397
|
72,359
|
||||||
Total liabilities
|
882,190
|
812,902
|
||||||
Stockholders’ equity:
|
||||||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 123,880,559 and 120,351,480 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively
|
124
|
122
|
||||||
Additional paid-in capital
|
1,410,102
|
1,311,229
|
||||||
Accumulated other comprehensive loss
|
(30,460
|
)
|
(30,358
|
)
|
||||
Accumulated deficit
|
(1,177,960
|
)
|
(1,181,428
|
)
|
||||
Total stockholders’ equity
|
201,806
|
99,565
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,083,996
|
$
|
912,467
|
Three Months Ended
March 31, 2017
|
||||||||
2017
|
2016
|
|||||||
Revenue:
|
||||||||
Commercial Revenue:
|
||||||||
SPINRAZA royalties
|
$
|
5,211
|
$
|
—
|
||||
Licensing and other royalty revenue
|
3,547
|
1,660
|
||||||
Total commercial revenue
|
8,758
|
1,660
|
||||||
Research and development revenue under collaborative agreements
|
101,546
|
35,214
|
||||||
Total revenue
|
110,304
|
36,874
|
||||||
Expenses:
|
||||||||
Research, development and patent
|
82,638
|
80,964
|
||||||
Selling, general and administrative
|
13,677
|
10,562
|
||||||
Total operating expenses
|
96,315
|
91,526
|
||||||
Income (loss) from operations
|
13,989
|
(54,652
|
)
|
|||||
Other income (expense):
|
||||||||
Investment income
|
2,280
|
1,457
|
||||||
Interest expense
|
(11,363
|
)
|
(9,490
|
)
|
||||
Other expense
|
(1,438
|
)
|
—
|
|||||
Income (loss) before income tax expense
|
3,468
|
(62,685
|
)
|
|||||
Income tax expense
|
—
|
(232
|
)
|
|||||
Net income (loss)
|
$
|
3,468
|
$
|
(62,917
|
)
|
|||
Basic net income (loss) per share
|
$
|
0.03
|
$
|
(0.52
|
)
|
|||
Shares used in computing basic net income (loss) per share
|
122,861
|
120,598
|
||||||
Diluted net income (loss) per share
|
$
|
0.03
|
(0.52
|
)
|
||||
Shares used in computing diluted net income (loss) per share
|
124,972
|
120,598
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Net income (loss)
|
$
|
3,468
|
$
|
(62,917
|
)
|
|||
Unrealized gains (losses) on securities, net of tax
|
266
|
(2,550
|
)
|
|||||
Reclassification adjustment for realized gains included in net income (loss)
|
(374
|
)
|
—
|
|||||
Currency translation adjustment
|
(6
|
)
|
—
|
|||||
Comprehensive income (loss)
|
$
|
3,354
|
$
|
(65,467
|
)
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Operating activities:
|
||||||||
Net income (loss)
|
$
|
3,468
|
$
|
(62,917
|
)
|
|||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation
|
1,980
|
1,841
|
||||||
Amortization of patents
|
393
|
377
|
||||||
Amortization of premium on investments, net
|
1,608
|
2,039
|
||||||
Amortization of debt issuance costs
|
396
|
298
|
||||||
Amortization of convertible senior notes discount
|
7,506
|
5,795
|
||||||
Amortization of long-term financing liability for leased facility
|
1,675
|
1,672
|
||||||
Stock-based compensation expense
|
20,912
|
20,103
|
||||||
Gain on investment in Regulus Therapeutics, Inc.
|
(374
|
)
|
—
|
|||||
Non-cash losses related to patents, licensing and property, plant and equipment
|
93
|
396
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Contracts receivable
|
38,686
|
(5,124
|
)
|
|||||
Inventories
|
688
|
379
|
||||||
Other current and long-term assets
|
(14,077
|
)
|
(2,747
|
)
|
||||
Accounts payable
|
472
|
(11,417
|
)
|
|||||
Accrued compensation
|
(15,919
|
)
|
(9,728
|
)
|
||||
Accrued liabilities and deferred rent
|
(6,273
|
)
|
(1,886
|
)
|
||||
Deferred contract revenue
|
81,431
|
(14,849
|
)
|
|||||
Net cash provided by (used in) operating activities
|
122,665
|
(75,768
|
)
|
|||||
Investing activities:
|
||||||||
Purchases of short-term investments
|
(266,185
|
)
|
(41,366
|
)
|
||||
Proceeds from the sale of short-term investments
|
99,223
|
81,805
|
||||||
Purchases of property, plant and equipment
|
(3,237
|
)
|
(628
|
)
|
||||
Acquisition of licenses and other assets, net
|
(983
|
)
|
(382
|
)
|
||||
Proceeds from the sale of Regulus Therapeutics
|
2,507
|
—
|
||||||
Net cash (used in) provided by investing activities
|
(168,675
|
)
|
39,429
|
|||||
Financing activities:
|
||||||||
Proceeds from equity awards
|
6,324
|
2,736
|
||||||
Proceeds from sale of stock to Novartis
|
71,640
|
—
|
||||||
Offering costs paid
|
(778
|
)
|
—
|
|||||
Principal payments on debt and capital lease obligations
|
(1,640
|
)
|
(1,857
|
)
|
||||
Net cash provided by financing activities
|
75,546
|
879
|
||||||
Net increase (decrease) in cash and cash equivalents
|
29,536
|
(35,460
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
84,685
|
128,797
|
||||||
Cash and cash equivalents at end of period
|
$
|
114,221
|
$
|
93,337
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Interest paid
|
$
|
106
|
$
|
31
|
||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||
Amounts accrued for capital and patent expenditures
|
$
|
1,648
|
$
|
2,524
|
||||
Unpaid deferred offering costs
|
$
|
319
|
$
|
—
|
1. |
Basis of Presentation
|
2. |
Significant Accounting Policies
|
● |
The exclusive license we granted to Bayer to develop and commercialize IONIS-FXI-LRx for the treatment of thrombosis;
|
● |
The development services we agreed to perform for IONIS-FXI-LRx and IONIS-FXIRx; and
|
● |
The remaining undelivered IONIS-FXIRx API that was part of the original agreement.
|
● |
Estimated future product sales;
|
● |
Estimated royalties on future product sales;
|
● |
Contractual milestone payments;
|
● |
Expenses we expect to incur;
|
● |
Income taxes; and
|
● |
An appropriate discount rate.
|
● |
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 API we will use.
|
● |
$64.9 million to the IONIS-FXI-LRx exclusive license;
|
● |
$11.0 million for development services for IONIS-FXI-LRx and IONIS-FXIRx; and
|
● |
$0.4 million for the remaining delivery of IONIS-FXIRx API.
|
● |
We recognized the portion of the consideration attributed to the IONIS-FXI-LRx license in the first quarter of 2017 because we delivered the license and earned the revenue;
|
● |
We are recognizing the amount attributed to the development services for IONIS-FXI-LRx and IONIS-FXIRx over the period of time we are performing the services; and
|
● |
We are recognizing the amount attributed to the remaining API supply as we deliver it to Bayer.
|
● |
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 authorization 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 authorization 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 authorization 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.
|
Three months ended March 31, 2017
|
Income
(Numerator)
|
Shares
(Denominator)
|
Per-Share
Amount
|
|||||||||
Income available to common shareholders
|
$
|
3,468
|
122,861
|
$
|
0.03
|
|||||||
Effect of dilutive securities:
|
||||||||||||
Shares issuable upon exercise of stock options
|
—
|
1,674
|
||||||||||
Shares issuable upon restricted stock award issuance
|
—
|
377
|
||||||||||
Shares issuable related to our ESPP
|
—
|
60
|
||||||||||
Income available to common shareholders, plus assumed conversions
|
$
|
3,468
|
124,972
|
$
|
0.03
|
● |
1 percent convertible senior notes;
|
● |
2¾ percent convertible senior notes;
|
● |
Dilutive stock options;
|
● |
Unvested restricted stock units; and
|
● |
Employee Stock Purchase Plan, or ESPP.
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Beginning balance accumulated other comprehensive loss
|
$
|
(30,358
|
)
|
$
|
(13,565
|
)
|
||
Unrealized losses on securities, net of tax (1)
|
266
|
(2,550
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (2)
|
(374
|
)
|
—
|
|||||
Currency translation adjustment
|
6
|
—
|
||||||
Net current period other comprehensive loss
|
(102
|
)
|
(2,550
|
)
|
||||
Ending balance accumulated other comprehensive loss
|
$
|
(30,460
|
)
|
$
|
(16,115
|
)
|
(1) |
There was no tax benefit for other comprehensive loss for the three months ended March 31, 2017 and 2016.
|
(2) |
Amounts are included in investment income on our condensed consolidated statement of operations.
|
Three Months Ended
March 31,
|
|||||
2017
|
2016
|
||||
Risk-free interest rate
|
1.8%
|
1.5%
|
|||
Dividend yield
|
0.0%
|
0.0%
|
|||
Volatility
|
66.3%
|
57.9%
|
|||
Expected life
|
4.5 years
|
4.5 years
|
Three Months Ended
March 31,
|
|||||
2017
|
2016
|
||||
Risk-free interest rate
|
0.7%
|
0.5%
|
|||
Dividend yield
|
0.0%
|
0.0%
|
|||
Volatility
|
66.5%
|
69.4%
|
|||
Expected life
|
6 months
|
6 months
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Research, development and patent
|
$
|
16,122
|
$
|
14,770
|
||||
Selling, general and administrative
|
4,790
|
5,333
|
||||||
Total
|
$
|
20,912
|
$
|
20,103
|
3. |
Investments
|
One year or less
|
64%
|
After one year but within two years
|
24%
|
After two years but within three and a half years
|
12%
|
Total
|
100%
|
Gross Unrealized
|
||||||||||||||||
March 31, 2017
|
Cost (1)
|
Gains
|
Losses
|
Estimated Fair Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities (2)
|
$
|
341,043
|
$
|
18
|
$
|
(405
|
)
|
$
|
340,656
|
|||||||
Debt securities issued by U.S. government agencies
|
64,784
|
2
|
(72
|
)
|
64,714
|
|||||||||||
Debt securities issued by the U.S. Treasury (2)
|
23,297
|
—
|
(19
|
)
|
23,278
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (2)
|
55,828
|
2
|
(116
|
)
|
55,714
|
|||||||||||
Total securities with a maturity of one year or less
|
484,952
|
22
|
(612
|
)
|
484,362
|
|||||||||||
Corporate debt securities
|
189,152
|
49
|
(833
|
)
|
188,368
|
|||||||||||
Debt securities issued by U.S. government agencies
|
25,670
|
—
|
(124
|
)
|
25,546
|
|||||||||||
Debt securities issued by the U.S. Treasury
|
3,497
|
—
|
(1
|
)
|
3,496
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
55,101
|
16
|
(291
|
)
|
54,826
|
|||||||||||
Total securities with a maturity of more than one year
|
273,420
|
65
|
(1,249
|
)
|
272,236
|
|||||||||||
Total available-for-sale securities
|
$
|
758,372
|
$
|
87
|
$
|
(1,861
|
)
|
$
|
756,598
|
Gross Unrealized
|
||||||||||||||||
December 31, 2016
|
Cost (1)
|
Gains
|
Losses
|
Estimated Fair Value
|
||||||||||||
Available-for-sale securities:
|
||||||||||||||||
Corporate debt securities
|
$
|
195,087
|
$
|
25
|
$
|
(161
|
)
|
$
|
194,951
|
|||||||
Debt securities issued by U.S. government agencies
|
26,548
|
—
|
(10
|
)
|
26,538
|
|||||||||||
Debt securities issued by the U.S. Treasury
|
29,298
|
2
|
(14
|
)
|
29,286
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (2)
|
72,775
|
2
|
(134
|
)
|
72,643
|
|||||||||||
Total securities with a maturity of one year or less
|
323,708
|
29
|
(319
|
)
|
323,418
|
|||||||||||
Corporate debt securities
|
202,408
|
36
|
(1,174
|
)
|
201,270
|
|||||||||||
Debt securities issued by U.S. government agencies
|
28,807
|
1
|
(167
|
)
|
28,641
|
|||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
36,816
|
1
|
(349
|
)
|
36,468
|
|||||||||||
Total securities with a maturity of more than one year
|
268,031
|
38
|
(1,690
|
)
|
266,379
|
|||||||||||
Total available-for-sale securities
|
$
|
591,739
|
$
|
67
|
$
|
(2,009
|
)
|
$
|
589,797
|
|||||||
Equity securities:
|
||||||||||||||||
Regulus Therapeutics Inc.
|
$
|
2,133
|
$
|
281
|
$
|
—
|
$
|
2,414
|
||||||||
Total equity securities
|
$
|
2,133
|
$
|
281
|
$
|
—
|
$
|
2,414
|
||||||||
Total available-for-sale and equity securities
|
$
|
593,872
|
$
|
348
|
$
|
(2,009
|
)
|
$
|
592,211
|
(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
|
354
|
$
|
421,288
|
$
|
(1,180
|
)
|
$
|
22,387
|
$
|
(58
|
)
|
$
|
443,675
|
$
|
(1,238
|
)
|
||||||||||||
Debt securities issued by U.S. government agencies
|
41
|
84,017
|
(196
|
)
|
—
|
—
|
84,017
|
(196
|
)
|
|||||||||||||||||||
Debt securities issued by the U.S. Treasury
|
4
|
25,773
|
(20
|
)
|
—
|
—
|
25,773
|
(20
|
)
|
|||||||||||||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states
|
97
|
90,816
|
(336
|
)
|
4,916
|
(71
|
)
|
95,732
|
(407
|
)
|
||||||||||||||||||
Total temporarily impaired securities
|
496
|
$
|
621,894
|
$
|
(1,732
|
)
|
$
|
27,303
|
$
|
(129
|
)
|
$
|
649,197
|
$
|
(1,861
|
)
|
4. |
Fair Value Measurements
|
At
March 31,
2017
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
||||||||||
Cash equivalents (1)
|
$
|
100,318
|
$
|
100,318
|
$
|
—
|
||||||
Corporate debt securities (2)
|
529,024
|
—
|
529,024
|
|||||||||
Debt securities issued by U.S. government agencies (3)
|
90,260
|
—
|
90,260
|
|||||||||
Debt securities issued by the U.S. Treasury (4)
|
26,774
|
26,774
|
—
|
|||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (5)
|
110,540
|
—
|
110,540
|
|||||||||
Total
|
$
|
856,916
|
$
|
127,092
|
$
|
729,824
|
At
December 31,
2016
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable Inputs
(Level 2)
|
||||||||||
Cash equivalents (1)
|
$
|
54,137
|
$
|
54,137
|
$
|
—
|
||||||
Corporate debt securities (3)
|
396,221
|
—
|
396,221
|
|||||||||
Debt securities issued by U.S. government agencies (3)
|
55,179
|
—
|
55,179
|
|||||||||
Debt securities issued by the U.S. Treasury (3)
|
29,286
|
29,286
|
—
|
|||||||||
Debt securities issued by states of the U.S. and political subdivisions of the states (5)
|
109,111
|
—
|
109,111
|
|||||||||
Investment in Regulus Therapeutics Inc.
|
2,414
|
2,414
|
—
|
|||||||||
Total
|
$
|
646,348
|
$
|
85,837
|
$
|
560,511
|
(1) |
Included in cash and cash equivalents on our condensed consolidated balance sheet.
|
(2) |
At March 31, 2017, $6.8 million was 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.
|
(3) |
Included in short-term investments on our condensed consolidated balance sheet.
|
(4) |
At March 31, 2017, $1.0 million was 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) |
At March 31, 2017 and December 31, 2016, $2.7 million and $9.3 million, respectively, were 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 asset (at December 31, 2016)
|
$
|
—
|
||
Value of the potential premium we will receive from Novartis at inception of the SPA (January 2017)
|
5,035
|
|||
Recurring fair value adjustment at March 31, 2017
|
(1,438
|
)
|
||
Ending balance of Level 3 asset (at March 31, 2017)
|
$
|
3,597
|
(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.
|
● |
Novartis may terminate the agreement as a whole or with respect to any drug at any time by providing written notice to us;
|
● |
Either we or Novartis may terminate the agreement with respect to any drug by providing written notice to the other party in good faith that we or Novartis has determined that the continued development or commercialization of the drug presents safety concerns that pose an unacceptable risk or threat of harm in humans or would violate any applicable law, ethical principles, or principles of scientific integrity;
|
● |
Either we or Novartis may terminate the agreement for a drug by providing written notice to the other party upon the other party’s uncured failure to perform a material obligation related to the drug under the agreement, or the entire agreement if the other party becomes insolvent; and
|
● |
We may terminate the agreement if Novartis disputes or assists a third party to dispute the validity of any of our patents.
|
● |
Development services for AKCEA-APO(a)-LRx;
|
● |
Development services for AKCEA-APOCIII-LRx;
|
● |
API for AKCEA-APO(a)-LRx; and
|
● |
API for AKCEA-APOCIII-LRx.
|
● |
$75 million from the upfront payment;
|
● |
$100 million our common stock Novartis purchased under the SPA, including $28.4 million for the premium paid by Novartis for its purchase of our common stock at a premium in the first quarter of 2017; and
|
● |
$5.0 million for the potential premium Novartis will pay if they purchase our common stock in the future.
|
● |
$64.0 million for the development services for AKCEA-APO(a)-LRx;
|
● |
$40.1 million for the development services for AKCEA-APOCIII-LRx;
|
● |
$1.5 million for the delivery of AKCEA-APO(a)-LRx API; and
|
● |
$2.8 million for the delivery of AKCEA-APOCIII-LRx API.
|
7. |
Segment Information and Concentration of Business Risk
|
March 31, 2017
|
Ionis Core
|
Akcea Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
Commercial revenue:
|
||||||||||||||||
SPINRAZA royalties
|
5,211
|
—
|
—
|
5,211
|
||||||||||||
Licensing and other royalty revenue
|
3,547
|
—
|
—
|
3,547
|
||||||||||||
Total commercial revenue
|
8,758
|
—
|
—
|
8,758
|
||||||||||||
R&D revenue under collaborative agreements
|
$
|
143,425
|
$
|
9,597
|
$
|
(51,476
|
)
|
$
|
101,546
|
|||||||
Total segment revenue
|
$
|
152,183
|
$
|
9,597
|
$
|
(51,476
|
)
|
$
|
110,304
|
|||||||
Income (loss) from operations
|
$
|
73,832
|
$
|
(59,873
|
)
|
$
|
30
|
$
|
13,989
|
March 31, 2016
|
Ionis Core
|
Akcea Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
Revenue:
|
||||||||||||||||
R&D revenue under collaborative agreements
|
$
|
35,214
|
$
|
—
|
$
|
—
|
$
|
35,214
|
||||||||
Licensing and other royalty revenue
|
1,660
|
—
|
—
|
1,660
|
||||||||||||
Total segment revenue
|
$
|
36,874
|
$
|
—
|
$
|
—
|
$
|
36,874
|
||||||||
Loss from operations
|
$
|
(38,567
|
)
|
$
|
(16,049
|
)
|
$
|
(36
|
)
|
$
|
(54,652
|
)
|
Total Assets
|
Ionis Core
|
Akcea Therapeutics
|
Elimination of
Intercompany Activity
|
Total
|
||||||||||||
March 31, 2017
|
$
|
1,202,164
|
$
|
132,982
|
$
|
(251,150
|
)
|
$
|
1,083,996
|
|||||||
December 31, 2016
|
$
|
1,067,770
|
$
|
10,684
|
$
|
(165,987
|
)
|
$
|
912,467
|
Three Months Ended
March 31,
|
|||||
2017
|
2016
|
||||
Partner A
|
59 %
|
3 %
|
|||
Partner B
|
18 %
|
58 %
|
|||
Partner C
|
4 %
|
14 %
|
ITEM 2 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Total revenue
|
$
|
110,304
|
$
|
36,874
|
||||
Total operating expenses
|
$
|
96,315
|
$
|
91,526
|
||||
Income (loss) from operations
|
$
|
13,989
|
$
|
(54,652
|
)
|
|||
Net income (loss)
|
$
|
3,468
|
$
|
(62,917
|
)
|
● |
Biogen reported $47 million from sales of SPINRAZA in the first quarter.
|
● |
Biogen received a positive CHMP opinion for SPINRAZA, recommending marketing approval with a broad indication in the EU.
|
● |
We and Biogen reported positive data at AAN from the CHERISH and NURTURE studies as well as encore data from the ENDEAR study.
|
o |
CHERISH data from an end of study analysis in non-ambulatory patients with later-onset SMA (consistent with Type 2) demonstrated:
|
◾ |
A highly statistically significant and clinically meaningful improvement in motor function scores in SPINRAZA-treated patients compared to untreated patients.
|
◾ |
Attainment of new motor milestones and upper limb motor function consistently in favor of SPINRAZA-treated patients.
|
◾ |
A favorable safety profile with no discontinuations due to adverse events.
|
o |
Data from an interim analysis of the NURTURE study in pre-symptomatic infants with genetically diagnosed SMA demonstrated that at the time of the interim analysis:
|
◾ |
Most infants achieved new motor milestones on essentially the same timeline as would be expected of a healthy infant.
|
● |
We received more than $290 million in cash from partners in the first quarter of 2017.
|
● |
In April, we received $75 million from Bayer to advance both IONIS-FXIRx and its LICA follow on, IONIS-FXI-LRx.
|
● |
GSK initiated Phase 2 studies of IONIS-HBVRx and the LICA follow on, IONIS-HBV-LRx.
|
● |
We initiated a Phase 1 study of IONIS-AGT-LRx, a wholly owned generation 2.0+ LICA drug, in patients with treatment resistant hypertension.
|
● |
We published papers in Nature Biotechnology on the mechanism of action for antisense drugs that significantly expand therapeutic opportunities for the technology.
|
● |
We published a paper in Nucleic Acid Therapeutics on the analysis of its Integrated Safety Database, which demonstrated no class generic effect of 2'-O-methoxyethyl-modified antisense oligonucleotides on platelet numbers and function.
|
● |
Our CEO, Dr. Stanley Crooke, received the E. B. Hershberg Award from the American Chemical Society
|
● |
We and Akcea reported that volanesorsen achieved its primary endpoint in the Phase 3 APPROACH study, demonstrating robust reductions in triglycerides and reduced incidence of pancreatitis attacks and reduced frequency and severity of abdominal pain.
|
● |
We and Akcea initiated a strategic collaboration with Novartis worth up to more than $1 billion plus royalties for the development and commercialization of AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx.
|
● |
Akcea initiated a Phase 2b study of AKCEA-APO(a)-LRx in patients with elevated Lp(a).
|
● |
Akcea filed a registration statement with the intention of completing an initial public offering.
|
● |
Top-line data from the Phase 3 APPROACH study of volanesorsen were presented at the 2017 European Atherosclerosis Society congress.
|
● |
Akcea published interim data in Expert Review of Cardiovascular Therapy from the IN-FOCUS survey that was commissioned to quantify the burden of FCS on patients and the healthcare system.
|
● |
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 and clinical development activities; and
|
● |
Estimating our net deferred income tax asset valuation allowance.
|
● |
Valuing of premiums under our and Akcea’s Novartis collaboration.
|
● |
$28.4 million for the premium paid by Novartis for its purchase of our common stock in the first quarter of 2017; and
|
● |
$5.0 million for the potential premium Novartis will pay if they purchase our common stock in the future at a premium.
|
● |
$65.5 million from Bayer primarily for the license of IONIS-FXI-LRx;
|
● |
$5 million milestone payment from Biogen for validating an undisclosed neurological disease target;
|
● |
$25.3 million from the amortization of upfront fees; and
|
● |
$5.7 million primarily from services we performed for our partners.
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
60,620
|
$
|
58,600
|
||||
Akcea Therapeutics
|
66,290
|
12,859
|
||||||
Elimination of intercompany activity
|
(51,507
|
)
|
(36
|
)
|
||||
Subtotal
|
75,403
|
71,423
|
||||||
Non-cash compensation expense related to equity awards
|
20,912
|
20,103
|
||||||
Total operating expenses
|
$
|
96,315
|
$
|
91,526
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Research, development and patent expenses
|
$
|
66,516
|
$
|
66,194
|
||||
Non-cash compensation expense related to equity awards
|
16,122
|
14,770
|
||||||
Total research, development and patent expenses
|
$
|
82,638
|
$
|
80,964
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
54,829
|
$
|
55,270
|
||||
Akcea Therapeutics
|
63,194
|
10,960
|
||||||
Elimination of intercompany activity
|
(51,507
|
)
|
(36
|
)
|
||||
Subtotal
|
66,516
|
66,194
|
||||||
Non-cash compensation expense related to equity awards
|
16,122
|
14,770
|
||||||
Total research, development and patent expenses
|
$
|
82,638
|
$
|
80,964
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Antisense drug discovery expenses
|
$
|
12,598
|
$
|
11,597
|
||||
Non-cash compensation expense related to equity awards
|
3,963
|
3,496
|
||||||
Total antisense drug discovery expenses
|
$
|
16,561
|
$
|
15,093
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
SPINRAZA
|
$
|
5,648
|
$
|
9,402
|
||||
Volanesorsen
|
4,259
|
5,414
|
||||||
IONIS-TTRRx
|
6,786
|
4,488
|
||||||
Other antisense development projects
|
10,417
|
9,884
|
||||||
Development overhead expenses
|
11,203
|
10,383
|
||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards
|
38,313
|
39,571
|
||||||
Non-cash compensation expense related to equity awards
|
7,012
|
6,088
|
||||||
Total antisense drug development expenses
|
$
|
45,325
|
$
|
45,659
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
27,711
|
$
|
29,257
|
||||
Akcea Therapeutics
|
58,996
|
10,314
|
||||||
Elimination of intercompany activity
|
(48,394
|
)
|
—
|
|||||
Subtotal
|
38,313
|
39,571
|
||||||
Non-cash compensation expense related to equity awards
|
7,012
|
6,088
|
||||||
Total antisense drug development expenses
|
$
|
45,325
|
$
|
45,659
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Manufacturing and operations expenses
|
$
|
8,805
|
$
|
7,996
|
||||
Non-cash compensation expense related to equity awards
|
1,705
|
1,602
|
||||||
Total manufacturing and operations expenses
|
$
|
10,510
|
$
|
9,598
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
8,104
|
$
|
7,690
|
||||
Akcea Therapeutics
|
3,784
|
306
|
||||||
Elimination of intercompany activity
|
(3,083
|
)
|
—
|
|||||
Subtotal
|
8,805
|
7,996
|
||||||
Non-cash compensation expense related to equity awards
|
1,705
|
1,602
|
||||||
Total manufacturing and operations expenses
|
$
|
10,510
|
$
|
9,598
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Personnel costs
|
$
|
2,852
|
$
|
2,244
|
||||
Occupancy
|
1,878
|
1,852
|
||||||
Patent expenses
|
499
|
758
|
||||||
Depreciation and amortization
|
67
|
57
|
||||||
Insurance
|
346
|
339
|
||||||
Other
|
1,158
|
1,780
|
||||||
Total R&D support expenses, excluding non-cash compensation expense related to equity awards
|
6,800
|
7,030
|
||||||
Non-cash compensation expense related to equity awards
|
3,442
|
3,584
|
||||||
Total R&D support expenses
|
$
|
10,242
|
$
|
10,614
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
6,416
|
$
|
6,726
|
||||
Akcea Therapeutics
|
414
|
340
|
||||||
Elimination of intercompany activity
|
(30
|
)
|
(36
|
)
|
||||
Subtotal
|
6,800
|
7,030
|
||||||
Non-cash compensation expense related to equity awards
|
3,442
|
3,584
|
||||||
Total R&D support expenses
|
$
|
10,242
|
$
|
10,614
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Selling, general and administrative expenses
|
$
|
8,887
|
$
|
5,229
|
||||
Non-cash compensation expense related to equity awards
|
4,790
|
5,333
|
||||||
Total selling, general and administrative expenses
|
$
|
13,677
|
$
|
10,562
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Ionis Core
|
$
|
5,791
|
$
|
3,330
|
||||
Akcea Therapeutics
|
3,096
|
1,899
|
||||||
Non-cash compensation expense related to equity awards
|
4,790
|
5,333
|
||||||
Total selling, general and administrative expenses
|
$
|
13,677
|
$
|
10,562
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Development and patent expenses
|
$
|
63,194
|
$
|
10,960
|
||||
General and administrative expenses
|
3,096
|
1,899
|
||||||
Total operating expenses, excluding non-cash compensation expense related to equity awards
|
66,290
|
12,859
|
||||||
Non-cash compensation expense related to equity awards
|
3,180
|
3,190
|
||||||
Total Akcea Therapeutics operating expenses
|
$
|
69,470
|
$
|
16,049
|
Three Months Ended
March 31,
|
||||||||
2017
|
2016
|
|||||||
Convertible notes:
|
||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
$
|
7,902
|
$
|
6,093
|
||||
Interest expense payable in cash
|
1,715
|
1,671
|
||||||
Non-cash interest expense for long-term financing liability
|
1,675
|
1,672
|
||||||
Other
|
71
|
54
|
||||||
Total interest expense
|
$
|
11,363
|
$
|
9,490
|
|
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
|
|||||||||||||||
Convertible senior notes (principal and interest payable)
|
$
|
720.0
|
$
|
6.9
|
$
|
13.9
|
$
|
699.2
|
$
|
—
|
||||||||||
Financing arrangements
|
13.3
|
0.3
|
13.0
|
—
|
—
|
|||||||||||||||
Facility rent payments
|
117.3
|
6.6
|
14.0
|
14.8
|
81.9
|
|||||||||||||||
Other obligations (principal and interest payable)
|
1.2
|
0.1
|
0.1
|
0.1
|
0.9
|
|||||||||||||||
Operating leases
|
23.5
|
2.3
|
3.8
|
3.0
|
14.4
|
|||||||||||||||
Total
|
$
|
875.3
|
$
|
16.2
|
$
|
44.8
|
$
|
717.1
|
$
|
97.2
|
1 Percent Convertible
Senior Notes
|
||||
Outstanding principal balance
|
$
|
685.5
|
||
Original issue date ($500 million of principal)
|
November 2014
|
|||
Additional issue date ($185.5 million of principal)
|
December 2016
|
|||
Maturity date
|
November 2021
|
|||
Interest rate
|
1 percent
|
|||
Conversion price per share
|
$
|
66.81
|
||
Total shares of common stock subject to conversion
|
10.3
|
(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 marketing authorizations;
|
● |
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;
|
● |
reimbursed more favorably by government and other third-party payors than our drugs;
|
● |
safer than our drugs;
|
● |
more effective than our drugs; or
|
● |
more convenient to use than our drugs.
|
● |
fund our development activities for SPINRAZA;
|
● |
seek and obtain regulatory approvals for SPINRAZA; and
|
● |
successfully commercialize SPINRAZA.
|
● |
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;
|
● |
patients who enroll in the clinical study may later drop out due to adverse events, a perception they are not benefiting from participating in the study, fatigue with the clinical study process or personal issues;
|
● |
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 marketing authorization; 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.
|
● |
marketing approvals and successful commercial launch for SPINRAZA;
|
● |
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 marketing authorizations;
|
● |
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 and IONIS-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
|
ITEM 6. |
EXHIBITS
|
a. |
Exhibits
|
Exhibit Number
|
Description of Document
|
|
10.1
|
Strategic Collaboration, Option and License Agreement, dated January 5, 2017, between Akcea Therapeutics, Inc. and Novartis Pharma AG. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment.
|
|
10.2
|
Stock Purchase Agreement, dated January 5, 2017, between Akcea Therapeutics, Inc., Ionis Pharmaceuticals, Inc. and Novartis Pharma AG.
|
|
10.3
|
Amendment #1 dated February 10, 2017 between the Registrant and Bayer AG. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment.
|
|
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 Ionis Pharmaceuticals, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, formatted in Extensive Business Reporting Language (XBRL): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of operations, (iii) condensed consolidated statements of comprehensive income (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)
|
May 9, 2017
|
||
/s/ ELIZABETH L. HOUGEN
|
Senior Vice President, Finance and Chief Financial Officer
|
|||
Elizabeth L. Hougen
|
(Principal financial and accounting officer)
|
May 9, 2017
|
Confidential
|
Execution Copy
|
1.1. |
Overview. The intent of the (A) pre-Option Exercise Collaboration is (i) for Akcea to develop AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx through the completion of a Phase 2 Dose-Ranging Trial, (ii) for Akcea to provide Novartis with API in quantities sufficient for Novartis to conduct the Pre-Option Novartis Activities prior to Option exercise, (iii) for Novartis to initiate, prior to Option exercise, a manufacturing plan to manufacture AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx to supply the Phase 3 Cardiovascular Outcomes Trial (or “CVOT”) for each Product, which CVOT Novartis will conduct following Option exercise for each such Product, and (iv) to provide Novartis an exclusive option to obtain an exclusive license to develop, manufacture and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, which options are exercisable after the End of Phase 2b Meeting for each of AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, and (B) following Novartis’ exercise of its Option for a Product (y) for Novartis to develop, manufacture and commercialize such Product globally in accordance with this Agreement, and (z) to provide Akcea the right to Co-Commercialize in selected markets such Product licensed to Novartis on terms and conditions to be agreed upon between the Parties. Prior to Option Exercise, the Collaboration will be conducted under the Pre-Option Development Plan and managed and overseen by the Collaboration Steering Committee (CSC). The purpose of this Section 1.1 is to provide a high-level overview of the roles, responsibilities, rights and obligations of each Party under this Agreement with regard to AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. This Section 1.1 is qualified in its entirety by the more detailed provisions of this Agreement set forth below.
|
1.2. |
AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx Pre-Option Responsibilities. Akcea will use Commercially Reasonable Efforts to develop each of AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx through the completion of a Phase 2 Dose-Ranging Trial in accordance with the Pre-Option Development Plan attached hereto as Appendix 2. Subject to Section 2.1.3(a), any material changes to the Pre-Option Development Plan must be mutually agreed to by the CSC.
|
1.2.1. |
Akcea’s Activities Prior to Option Exercise on a Product-by-Product Basis. On a Product-by-Product basis, Akcea shall use Commercially Reasonable Efforts to (i) conduct the Akcea Activities under the Pre-Option Development Plan for such Product in accordance with the timelines specified therein and (ii) complete the other activities Akcea agreed to conduct under this ARTICLE 1, until the earlier of the date (x) Novartis exercises the applicable Option for such Product under this Agreement; provided, however, if Novartis exercises its Option before Akcea completes the Akcea Activities, Akcea will complete such remaining uncompleted Akcea Activities, (y) the Option Period has expired with respect to such Product, or (z) the Parties mutually agree that, for scientific, medical or other reasons, continuing to conduct the Akcea Activities under the Pre-Option Development Plan for such Product is futile. Without limiting the foregoing, Akcea may discontinue an activity under the Pre-Option Development Plan if after having consulted, and having given good faith consideration to the recommendations of the CSC, Akcea in good faith believes that continuing such activity would (A) pose an unacceptable risk or threat of harm in humans, or (B) violate any Applicable Law, ethical principles, or principles of scientific integrity. If there are additional activities Novartis wishes Akcea to conduct under the Pre-Option Development Plan, the Parties will discuss and mutually agree on any such additional activities through the CSC, and Akcea will use Commercially Reasonable Efforts to conduct such agreed activities under the Pre-Option Development Plan (and such plan will be updated accordingly).
|
1.2.2. |
Novartis’ Activities prior to Option Exercise on a Product-by-Product Basis. Prior to the Option Exercise, Novartis shall use Commercially Reasonable Efforts to conduct at risk the Pre-Option Novartis Activities attached hereto as Schedule 1.3.2 so as to enable timely initiation of the CVOT for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx upon exercise by Novartis of the Option for such Product.
|
1.2.3. |
Delivery of the Draft Study Report and Final Study Report. On a Product-by-Product basis, no later than [***] months before the anticipated Completion of the Phase 2 Dose-Ranging Trial, the Parties shall define and agree on the format and substantive content of the Draft Study Report and the Final Study Report in accordance with the ICH E3 industry guidelines for Structure and Content of Clinical Study Report. Notwithstanding the foregoing, it is understood and agreed that the Draft Study Report will include all [***], as well as all [***], [***] and [***] and any information related thereto, [***] and [***] generated from the [***] in sufficient detail so as to reasonably demonstrate whether [***] has been achieved in accordance with [***] and whether any [***] further development of a Product.
|
1.2.4. |
Delivery of the Phase 2 Dose-Ranging Trial Information Package. As promptly as practicable following Completion of the Phase 2 Dose-Ranging Trial for a Product (but no later than [***] calendar days following Completion of such study), Akcea will deliver to Novartis the Phase 2 Dose-Ranging Trial Information Package. During the period beginning on the date Novartis receives such Phase 2 Dose-Ranging Trial Information Package until the Option Deadline (which period will in no event be less than [***] calendar days from the date Novartis receives such Phase 2 Dose-Ranging Trial Information Package), Novartis shall have the right to request from Akcea such additional information relating to the Phase 2 Dose-Ranging Trial then in the possession of or readily available to Akcea as Novartis may reasonably require in order to make a scientific, legal, regulatory and business evaluation of the Development and Commercialization potential of the applicable Product, and Akcea shall promptly (but no later than [***] calendar days after Akcea’s receipt of such request) provide or make available to Novartis any such additional information.
|
1.2.5. |
End of Phase 2b Meeting. Prior to, but no later than [***] months before the anticipated Completion of the Phase 2 Dose-Ranging Trial for a Product, in preparation for the End of Phase 2b Meeting, Novartis will deliver to Akcea drafts of all documents Novartis reasonably determines are necessary for the End of Phase 2b Meeting, including, at a minimum, a draft [***] for the CVOT and the Cardiovascular Risk Reduction (or “CVRR”) Indication Novartis will pursue for such Product, draft [***] and [***]. The Parties will update such draft documents after the primary endpoint and key safety data generated based on the database lock under the statistical analysis plan for such study are available and, within [***] ([***]) calendar days after Completion of the Phase 2 Dose-Ranging Trial for such Product, will promptly convene a special meeting of the CSC for the CSC to mutually agree on the final contents of all such documents prior to Akcea requesting an End of Phase 2b Meeting. If the CSC cannot agree on final versions of such documents within such [***] ([***]) calendar day period, then (i) [***] will have the final decision-making authority regarding the final contents of all such documents to the extent such contents relate to [***] or its Affiliate’s[***], or any information pertaining to[***] or its Affiliate’s other [***] (collectively, “[***] Information”), and (ii) [***] will have the final decision-making authority regarding the final contents of all such documents to the extent such contents do not relate to [***] Information, and each Party will make such final decisions within [***] calendar days. Once such documents are finalized, Akcea will use Commercially Reasonable Efforts to schedule and conduct an End of Phase 2b Meeting. Akcea will invite Novartis to participate in any key internal Akcea meetings Akcea holds to prepare and discuss strategy for the first End of Phase 2b Meeting for such Product. The Parties will mutually agree on a plan and strategy (including key messages) for the conduct of the End of Phase 2b Meeting that reflects Akcea’s role as IND-holder for such Product and facilitates Novartis’ active participation as the Party potentially responsible for conducting the CVOT and IND and MAA/NDA-Holder in the event of Option exercise. Akcea will invite Novartis representatives to attend the End of Phase 2b Meeting and such representatives will participate in such meeting under the direction of Akcea.
|
1.2.6. |
Other Regulatory Interactions before Option Exercise. Any interactions Akcea has or plans to have with a Regulatory Authority for a Product before Option Exercise (other than the End of Phase 2b Meeting under Section 1.2.5), including any meetings, correspondence and submissions, shall be the sole responsibility of Akcea. Subject to Section 2.1.3(a), Akcea shall present to the CSC for the CSC’s review and comment, Akcea’s material planned interactions and material submissions to Regulatory Authorities in Major Markets in accordance with the principles set forth in ARTICLE 2.
|
1.2.7. |
Disclosure of Results. Akcea will promptly disclose to Novartis through the CSC the results of all work performed by Akcea under the Pre-Option Development Plan (including activities under Schedule 1.3.2) in a reasonable manner as such results are obtained. Akcea will provide reports and analyses at each CSC meeting detailing the current status of each Product under the Pre-Option Development Plan together with a summary of the data generated by Akcea under such plan. Furthermore, during the Option Period, Akcea shall promptly notify Novartis of, and promptly provide to Novartis, all data and/or information in the possession of or readily available to Akcea relating to a Product that Akcea generates before the end of the Option Period that would be relevant for Novartis’ decision concerning the exercise of the Option, as well as any such data and information specifically requested by Novartis during the Option Period.
|
1.3. |
Manufacturing and Supply.
|
1.3.1. |
Manufacturing and Supply during the Option Period.
|
(a) |
Akcea Activities. [***], Akcea is responsible for supplying API sufficient to support the (i) [***], (ii) the [***] and [***], and (iii) the [***] activities for each Product, in each case as set forth in the Pre-Option Development Plan.
|
(b) |
Pre-Option Novartis Activities. In support of the Pre-Option Novartis Activities, [***], Akcea will supply or cause to be supplied to Novartis during the Option Period, API in the quantities, at the [***], and on such other terms and conditions as set forth on Schedule 1.3.1. In addition, at Novartis’ reasonable written request [***] calendar days in advance of [***], Akcea shall [***] to allow Novartis to conduct, [***], an audit of Akcea’s or its Affiliates’ (including CMO) manufacturing facility where such API was made, [***] for Novartis to complete its vendor qualification activities for such API.
|
1.3.2. |
Product Manufacturing Transition Strategy.
|
(a) |
Manufacturing Transition Strategy, Plan and Activities. Within [***] days from the Effective Date, the Parties will discuss and mutually agree through the CSC, on an initial manufacturing technology transition strategy to transition API and Finished Drug Product Manufacturing for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx to [***] as the case may be.
|
(b) |
Within [***] calendar days from the Effective Date, Akcea shall deliver the first quantity of API in accordance with Schedule 1.3.1.
|
(c) |
Prior to Option Exercise, through the CSC, the Parties will agree on a final manufacturing technology transition plan, and, upon Novartis’ notification to Akcea (such notice, the “Manufacturing Tech Transfer Notice”) that Novartis is ready to commence the manufacturing technology transfer under such plan, Akcea will, at a mutually agreed date and time as soon as practicable after such notice, transfer [***] the Akcea Manufacturing and Analytical Know-How necessary to manufacture API and Finished Drug Product Manufacturing for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, including relevant analytical methods, API batch records and the CMC sections of the IND for each Product.
|
(d) |
Novartis’ CMO Agreements. In furtherance of such plan, the Parties agree that Novartis may enter into contractual arrangements (each, a “CMO Agreement”) with one or more CMOs to manufacture clinical supplies for Phase 3 Trials and commercial supply of API and Finished Drug Product. Novartis will [***] executing such CMO Agreement. Novartis will have final decision-making authority with regard to the [***] and the [***]. In any such CMO Agreement, Novartis shall use Commercially Reasonable Efforts to include the [***] if this Agreement terminates with respect to a given Product or the Option for a given Product terminates or expires unexercised.
|
(e) |
Manufacturing License Grant to Novartis during the Option Period. Subject to the terms and conditions of this Agreement, Akcea hereby grants Novartis, a worldwide, non-exclusive, sublicensable (but only by Novartis to a Novartis Affiliate or a CMO), royalty-free license under the Licensed Technology solely to conduct during the Option Period the manufacturing and manufacturing transition activities contemplated by this Section 1.3.2 to manufacture API and Finished Drug Product for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx.
|
(f) |
Manufacturing Transition Activities Costs. Akcea’s technology transfer activities under this Section 1.3.2 will be [***] until the [***] calendar day after the date Akcea initiates the manufacturing technology transfer. Thereafter, any technology transfer activities Akcea agrees to conduct will be under a mutually agreed scope of work (such agreement not to be unreasonably withheld, delayed or conditioned) and, after the [***] under such scope of work, [***] for any such technology transfer activities conducted by Akcea and its Affiliates.
|
1.3.3. |
After Option Exercise.
|
(a) |
Within [***] calendar days after Option Exercise for a Product, Akcea will provide Novartis with an inventory of any API, Finished Drug Product and packaged Clinical Study material for such Product in Akcea’s possession (together with the price Akcea was charged by Ionis ([***] for such material). If, within [***] calendar days after Novartis’ receipt of such inventory list, Novartis delivers a written request to Akcea to purchase any such material, then Akcea will sell such material to Novartis [***] ([***]) for such material calculated [***]. Promptly after Akcea receives such order from Novartis, Akcea will ship such material to Novartis and Novartis will pay Akcea within [***] ([***]) calendar days after Novartis’ receipt of such material.
|
(b) |
If requested by Novartis and mutually agreed by Akcea (such agreement not to be unreasonably withheld, delayed or conditioned), after Option Exercise, Akcea shall continue to provide the manufacturing transition assistance with respect to any activities contemplated by Section 1.3.2 that were not completed during the Option Period. Novartis will compensate Akcea in accordance with Section 7.10 for Akcea’s and its Affiliates’ activities conducted under this Section 1.3.3(b).
|
(c) |
If, after Option Exercise, Novartis notifies Akcea that Novartis wishes to acquire additional API, the Parties will discuss in good faith and endeavor to mutually agree through the JDCC on the quantity and timelines for the supply of any such additional API on terms and conditions as set forth in Schedule 1.3.1. If required, the Parties shall negotiate in good faith the terms and conditions of a Supply and Quality Agreement.
|
2.1. |
Development Management.
|
2.1.1. |
Collaboration Steering Committee during the Option Period. The Parties will establish a Collaboration Steering Committee (“CSC”) initially comprising the individuals from each Party as set forth on Schedule 2.1.1 with the powers, roles and responsibilities set forth in this Section 2.1.1 to provide strategic oversight for the Collaboration during the Option Period. The CSC will consist of three representatives appointed by Akcea and three representatives appointed by Novartis (which may include representative(s) from each Party’s Affiliates), and each CSC member will be a senior executive of such Party (or its Affiliate). The CSC will be chaired by Akcea. The CSC will determine the CSC operating procedures at its first meeting, including the CSC’s policies for replacing CSC members, policies for participation by additional representatives or consultants invited to attend CSC meetings, and the location of meetings, which will be codified in the written minutes of the first CSC meeting. Each Party will be responsible for the costs and expenses of its own employees or consultants attending CSC meetings.
|
(a) |
Role of the CSC. Without limiting any of the foregoing, subject to Section 2.1.3, the CSC will perform the following functions, some or all of which may be addressed directly at any given CSC meeting:
|
(i) |
approve material amendments to the Pre-Option Development Plan, including approving any additional costs associated with any approved changes to the Akcea Activities;
|
(ii) |
review the Phase 2 Dose-Ranging Trial protocol;
|
(iii) |
discuss any additional activities Novartis wishes Akcea to conduct under the Pre-Option Development Plan as contemplated by Section 1.2.1;
|
(iv) |
mutually agree on the final contents of all documents for the End of Phase 2b Meeting as contemplated by Section 1.2.5;
|
(v) |
review Akcea’s material planned interactions and material submissions to Regulatory Authorities in Major Markets as contemplated by Section 1.2.6;
|
(vi) |
review reports and analyses provided by Akcea detailing the current status of each Product under the Pre-Option Development Plan (including any summary of the data generated by Akcea under such plan) as contemplated by Section 1.2.7;
|
(vii) |
review updates provided by Novartis on the Pre-Option Novartis Activities (including a summary of relevant data or other information generated by Novartis from conducting such activities) as contemplated by Section 1.2.7;
|
(viii) |
discuss and mutually agree on a manufacturing technology transition strategy to transition API and Finished Drug Product Manufacturing for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx to Novartis’ own manufacturing site or to Third Party CMOs as the case may be, as contemplated by Section 1.3.2;
|
(ix) |
review progress updates of the Parties’ activities under such manufacturing technology transfer plan as contemplated by Section 1.3.2(b);
|
(x) |
assist with and participate in the resolution of pre-Option Exercise disputes that may arise during the Option Period; and
|
(xi) |
such other review and advisory responsibilities as may be assigned to the CSC by the Parties pursuant to this Agreement.
|
(b) |
Obligation to Participate in the CSC. Akcea’s obligation to participate in the CSC will terminate upon Novartis’ exercise (or expiration) of the Option for the last Product.
|
2.1.2. |
Joint Development and Commercialization Committee After Option Exercise. Within [***] ([***]) calendar days after the first Option Exercise for a Product, the Parties will establish a joint development and commercialization committee (“JDCC”) to supervise the activities under the Strategic Plan related to such Product. The JDCC will consist of three representatives appointed by Akcea and three representatives appointed by Novartis (which may include representative(s) from each Party’s Affiliates). Each JDCC member will be a senior clinical development or commercial leader, and at least one of each Party’s members will have operational responsibility for such Party’s respective activities under the Strategic Plan. The JDCC shall be chaired by Novartis. The chair will be responsible for overseeing the activities of the JDCC consistent with the responsibilities set forth below in this Section 2.1.2. The JDCC will determine its operating procedures at its first meeting, including the JDCC’s policies for replacement of JDCC members, policies for participation by additional representatives or consultants invited to attend JDCC meetings, and the location of meetings, which will be codified in the written minutes of the first JDCC meeting. Each Party will be responsible for the costs and expenses of its own employees or consultants attending JDCC meetings.
|
(a) |
Role of the JDCC. Without limiting any of the foregoing, subject to Section 2.1.3, the JDCC will perform the following functions, some or all of which may be addressed directly at any given JDCC meeting:
|
(i) |
Supervise the activities under the Strategic Plan, including reviewing updates to the key elements of the planning and strategy to support Development, Manufacturing, Regulatory Approvals and Commercialization;
|
(ii) |
establish teams, committees and working groups to oversee and manage activities under the Strategic Plan;
|
(iii) |
receive updates from Novartis regarding any CMO Agreements and strategic sublicenses granted by Novartis to Third Parties in Major Markets as contemplated by Section 5.2.1;
|
(iv) |
if regulatory or Development issues arise that are outside of Novartis’ reasonable control that impede achievement of any Specific Performance Milestone Event on the stated timeline, discuss in good faith and revise the date by which the applicable Specific Performance Milestone Event will be or can be achieved as contemplated by Section 6.4.2;
|
(v) |
assisting with and participating in the resolution of disputes as contemplated in Section 13.1; and
|
(vi) |
such other review and advisory responsibilities as may be assigned to the JDCC by the Parties pursuant to this Agreement.
|
2.1.3. |
Decision Making.
|
(a) |
CSC Decision Making – During the Option Period. Each Party will give due consideration to, and consider in good faith, the recommendations and advice of the CSC regarding the conduct of the Akcea Activities and the Pre-Option Novartis Activities. The CSC will endeavor to reach consensus on all decisions to be made by the CSC, however, if the CSC cannot unanimously agree on a matter to be decided by the CSC then (i) Akcea will have the final decision-making authority regarding the [***] and (ii) Novartis will have the final decision-making authority regarding the [***] and the [***]; provided, however, that such decision-making authority does not permit Novartis to [***].
|
(b) |
JDCC Decision Making – After Option Exercise. Each Party will give due consideration to, and consider in good faith, the recommendations and advice of the JDCC regarding any matters to be considered by the JDCC. The JDCC will endeavor to reach consensus on all decisions to be made by the JDCC, however, if the JDCC cannot unanimously agree on a matter to be decided by the JDCC then Novartis will have the final decision-making authority regarding any such decisions to be made by the JDCC; provided, however, that such decision-making authority does not permit Novartis to [***].
|
2.1.4. |
Obligation to Participate in the JDCC. Akcea’s obligation to participate in the JDCC will terminate upon Novartis’ exercise (or expiration) of the Option for the last Product. Thereafter, Akcea will have the right, but not the obligation, to participate on the JDCC upon Akcea’s request provided that, if requested in writing by Novartis, Akcea shall not unreasonably refuse to participate in JDCC meeting(s).
|
2.2. |
Alliance Managers. Each Party shall appoint a representative to act as its alliance manager under this Agreement (each, an “Alliance Manager”). Each Alliance Manager will be responsible for supporting the CSC and the JDCC, and performing the activities listed in Schedule 2.2.
|
2.3. |
Collaboration Costs.
|
2.3.1. |
Novartis and Akcea will [***] the costs associated with the [***] and [***] under the Pre-Option Development Plan, which [***] Akcea estimates will cost US$[***] for [***]. Novartis will pay Akcea US$[***] for such [***] and [***] as follows:
|
(i) |
US$[***] payment upon [***] for the [***] and [***] (expected in [***] but no earlier than the [***]);
|
(ii) |
US$[***] payment upon the [***] in each of the [***] and [***] (expected in [***]); and
|
(iii) |
US$[***] payment upon the later of (x) [***] and [***], and (y) [***],
|
2.3.2. |
Except as otherwise expressly provided in this Agreement, Akcea will be responsible for all costs associated with the Akcea Activities under the Pre-Option Development Plan and the activities Akcea agrees to conduct under ARTICLE 1, and Novartis will be responsible for all costs associated with any Pre-Option Novartis Activities and the activities Novartis agreed to conduct under ARTICLE 1.
|
2.3.3. |
If a Regulatory Authority requires any changes to the Akcea Activities during the Option Period, then the Parties will discuss such changes in good faith through the CSC. If the CSC cannot mutually agree on whether to implement such a change to the Akcea Activities, then Akcea will have the final decision-making authority regarding [***] and each Party will only be responsible for paying the additional cost of such changes to the extent [***]. If Novartis requests any changes to the Akcea Activities that are not required by a Regulatory Authority and Akcea agrees (through the CSC) to implement such changes, then Novartis will pay Akcea for the additional cost in accordance with Section 7.10 and Akcea and Novartis will update Appendix 2 with any such revised activities.
|
3.1. |
Option Grants. Subject to the terms and conditions of this Agreement, on a Product-by-Product basis, Akcea hereby grants to Novartis an exclusive option to obtain the license set forth in Section 5.1.1 or Section 5.1.2 (as applicable) with respect to such Product (each, an “Option”).
|
3.2. |
Option Fee. In consideration of the Options granted to Novartis hereunder, Novartis shall pay to Akcea upon execution by the Parties of this Agreement a one-time payment of seventy-five million dollars (US$75,000,000) (the “Upfront Option Fee”). Such payment shall be payable within [***] ([***]) Business Days after receipt by Novartis of an original invoice from Akcea for such amount and in the form attached hereto as Exhibit X, which original invoice shall be issued no earlier than the Effective Date.
|
3.3. |
Option Exercise.
|
3.3.1. |
Subject to Section 3.4 below, on a Product-by-Product basis, each Option for a Product will be exercisable by Novartis at its sole discretion on or before (each an “Option Deadline”) 5:00 pm (Eastern Time) on the 60th calendar day after the later of:
|
(a) |
Novartis’ receipt of the Phase 2 Dose-Ranging Trial Data Package for such Product; and
|
(b) |
the End of Phase 2b Meeting for such Product.
|
3.3.2. |
If, by the Option Deadline, Novartis (i) notifies Akcea in writing that it wishes to exercise the applicable Option, and (ii) undertakes to pay Akcea the license fee set forth in Section 7.1 or Section 7.2 (as applicable), Akcea will grant to Novartis the license as set forth in Section 5.1.1 or Section 5.1.2 (as applicable) (on a Product-by-Product basis, an “Option Exercise”). Such payment set forth in Section 7.1 or Section 7.2 (as applicable) is due within [***] ([***]) Business Days after receipt by Novartis of an original invoice from Akcea for such amount and in the form attached hereto as Exhibit X, which invoice shall be issued no earlier than the date on which Novartis notifies Akcea in writing that it wishes to exercise the applicable Option. If, by the Option Deadline, Novartis has not both (y) provided Akcea a written notice stating that Novartis is exercising its Option, and (z) undertaken to pay Akcea the license fee in accordance with Section 7.1 or Section 7.2 (as applicable), then (A) Novartis’ Option for the applicable Product will expire, (B) Novartis will promptly deliver to Akcea all data, results and information (including Novartis’ Confidential Information for as long as pertaining to the Product and any regulatory documentation (including drafts)) related to the Pre-Option Novartis Activities for such Product in the possession of Novartis and its contractors, and (C) this Agreement will be deemed terminated under Section 11.2.1 with respect to such Product and the provisions of Section 11.3 will apply.
|
3.4. |
HSR Filing. If Novartis notifies Akcea within [***] ([***]) calendar days following the applicable End of Phase 2b Meeting for the Product that an HSR Filing is required for Novartis to receive the license under Section 5.1.1 or Section 5.1.2 (as applicable), each of Novartis and Akcea will, within [***] ([***]) calendar days after such notice from Novartis (or such later time as may be agreed to in writing by the Parties), file with the United States Federal Trade Commission (“FTC”) and the Antitrust Division of the United States Department of Justice (“DOJ”), any HSR Filing required with respect to the transactions contemplated hereby, Novartis shall not exercise any Option under Section 3.3 until any applicable waiting period (and any extension thereof) under the HSR Act shall have expired or been terminated and the Option Deadline shall expire no sooner than [***] ([***]) calendar days after any waiting period (and any extensions thereof) under the HSR Act shall have expired or been terminated. The Parties will cooperate with one another to the extent necessary in the preparation of any such HSR Filing and each Party will request in their respective HSR Filing early termination of the waiting period under the HSR Act. Each Party will be responsible for its own costs and expenses associated with any HSR Filing.
|
3.5. |
HSR Clearance. In connection with obtaining such HSR Clearance from the FTC, the DOJ or any other governmental authority for an HSR Filing filed under Section 3.4, Akcea and Novartis will use their respective Commercially Reasonable Efforts to resolve as promptly as practicable any objections that may be asserted with respect to this Agreement or the transactions contemplated by this Agreement under any antitrust, competition or trade regulatory law.
|
3.6. |
Conditions to Novartis’ Obligations under this Agreement. Novartis’ obligation to complete the transactions contemplated in this Agreement is subject to the fulfillment or waiver of the following conditions:
|
3.6.1. |
[***]. From and after the Execution Date and until the Effective Date, there shall have occurred [***]; and
|
3.6.2. |
[***]. Akcea shall have duly executed and delivered to Novartis the [***].
|
3.7. |
Mutual Conditions to Each Party’s Obligations under this Agreement. The obligations of Novartis on the one hand, and Ionis and Akcea (as applicable) on the other hand, to consummate the transactions contemplated under this Agreement is subject to the fulfillment or waiver of the following conditions:
|
3.7.1. |
HSR Act Qualification; Initial Stock Purchase. The filings required under the HSR Act in connection with the Stock Purchase Agreement shall have been made and the required waiting period shall have expired or been terminated and the Initial Closing (as defined in the Stock Purchase Agreement) under the Stock Purchase Agreement shall have occurred; and
|
3.7.2. |
Absence of Litigation. No proceeding challenging this Agreement or the transactions contemplated hereby, or seeking to prohibit, alter, prevent or delay the occurrence of the Effective Date or the Initial Closing (as defined in the Stock Purchase Agreement), will have been instituted or be pending before any court, arbitrator, governmental body, agency or official.
|
4.1. |
Exclusivity Covenants. The Parties agree as set forth below to certain exclusivity covenants with respect to each Product and Exclusive Target.
|
4.1.1. |
Akcea’s Exclusivity Covenants. On a Product-by-Product and Exclusive Target-by-Exclusive Target basis, Akcea and its Affiliates will not (independently or with a Third Party):
|
(a) |
During the Option Period. During the Option Period, grant any license or other right to a Third Party that would diminish Novartis’ rights under Section 3.1 or Section 5.1.1 or Section 5.1.2 (as applicable) or otherwise under this Agreement.
|
(b) |
After the Option Period. After the Option Period, [***], for a period of [***] months after the [***] of such Product [***].
|
4.1.2. |
Novartis’ Exclusivity Covenants. On a Product-by-Product and Exclusive Target-by-Exclusive Target basis, Novartis and its Affiliates will not (independently or with a Third Party):
|
(a) |
During the Option Period. During the Option Period, [***]; and
|
(b) |
After the Option Period. After the Option Period, [***], for a period of [***] months after the [***] of such Product [***].
|
4.2. |
Limitations and Exceptions to the Parties’ Exclusivity Covenants. Notwithstanding anything to the contrary in Section 4.1.1, the Parties and their Affiliates may perform the following activities:
|
(i) |
With regard to the Parties and their Affiliates:
|
(1) |
all activities permitted or contemplated under this Agreement, including those contained in Section 4.3 and Section 6.5; and
|
(2) |
the practice of any Jointly-Owned Program Technology, including granting a license to a Third Party under any Jointly-Owned Program Technology.
|
(ii) |
With regard to Akcea and its Affiliates:
|
(1) |
Any activities pursuant to the Prior Agreements;
|
(2) |
The granting of, or performance of obligations under, Permitted Licenses; and
|
(3) |
The research, Development, Manufacture or Commercialization of Volanesorsen on its own or with a Third Party.
|
4.3. |
Competitive Oligo Transactions. The Parties acknowledge that after the Effective Date a Party or its Affiliate may acquire (including through any merger or business combination) or be acquired by a Third Party. In the case of such a transaction where such Third Party is Developing or Commercializing a Competitive Oligo that would violate Section 4.1.1 or 4.1.2, notwithstanding anything to the contrary in this Agreement:
|
4.3.1. |
Akcea or its Affiliate Acquires or is Acquired by a Third Party. On a Product-by-Product basis and after Novartis exercises its Option for such Product, for a period of [***] months after the [***] of such Product for the same Exclusive Target as such Competitive Oligo, if Akcea or its Affiliate acquires or is acquired by a Third Party with a Competitive Oligo, then within [***] months after such acquisition, Akcea (or its Affiliate) and such Third Party must either (i) [***] such Competitive Oligo, or (ii) not [***] (or, if such Competitive Oligo is already being [***], will stop [***] within [***] months) such Competitive Oligo. Any such transaction that occurs during the Option Period is [***] until such time as Novartis exercises its Option for the applicable Product for the same Exclusive Target as such Competitive Oligo, at which time [***].
|
4.3.2. |
Novartis or its Affiliate Acquires or is Acquired by a Third Party. On a Product-by-Product basis and after Novartis exercises its Option for such Product, for a period of [***] months after the [***] of such Product for the same Exclusive Target as such Competitive Oligo, if Novartis or its Affiliate acquires or is acquired by a Third Party with a Competitive Oligo, then within [***] months after such acquisition, Novartis (or its Affiliate) and such Third Party must either (i) [***] such Competitive Oligo, or (ii) not [***] (or, if such Competitive Oligo is already being [***], will stop [***] within [***] months) such Competitive Oligo. Any such transaction that occurs during the Option Period is [***] until such time as Novartis exercises its Option for the applicable Product for the same Exclusive Target as such Competitive Oligo, at which time [***].
|
4.4. |
Effect of Exclusivity on Indications. Akcea and Novartis are subject to certain restrictive covenants under Section 4.1.1 or Section 4.1.2; however, the Parties acknowledge and agree that each Party (on its own or with a Third Party) may continue to research, Develop and Commercialize any therapeutic compound that is designed to directly modulate a gene that is not an Exclusive Target for any Indication, even if such therapeutic compound is designed to treat the same disease or condition as a Product.
|
5.1. |
License Grants to Novartis.
|
5.1.1. |
AKCEA-APO(a)-LRx Development, Manufacture and Commercialization License. Subject to the terms and conditions of this Agreement, upon Novartis’ exercise of the Option for AKCEA-APO(a)-LRx in accordance with ARTICLE 3 and Novartis’ payment of the license fee under Section 7.1, Akcea grants to Novartis a worldwide, exclusive, royalty-bearing, sublicensable (in accordance with Section 5.2) license under the Licensed Technology to Research, Develop, Manufacture, have Manufactured and Commercialize AKCEA-APO(a)-LRx.
|
5.1.2. |
AKCEA-APOCIII-LRx Development, Manufacture and Commercialization License. Subject to the terms and conditions of this Agreement, upon Novartis’ exercise of the Option for AKCEA-APOCIII-LRx in accordance with ARTICLE 3 and Novartis’ payment of the license fee under Section 7.2, Akcea grants to Novartis a worldwide, exclusive, royalty-bearing, sublicensable (in accordance with Section 5.2) license under the Licensed Technology to Research, Develop, Manufacture, have Manufactured and Commercialize AKCEA-APOCIII-LRx.
|
5.2. |
Sublicense Rights. Novartis will have the right to grant sublicenses under the licenses granted to Novartis in Section 5.1 as expressly permitted by this Section 5.2.
|
5.2.1. |
Right to Grant Sublicenses. Novartis acknowledges that the licenses under Section 5.1 are personal to Novartis. Notwithstanding anything to the contrary, Novartis will have the right to grant sublicenses under the licenses granted under Section 5.1.1 and Section 5.1.2 above:
|
(i) |
under the Licensed Technology to an Affiliate of Novartis to Develop, Manufacture, have Manufactured and Commercialize or have Commercialized a Product; or
|
(ii) |
under the Licensed Technology to a Third Party contracted by Novartis or its Affiliate to further Develop and Commercialize a Product if any such arrangement between Novartis and such [***] is [***] the license (and collaboration) agreements Novartis enters into for [***]; or
|
(iii) |
under the Licensed Technology solely to a Third Party (including a [***]) with [***] (which [***], if required, will not be unreasonably withheld, conditioned or delayed) under the Akcea Manufacturing and Analytical Patents and Akcea Manufacturing and Analytical Know-How, in each case solely to Manufacture API or Products in a manufacturing facility owned or operated by such Third Party; or
|
(iv) |
in all other cases with Akcea’s prior written consent (which consent will not be unreasonably withheld, conditioned or delayed), under the Licensed Technology to a Third Party solely to further Manufacture, Develop and Commercialize a Product;
|
5.2.2. |
Enforcement of Sublicense Agreements. If, within [***] ([***]) calendar days after first learning of a material breach of the terms of any such sublicense agreement, Novartis does not take any action to enforce the sublicense terms of a sublicense granted pursuant to this Section 5.2, which failure could cause a material adverse effect on Akcea, Novartis hereby grants Akcea the right to enforce such sublicense terms on Novartis’ behalf and will cooperate with and support Akcea (which cooperation will be at Novartis’ sole expense and will include, Novartis joining any action before a court or administrative body filed by Akcea against such Sublicensee if and to the extent necessary for Akcea to have legal standing before such court or administrative body) in connection with enforcing such terms.
|
5.2.3. |
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 Akcea with respect to the rights sublicensed to the Sublicensee by Novartis; so long as (i) 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 Novartis, and (ii) such Sublicensee agrees to pay directly to Akcea such Sublicensee’s payments under this Agreement to the extent applicable to the rights sublicensed to it by Novartis. Upon Akcea’s written request after such termination of this Agreement, Novartis will use Commercially Reasonable Efforts to deliver to Akcea within [***] calendar days a copy of any such sublicense with such Sublicensee (provided that Novartis may redact any information in such sublicense that does not relate to the Product or Products).
|
5.3. |
Consequence of Natural Expiration of this Agreement. If this Agreement naturally expires in accordance with Section 11.1, then with respect to any Product that is the subject of such expiration for which Novartis has a license under Section 5.1 at such time, Akcea grants to Novartis a perpetual, non-exclusive, worldwide, royalty-free license under [***] and the [***] to Research, Develop, Manufacture, have Manufactured and Commercialize such Product.
|
5.4. |
No Implied Licenses. All rights in and to Licensed Technology not expressly licensed to Novartis under this Agreement are hereby retained by Akcea and its Affiliates. All rights in and to Novartis Technology not expressly licensed to Akcea under this Agreement, are hereby retained by Novartis and 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.
|
5.5. |
License Conditions; Limitations. Subject to Section 7.9, the licenses granted under Section 5.1.1 and Section 5.1.2 and the sublicense rights under Section 5.2 are subject to and limited by (i) the Prior Agreements, (ii) the Akcea In-License Agreements, in each case to the extent such agreements are disclosed to Novartis prior to the date Novartis exercises the applicable Option with respect to AKCEA-APO(a)-LRx or AKCEA-APOCIII-LRx (as applicable), and (iii) Akcea’s Co-Commercialization right to be agreed upon as contemplated in Section 6.5.
|
5.6. |
Trademark and Domain Names.
|
5.6.1. |
Novartis will be solely responsible for selecting, registering and maintaining the Trademarks used to Commercialize Products. Novartis will own and control the Trademarks and pay all relevant costs related thereto.
|
5.6.2. |
So long as Novartis Commercializes a Product under this Agreement, only Novartis will be authorized to initiate at its own discretion legal proceedings against any infringement or threatened infringement of the Trademarks for such Product.
|
5.6.3. |
Novartis will be responsible for registering, hosting, maintaining and defending 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, and subject to the terms of Section 11.3.4 for any Transition Services, Novartis may 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.
|
5.7. |
Technology and Information Transfer. On a Product-by-Product basis, within [***] ([***]) calendar days after Akcea grants Novartis the license for such Product under Section 5.1, Akcea will deliver to Novartis the following Licensed Know-How pursuant to a technology transfer plan to be mutually agreed by Akcea and Novartis:
|
5.7.1. |
Licensed Know-How - Generally. Copies of Licensed Know-How (other than the Akcea Manufacturing and Analytical Know-How) in Akcea’s possession that has not previously been provided hereunder, for use solely in accordance with the licenses granted under Section 5.1.1 or Section 5.1.2, as the case may be, to Novartis, which includes transferring to Novartis the applicable IND and delivering copies of information included in such IND and the data from the Phase 1 Trials and Phase 2 Trials conducted by Akcea, together with all regulatory documentation.
|
5.7.2. |
Akcea Manufacturing and Analytical Know-How. Solely for use by Novartis, its Affiliates or a Third Party as permitted under Section 5.2, copies of the Akcea Manufacturing and Analytical Know-How relating to Products in Akcea’s possession that has not previously been provided hereunder, which is necessary for Novartis, its Affiliates or a Third Party to exercise the Manufacturing rights granted under Section 5.1.1 or Section 5.1.2, as the case may be.
|
5.7.3. |
Akcea Assistance. If requested by Novartis, Akcea will provide Novartis with a timely and reasonable level of assistance in connection with such Licensed Know-How under Section 5.7.1 and Section 5.7.2. Novartis will compensate Akcea in accordance with Section 7.10 for Akcea’s and its Affiliates’ activities conducted under Section 5.7.1 and Section 5.7.2.
|
5.8. |
Cross-Licenses under Program Technology.
|
5.8.1. |
Enabling Patent License from Novartis to Akcea. Subject to the terms and conditions of this Agreement (including Akcea’s exclusivity obligations under Section 4.1.1 and without limiting the license(s) granted to Novartis under Section 5.1), Novartis hereby grants Akcea a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicensable license under any Novartis Program Technology (excluding any Product-Specific Patents) to research, Develop, manufacture, have manufactured and Commercialize products that include an [***] as an active pharmaceutical ingredient (other than a Product that is being Developed or Commercialized by Novartis, its Affiliates or Sublicensees under this Agreement).
|
5.8.2. |
Enabling Patent License from Akcea to Novartis. Subject to the terms and conditions of this Agreement (including Novartis’ exclusivity obligations under Section 4.1.2 and without limiting the license(s) granted to Novartis under Section 5.1), Akcea hereby grants Novartis a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicensable license under any Akcea Program Technology (excluding any Product-Specific Patents) to research, Develop, manufacture, have manufactured and Commercialize products that do not include an Oligonucleotide as an active pharmaceutical ingredient; provided, however, if Novartis delivers a written request to Akcea for the right to expand the license under this Section 5.8.2 to include the right to research, Develop, manufacture, have manufactured and Commercialize products that include [***] as an active pharmaceutical ingredient for a particular [***], Akcea will not unreasonably refuse to grant such a request and, if such request is refused by Akcea, Akcea will deliver to Novartis [***] confirming that [***] such request.
|
6.1. |
The Strategic Plan for Licensed Product(s). Subject to and in accordance with the terms of this Agreement, for each Product licensed to Novartis under Section 5.1, Novartis will use Commercially Reasonable Efforts to Develop and Commercialize such Product in accordance with a global strategic development and commercialization plan to be defined by Novartis (the “Strategic Plan”).
|
(i) |
The objectives of the Strategic Plan and estimated timelines;
|
(ii) |
The estimated timing and launch sequence per Indication for each Product;
|
(iii) |
The key global Clinical Studies (including the CVOT Novartis will conduct), including estimated timelines for the key milestones associated with such studies, the primary and secondary endpoints, approximate size and duration of such studies, and patient populations, in reasonable detail as determined by Novartis, that Novartis will conduct for each Product; and
|
(iv) |
Key elements of the planning and strategy to support Development, Manufacturing, Regulatory Approvals and Commercialization (including [***] and [***]).
|
6.2. |
Initial Strategic Plan. Novartis will deliver an initial draft Strategic Plan for each Product to Akcea within [***] ([***]) calendar days after the date Novartis licenses a Product under Section 5.1. [***] It is agreed that the Initial Strategic Plan will primarily cover details pertaining to the CVOT Novartis will conduct for such Product.
|
6.3. |
Updating the Strategic Plan.
|
6.3.1. |
Novartis will review and update the Strategic Plan every [***] months and the Parties will meet or hold a telephone conference to review such updates. Novartis will be 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, among other things:
|
(i) |
Material updates to the Strategic Plan;
|
(ii) |
Relevant new data and results from ongoing or completed Clinical Studies and non-clinical studies;
|
(iii) |
Technology advancements (including platform technology) potentially relevant to the Products;
|
(iv) |
Key elements of the manufacturing planning and strategy to support Development, Regulatory Approvals and Commercialization for the Products; and
|
(v) |
The evolving competitive landscape (including [***],[***] and [***]) and its potential impact on the Products and strategy.
|
6.3.2. |
Material Changes to the Strategic Plan. Novartis is responsible for preparing each updated Strategic Plan and the agenda for each meeting or telephone conference of the Parties to discuss such update, and will submit such updated plan and agenda to Akcea at least [***] ([***]) calendar days prior to the date of such next scheduled meeting or telephone conference, as applicable. The Parties’ goal is to mutually agree on changes to the Strategic Plan materially changing the CVRR Indication, the details or timing of the CVOT for a Product (each, a “Material Change”). If, however, after good faith discussions, the Parties cannot mutually agree on a Material Change to the Strategic Plan, then Novartis will have final decision-making authority regarding [***].
|
6.3.3. |
Ad Hoc Meetings. At either Party’s reasonable request, the Parties may meet or hold a telephone conference 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.
|
6.4. |
Commercialization and Novartis Diligence.
|
6.4.1. |
Generally. Novartis will use Commercially Reasonable Efforts to Develop the Products, including pursuing the CVRR for each Product and conducting the activities set forth in the Strategic Plan in accordance with the timelines specified therein. Subject to JDCC governance and Section 6.5, Novartis will be solely responsible for all aspects of Commercialization of such Products, including planning and implementation, distribution, booking of sales, pricing and reimbursement. Novartis shall itself, or through its Affiliates or Sublicensees, use Commercially Reasonable Efforts to Commercialize each Product [***]. Notwithstanding the foregoing, Novartis’ application of Commercially Reasonable Efforts shall not require Novartis to Commercialize a Product in any country or territory in which Novartis reasonably determines it is not commercially reasonable to do so for such Product. Subject to compliance with the foregoing, Novartis will have sole discretion and the final decision-making authority regarding the [***] under the Strategic Plan so long as such decisions are consistent with Novartis’ obligations under Section 6.4.2.
|
6.4.2. |
Specific Performance Milestone Events. Novartis will achieve the specific performance milestone events set forth in Schedule 6.4.2 (“Specific Performance Milestone Events”); provided, however, if [***] issues arise that are outside of Novartis’ reasonable control that impede achievement of any such Specific Performance Milestone Event on the stated timeline, the Parties will meet and discuss in good faith through the JDCC and revise the date by which the applicable Specific Performance Milestone Event will be or can be achieved.
|
6.5. |
Akcea’s Right to Co-Commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Akcea has the right to Co-Commercialize each Product with Novartis in selected markets with the terms and conditions of such Co-Commercialization to be mutually agreed between Akcea and Novartis. If, on or before the [***] calendar day after [***] or [***] for a particular Product, Akcea delivers written notice to Novartis indicating that Akcea intends to Co-Commercialize such Product with Novartis, then the Parties shall negotiate in good faith on the terms and conditions upon which Akcea will Co-Commercialize the Product.
|
6.6. |
Regulatory Interactions.
|
6.6.1. |
Regulatory Interactions. In accordance with the Strategic Plan, after Option Exercise, Novartis will (i) determine the regulatory plans and strategies for the Products, (ii) (either itself or through its Affiliates or sublicensees) make all Regulatory Filings with respect to the Products, and (iii) will be responsible for obtaining and maintaining Regulatory Approvals in the name of Novartis or its Affiliates or Sublicensees. Until Regulatory Approval of a Product, Novartis will provide Akcea with material correspondence with and material submissions (NDA, MAA, briefing documents, priority review or breakthrough request) to any Regulatory Authority in each Major Market for such Product, sufficiently in advance of providing such correspondence or submission to the applicable Regulatory Authority to enable Akcea to provide comments on the contents thereof. In the event Akcea does not provide comments within [***] calendar days from receipt (or shorter notice as reasonably indicated by Novartis), it is agreed that Novartis shall be entitled to submit such submission or correspondence as the case may be. In addition, until Regulatory Approval of a Product, Novartis will notify, at JDCC meeting, Akcea of any planned significant meetings with a Regulatory Authority for a Product in a Major Market, and will, at Akcea’s request, consider in good faith inviting Akcea (or its Affiliate) to participate with one representative [***] under the direction of Novartis in any such meeting. For the avoidance of doubt, Akcea’s performance under this Section 6.6.1 shall be at no cost to Novartis.
|
6.6.2. |
Akcea Cooperation.
|
(a) |
At no cost to Novartis, on a Product-by-Product basis, within [***] ([***]) calendar days after Akcea grants Novartis the license for such Product under Section 5.1, Akcea will transfer the IND for such Product to Novartis together with all regulatory documentation (including pending drafts) related to such Product.
|
(b) |
Following such IND transfer under Section 6.6.2(a), if requested by Novartis and mutually agreed by Akcea (such agreement not to be unreasonably withheld, delayed or conditioned), Akcea shall cooperate with and provide reasonable assistance to Novartis in connection with filings or submission to any Regulatory Authority relating to the Products, including by executing any required documents, providing access to personnel and providing Novartis with copies of all reasonably required documentation. After the first [***] hours of Akcea’s time for any assistance under this Section 6.6.2(b), Novartis will compensate Akcea in accordance with Section 7.10 for Akcea’s and its Affiliates’ activities conducted under this Section 6.6.2(b). To the extent required to submit a regulatory filing or submission to a Regulatory Authority, Akcea shall grant or cause to be granted to Novartis and its Affiliates or Sublicensees cross-reference rights to any relevant drug master files and other filings submitted by Akcea or its Affiliates with any Regulatory Authority
|
6.6.3. |
Class Generic Claims; Investigator’s Brochure. To the extent Novartis intends to make any claims in a Product label or regulatory filing that are class generic to Oligonucleotides, Akcea’s or its Affiliate’s generation 2.0 or 2.5 chemistry platform(s), Conjugate Technology, or any other Akcea technology included in a Product, Novartis will provide such claims and regulatory filings to Akcea in advance and will [***] any proposals and comments made by Akcea (or its Affiliates). Novartis will provide Akcea updated versions of the investigator’s brochure when Development of the Products results in any substantive change to the safety or risk to the Products.
|
6.7. |
Compliance. 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.
|
6.8. |
Pharmacovigilance and Ionis Internal ASO Safety Database.
|
(a) |
On a Product-by-Product basis and within [***] ([***]) months after Option Exercise, the Parties shall agree upon and implement procedures for the mutual exchange of adverse events reports and safety information associated with the Products. Details of the operating procedures regarding such adverse events reports and safety information exchange shall be subject to a written pharmacovigilance agreement which shall be entered into within such [***] ([***]) month period.
|
(b) |
Akcea’s Affiliate, Ionis, maintains an internal database that includes information regarding the tolerability of its drug compounds, individually and as a class, including information discovered during non-clinical and clinical development (the “Ionis Internal ASO Safety Database”). In an effort to maximize understanding of the safety profile and pharmacokinetics of Akcea compounds, Novartis will cooperate in connection with populating the Ionis Internal ASO Safety Database. To the extent collected by Novartis and in the form in which Novartis stores such information for its own purposes, Novartis will provide Akcea with information concerning toxicology, pharmacokinetics, safety pharmacology study(ies) and adverse events related to Products licensed by Novartis under this Agreement within a reasonable period of time (but not later than [***] ([***]) calendar days after Novartis’ receipt of such information). In connection with any reported serious adverse event, Novartis will provide Akcea all serious adverse event reports within a reasonable time period of time but not later than [***] ([***]) calendar days after Novartis’ receipt of such information. In addition, with respect to Products, Novartis will provide Akcea with copies of Annual safety updates filed with each IND (e.g. DSURs or IND annual reports) and the safety sections of any final Clinical Study reports within [***] ([***]) calendar days following the date such information is filed, as applicable. Furthermore, Novartis will provide in a timely manner to Akcea supporting data that Novartis determines to be reasonably related to such safety information provided by Novartis under this Section 6.8(a) and answer in a timely manner any follow-up questions reasonably requested by Akcea or its Affiliates to the extent such data and answers are reasonably available to Novartis. All such information disclosed by Novartis to Akcea will be Novartis Confidential Information and Novartis acknowledges and agrees that Akcea will provide all such information to Ionis to enable Ionis to populate the Ionis Internal ASO Safety Database. In addition, so long as Akcea does not disclose the identity of a Product or Novartis’ identity, Akcea may disclose any such Novartis Confidential Information to (i) Akcea’s other partners pursuant to Section 6.8(c) below if such information is regarding class generic properties of ASOs, (ii) any Third Party (other than a Regulatory Authority) that contributes to the populating of the Ionis Internal ASO Safety Database, or (iii) a Regulatory Authority. Novartis will deliver all such information to Akcea for the Ionis Internal ASO Safety Database to Akcea Therapeutics, Inc., 55 Cambridge Parkway, Cambridge, MA 02142, Attention: Chief Medical Officer (or to such other address/contact designated in writing by Akcea). Novartis will also cause its Affiliates and Sublicensees to comply with this Section 6.8(b).
|
(c) |
From time to time, Akcea and Ionis utilize the information in the Ionis Internal ASO Safety Database to conduct analyses to keep Akcea, Ionis and their partners informed regarding class generic properties of ASOs, including with respect to safety. As such, if and when Akcea identifies safety or other related issues that may be relevant to a Product (including any potential class-related toxicity), Akcea will inform Novartis in a timely manner of such issues and, if requested allow Novartis to review such issues and conclusions and allow Novartis the opportunity to review and align on safety statement and health authority submissions in a timely manner before release.
|
(d) |
During the Agreement Term, Novartis may submit written requests to Akcea for Akcea to have queries run of the Ionis Internal ASO Safety Database relevant to Products licensed to Novartis under this Agreement, and Akcea will use Commercially Reasonable Efforts to promptly cause such queries to be run and deliver to Novartis the results of such queries. Any information disclosed between the Parties under this Section 6.8(d) will be treated as Confidential Information in accordance with ARTICLE 12 below.
|
7.1. |
License Fee for AKCEA-APO(a)-LRx. Upon Novartis’ written notice to Akcea stating that Novartis is exercising the Option for AKCEA-APO(a)-LRx in accordance with this Agreement, Novartis will pay to Akcea a license fee of US$150,000,000 within [***] ([***]) Business Days after receipt by Novartis of an original invoice from Akcea for such amount and in the form attached hereto as Exhibit X.
|
7.2. |
License Fee for AKCEA-APOCIII-LRx. Upon Novartis’ written notice to Akcea stating that Novartis is exercising the Option for AKCEA-APOCIII-LRx in accordance with this Agreement, Novartis will pay to Akcea a license fee of US$150,000,000 within [***] ([***]) Business Days after receipt by Novartis of an original invoice from Akcea for such amount and in the form attached hereto as Exhibit X.
|
7.3. |
Milestone Payments for Achievement of Development Milestone Events by AKCEA-APO(a)-LRx. Novartis will pay Akcea the milestone payments as set forth in Table 1 below when a development milestone event listed in Table 1 is first achieved by AKCEA-APO(a)-LRx:
|
Table 1
|
||
Development Milestone Event
|
Milestone Event Payment
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
7.4. |
Milestone Payments for Achievement of Development Milestone Events by AKCEA-APOCIII-LRx. Novartis will pay Akcea the milestone payments as set forth in Table 2 below when a development milestone event listed in Table 2 is first achieved by AKCEA-APOCIII-LRx:
|
Table 2
|
||
Development Milestone Event
|
Milestone Event Payment
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
|
[***]
|
US$[***]
|
7.5. |
Milestone Payments for First Achievement of Sales Milestone Events by AKCEA-APO(a)-LRx. Novartis will pay Akcea the sales milestone payments set forth in Table 3 below if a sales milestone event listed in Table 3 is achieved by AKCEA-APO(a)-LRx:
|
Table 3
|
||
Sales Milestone Event for AKCEA-APO(a)-LRx
|
Milestone Payment
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
7.6. |
Milestone Payments for First Achievement of Sales Milestone Events by AKCEA-APOCIII-LRx. Novartis will pay Akcea the sales milestone payments set forth in Table 4 below if a sales milestone event listed in Table 4 is achieved by AKCEA-APOCIII-LRx:
|
Table 4
|
||
Sales Milestone Event for AKCEA-APOCIII-LRx
|
Milestone Payment
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
|
US$[***] in Annual Net Sales
|
US$[***]
|
7.7. |
Limitations on Milestone Payments; Exceptions; Notice.
|
7.7.1. |
Each milestone payment set forth in Table 1, Table 2, Table 3 and Table 4 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.
|
7.7.2. |
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. For example, if Novartis proceeds directly to “[***]” without achieving the “[***],” then upon achieving the “[***]” milestone event, both the “[***]” and “[***]” milestone event payments are due.
|
7.7.3. |
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. For example, if Novartis achieves the “[***]” milestone event and the [***] ([***]) that was the subject of such milestone event contains one or more separate [***] that were also [***], then both the “[***]” and the “[***]” milestone event payments are due.
|
7.7.4. |
Each time a milestone event is achieved under this ARTICLE 7, Novartis will send Akcea a written notice thereof within [***] ([***]) calendar days following the date of achievement of such milestone event and the applicable milestone payment is due within [***] ([***]) calendar days after receipt by Novartis of an original invoice from Company for such amount and in the form attached hereto as Exhibit X.
|
7.7.5. |
Novartis and Akcea acknowledge and agree that nothing in this Agreement shall be construed as representing an estimate or projection of anticipated sales of any Product, and that the Milestones and Net Sales levels set forth above are only intended to define the Milestone Payment and royalty obligations to Akcea in the event such milestones or Net Sales level are achieved. Neither Akcea nor Novartis makes any representation or warranty, either express or implied, that it will be able to successfully Develop or Commercialize any Product or, if Commercialized, that any particular Net Sales of such Product will be achieved.
|
7.8. |
Royalty Payments.
|
7.8.1. |
Royalty. As partial consideration for the rights granted to Novartis hereunder, subject to the provisions of this Section 7.8.1 and Section 7.8.2, Novartis will pay to Akcea royalties on Annual worldwide Net Sales of Products sold by Novartis, its Affiliates or Sublicensees, on a country-by-country and Product-by-Product basis, in each case in the amounts as follows in Table 5 below (the “Novartis Royalty”):
|
Table 5
|
|||
Royalty
Tier
|
Annual Worldwide Net Sales of such Product
|
Royalty
Rate
|
|
1
|
For the portion of Annual Worldwide Net Sales < US$[***]
|
[***]%
|
|
2
|
For the portion of Annual Worldwide Net Sales > US$[***] but < US$[***]
|
[***]%
|
|
3
|
For the portion of Annual Worldwide Net Sales > $[***] but < US$[***]
|
[***]%
|
|
4
|
For the portion of Annual Worldwide Net Sales > US$[***]
|
[***]%
|
7.8.2. |
Application of Royalty Rates. All royalties set forth under Section 7.8.1 are subject to the provisions of this Section 7.8.2, and are payable as follows:
|
(a) |
Initial Payment Period. Novartis’ obligation to pay Akcea the Novartis Royalty 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 of such Product until the later of the date of expiration of (i) the last Valid Claim of the Orange Book Patents Covering such Product in the country in which such Product is made, used or sold, (ii) the data exclusivity period conferred by the applicable Regulatory Authority in such country with respect to such Product, and (iii) the tenth anniversary of the First Commercial Sale of such Product in such country (such royalty period, the “Initial Payment Period”).
|
(b) |
Generic Competition During the Initial Payment Period. Notwithstanding the foregoing, on a country-by-country and Product-by-Product basis, if at any time during the Initial Payment Period a Generic Product is sold in such country, then Novartis will pay Akcea royalties on Net Sales of Products sold by Novartis, its Affiliates or Sublicensees in such country using the royalty adjustment set forth in this Section 7.8.2(b) for such country as follows:
|
(i) |
If the aggregate Net Sales of such Product in such country in any Calendar Year are between [***]% - [***]% lower as compared to the aggregate Net Sales of such Product in the last Calendar Year during which there were no Generic Products sold in such country, then, following such reduction in Net Sales, the applicable Net Sales from such country upon which royalties are calculated shall be adjusted to [***] percent ([***]%) for purposes of calculation of such royalties; or
|
(ii) |
If the aggregate Net Sales of such Product in such country in any Calendar Year are at least [***]% lower as compared to the aggregate Net Sales of such Product in the last Calendar Year during which there were no Generic Products sold in such country, then, following such reduction in Net Sales, the applicable Net Sales from such country upon which royalties are calculated shall be adjusted to [***] percent ([***]%) for the purpose of calculation of such royalties.
|
(c) |
Royalty Adjustment After the Initial Payment Period. On a country-by-country and Product-by-Product basis, after the expiration of the Initial Payment Period and until the end of the Adjusted Payment Period for such Product, Novartis will pay Akcea a royalty on [***]% of the Net Sales of Products sold by Novartis, its Affiliates or Sublicensees on a Calendar Year-by-Calendar Year basis at the royalty rates set forth in Table 5 of Section 7.8.1 above. “Adjusted Payment Period” means, on a country-by-country and Product-by-Product basis, the period commencing upon the expiration of the Initial Payment Period and ending when (i) aggregate Net Sales of such Product in such country in a Calendar Year are at least [***]% lower as compared to the aggregate Net Sales of such Product in the immediately preceding Calendar Year, or (ii) Akcea (by itself or through an Affiliate or Third Party) commercializes a drug designed to directly modulate an Exclusive Target (other than Volanesorsen), whichever occurs first.
|
(d) |
End of Royalty Obligation for Products. On a country-by-country and Product-by-Product basis, [***], Novartis’ obligation to make royalty payments hereunder for such Product in such country will end on the expiration of the Adjusted Payment Period in such country.
|
(e) |
API Cost Adjustment. The Parties may negotiate in good faith a potential adjustment to the Novartis Royalty in Table 5 of Section 7.8.1.
|
(f) |
Royalty Examples. Schedule 7.8.2(f) attached hereto contains examples of how royalties will be calculated under this Section 7.8.
|
(g) |
Limitation on [***] for [***].
|
7.9. |
Third Party Payment Obligations. Any Third Party Obligations that become payable by Akcea or Novartis under an agreement such Party (or its Affiliate) has entered into to license or otherwise acquire Third Party Patent Rights will be promptly paid by a Party or shared by the Parties as expressly set forth in this Section 7.9.
|
7.9.1. |
Existing In-License Agreements as of Option Exercise.
|
(a) |
Akcea’s Existing In-License Agreements. On a Product-by-Product basis, certain of the Licensed Technology Controlled by Akcea as of the date of Option Exercise that may be licensed to Novartis under Section 5.1.1 or Section 5.1.2, as the case may be, are in-licensed or were acquired by Akcea or its Affiliates under (i) the agreements with Third Party licensors or sellers listed on Appendix 3, or (ii) the Ionis-Akcea License Agreement (such license or purchase agreements being the “Akcea In-License Agreements”), and certain milestone, royalty payments, license maintenance fees and other payments may become payable by Akcea or its Affiliates to such Third Parties under the Akcea In-License Agreements based on the Development or Commercialization of a Product by Novartis, its Affiliates or Sublicensees. Any payment obligations arising under the Akcea In-License Agreements will be paid by [***] as [***].
|
(b) |
Novartis’ Existing In-License Agreements. On a Product-by-Product basis, [***] will be solely responsible for any Third Party Obligations that become payable by Novartis or its Affiliates to Third Parties under any agreements or arrangements Novartis or its Affiliates has with such Third Parties as of the date of Option Exercise, based on the Development or Commercialization of a Product by Novartis, its Affiliate or Sublicensee under this Agreement. Any such payment obligations will be paid by [***] as [***].
|
7.9.2. |
New In-Licensed Akcea Core Technology Patents, Akcea Manufacturing and Analytical Patents or Akcea Product-Specific Patents.
|
(a) |
New In-Licensed Akcea Core Technology Patents or Akcea Manufacturing and Analytical Patents. On a Product-by-Product basis, if, after the date of Option Exercise, Akcea obtains Third Party Patent Rights necessary to Develop, Manufacture or Commercialize a Product that would have been considered an Akcea Core Technology Patent or an Akcea Manufacturing and Analytical Patent had Akcea Controlled such Patent Rights on the Effective Date, Akcea will include such Third Party Patent Rights in the license granted to Novartis under Section 5.1.1 or Section 5.1.2 (as applicable) and any and all costs arising under such Third Party agreement as they apply to a Product will be paid solely by [***] as [***].
|
(b) |
New In-Licensed Akcea Product-Specific Patents. On a Product-by-Product basis, if, after the date of Option Exercise, Akcea obtains Third Party Patent Rights necessary to Develop, Manufacture or Commercialize a Product that would have been considered an Akcea Product-Specific Patent had Akcea Controlled such Patent Rights on the Effective Date, Akcea will include such Third Party Patent Rights in the license granted to Novartis under Section 5.1.1 or Section 5.1.2 (as applicable) if [***] as [***] any and all costs arising under such Third Party agreement as they apply to Products; provided, however, if Akcea obtains any such Akcea Product-Specific Patents as a result of [***], then Akcea will include such Third Party Patent Rights in the license granted to Novartis under Section 5.1.1 or Section 5.1.2 (as applicable) and any and all costs arising under such Third Party agreement as they apply to a Product will be paid solely by [***] as [***].
|
7.9.3. |
Additional IP In-License Agreements.
|
(a) |
After the date of Option Exercise, on a Product-by-Product basis, Novartis will promptly provide Akcea written notice of any Additional IP Novartis believes it has identified and Akcea or its Affiliate will have the first right, but not the obligation, to negotiate with, and obtain a license from the Third Party Controlling such Additional IP. If Akcea or its Affiliate obtains such a Third Party license, Akcea will include such Additional IP in the license granted to Novartis under Section 5.1.1 or Section 5.1.2 (as applicable), and [***] will pay any financial obligations under such Third Party agreement as [***].
|
(b) |
If, however, Akcea and its Affiliates elect not to obtain such a license to such Additional IP, Akcea will so notify Novartis, and Novartis may obtain such a Third Party license and, except as set forth in Section 7.9.3(d), Novartis may offset an amount equal to [***]% of [***] during a Calendar Quarter paid by Novartis under such Third Party license against any [***] during the same Calendar Quarter.
|
|
(c) |
If Akcea does not agree that certain intellectual property identified by Novartis pursuant to Section 7.9.3(a) is Additional IP under Section 7.9.3(b), Akcea will send written notice to such effect to Novartis, 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 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 Novartis is permitted to apply the offset under Section 7.9.3(b) above. The costs of any Third Party expert engaged under this Section 7.9.3(c) will be paid by the Party against whose position the Third Party lawyer's determination is made.
|
(d) |
Notwithstanding the determination of the Third Party lawyer under Section 7.9.3(c), if a Third Party Controlling Additional IP is awarded a final judgment from a court of competent jurisdiction arising from its claim against Novartis asserting that a license to such Additional IP is necessary for Novartis to practice an invention claimed within an Orange Book Patent to Commercialize a particular Product in a particular country or Novartis and Akcea mutually agree to settle such a Third Party claim, then, on a country-by-country and Product-by-Product basis, Novartis will be permitted to, subject to Section 7.8.2(g), offset against any [***] for such Product in such country (A) [***]% of the sum of any amounts paid by Novartis to such Third Party constituting [***] or [***] (excluding any [***] or [***]) awarded by such court against Novartis based on [***] occurring after Option Exercise and prior to the date of such final judgment or such settlement, and (B) [***]% of the sum of any royalties paid by Novartis to such Third Party on such Product sold in such country under such final judgment or such settlement. In no event will Novartis have the right to offset the sum of any amounts paid by Novartis to such Third Party constituting [***] or [***].
|
7.9.4. |
Minimum Third Party Payments. Any Minimum Third Party Payments Novartis is obligated to pay under this Agreement will be satisfied by paying Akcea directly.
|
7.10. |
Invoices. If the Parties explicitly refer to this Section 7.10, for any mutually agreed work performed by Akcea and/or Akcea’s Affiliates at Novartis’ request under this Agreement (other than the Akcea Activities) after (i) the first [***] hours of Akcea’s time for any [***], (ii) the first [***] hours of Akcea’s time for [***], or (iii) the first [***] hours of Akcea’s time for [***], as applicable, Novartis will reimburse Akcea for the services rendered within [***] ([***]) Business Days from the date an invoice is received by Novartis; provided that any invoiced costs are for fees or services that have been rendered by Akcea plus out-of-pocket costs incurred by Akcea. Akcea’s invoices will include Akcea’s good faith estimate of the FTE cost incurred by Akcea in performing the services and the amount of any out-of-pocket costs incurred by Akcea. Before Akcea commences work for which it intends to invoice Novartis, Novartis and Akcea will agree to a budget for the work Novartis requests Akcea to perform that will include Akcea’s good faith estimate of the FTE cost plus any out-of-pocket costs.
|
7.11. |
Payments.
|
7.11.1. |
Commencement. Beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, Novartis will make royalty payments to Akcea under this Agreement within [***] ([***]) calendar days following the end of each such Calendar Quarter. Each royalty payment will be accompanied by a report, summarizing Net Sales for Products during the relevant Calendar Quarter and the calculation of royalties due thereon, including country, units, sales price and the exchange rate used. If no royalties are payable in respect of a given Calendar Quarter, Novartis will submit a written royalty report to Akcea so indicating together with an explanation as to why no such royalties are payable. In addition, beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, Novartis will provide Akcea with a single preliminary, non-binding Net Sales amount for the entire territory (worldwide) within [***] ([***]) Business Days after the end of the Calendar Quarter in order to provide Akcea with an indication of the approximate Net Sales for all Products that are likely to be due under the applicable royalty report pursuant to Section 7.8. Such “preliminary Net Sales” shall be provided as a courtesy estimate only and shall not be used as a basis of comparison against actual royalties due or be considered binding in any way. For the avoidance of doubt, royalty reports and “preliminary Net Sales” hereunder are Novartis’ Confidential Information subject to the terms and conditions of this Agreement.
|
7.11.2. |
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 Akcea in writing, and (iii) non-creditable (except as otherwise provided in Section 7.12) and non-refundable. All payments under this Agreement shall be made in US Dollars. Any sales incurred in a currency other than US Dollars shall be converted to the US Dollar equivalent using Novartis’ then-current standard exchange rate methodology as consistently applied in its external reporting for the conversion of foreign currency sales into US Dollars. Novartis shall notify Akcea in the event of changes to this methodology. In addition, an “original invoice” will be deemed duly delivered by a Party to the other Party under this Agreement when delivered electronically to such other Party and, if so delivered electronically, will be promptly followed by delivery of a paper copy of such invoice.
|
7.11.3. |
Records Retention. Commencing with the First Commercial Sale of a Product, Novartis will keep complete and accurate records pertaining to the Net Sale of Products for a period of [***] ([***]) months after the Quarter in which such sales occurred in accordance with Novartis Accounting Standards.
|
7.12. |
Audits.
|
7.12.1. |
During the Agreement Term and for a period of [***] months thereafter, at Akcea’s expense and upon written notice to Novartis, Novartis will permit an independent certified public accountant of internationally recognized standing (the “Auditor”) appointed by Akcea and reasonably acceptable to Novartis, at reasonable times and upon reasonable notice, but in no case more than [***] per Calendar Year and not more frequently than [***] with respect to records covering any specific period of time, to examine such records as may be necessary for the sole purpose of verifying the accrual of any milestone payments, the calculation and reporting of Net Sales, and the correctness of any milestone or royalty payment made under this Agreement for any period within the preceding [***] months.
|
7.12.2. |
As a condition to and prior to examining any of Novartis’ records, such Auditor will sign a nondisclosure agreement reasonably acceptable to Novartis in form and substance. Any and all of Novartis’ records examined by such independent certified public accountant will be deemed Novartis’ Confidential Information. Novartis and its Affiliates shall make their records available for inspection by such Auditor during regular business hours at such place or places where such records are customarily kept, upon receipt of reasonable advance notice from Akcea.
|
7.12.3. |
Upon completion of the audit, the accounting firm will provide both Novartis and Akcea with a written audit report disclosing whether the milestone or royalty payments made by Novartis are correct or incorrect and the specific details concerning any discrepancies (“Audit Report”). Before it is considered final, Novartis shall have the right to request a further determination by such Auditor as to matters which Novartis disputes within [***] ([***]) Business Days following receipt of such Audit Report. Novartis will provide Akcea and the Auditor with a reasonably detailed statement of the grounds upon which it disputes any findings in the Audit Report and the Auditor shall undertake to complete such further determination within [***] ([***]) Business Days after the dispute notice is provided, which determination shall be limited to the disputed matters. Any matters that remain unresolved shall be resolved in accordance with the dispute resolution procedures in Section 13.1. No Audit Report shall be considered final until conclusions are undisputed by both Parties or are otherwise conclusively determined.
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7.12.4. |
If, as a result of any inspection of Novartis’ books and records, it is undisputed (or later conclusively determined) that Novartis’ payments under this Agreement were more or less than the milestone or royalty amount which should have been paid, then the relevant Party will make all payments required to be made by paying the other Party the difference between such amounts to eliminate any discrepancy revealed by said inspection within [***] ([***]) Business Days of receiving the final Audit Report, with interest calculated in accordance with Section 7.14; provided, however, that any such payment by Akcea to Novartis will be in the form of a credit against future royalty payments due under Section 7.8 equal to the difference between the amounts actually paid by Novartis to Akcea and the royalty amounts Novartis should have paid Akcea. Akcea will pay for such audit, except that if Novartis is found to have underpaid Akcea by more than [***]% of the amount that should have been paid for the audited period, Novartis will reimburse Akcea the reasonable fees and expenses charged by the Auditor for the audit.
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7.13. |
Taxes.
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7.13.1. |
Taxes on Income. Each Party alone will be solely responsible for paying any and all taxes (other than withholding taxes required by Applicable Law to be paid by Novartis or Akcea (as the case may be) levied on account of, or measured in whole or in part by reference to, the income of such Party.
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7.13.2. |
Indirect Taxes. All payments are exclusive of Indirect Taxes. If any Indirect Taxes are chargeable in respect of any payments, the paying Party will pay such Indirect Taxes at the applicable rate in respect of such payments following receipt, where applicable, of an Indirect Taxes invoice in the appropriate form issued by the receiving Party in respect of those payments.
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7.13.3. |
Withholding Tax. To the extent the paying Party is required to deduct and withhold taxes 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 promptly furnish the receiving Party with proof of payment of such taxes. 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.
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7.13.4. |
Tax Cooperation. At least [***] ([***]) Business days prior to the date a given payment is due under this Agreement, the non-paying Party will provide the paying Party with any and all tax forms that may be reasonably necessary in order for the paying Party to lawfully not withhold tax or to withhold tax at a reduced rate with respect to such payment under an applicable bilateral income tax treaty. Following the paying Party’s timely receipt of such tax forms from the non-paying Party, the paying Party will not withhold tax or will withhold tax at a reduced rate under an applicable bilateral income tax treaty, if appropriate under the Applicable Laws. Each Party will provide the other with reasonable assistance 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 7.13.
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7.14. |
Interest. Any undisputed payments to be made hereunder that are not paid on or before the date such payments are due under this Agreement, and any payments that are pending resolution of any dispute unless the dispute is ruled in favor of the paying Party, will bear interest at a rate per annum equal to the lesser of (i) the rate announced by Bank of America (or its successor) as its prime rate in effect on the date that such payment would have been first due plus [***]% or (ii) the maximum rate permissible under applicable law.
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8.1. |
Joint Patent Committee.
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8.1.1. |
Unless the Parties mutually agree to establish it sooner, the Parties will establish a “Joint Patent Committee” or “JPC” upon the [***]. 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. If the JPC 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 Akcea Product-Specific Patents that would be or are licensed to Novartis under Section 5.1 and Novartis 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 this 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. Upon Novartis’ exercise of (or the expiration or termination of) the last Option, each Party will no longer have the obligation, but will continue to have the right, to participate in the JPC, provided that, if requested by Novartis, Akcea shall consider in good faith and not unreasonably refuse to participate in the JPC.
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|
8.1.2. |
The JPC will comprise an equal number of at most three members from each Party. The JPC 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. 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 JPC will consider comments and suggestions made by the other in good faith. Each Party will bear their own cost of participation on the JPC.
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8.2. |
Ownership.
|
8.2.1. |
Akcea Technology and Novartis Technology. As between the Parties, Akcea will own and retain all of its rights, title and interest in and to the Licensed Know-How and Licensed Patents and Novartis will own and retain all of its rights, title and interest in and to the Novartis Know-How and Novartis Patents, subject to any rights or licenses expressly granted by one Party to the other Party under this Agreement.
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8.2.2. |
Program Technology. As between the Parties, Novartis is the sole owner of any Know-How discovered, invented or created solely by or on behalf of Novartis or its Affiliates under or in connection with this Agreement (“Novartis Program Know-How”) and any Patent Rights that claim or cover Novartis Program Know-How (“Novartis Program Patents” and together with the Novartis Program Know-How, the “Novartis Program Technology”), and will retain all of its rights, title and interest thereto, subject to any rights or licenses expressly granted by Novartis to Akcea under this Agreement. As between the Parties, Akcea is the sole owner of any Know-How discovered, invented or created solely by or on behalf of Akcea or its Affiliates under or in connection with this Agreement (“Akcea Program Know-How”) and any Patent Rights that claim or cover such Know-How (“Akcea Program Patents” and together with the Akcea Program Know-How, the “Akcea Program Technology”), and will retain all of its rights, title and interest thereto, subject to any rights or licenses expressly granted by Akcea to Novartis under this Agreement. Any Know-How discovered, invented or created jointly under or in connection with 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 Novartis and Akcea 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.
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8.2.3. |
In addition, the JPC (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 JPC (or otherwise between Akcea and Novartis) over inventorship of Program Patents, if the JPC (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 (or its Affiliates) 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.
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8.3. |
Filing, Prosecution and Maintenance of Patents.
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8.3.1. |
Licensed Patents.
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(a) |
Akcea Core Technology Patents and Akcea Manufacturing and Analytical Patents. Akcea will control and be responsible for Prosecuting and Maintaining (i) the Akcea Core Technology Patents, and (ii) Akcea Manufacturing and Analytical Patents, including any Jointly-Owned Program Patents in (i) or (ii).
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(b) |
Akcea Product-Specific Patents. Prior to the date Novartis exercises its Option for a Product in accordance with this Agreement, Akcea will control and be responsible for Prosecuting and Maintaining the Akcea Product-Specific Patents (including any Jointly-Owned Program Patents that are Product-Specific Patents). On a Product-by-Product basis, following the date Novartis exercises its Option for such Product in accordance with this Agreement (and so long as the applicable license to Novartis under Section 5.1 is in effect), Akcea will continue to control and be responsible for Prosecuting and Maintaining the Akcea Product-Specific Patents (including any Jointly-Owned Program Patents that are Product-Specific Patents) that (i) Cover an Akcea-Separate Product or (ii) Cover Conjugate Technology (“Akcea Special Product-Specific Patents”) and Novartis will control and be responsible for Prosecuting and Maintaining all other Product-Specific Patents (including any Jointly-Owned Program Patents) that are not Akcea Special Product-Specific Patents.
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(c) |
Other Jointly-Owned Program Patents. The Parties will decide through the JPC the appropriate Party to control and be responsible for Prosecuting and Maintaining all other Jointly-Owned Program Patents not provided for above.
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8.3.2. |
Other Matters Pertaining to Prosecution and Maintenance of Patents.
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(a) |
Each Party will keep the other Party informed through the JPC as to material developments with respect to the 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 8.3.1 or this Section 8.3.2, including by providing copies of 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, inter partes reviews, post-grant reviews, 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.
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(b) |
If Novartis elects (i) not to file and prosecute patent applications for a Patent Right Novartis is responsible for Prosecuting and Maintaining under Section 8.3.1 above (“Novartis-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 Novartis-Prosecuted Patent in a particular country, or (iii) not to file and prosecute patent applications for the Novartis-Prosecuted Patent in a particular country following a written request from Akcea to file and prosecute in such country, then Novartis will so notify Akcea promptly in writing of its intention (including a reasonably detailed rationale for doing so) in good time to enable Akcea to meet any deadlines by which an action must be taken to establish or preserve any such Patent Right in such country; and Akcea will have the right, but not the obligation, to file, prosecute, maintain, enforce, or otherwise pursue such Novartis-Prosecuted Patent in the applicable country at its own expense with counsel of its own choice. In such a case, Novartis will cooperate with Akcea to file for, or continue to Prosecute and Maintain or enforce, or otherwise pursue such Novartis-Prosecuted Patent in such country in Akcea’s own name, but only to the extent that Novartis is not required to take any position with respect to such abandoned Novartis-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 Novartis under this Agreement. Notwithstanding anything to the contrary in this Agreement, if Akcea assumes responsibility for the Prosecution and Maintenance of any such Novartis-Prosecuted Patent under this Section 8.3.2(b), Akcea will have no obligation to notify Novartis if Akcea intends to abandon such Novartis-Prosecuted Patent.
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(c) |
The Parties, through the JPC, 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.
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(d) |
If the Party responsible for Prosecution and Maintenance pursuant to Section 8.3.1 intends to abandon a Jointly-Owned Program Patent without first filing a continuation or substitution, then such Party will notify the other Party of such intention at least [***] ([***]) calendar 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 8.4) 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 8.3.2(d), such Party will have no obligation to notify the other Party of any intention of such Party to abandon such Jointly-Owned Program Patents.
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8.4. |
Patent Costs. Except as set forth in Section 8.3.2 and this Section 8.4, each Party will be responsible for all Patent Costs incurred by such Party prior to and after the Effective Date in all countries designated by it in the Prosecution and Maintenance of Patent Rights for which such Party is responsible under ARTICLE 8. Unless the Parties agree otherwise, the following Patent Costs will be paid by the Parties as follows:
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8.4.1. |
Akcea and Novartis will [***] the Patent Costs associated with the Prosecution and Maintenance of each Akcea Special Product-Specific Patent with each Party’s share of such Patent Costs calculated based on the [***]; and
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8.4.2. |
Akcea and Novartis will [***] the Patent Costs associated with the Prosecution and Maintenance of Jointly-Owned Program Patents;
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8.5. |
Defense of Claims Brought by Third Parties; Oppositions.
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8.5.1. |
AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx – 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 any Product with respect to which Novartis has not yet exercised its Option, Akcea will have the first right, but not the obligation, to defend against any such Proceeding at its sole cost and expense. If Akcea elects to defend against such Proceeding, then Akcea will have the sole right to direct the defense and to elect whether to settle such claim.
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8.5.2. |
AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx – After 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 any Product being Developed or Commercialized by Novartis under a license granted under Section 5.1, then Novartis will have the first right, but not the obligation, to defend against any such Proceeding at its sole cost and expense. If Novartis elects to defend against such Proceeding, then Novartis will have the sole right to direct the defense and to elect whether to settle such claim (but only with the prior written consent of Akcea, not to be unreasonably withheld, conditioned or delayed). Akcea will reasonably assist Novartis in defending such Proceeding and cooperate in any such litigation at Novartis’ request and expense. Novartis will keep Akcea apprised of the progress of such Proceeding. If Novartis elects not to defend against a Proceeding, then Novartis will so notify Akcea in writing within [***] ([***]) calendar days after Novartis first receives written notice of the initiation of such Proceeding, and Akcea will have the right, but not the obligation, to defend against such a Proceeding at its sole cost and expense and thereafter Akcea 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 Novartis, 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 defending Party’s request and expense. 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 8.5. Each Party will provide the other Party with prompt written notice of the commencement of any such Proceeding under this Section 8.5, 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.
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8.5.3. |
Interferences, Reissues, Re-Examinations and Oppositions. If a Third Party initiates a Proceeding related to an interference, reissue, re-examination or opposition of an Akcea Product-Specific Patent, then (A) if such Proceeding occurs prior to Option exercise (or after Option exercise with respect to an Akcea Special Product-Specific Patent), Akcea will have the right, but not the obligation, to control the defense of such Proceeding as Akcea determines in Akcea’s sole discretion, and (B) if such Proceeding occurs after Option exercise and does not involve an Akcea Special Product-Specific Patent, Novartis will, at Novartis’ expense, by written notice to Akcea either (i) control the defense of such Proceeding solely to the extent such Proceeding relates to an interference, reissue, re-examination or opposition of an Akcea Product-Specific Patent that is not an Akcea Special Product-Specific Patent, or (ii) have Akcea control the defense of such Proceeding, provided if Novartis makes no such election within a reasonable period of time, then Akcea will have the right, but not the obligation, to control the defense of such Proceeding and Akcea and Novartis will evenly split the cost of such defense. If Akcea elects not to defend against such a Proceeding under (A) in this section above, then Akcea will so notify Novartis in writing within [***] ([***]) calendar days after Akcea first receives written notice of the initiation of such Proceeding, and Novartis will have the right, but not the obligation, to defend against such Proceeding at its sole cost and expense and thereafter Novartis 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 Akcea, 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 defending Party’s request and expense. 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 8.5. Each Party will provide the other Party with prompt written notice of the commencement of any such Proceeding under this Section 8.5, 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.
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8.6. |
Enforcement of Patents Against Competitive Infringement. With respect to infringement, unauthorized use, misappropriation or threatened infringement by a Third Party of any Akcea Product-Specific Patents by reason of the development, manufacture, use or commercialization of a product that binds to an Exclusive Target (“Competitive Infringement”), prior to the date Novartis exercises its applicable Option under this Agreement (or after Option exercise with respect to an Akcea Special Product-Specific Patent), Akcea will have the sole right, but not the obligation, to institute, prosecute, and control a Proceeding with respect thereto. With respect to any Competitive Infringement involving an Akcea Licensed Patent that is not an Akcea Special Product-Specific Patent that occurs after the date Novartis exercises its applicable Option under this Agreement, the Parties will handle such Competitive Infringement in accordance with the remainder of this Section 8.6.
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8.6.1. |
Duty to Notify of Competitive Infringement. If either Party learns of a Competitive Infringement by a Third Party, 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 8.6.6 below, such written notice will be given within [***] ([***]) calendar days.
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8.6.2. |
Control of Competitive Infringement Proceedings. For any Competitive Infringement involving an Akcea Product-Specific Patent that is not an Akcea Special Product-Specific Patent for a Product licensed to Novartis under Section 5.1 that occurs after Novartis exercises its Option for such Product, so long as part of such Proceeding Novartis also enforces any Patent Rights Controlled by Novartis being infringed that Cover such Product, then Novartis will have the first right, but not the obligation, to institute, prosecute, and control a Proceeding with respect thereto by counsel of its own choice at its own expense, and Akcea will have the right, at its own expense, to be represented in that action by counsel of its own choice, however, Novartis will have the right to control such litigation. If Novartis fails to initiate a Proceeding within a period of [***] ([***]) calendar days after receipt of written notice of such Competitive Infringement (subject to a [***] ([***]) calendar days extension to conclude negotiations, if Novartis has commenced good faith negotiations with an alleged infringer for elimination of such Competitive Infringement within such [***] calendar day period), Akcea will have the right to initiate and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice, and Novartis will have the right to be represented in any such action by counsel of its own choice at its own expense.
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8.6.3. |
Joinder; Cooperation.
|
(a) |
If a Party initiates a Proceeding in accordance with this Section 8.6, the other Party agrees to be joined as a party plaintiff where necessary and to give the first Party reasonable assistance and authority to file and prosecute the Proceeding. Subject to Section 8.6.4, the costs and expenses of each Party incurred pursuant to this Section 8.6.3(a) will be borne by the Party initiating such Proceeding; provided Novartis will only be requested to join such a Proceeding if such Proceeding relates to a Patent Right or Product licensed to Novartis under Section 5.1.
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(b) |
If one Party initiates a Proceeding in accordance with this Section 8.6.3, 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.
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8.6.4. |
Share of Recoveries. Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to Section 8.5 or this Section 8.6 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
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(b) |
any remaining proceeds will be allocated as follows: (A) prior to Option exercise, to [***], and (B) after Option exercise, (x) if Novartis initiates or controls the defense of the Proceeding pursuant to Section 8.5.2 or Section 8.6.2, [***], or (y) if Akcea initiates or controls the defense of the Proceeding, [***] will receive and retain the remaining proceeds.
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8.6.5. |
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 without first obtaining the written consent of the Party that Controls the relevant Patent Right.
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8.6.6. |
35 USC 271(e)(2) Infringement. Notwithstanding anything to the contrary in this Section 8.6, for a Competitive Infringement under 35 USC 271(e)(2), the time period set forth in Section 8.6.2 during which a Party will have the initial right to bring a Proceeding will be shortened to a total of twenty five (25) calendar 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 [***] ([***]) calendar days after such first Party’s receipt of written notice of such Competitive Infringement.
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8.7. |
Other Infringement - Jointly-Owned Program Patents. With respect to the infringement of a Jointly-Owned Program Patent which is not a Competitive Infringement, 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 8.7 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 8.7, each Party will retain or receive 50% of such remaining proceeds; and (B) if only one Party initiates the Proceeding pursuant to this Section 8.7, such Party will retain or receive such remaining proceeds. Notwithstanding the provision of Section 8.6.4. the remaining proceeds contemplated under this section, if retained by Novartis, shall not be treated as if it were Net Sales,
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8.8. |
Patent Listing. Novartis 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 JPC, to evaluate and identify all applicable Patent Rights, and Novartis will have the right to review, where reasonable, original records relating to any invention for which Patent Rights are being considered by the JPC for any such listing. Notwithstanding the preceding sentence, Novartis will retain final decision-making authority as to [***] for a Product that [***], regardless of which Party owns such [***].
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8.9. |
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, it will notify the other Party and neither Party will make an election under such provision when exercising its rights under this ARTICLE 8 without the prior written consent of the other Party (such consent not to be unreasonably withheld, conditioned or delayed), 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).
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8.10. |
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 5.5, provided, however, that, to the extent that Akcea has a non-transferable right to prosecute, maintain or enforce any Patent Rights licensed to Novartis hereunder and, this Agreement purports to grant any such rights to Novartis, Akcea will act in such regard with respect to such Patent Rights at Novartis’ direction.
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8.11. |
Additional Rights and Exceptions. Other than as set forth in this ARTICLE 8, Akcea retains the sole right to (i) commence, control, prosecute and settle any Proceeding involving Volanesorsen, and (ii) Prosecute and Maintain (A) Akcea Special Product-Specific Patents, (B) Akcea Core Technology Patents, and (C) Akcea Manufacturing and Analytical Patents during the Agreement Term and to control any enforcement of Akcea Special Product-Specific Patents, Akcea Core Technology Patents and Akcea 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 Akcea and Covering Akcea Special Product-Specific Patents, the Akcea Core Technology Patents or Akcea Manufacturing and Analytical Patents is at risk.
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8.12. |
Patent Term Extension. The Parties will cooperate with each other in gaining patent term extension wherever applicable to a Product, and Novartis will determine which Akcea Product-Specific Patents (other than Akcea Special Product-Specific Patents) will be extended.
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9.1. |
Representations and Warranties of Both Parties. Each Party hereby represents and warrants as of the Effective Date (and covenants as applicable) to the other Party that:
|
9.1.1. |
it is a corporation duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation;
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9.1.2. |
It has the power and authority and the legal right to enter into this Agreement and perform its obligations hereunder, and that it has taken all necessary action on its part required to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder;
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9.1.3. |
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;
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9.1.4. |
other than compliance with the HSR Act for the exercised Options granted hereunder, 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;
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9.1.5. |
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, 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;
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9.1.6. |
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;
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9.1.7. |
(i) neither such Party nor, to the actual knowledge of such Party, any employee, agent or subcontractor of such Party involved or to be involved in the Development of the Products has been debarred under Subsection (a) or (b) of Section 306 of the Federal Food, Drug and Cosmetic Act (21 U.S.C. 335a); (ii) no Person who is known by such Party to have been debarred under Subsection (a) or (b) of Section 306 of said Act will be employed by such Party in the performance of any activities hereunder; and (iii) to the actual knowledge of such Party, no Person on any of the FDA clinical investigator enforcement lists (including, but not limited to, the (1) Disqualified/Totally Restricted List, (2) Restricted List and (3) Adequate Assurances List) will participate in the performance of any activities hereunder;
|
9.1.8. |
during the term of this Agreement, neither Party nor any of its Affiliates shall disclose any Confidential Information of the other Party relating to any Product to any Third Party if such disclosure would fundamentally frustrate the purpose of this Agreement;
|
9.1.9. |
Akcea has taken reasonable precautions, and during the term of this Agreement each Party will take reasonable precautions, to preserve the confidentiality of the Licensed Know-How, including requiring each Person having access to the Licensed Know-How to be subject to confidentiality, non-use, and non-disclosure obligations protecting the Licensed Know-How as the confidential, proprietary materials and information of Akcea;
|
9.1.10. |
there are no claims pending or, to each Party’s Knowledge, threatened against such Party or any of its Affiliates, nor is such Party or any of its Affiliates a party to any judgment or settlement, that would be reasonably expected to adversely affect or restrict the ability of such Party to consummate any of the transactions contemplated under this Agreement or to perform any of its obligations under this Agreement, or which would affect any of the Licensed Technology, including the Licensed Patents, or Akcea’s Control thereof, or any Product;
|
9.1.11. |
all non-clinical and clinical studies and trials conducted by a Party on AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, have been and will be conducted in accordance with Applicable Law and, as applicable, GLP and GCP;
|
9.1.12. |
except for any activities Akcea is obligated to conduct under the Prior Agreements as in effect on the Effective Date, each Party does not and during the term of this Agreement will not conduct any activities which would violate ARTICLE 4; and
|
9.1.13. |
Each Party and its Affiliates have conducted and will conduct their business in compliance with the Foreign Corrupt Practices Act of 1977, the UK Bribery Act of 2010 and any other applicable anti-corruption Laws.
|
9.2. |
Representations, Warranties and Covenants of Akcea. Akcea hereby represents and warrants as of the Effective Date and any applicable bring-down date under Section 1.2.4 (and covenants as applicable) to Novartis that:
|
9.2.1. |
Except for certain Akcea Core Technology Patents noted in Appendix 4 that are jointly-owned by Ionis and Novartis, Akcea or Ionis is the sole and exclusive owner or exclusive licensee of, and has the right to grant all rights and licenses it purports to grant to Novartis with respect to, the Licensed Technology, including the Licensed Patents, in each case under this Agreement for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx, free and clear of all liens, claims, security interests or other encumbrances of any kind (including prior license grants other than under the Akcea In-License Agreements) that would interfere, or the exercise of which would interfere, with Novartis’s exercise of any license or right granted, or that may be granted, hereunder;
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9.2.2. |
Except for certain Akcea Core Technology Patents noted in Appendix 4 that are jointly-owned by Ionis and Novartis, Akcea or Ionis is listed in the records of the appropriate governmental agencies as the sole and exclusive owner of record or exclusive licensee for each registration, grant and application included in the Licensed Patents;
|
9.2.3. |
the Licensed Technology was not and will not be funded by the U.S. federal government or otherwise subject to any rights of the U.S. federal government under the Bayh-Dole Act;
|
9.2.4. |
all Licensed Patents have been filed, prosecuted and maintained properly and correctly in all material respects;
|
9.2.5. |
neither Akcea nor any of its Affiliates has previously entered into, or during the term of this Agreement will enter into, any agreement, whether written or oral, with respect to, or has otherwise assigned, transferred, licensed, conveyed or otherwise encumbered, or during the term of this Agreement will otherwise assign, transfer, license, convey or otherwise encumber, any portion of 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;
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9.2.6. |
each Akcea Product-Specific Patent and, to Akcea’s Knowledge, each of the other Licensed 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;
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9.2.7. |
to Akcea’s Knowledge, the issued patents in the Licensed Patents are valid and enforceable without any claims, challenges, oppositions, nullity actions, interferences, inter-partes reexaminations, inter-partes reviews, post-grant reviews, derivation proceedings or other proceedings pending or threatened;
|
9.2.8. |
to Akcea’s Knowledge, neither Akcea nor any of its Affiliates has committed any act, or omitted to commit any act, that may cause the Licensed Patents to expire prematurely or be declared invalid or unenforceable;
|
9.2.9. |
all application, registration, maintenance and renewal fees in respect of the Licensed Patents existing as of the Effective Date have been paid and all necessary documents and certificates have been filed with the relevant agencies for the purpose of maintaining such Licensed Patents;
|
9.2.10. |
as of the Effective Date, neither Akcea nor any of its Affiliates has received any written Claim alleging that any of the Licensed Technology is invalid or unenforceable;
|
9.2.11. |
where Akcea’s or its Affiliates’ ownership of any of the Licensed Technology is based upon or depends on a sequence of historical transfers of title to any of the Licensed Technology (i.e., chain of title to the applicable Licensed Technology) being valid, effective and free from defects and other problems, if at any time there is a potential defect with the validity or effectiveness in such transfers or other problems in such chain of title, then Akcea and its Affiliates shall, at their expense, with urgency and diligence, use reasonable efforts to make any and all corrections and clarifications, including preparing any documents and obtaining any necessary Third Party signatures and consents, as may be necessary, including filing such documents in any patent office as appropriate, to remedy any such problems and to restore such chain of title;
|
9.2.12. |
as of the Effective Date, Akcea has not received any written claim alleging that any of Akcea’s activities relating to AKCEA-APO(a)-LRx or AKCEA-APOCIII-LRx infringes or misappropriates any intellectual property rights of a Third Party;
|
9.2.13. |
(i) the licenses granted to Akcea under the Akcea In-License Agreements are in full force and effect, (ii) Akcea has not received any written notice, and is not aware, of any breach by any party to the Akcea In-License Agreements, and (iii) Akcea’s performance of its obligations under this Agreement (including the Pre-Option Development Plan as it exists on the Effective Date) will not constitute a breach of Akcea’s obligations under the Akcea In-License Agreements or the licenses granted to Akcea thereunder;
|
9.2.14. |
to Akcea’s Knowledge, in respect of the pending United States patent applications included in the Licensed Patents, Akcea or its Affiliates have submitted all material prior art of which it or they are aware in accordance with the requirements of the United States Patent and Trademark Office;
|
9.2.15. |
to Akcea’s Knowledge, (i) there are no rights of any Person that may be infringed, misappropriated or violated by any of the activities specifically anticipated by Akcea as of the Effective Date to be performed under this Agreement, and (ii) the manufacture (as manufactured by Akcea or its Affiliate), use and sale of each Product in the product presentation existing on the Execution Date does not and will not infringe any of Akcea’s or any Third Party’s Patent Rights, Know-How or other intellectual property rights; Provided that Novartis cannot assert a claim against Akcea for breach of this Section 9.2.15 related to any Third Party Patent Rights Novartis has Knowledge of as of the Effective Date;
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9.2.16. |
Akcea has not used, and during the term of this Agreement will not knowingly use in the Development, Manufacture or Commercialization of any Product any Know-How that is encumbered by any contractual right of or obligation to a Third Party that conflicts or interferes with any of the rights or licenses granted or that may be granted to Novartis hereunder;
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9.2.17. |
As of the Effective Date, neither Akcea or any of its Affiliates has granted any right or license to practice any Know-How related to, or Patent Rights that Cover, the Development, Manufacture or Commercialization of any Product that conflicts or interferes with any of the rights or licenses granted or that may be granted to Novartis hereunder;
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9.2.18. |
As of the Effective Date, neither Akcea nor any of its Affiliates has initiated or been involved in any Claim in which it has alleged that any Third Party is or was infringing or misappropriating any Licensed Technology, nor has any such Claim been threatened by Akcea or any of its Affiliates, nor do Akcea or any of its Affiliates know of any valid basis for any such Claim;
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9.2.19. |
except for the Akcea In-License Agreements, as of the Effective Date, there are no agreements pursuant to which Akcea or any of its Affiliates has in-licensed or otherwise acquired the right to practice any Know-How related to, or Patent Rights that Cover, the Development, Manufacture or Commercialization of any Product;
|
9.2.20. |
to Akcea’s Knowledge, no officer, employee or consultant of Akcea or any of its Affiliates is, or during the term of this Agreement will be, subject to any agreement that requires such individual to assign any interest in any Licensed Technology to any Third Party;
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9.2.21. |
the Patents listed in Appendices 4, 5 and 6 are a complete and correct listing of the relevant Akcea Core Technology Patents, Akcea Manufacturing and Analytical Patents, and Akcea Product Specific Patents which are owned or otherwise Controlled by Akcea;
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9.2.22. |
other than the Akcea Core Technology Patents, Akcea Manufacturing and Analytical Patents, and Akcea Product Specific Patents, no other Patent Rights are owned by or licensed to Akcea or any of its Affiliates as of the Effective Date that are necessary or reasonably useful for the Development, Manufacture or Commercialization of a Product;
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9.2.23. |
Except as otherwise expressly provided in this Agreement, Akcea or its Affiliate shall be and remain solely responsible for fulfilling and performing at its cost and expense, any and all obligations under each Akcea In-License Agreement, including timely, full and complete payment of any and all amounts due thereunder or in connection therewith to the other parties thereto;
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9.2.24. |
Akcea shall not, and shall cause its Affiliates not to, incur or permit to exist, with respect to any Licensed Technology, any lien, encumbrance, charge, security interest, mortgage, liability, assignment, grant of license or other obligation that is or would be inconsistent with the licenses and other rights granted to, or that may be granted to, Novartis under this Agreement;
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9.2.25. |
Akcea shall not enter into any amendment to any Akcea In-License Agreement that adversely affects any rights granted to, or that may be granted to, Novartis hereunder without the prior written consent of Novartis;
|
9.2.26. |
Akcea will promptly furnish Novartis with true and complete copies of all amendments to the Akcea In-License Agreements arising after the Effective Date;
|
9.2.27. |
Akcea will remain, and cause its Affiliates to remain, in compliance in all material respects with all Akcea In-License Agreements; and
|
9.2.28. |
Akcea will furnish Novartis with copies of all notices received by Akcea or any of its Affiliates relating to any alleged breach or default by Akcea or any of its Affiliates under any Akcea In-License Agreement within seven (7) calendar days after receipt thereof and thereafter furnish Novartis with copies of all correspondence and summaries of material discussions between the applicable parties to the Akcea In-License Agreement relating to the alleged breach, including any proposed resolution of the matter.
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9.3. |
DISCLAIMER OF WARRANTY. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS ARTICLE 9, NOVARTIS AND AKCEA MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND NOVARTIS AND AKCEA 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.
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10.1. |
Indemnification by Novartis. Novartis agrees to defend Akcea, its Affiliates and their respective directors, officers, employees and their respective successors, heirs and assigns (collectively, the “Akcea Indemnitees”), and will indemnify and hold harmless the Akcea 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 Akcea Indemnitee and resulting from or occurring as a result of: (a) any activities conducted by a Novartis employee, consultant, Affiliate, Sublicensee, or (sub)contractor in the performance of the activities Novartis agrees to perform under this Agreement, including, the Manufacture, Development or Commercialization of any Product, or (b) any breach by Novartis 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 Akcea Indemnitee, (ii) any breach by Akcea of any of its representations, warranties, covenants or obligations pursuant to this Agreement, or (iii) any breach of Applicable Law by any Akcea Indemnitee, and provided that Novartis shall not be obliged to so indemnify, defend and hold harmless the Akcea Indemnities for any claims for which Akcea has an obligation to indemnify Novartis Indemnities pursuant to Section 10.2.
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10.2. |
Indemnification by Akcea. Akcea agrees to defend Novartis, its Affiliates and their respective directors, officers, employees and their respective successors, heirs and assigns (collectively, the “Novartis Indemnitees”), and will indemnify and hold harmless the Novartis Indemnitees, from and against any Losses arising out of Third Party Claims brought against any Novartis Indemnitee and resulting from or occurring as a result of: (a) any activities that an Akcea 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 Akcea agreed to perform under this Agreement, including, the Manufacture, Development or Commercialization of any Product or Terminated Product, or (b) any breach by Akcea 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 Novartis Indemnitee, (ii) any breach by Novartis of any of its representations, warranties, covenants or obligations pursuant to this Agreement, or (iii) any breach of Applicable Law by any Novartis Indemnitee, and provided that Akcea shall not be obliged to so indemnify, defend and hold harmless the Novartis Indemnities for any claims for which Novartis has an obligation to indemnify Akcea Indemnities pursuant to Section 10.1.
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10.3. |
Notice of Claim. All indemnification claims provided for in Section 10.1 or Section 10.2 will be made solely by such Party to this Agreement (the “Indemnified Party”). The Indemnified Party will give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any Losses or the discovery of any fact upon which the Indemnified Party intends to base a request for indemnification under Section 10.1 or Section 10.2, but in no event will the indemnifying Party be liable for any Losses to the extent such Losses result from any delay in providing such notice. The failure or delay to so notify the Indemnified Party shall not relieve the indemnifying Party of any obligation or liability to the Indemnified Party, except to the extent that the indemnifying Party demonstrates that its ability to defend or resolve such Claim is adversely affected as a result of such failure or delay. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party will furnish promptly to the indemnifying Party copies of all papers and official documents received or sent in respect of any Losses and Third Party Claims.
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10.4. |
Defense, Settlement, Cooperation and Expenses.
|
10.4.1. |
Control of the Defense. At its option, the indemnifying Party may assume the defense and handling of any Third Party Claim by giving written notice to the Indemnified Party within [***] ([***]) calendar days after the indemnifying Party’s receipt of an Indemnification Claim Notice. The assumption and handling of the defense of a Third Party Claim by the indemnifying Party shall not be construed as an acknowledgment that the indemnifying Party is liable to indemnify the Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification. Upon assuming the defense of a Third Party Claim, the indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the indemnifying Party. If the indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party will as soon as is reasonably possible deliver to the indemnifying Party all original notices and documents (including court papers) received or sent by the Indemnified Party in connection with the Third Party Claim. Should the indemnifying Party assume the defense of a Third Party Claim, except as provided in this Section 10.4.1, the Indemnified Party will be responsible for the legal costs or expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim.
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10.4.2. |
Right to Participate in Defense. Without limiting Section 10.4.1, any Indemnified Party will be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment will be at the Indemnified Party’s own cost and expense unless (a) the employment thereof has been specifically authorized by the indemnifying Party in writing, (b) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 10.4.1 (in which case the Indemnified Party will control the defense), or (c) the interests of the Indemnified Party and the indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under Applicable Law, ethical rules or equitable principles in which case the indemnifying Party will be responsible for any such costs and expenses of counsel for the Indemnified Party.
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10.4.3. |
Settlement. With respect to any Third Party Claims relating solely to the payment of money damages in connection with a Third Party Claim and that will not admit liability or violation of Law on the part of the Indemnified Party or result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affecting the business of the Indemnified Party in any manner (such as granting a license or admitting the invalidity of a Patent Right Controlled by an Indemnified Party), and as to which the indemnifying Party will have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, the indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, will deem appropriate. With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 10.4.1, the indemnifying Party will have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss provided it obtains the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld, delayed or conditioned). The indemnifying Party will not be liable for any settlement, consent to entry of judgment, or other disposition of a Loss by an Indemnified Party that is reached without the written consent of the indemnifying Party. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, no Indemnified Party will admit any liability with respect to or settle, compromise or discharge, any Third Party Claim without the prior written consent of the indemnifying Party, such consent not to be unreasonably withheld, delayed or conditioned.
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10.4.4. |
Cooperation. Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party will, and will cause each other Indemnified Party to, cooperate in the defense or prosecution thereof and will furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation will include access during normal business hours afforded to indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the indemnifying Party will reimburse the Indemnified Party for all its reasonable out-of-pocket costs and expenses in connection therewith.
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10.4.5. |
Costs and Expenses. Except as provided above in this Section 10.4, the costs and expenses, including attorneys’ fees and expenses, incurred by the Indemnified Party in connection with any claim will be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.
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10.5. |
Insurance.
|
10.5.1. |
Akcea’s Insurance Obligations. Akcea will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement, including its indemnification obligations herein, in such amounts and on such terms as are customary for prudent practices for biotech companies of similar size and with similar resources in the pharmaceutical industry for the activities to be conducted by it under this Agreement taking into account the scope of development of Products.
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10.5.2. |
Novartis’ Insurance Obligations. Novartis hereby represents and warrants to Akcea that it will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement (including product liability), including its indemnification obligations herein, in such amounts and on such terms as are customary for prudent practices for large companies in the pharmaceutical industry for the activities to be conducted by Novartis under this Agreement.
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10.6. |
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) NOVARTIS’ BREACH OF SECTION 6.5, OR (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.
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11.1. |
Agreement Term; Expiration. This Section 11.1, ARTICLE 12 and ARTICLE 13 of this Agreement are effective as of the Execution Date and the remainder of this Agreement will 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 this Agreement expires as follows:
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11.1.1. |
where all Options have expired unexercised;
|
11.1.2. |
on a country-by-country and Product-by-Product basis, on the date of expiration of all payment obligations by Novartis under this Agreement with respect to such Product in such country; or
|
11.1.3. |
in its entirety upon the expiration of all payment obligations by Novartis under this Agreement with respect to the last Product in all countries pursuant to Section 11.1.2.
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11.2. |
Termination of the Agreement.
|
11.2.1. |
Novartis’ Termination for Convenience. At any time following payment by Novartis of the Upfront Option Fee under Section 3.2, subject to Section 11.3 below, Novartis will be entitled to terminate this Agreement in its entirety or in part on a Product-by-Product basis for convenience by providing [***] ([***]) calendar days written notice to Akcea of such termination.
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11.2.2. |
Termination for Material Breach.
|
(a) |
Novartis’ Right to Terminate. If Novartis has reason to believe that Akcea is in material breach of this Agreement (other than with respect to a failure to use Commercially Reasonable Efforts under ARTICLE 1, which is governed by Section 11.2.3 below), then Novartis may deliver notice of such material breach to Akcea. If the breach is curable, Akcea will have [***] ([***]) calendar days to cure such breach. If Akcea fails to cure such breach within such [***] ([***]) calendar days period, or if the breach is not subject to cure, Novartis may terminate this Agreement in its entirety if such breach relates to this Agreement in its entirety, or in relevant part on a Product-by-Product basis if such breach does not relate to this Agreement in its entirety, by providing written notice to Akcea.
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(b) |
Akcea’s Right to Terminate. If Akcea has reason to believe that Novartis is in material breach of this Agreement (other than with respect to a failure to use Commercially Reasonable Efforts under ARTICLE 1 or ARTICLE 6, which is governed by Section 11.2.3 below), then Akcea may deliver notice of such material breach to Novartis. If the breach is curable, Novartis will have [***] ([***]) calendar 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 [***] ([***]) calendar days following such notice). If Novartis fails to cure such breach within such [***] ([***]) calendar day or [***] ([***]) calendar day period, as applicable, or if the breach is not subject to cure, Akcea may terminate this Agreement in its entirety if such breach relates to this Agreement in its entirety, or in relevant part on a Product-by-Product basis if such breach does not relate to this Agreement in its entirety, by providing written notice to Novartis.
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11.2.3. |
Remedies for Failure to Use Commercially Reasonable Efforts.
|
(a) |
If Akcea fails to use Commercially Reasonable Efforts as contemplated in ARTICLE 1 (as determined in accordance with Section 13.1), Novartis will notify Akcea and, within [***] ([***]) calendar days thereafter, Akcea and Novartis will meet through the CSC or JDCC (as applicable) and attempt to resolve the matter in good faith, and to devise a mutually agreeable plan to address any outstanding issues related to Akcea’s use of Commercially Reasonable Efforts in ARTICLE 1. Following such a meeting, if Akcea fails to use Commercially Reasonable Efforts as contemplated in ARTICLE 1 and such failure constitutes a material breach of this Agreement, then subject to Section 11.2.4 below, Novartis will have the right, at its sole discretion, to terminate this Agreement in whole or in part on a Product-by-Product basis.
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(b) |
If Novartis fails to use Commercially Reasonable Efforts as contemplated in ARTICLE 1 or ARTICLE 6 (as determined in accordance with Section 13.1), Akcea will notify Novartis and, within [***] ([***]) calendar days thereafter, Akcea and Novartis will meet and confer to discuss and resolve the matter in good faith, and attempt to devise a mutually agreeable plan to address any outstanding issues related to Novartis’ use of Commercially Reasonable Efforts in ARTICLE 1 or ARTICLE 6. Following such a meeting, if Novartis fails to use Commercially Reasonable Efforts as contemplated in ARTICLE 1 or ARTICLE 6, and such failure constitutes a material breach of this Agreement then subject to Section 11.2.4 below, Akcea will have the right, at its sole discretion, to terminate this Agreement in part on a Product-by-Product basis.
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11.2.4. |
Disputes Regarding Material Breach. Notwithstanding the foregoing, if the Breaching Party in Section 11.2.2 or Section 11.2.3 disputes in good faith the existence, materiality, or failure to cure of any such breach which is not a payment breach, and provides notice to the Non-Breaching Party of such dispute within such [***] calendar day cure period or [***] calendar day notice period (as applicable), the Non-Breaching Party will not have the right to terminate this Agreement in accordance with Section 11.2.2 or Section 11.2.3, 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 [***] ([***]) calendar days following such determination. It is understood and acknowledged that during the pendency of such dispute, all the terms and conditions of this Agreement will remain in effect and the Parties will continue to perform all of their respective obligations hereunder, including satisfying any payment obligations.
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11.2.5. |
Termination for Insolvency.
|
(a) |
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 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 [***] ([***]) calendar 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.
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(b) |
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”) or analogous provisions of Applicable Law outside the U.S. licenses of rights to “intellectual property” as defined in Section 101(56) of the Bankruptcy Code or analogous provisions of Applicable Law outside the U.S. The Parties will retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code or analogous provisions of Applicable Law outside the U.S. Upon the commencement of a bankruptcy proceeding 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 all embodiments which, if not already in its possession, will be promptly delivered to the non-bankrupt Party upon written request.
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11.2.6. |
Termination for Patent Challenge. Akcea may terminate this Agreement if Novartis or its Affiliates disputes, or assists any Third Party to dispute, the validity of any Licensed Patent, in a patent re-examination, inter-partes review, post grant or other patent-office proceeding, opposition, litigation, or other court proceeding and, within [***] ([***]) calendar days written notice from Akcea, Novartis fails to rescind any and all of such actions, provided however that, nothing in this clause prevents Novartis or its Affiliates from taking any of the actions referred to in this clause and provided further that Akcea will not have the right to terminate if Novartis or its Affiliates:
|
(a) |
asserts invalidity as a defense in any court proceeding brought by Akcea or its Affiliates asserting infringement of a Licensed Patent; or
|
(b) |
Acquires a Third Party that has an existing challenge, whether in a court or administrative proceeding, against a Licensed Patent; or
|
(c) |
licenses a product for which Akcea has an existing challenge, whether in a court or administrative proceeding, against a Licensed Patent.
|
11.2.7. |
Termination for Safety Issue. Each Party shall have the right to terminate this Agreement without any further obligations or liabilities towards the other Party (other than the consequences of termination set forth in Section 11.3 below), if, during the term of the Agreement, such Party delivers written notice to the other Party that such Party reasonably and in good faith has determined that the continued Development or Commercialization of such Product presents safety concerns that pose an unacceptable risk or threat of harm in humans, or (ii) would violate any Applicable Law, ethical principles, or principles of scientific integrity.
|
11.3. |
Consequences of Expiration or Termination of this Agreement.
|
11.3.1. |
Consequence of Termination of this Agreement. If this Agreement is terminated by a Party in accordance with Section 11.2 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., with respect to the terminated Product (the “Terminated Product” and its Exclusive Target, the “Terminated Target”), or in its entirety):
|
(a) |
Options. If not exercised prior to the date of termination, Novartis’ Option will terminate with respect to any Terminated Product.
|
(b) |
Licenses. Any license granted by Akcea to Novartis under Section 5.1 will terminate. Novartis and its Affiliates and, subject to Section 5.2.3, its Sublicensees will cease selling Terminated Products under such licenses, unless Akcea elects to have Novartis continue to sell the applicable Terminated Product as part of the Transition Services under Section 11.3.4; provided, that (i) in any case, unless otherwise agreed by the Parties under Section 11.3.4, Novartis and its Affiliates and Sublicensees will have the right to sell any remaining inventory of Terminated Product over a period of no greater than [***] months after the effective date of such termination, Novartis will pay Akcea royalties in accordance with Section 7.8 on the Net Sales of such inventory of such Products, to the extent not already paid; and (ii) if there are any Clinical Studies being conducted at the date of termination, Novartis shall be entitled to continue Developing and Manufacturing Products to the extent and for the period necessary to effect an orderly transfer or wind down of such Clinical Studies in a timely manner and in accordance with all Applicable Laws.
|
(c) |
Exclusivity. Neither Party will have any further obligations under ARTICLE 4 of this Agreement insofar as it relates to a Terminated Product and the Terminated Target.
|
(d) |
Pre-Option Development Plan. Neither Party will have any further obligations with respect to the Terminated Product under the Pre-Option Development Plan.
|
(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 to which it does not retain rights under the surviving provisions of this Agreement. 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. Each Party will also be permitted to retain such additional copies of or any computer records or files containing the other Party's Confidential Information that have been created solely by automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with the retaining Party’s standard archiving and back-up procedures, but not for any other use or purpose. All Confidential Information shall continue to be subject to the terms of this Agreement for the period set forth in ARTICLE 12.
|
(f) |
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 accrue as of the date the applicable milestone event is achieved even if the payment is not due at that time.
|
(g) |
Survival. The following provisions of this Agreement will survive the expiration or earlier termination of this Agreement: Section 5.2.3 (Effect of Termination on Sublicenses); Section 5.3 (Consequences of Natural Expiration of this Agreement); Section 5.8 (Cross-Licenses Under Program Technology); Section 7.11.3 (Records Retention); Section 7.12 (Audits); Section 8.2.1 (Akcea Technology and Novartis Technology); Section 8.2.2 (Program Technology); Section 9.3 (Disclaimer of Warranty); ARTICLE 10 (Indemnification; Insurance); ARTICLE 11 (Term; Termination); ARTICLE 12 (Confidentiality); ARTICLE 13 (Miscellaneous); Appendix 1 (to the extent definitions are embodied in the foregoing listed Articles and Sections).
|
11.3.2. |
Akcea: Special Consequences of Certain Terminations. If (A) Novartis terminates the Agreement under Section 11.2.1 or Section 11.2.7 or (B) Akcea terminates this Agreement under Section 11.2.2(b), Section 11.2.3(b), Section 11.2.5, Section 11.2.6, or Section 11.2.7, then, in addition to the terms set forth in Section 11.3.1, the following additional terms will also apply but only with respect to the Terminated Product:
|
(a) |
Novartis will and hereby does grant to Akcea:
|
(i) |
a sublicensable, worldwide, exclusive license or sublicense, as the case may be, under all Novartis Technology (excluding Novartis Background Technology) Controlled by Novartis as of the date of such termination that Covers the Terminated Product as of such date;
|
(ii) |
a sublicensable, worldwide, non-exclusive royalty-bearing license or sublicense, as the case may be, under all Novartis Background Technology Controlled by Novartis as of the date of such termination that Covers the Terminated Product as of such date; provided, however, that Akcea will not sublicense to [***] any Novartis Background Know-How claiming or covering [***] without Novartis’ prior written consent (such consent not to be unreasonably withheld, delayed or conditioned); and
|
(iii) |
in each case solely to Develop, make, have made, use, sell, offer for sale, have sold, import and otherwise Commercialize the Terminated Product. Novartis will execute confirmatory license grants of the licenses granted to Akcea under this Section 11.3.2(a) within [***] ([***]) calendar days following the effective date of termination.
|
(b) |
Within [***] ([***]) calendar days following the date of termination, Novartis will deliver to Akcea for use with respect to the Development and Commercialization of the Terminated Product, any Know-How, data, results, regulatory information, pricing and market access strategy information, health economic study information, material communications with payors, regulatory filings in the possession of Novartis, or copies thereof, as of the date of such termination that relate solely to such Terminated Product;
|
(c) |
Within [***] ([***]) calendar days following the date of termination, Novartis will grant to Akcea an exclusive, royalty-free, fully paid up license under any Trademarks that are specific to a Terminated Product solely for use with such Terminated Product;
|
(d) |
Akcea will control and be responsible for all aspects of the Prosecution and Maintenance of all Akcea Product-Specific Patents and Jointly-Owned Program Patents and Novartis will provide Akcea with (and will instruct its counsel to provide Akcea with) all of the information and records in Novartis’ and its counsel’s possession related to the Prosecution and Maintenance of such Akcea Product-Specific Patents and Jointly-Owned Program Patents, in each case only in respect of the Terminated Product;
|
(e) |
If requested by Akcea, Novartis will sell to Akcea all remaining API or Finished Drug Product in Novartis’ possession at a price equal to [***] (or [***]) at the time such material was [***]; and
|
(f) |
Akcea may request Novartis to support (or cause to be supported by Novartis’ CMO) a technology transfer to Akcea (or Akcea’s designated Third Party supplier) of any technology, information and data reasonably related to Novartis’ or such CMO’s manufacturing and supply of API and/or Finished Drug Product for such Product, and if so requested, Novartis will, at no cost to Akcea for the first [***] hours of Novartis’ time, support (or cause to be supported by Novartis’ CMO) such a technology transfer and Novartis will (or will cause Novartis’ CMO to) continue to (i) provide reasonable support and cooperation with Akcea’s regulatory filings and interactions with Regulatory Authorities related to Novartis’ or such CMO’s API and/or Finished Drug Product manufacturing (including any required inspections), and (ii) supply (or cause to be supplied by Novartis’ CMO) API and/or Finished Drug Product to Akcea, at a price equal to [***] ([***]) at the time such material was [***], for a period of up to [***] ([***]) months to enable Akcea to identify and contract with a suitable Third Party API and/or Finished Drug Product manufacturer.
|
11.3.3. |
Novartis: Special Consequences of Certain Terminations. If Novartis terminates this Agreement under Section 11.2.2(a), Section 11.2.3(a) or Section 11.2.5, all of the provisions of Section 11.3.1 will apply, except that Novartis, its Affiliates, and Sublicensees will have the right to sell any remaining inventory of Product and Novartis will pay Akcea royalties in accordance with Section 7.8 on the Net Sales of such inventory of such Products to the extent not already paid (unless Akcea elects to have Novartis continue to sell the applicable Terminated Product as part of the Transition Services under Section 11.3.4 (in which case Akcea will own all revenue derived from the Product after the termination date)).
|
11.3.4. |
Transition Services.
|
(a) |
In the case where (i) Novartis terminates the Agreement under Section 11.2.1 (Novartis’ Termination for Convenience) or Section 11.2.7 (Termination for Safety Issue), or (ii) Akcea terminates this Agreement under Section 11.2.2(b) (Akcea’s Right to Terminate), Section 11.2.3(b) (Remedies for Failure to Use Commercially Reasonable Efforts), or Section 11.2.6 (Termination for Patent Challenge) with respect to one or more Products, the Parties wish to provide a mechanism to ensure that patients who were being treated with the Product prior to such termination or who desire access to the Product can continue to have access to such Product while the regulatory and commercial responsibilities for the Product are transitioned from Novartis to Akcea. As such, Akcea may request Novartis perform transition services that are necessary or useful to (1) provide patients with continued access to the applicable Products, (2) enable Akcea (or Akcea’s designee) to assume and execute the responsibilities under all Regulatory Approvals and ongoing Clinical Studies for the applicable Product, and (3) ensure long-term continuity of supply for the Product (collectively, the “Transition Services”), including Transition Services related to commercial matters, patient continuity, medical affairs, government and managed care contracts, quality, and supply chain and manufacturing. The Parties shall negotiate in good faith a Transition Services agreement and Novartis shall use Commercially Reasonable Efforts to provide such Transition Services on terms to be mutually agreed upon between the Parties for a maximum duration of [***] months (unless agreed otherwise).
|
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”). Subject to the other provisions of this ARTICLE 12, each Party shall hold as confidential such Information of the other Party and its Affiliates in the same manner and with the same protection as such Receiving Party maintains its own Confidential Information.
|
12.2. |
Prior Confidentiality Agreement Superseded. As of the Effective Date, this Agreement supersedes the Confidential Disclosure Agreement executed by Ionis and Novartis on February 4, 2016 (including any and all amendments thereto). All information exchanged among Ionis, Akcea and Novartis under such Confidential Disclosure Agreement are deemed Confidential Information hereunder and 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 Confidential Information of the Disclosing Party to (i) employees, agents, contractors, consultants and advisors of the Receiving Party and its Affiliates, and sublicensees and to (ii) Third Parties to the extent reasonably necessary for the performance of its obligations or exercise of rights granted or reserved in this Agreement, in each case under confidentiality provisions no less restrictive than those in this Agreement. In addition, a Receiving Party or its Affiliates may disclose Confidential Information of the Disclosing Party (i) 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 Regulatory Approvals, conducting non-Clinical Studies or Clinical Studies, marketing a 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; (ii) on a need-to-know basis, in communication with actual or potential lenders, potential acquirers, investors, merger partners, consultants, or professional advisors, in each case under confidentiality provisions no less restrictive than those of this Agreement; (iii) 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 (iv) as mutually agreed to in writing by the Parties.
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12.4. |
Press Release; Publications; Disclosure of Agreement.
|
12.4.1. |
Announcement of Transaction. On or promptly after the Execution Date and, on a Product-by-Product basis, on or promptly after exercise by Novartis of the Options, Novartis and Akcea (and/or Ionis) will issue a public announcement in form and substance mutually agreed by the Parties.
|
12.4.2. |
Other Disclosures.
|
(a) |
During the Option Period. 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, during the Option Period, neither Novartis nor its Affiliates will make any public announcements, press releases or other public disclosures concerning a Product, this Agreement or the terms or the subject matter hereof without the prior written consent of Akcea, which consent will not be unreasonably withheld, conditioned or delayed.
|
(b) |
After Option Exercise. 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, after Option Exercise with respect to a Product, neither Akcea nor its Affiliates will make any public announcements, press releases or other public disclosures regarding this Agreement or the terms or the subject matter hereof, or that will materially impact a Product, without the prior written consent of Novartis, which consent 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 use Commercially Reasonable Efforts to immediately notify (and provide as much advance notice as possible, but at a minimum [***] ([***]) Business Days advance notice to) the other Party of any event materially related or significant to a Product so the Parties may analyze the need for or desirability of publicly disclosing or reporting such event. If Novartis intends to make a press release or similar public communication disclosing information that may materially impact a Product licensed by Novartis hereunder (i) Novartis will submit such proposed communication to Akcea for review at least [***] ([***]) Business Days in advance of such proposed public disclosure, (ii) Akcea will have the right to review and recommend changes to such communication, and (iii) Novartis will in good faith consider any changes that are timely recommended by Akcea. For the purpose of this Section 12.4.4, an event materially related or significant to a Product or information that may materially impact a Product shall be limited to events or information concerning Product regulatory filings, regulatory approvals in Major Markets, reimbursement matters in Major Markets, data from Phase III clinical trials or supporting new indications regulatory filings, safety and efficacy issues, pricing or sales projections. If Akcea intends to make a press release or similar public communication disclosing material information that can negatively impact the Product, unless Akcea’s or its Affiliate’s existing confidentiality obligations to a Third Party prohibit it from doing so, (i) Akcea will submit such proposed communication to Novartis for review at least [***] ([***]) Business Days in advance of such proposed public disclosure, (ii) Novartis will have the right to review and recommend changes to such communication, and (iii) Akcea will in good faith consider any changes that are timely recommended by Novartis.
|
12.4.5. |
Scientific or Clinical Presentations. Upon exercise of the Option on a Product-by-Product basis, Novartis shall be solely responsible for any Scientific or Clinical Presentations related to the Product. Any Scientific or Clinical Presentation relating to the Product that represents work in which Akcea (or its Affiliate) and for which Akcea is an author or a co-author, authorship will be mutually agreed to by Novartis and Akcea before any such abstract, presentation or publication is submitted to the Third Party publisher for publication and will appropriately represent the contribution of Akcea (or its Affiliate), Novartis and any Third Party collaborators. Industry-recognized principles of both inclusion of authors and order of authors will be applied to respect appropriately the contributions of all parties to the inventions or data being presented or published. For abstract, presentation or publication that are authored or co-authored with Akcea according to the preceding sentence, 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. 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 [***] ([***]) Business 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. If at any time during such [***] ([***]) Business 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 [***] ([***]) calendar 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. In Scientific or Clinical presentation, Novartis will acknowledge Akcea (as an affiliate of Ionis) role in discovering the Product and that the Product is under license from Akcea. For the avoidance of doubt, the term of this Section 12.4.5 shall be limited to publication authored or co-authored by Akcea personnel in peer reviewed journal and limited to abstracts authored or co-authored by Akcea at international congresses.
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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. Novartis will acknowledge in any press release, public presentation or publication regarding a Product, Akcea’s and/or Ionis’ role in discovering and developing the Product, that the Product is under license from Akcea and otherwise acknowledge Akcea’s contributions, and Akcea’s and, if referring to Ionis or Akcea as an Affiliate of Ionis, Ionis’ and Akcea’s stock ticker symbol (e.g., Nasdaq: IONS). Akcea and Ionis may include each Product (and identify Novartis as its partner for the Product) in Akcea’s and Ionis’ respective drug pipelines, any press release, public presentation or publication mentioning a Product.
|
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 7.9.3(c), 8.2.3 and 13.1.5, any Dispute between the Parties or their respective Affiliates will be resolved in accordance with this Section 13.1.
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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 Chief Executive Officer of Novartis Pharmaceuticals Unit and to the Chief Executive Officer of Akcea (the “Executives”) for attempted resolution. If the Executives are unable to resolve such Dispute within [***] ([***]) calendar 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 cannot resolve the Dispute through Escalation, and a Party desires to pursue resolution of the Dispute, any Dispute will be finally settled under the Rules of Arbitration of the ICC 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, will 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 will be New York, New York and the language to be used in any such proceeding (and for all testimony, evidence and written documentation) will be English. The IBA Rules on the Taking of Evidence in International Arbitration will 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 will have no authority to award consequential damages not permitted to be recovered pursuant to Section 10.6. The Parties agree to select the arbitrator(s) within [***] ([***]) calendar days after initiation of the arbitration. The hearing will be concluded within [***] ([***]) calendar days after selection of the arbitrator(s) and the award will be rendered within [***] calendar days after the conclusion of the hearing, or of any post hearing briefing, which briefing will be completed by both Parties within [***] ([***]) calendar 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 practicable.
|
(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 will – 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 Akcea and Novartis 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 remediation plan within [***] ([***]) calendar days after the date the Parties agreed to such remediation plan (or during a longer period of time if such breach is not reasonably curable within such [***]-calendar 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 will 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.
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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 7.9.3(c) and Section 8.2.3 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.
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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. The United Nations Convention on Contract for the International Sales of Goods (1980) shall not apply to the interpretation of this Agreement.
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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 7.8.2(e), Section 10.1 or Section 10.2, and the offsets under Sections 7.9.3(b) and Section 7.9.3(d)). Except for the offset and credits explicitly set forth in Section 7.12, Section 7.9.3(b), and Section 7.9.3(d), 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.
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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. In addition, Akcea may assign or transfer its rights to receive payments under this Agreement (but no liabilities), without Novartis’ consent, to an Affiliate or to a Third Party in connection with a payment factoring transaction. Except in the case where Akcea assigns or transfers its rights to receive payments under this Agreement to a Third Party, any permitted assignee will assume all obligations of its assignor under this Agreement. Subject to the terms of this Agreement, this Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. 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 higher withholding taxes compared to the withholding taxes applicable prior to such assignment, then such higher withholding taxes will be borne by the assigning Party (“Transferring Party”) such that the Party (“Non-Transferring Party”) entitled to receive a given payment under this Agreement receives the amount of such payment such Party would have otherwise received under this Agreement but for the assigning Party’s transfer or assignment. Any purported assignment or transfer made in contravention of this Section 13.4 will be null and void. This Section 13.4 will apply to the assignment of Licensed Technology mutatis mutandis.
|
13.5. |
To the extent the Non-Transferring Party utilizes a [***] in any year, the Non-Transferring Party will [***] the Transferring Party an amount equal to (i) [***]% of the [***] or (ii) [***] the Non-Transferring Party resulting from the [***], which [***] will be calculated as the sum of (a) the amount [***] multiplied by the highest [***] applicable to the Non-Transferring Party; plus (b) any [***] of the [***] by the Non-Transferring Party. To assist the Transferring Party in determining when a [***] from the Non-Transferring Party pursuant to the foregoing sentence, beginning with the first Annual tax return for the year in which the Transferring Party [***] (i.e., [***]) payment under this Section 13.4, and each year thereafter (including, for clarity, all years in which the Non-Transferring Party [***] or [***]), the Non-Transferring Party will provide the Transferring Party with the relevant portions of the Non-Transferring Party’s Annual tax returns (federal and state) and, in years in which the Non-Transferring Party utilizes the [***], supporting documentation for such [***].
|
13.6. |
Change of Control Event Involving Novartis or Akcea. A Party subject to a Change of Control Event will provide written notice to the other Party within [***] ([***]) calendar days following the closing of a Change of Control Event, and such notice will identify the Third Party acquiring company (the “Acquirer”) and the contact information of the person at the Acquirer with whom the other Party will work to schedule meetings between the Acquirer and the other Party. Within [***] ([***]) calendar days following the closing of such Change of Control Event, the Party or the Acquirer will meet or hold a teleconference with the other Party at a mutually agreed date, time and/or place to discuss any possible impacts of the Change of Control Event for this Agreement. In the event of a change of control involving Akcea, within [***] calendar days following the announcement of a Change of Control Event, Novartis, Akcea and Ionis shall meet and negotiate in good faith any amendment required to this Agreement reflecting obligations that may have been assumed by Ionis on behalf of Akcea and rights that may be owned by Ionis but that may be required for Novartis to fully exercise the licenses granted under this Agreement.
|
13.7. |
Subcontracting.
|
13.7.1. |
Subject to the terms of this Section 13.7, each Party will have the right to engage Third-Party subcontractors to perform certain of its obligations under this Agreement. Any subcontractor to be engaged by a Party to perform a Party’s obligations set forth in the Agreement 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 a subcontractor hereunder will remain responsible and obligated for such activities and will not grant rights to such subcontractor that interfere with the rights of the other Party under this Agreement. Each Party will be responsible for any income or non-income taxes that arise as a result of such Party’s use of any Third Party subcontractors hereunder, including payroll, income, withholding, sales and use, VAT, customs, duties excise or property taxes, and such taxes will not be reimbursable expenditures.
|
13.7.2. |
Akcea agrees that, where Novartis wishes to (sub)contract with a Third Party with respect to any of the rights granted under Section 1.3.2, Akcea will, within [***] ([***]) calendar days of any request by Novartis, provide Novartis with a letter of authorization as necessary for Novartis to be able to contract with such Third Party in accordance with the terms of this Agreement. Novartis will use Commercially Reasonable Efforts to ensure that CMOs Novartis may use to conduct the manufacturing activities contemplated by Section 1.3.2 will be obligated to assign to Novartis all right, title and interest in and to any inventions developed by such (sub)contractors in the performance of such activities. In addition, Novartis will use Commercially Reasonable Efforts to include in agreements with CMOs, the [***] in the event the applicable Option is terminated, expires unexercised or this Agreement is terminated.
|
13.8. |
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, cyber-attacks, 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 shall promptly 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 and shall use commercially reasonable efforts to minimize the duration of any force majeure and resume performance of its obligation as promptly as practicable. Notwithstanding the foregoing, if such Force Majeure event induced delay or failure of performance continues for a period [***] ([***]) calendar 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.
|
13.9. |
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 Akcea, addressed to:
|
Akcea Therapeutics, Inc.
|
|
55 Cambridge Parkway
|
||
Cambridge, MA 02142
|
||
Attention: Chief Executive Officer
|
||
Fax: 760-602-1855
|
with a copy to:
|
Ionis Pharmaceuticals, Inc.
|
|
(so long as Ionis and
|
2855 Gazelle Court
|
|
Akcea are Affiliates)
|
Carlsbad, CA 92010
|
|
Attention: General Counsel
|
||
Fax: 760-268-4922
|
If to Novartis, addressed to:
|
Novartis Pharma AG
|
|
Lichtstrasse 35
|
||
4002, Basel, Switzerland
|
||
Attention: General Counsel
|
||
[***]
|
with a copy to:
|
Novartis Pharma AG
|
|
Lichtstrasse 35
|
||
4002, Basel, Switzerland
|
||
Attention: Head Global Business Development & Licensing
|
||
[***]
|
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 shall 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 shall be construed as a continuing waiver or subsequent waiver of such condition or term or of another condition or term. No waiver shall be effective unless it has been given in writing and signed by the Party giving such waiver.
|
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 “will” and “shall” 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 (or any notice, invoice or other document to be delivered by a Party hereunder) 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, and 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.
|
NOVARTIS PHARMA AG
|
||
By:
|
/s/ Paul Hudson |
Name:
|
Paul Hudson
|
|
Title:
|
CEO
|
|
NOVARTIS PHARMA AG
|
By:
|
/s/ Nigel Sheail
|
Name:
|
Nigel Sheail
|
|
Title:
|
Head of Business Development & Licensing
|
By:
|
/s/ Paula Soteropolous
|
|
Name:
|
Paula Soteropolous
|
|
Title:
|
President & CEO
|
· |
field force detailing Products to Lipid Specialists;
|
· |
providing input on medical affairs communications;
|
· |
providing input on marketing materials and strategy;
|
· |
participating in field force trainings; and
|
· |
participating in Novartis presence at medical meetings and congresses.
|
(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.
|
(A) |
a mandatory patent listing process in such country, only Licensed Patents that are listed in such country’s patent listing will be considered “Orange Book Patents” (and therefore royalty-bearing) in such country, irrespective of whether the foreign equivalent Patent Rights of such Licensed Patents are listed in another country;
|
(B) |
a voluntary patent listing process in such country, both (x) Licensed Patents that are listed in such country’s patent listing, and (y) Licensed Patents that are not listed in such country’s patent listing but are the foreign equivalent Patent Rights of the Licensed Patents listed in the mandatory patent listing of another country, in each case will be considered “Orange Book Patents” (and therefore royalty-bearing) in such country; and
|
(C) |
no patent listing process in such country, Licensed Patents that are the foreign equivalent of the Licensed Patents listed in the mandatory patent listing of another country, in each case will be considered “Orange Book Patents” (and therefore royalty-bearing) in such country, irrespective of whether the foreign equivalent Patent Rights of such Licensed Patents are listed in another country.
|
· |
[***] – [***] kilograms of API delivered to Novartis after [***]; and
|
· |
Remaining quantities of API to be delivered to Novartis in [***] in accordance with the terms of the Quality Agreement to be agreed upon in [***].
|
· |
[***] kilograms of API delivered to Novartis in [***]; and
|
· |
Akcea will endeavor to deliver the remaining quantities of API in [***], provided that, any remaining quantity Akcea cannot deliver in [***] will be delivered as soon as practicable thereafter.
|
(a) |
Promoting the overall health of the relationship between the Parties;
|
(b) |
Developing a mutually agreed alliance launch plan covering any activities and systems that the Parties need to implement within the first one hundred (100) calendar days upon the Option Exercise of the First Product to support the Collaboration;
|
(c) |
Organizing CSC and JDCC meetings, including agendas, drafting minutes, and publishing final minutes;
|
(d) |
Supporting the co-chairs of the CSC and JDCC with organization of meetings, information exchange, meeting minutes, and facilitating dispute resolution as necessary;
|
· |
conducting all non-Clinical Studies and Clinical Studies on the Product as deemed necessary or desirable by Novartis or any applicable Regulatory Authority with Commercially Reasonable Efforts;
|
· |
preparing and filing all regulatory filings for the Product in each Major Market, including all INDs, NDAs, MAAs, JNDAs and other filings with Commercially Reasonable Efforts;
|
· |
Manufacturing or having Manufactured (including process development, validation and scale up) API, Clinical Supplies and Finished Drug Product for ongoing Development and Commercialization requirements, consistent with Novartis’ internal practices and all Applicable Laws and using Commercially Reasonable Efforts; and
|
· |
conducting, at Novartis’ sole expense, Commercialization activities in connection with the marketing, promotion, and sale of the Product with Commercially Reasonable Efforts in each and every Major Market (except for co-commercialization Akcea may conduct if mutually agreed between the Parties)
|
· |
Initiate a [***] within [***] months after Novartis exercises the option for the Product;
|
· |
[***] or [***] covering the Product within [***] months after [***] for the first [***] for the Product, unless the FDA or EMA require any additional actions for [***], as applicable, in which case Novartis shall evaluate such actions and use Commercially Reasonable Efforts to complete such action; and
|
· |
Use Commercially Reasonable Efforts to market the approved Product [***] as soon as practicable after receiving Regulatory Approval for the Product [***].
|
Section 1. |
Sale and Purchase of Ionis Stock
|
Section 2. |
Purchase of Shares of Akcea Common Stock or Additional Shares of Ionis Common Stock.
|
Section 3. |
Representations and Warranties of Ionis
|
Section 4. |
Representations and Warranties of Novartis
|
Section 5. |
Notice of Intent to Acquire Akcea Shares
|
Section 6. |
Akcea Voting Agreement
|
Section 7. |
Transfer, Resale, Legends.
|
Section 8. |
Conditions to Closing
|
Section 9. |
Registration Rights; Lockup Agreement
|
Section 10. |
Governing Law; HSR; Termination; Miscellaneous.
|
If to Ionis, addressed to:
|
Ionis Pharmaceuticals, Inc.
|
2855 Gazelle Court
|
|
Carlsbad, CA 92010
|
|
Attention: Chief Operating Officer
|
|
Fax: 760-918-3592
|
with a copy to:
|
Ionis Pharmaceuticals, Inc.
|
2855 Gazelle Court
|
|
Carlsbad, CA 92010
|
|
Attention: General Counsel
|
|
Fax: 760-268-4922
|
|
|
|
If to Akcea, addressed to:
|
Akcea Therapeutics Inc.
|
55 Cambridge Parkway, Suite 100
|
|
Cambridge, MA 02142
|
|
Attention: Chief Executive Officer
|
|
Fax: 760-602-1855
|
|
|
|
with a copy to:
|
Akcea Therapeutics Inc.
|
2855 Gazelle Court
|
|
Carlsbad, CA 92010
|
|
Attention: General Counsel
|
|
Fax: 760-268-4922
|
|
|
|
If to Novartis, addressed to:
|
Novartis Pharma AG
|
Lichtstrasse 35
|
|
4002, Basel, Switzerland
|
|
Attention: General Counsel
|
|
Fax: +41613247399
|
|
|
|
with a copy to:
|
Novartis Pharma AG
|
Lichtstrasse 35
|
|
4002, Basel, Switzerland
|
|
Attention: Head Global Business Development & Licensing
|
|
Fax: +41613247399
|
Novartis Pharma AG
|
|||
By:
|
/s/ Paul Hudson
|
||
Its:
|
Novartis Pharma CEO
|
||
Novartis Pharma AG
|
|||
By:
|
/s/ Nigel Sheail
|
||
Its:
|
Head of Business Development & Licensing
|
||
Ionis Pharmaceuticals, Inc.
|
|||
By:
|
/s/ B. Lynne Parshall
|
||
Its:
|
Chief Operating Officer
|
||
Akcea Therapeutics Inc.
|
|||
By:
|
/s/ Paula Soteropoulos
|
||
Its:
|
President & CEO
|
(A) |
Ionis and Bayer have entered into a License Agreement dated May 1, 2015, as amended (the “Agreement”) in respect of ISIS-FXIRx, including option rights to a Factor XI follow-on compound and a [***] compound;
|
(B) |
Under the Agreement, Ionis has completed certain clinical and non-clinical studies for ISIS-FXIRx, including the “Isis Completion Activities” and has identified and designated a follow-on Development Candidate targeting Factor XI incorporating Ionis’ liver-targeted Conjugate Technology, [***];
|
(C) |
The Agreement provides for an Option for Bayer to license ISIS-FXIRx-2 upon the designation of a Development Candidate and Bayer is exercising its Option to ISIS-FXIRx-2 to obtain the license to ISIS-FXIRx-2 in accordance with this Amendment #1; and
|
(D) |
To expedite the Development of ISIS-FXIRx and ISIS-FXIRx-2, Ionis will conduct the Ionis Development Activities described in this Amendment #1.
|
1. |
DEFINITIONS - Appendix 1 of the Agreement shall be amended by adding or amending the definitions as set forth in Appendix 1A attached hereto this Amendment #1.
|
2. |
ARTICLE 1
|
2.1 |
Sections 1.1 through 1.4 of the Agreement
|
2.2 |
Section 1.6
|
2.3 |
New Section 1.7a
|
“1.7a
|
Ionis Development Activities
|
1.7a(i) |
Ionis Development Activities for ISIS-FXIRx. Ionis will use Commercially Reasonable Efforts to Complete the phase IIb clinical trial set forth in Schedule 1.7a attached to this Amendment #1 for ISIS-FXIRx (such study, the “CS5 Study”), in accordance with the timelines specified therein. Ionis and Bayer will collaborate in the creation of a detailed protocol for the CS5 Study to be finalized no later than [***], however, Ionis will [***] regarding [***] of the CS5 Study and such [***] shall be consistent with Schedule 1.7a.
|
1.7a(ii) |
Ionis Development Activities for ISIS-FXIRx-2. Ionis will use Commercially Reasonable Efforts to Complete the [***], and [***] the Phase I Clinical Trial, in each case as expressly set forth in Schedule 1.7a to this Amendment #1 for ISIS-FXIRx-2 (such [***], collectively, the “Non-Clinical Studies” and such Phase I Clinical Trial, the “CS1 Study”). Ionis and Bayer will collaborate in the creation of detailed protocols for the Non-Clinical Studies and the CS1 Study no later than [***]; however, Ionis will [***] regarding [***] of the Non-Clinical Studies and the CS1 Study and such [***] shall be consistent with Schedule 1.7a.
|
1.7a(iii)
|
Amendment Data Package. As soon as practicable following Completion of each of the Non-Clinical Studies, the CS1 Study and the CS5 Study (the CS1 Study and CS5 Study, collectively the “Amendment-Clinical Studies”), Ionis will deliver to Bayer, as applicable, [***]. All such information described in this paragraph collectively the “Amendment Data Package”.
|
1.7a(iv)
|
Information Exchange. Prior to the Decision Deadline, Ionis shall keep Bayer regularly informed on the Ionis Development Activities. The Parties (including the appropriate clinical and non-clinical personnel of each Party) shall regularly meet in person or hold a telephone conference to share and discuss the progress of ongoing Ionis Development Activities as well as any available new data and results from ongoing or completed Ionis Development Activities, including but not limited to minutes of the Data and Safety Monitoring Board and/or any other relevant safety documentation. Each Party’s Alliance Manager will facilitate and set the agenda for such meetings and otherwise coordinate such interactions between the Parties.
|
1.7a(v)
|
Bayer Development Activities. For the avoidance of doubt, irrespective of the Ionis Development Activities and subject to payment by Bayer of the license fee pursuant to Section 7.3.1 of the Agreement (as amended by this Amendment #1), Bayer has the right to initiate at any time additional Development activities with regard to ISIS-FXIRx and/or ISIS-FXIRx-2. Bayer shall consult and coordinate with Ionis prior to initiating any such Development activities. In setting up its Development activities, Bayer shall reasonably consider Ionis’ comments and shall not conduct any Development activity that would have a material negative impact on the Completion of the Ionis Development Activities.”
|
2.4 |
New Section 1.8.3
|
2.5 |
Section 1.9
|
2.5.1 |
Section 1.9.2(a)(ii) – In the first sentence of Section 1.9.2(a)(ii) the words “first [***]” are deleted and replaced with the words “first [***]”.
|
2.5.2
|
New Section 1.9.2(c) - The following Section shall be added as Section 1.9.2(c):
|
“1.9.2(c)
|
Supplies for the IONIS Development Activities. Upon Ionis’ request, Bayer will ([***]) provide Ionis with approximately [***] of API for ISIS-FXIRx purchased by Bayer under Purchase Order No. [***], for Ionis’ use in the CS5 Study and together with such API will provide Ionis with such minimum documentation related to Bayer’s transport and storage of such API that Ionis reasonably requires to comply with Applicable Law (including GMP and GCP); for clarity and notwithstanding anything to the contrary, Ionis shall remain responsible for [***] of such API for use in the CS5 Study. In addition, [***], Bayer agrees that Ionis may use in the CS5 Study the Finished Drug Product in Ionis’ possession (or the possession of Ionis’ CMO) that was previously ordered by Bayer under Purchase Order No. [***], and Ionis will [***] for such Finished Drug Product.
|
2.5.3 |
Section 1.9.3 of the Agreement shall be deleted in its entirety and replaced with the following:
|
“1.9.3 |
After Ionis Completes the CS5 Study. After Ionis completes the CS5 Study, and upon Bayer’s delivery of a Continuation Notice to Ionis, upon Bayer’s request, Ionis will deliver to Bayer any inventory of cGMP API, Finished Drug Product and packaged Clinical Study material for ISIS-FXIRx in Ionis’ possession on the terms set forth on Schedule 1.9.2(a) of the Agreement (except for any API Bayer delivered to Ionis for the CS5 Study, which will be returned to Bayer free of charge) and taking into account any amounts Bayer previously paid Ionis for any such material.”
|
2.5.3 |
New Section 1.9.4 - The following new Section 1.9.4 shall be added to the Agreement:
|
“1.9.4 |
After Ionis Completes the Non-Clinical Studies and CS1 Study. After Ionis completes the Non-Clinical Studies and the CS1 Study and upon Bayer’s delivery of a Continuation Notice to Ionis, upon Bayer’s request, Ionis will provide to Bayer any inventory of cGMP API, Finished Drug Product and packaged Clinical Study material for ISIS-FXIRx-2 in Ionis’ possession on the terms set forth on Schedule 1.9.2(a) of the Agreement.”
|
2.5.4 |
The following new Section 1.9.5 shall be added to the Agreement:
|
“1.9.5
|
Joint CMC Plan. Following Completion of the Ionis Development Activities and Bayer’s delivery of a Continuation Notice, Bayer will be responsible for supplying API and Finished Product for all future Development and Commercialization. To facilitate Bayer’s efforts in that regard, within the first [***] days after the Amendment Date, the Parties’ CMC teams will discuss and mutually agree on a joint CMC plan for technology transfer for API and Finished Drug Product Manufacturing for ISIS-FXIRx and ISIS-FXIRx-2, however, Bayer will [***] to set up the CMC plan; provided, further, that such [***] will not permit Bayer to [***] to conduct any activity that [***]. Each Party will use Commercially Reasonable Efforts to conduct their respective activities under the mutually agreed CMC plan.”
|
3. |
ARTICLE 2
|
4. |
New ARTICLE 2A
|
2.A(i) |
Within [***] ([***]) days following Bayer’s receipt of the last document required to constitute the Amendment Data Package (the “Decision Deadline”), Bayer shall deliver written notice to Ionis indicating that Bayer will either (i) continue the Development and Commercialization of one or both of ISIS-FXIRx and/or ISIS-FXIRx-2 in accordance with the Agreement (such notice, a “Continuation Notice”), or (ii) terminate the Agreement either (x) in its entirety or (y), subject to Bayer having delivered to Ionis a Drug Discovery Request Notice regarding [***] prior to delivering the notice of termination, with respect to ISIS-FXIRx and ISIS-FXIRx-2 only (such notice, a “Termination Notice”).
|
2.A(ii) |
If, by the Decision Deadline, Bayer delivers a Continuation Notice to Ionis, then on the earlier of (i) [***] ([***]) days following Bayer’s delivery of such Continuation Notice, or (ii) Initiation by Bayer of a Clinical Study of ISIS-FXIRx-2 following delivery of the Continuation Notice, Bayer shall pay to Ionis within [***] days following receipt of an invoice from Ionis a milestone payment of $[***].
|
2.A(iii) |
If, by the Decision Deadline, Bayer delivers a Termination Notice to Ionis, then the Agreement will automatically terminate, as the case may be, either (i) with respect to ISIS-FXIRx and ISIS-FXIRx-2 or (ii) in its entirety, the provisions of Section 11.3 of the Agreement will apply and all rights to ISIS-FXIRx, ISIS-FXIRx-2 and, as the case may be, [***] will revert back to Ionis.
|
5. |
ARTICLE 3
|
5.1 |
Section 3.3.3 shall no longer apply to ISIS-FXIRx-2.
|
5.2 |
The following Section 3.3.4 shall be added to the Agreement:
|
“3.3.4 |
Ionis Development Activities. Ionis will be responsible for all costs associated with the Ionis Development Activities under Schedule 1.7a, including any costs associated with changes to the Amendment-Clinical Studies required by a Regulatory Authority.”
|
5.3 |
New Section 3.5 - The following Section 3.5 shall be added to the Agreement:
|
6. |
ARTICLE 5
|
6.1 |
Section 5.1.2 shall be amended to read as follows:
|
6.2 |
Section 5.2.1 shall be amended to no longer refer to the milestone payment for Completion of the CS IV Study, but to the milestone payment following delivery of a Continuation Notice by Bayer pursuant to Article 2.A(ii). The following sentence shall be added at the end of Section 5.2.1:
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6.3 |
Section 5.2.2 shall no longer apply to ISIS-FXIRx-2 and will be limited in scope to [***].
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7. |
ARTICLE 7
|
7.1 |
Section 7.2 shall no longer apply to ISIS-FXIRx-2, and Section 7.2.1 is deleted in its entirety.
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7.2 |
Section 7.3.1 shall be deleted in its entirety and replaced by the following:
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7.3 |
Section 7.4 – The first sentence of Section 7.4 shall be deemed amended to read as follows:
|
7.4 |
Section 7.5 shall be deleted in its entirety.
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8. |
New Article 9A
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9. |
ARTICLE 11
|
9.1 |
Section 11.2.1 shall be deleted in its entirety and replaced by the following:
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10. |
Article 13
|
10.1 |
13.8. Notices. For notices Ionis delivers to Bayer, the company shall be Bayer AG, having an address at Müllerstr. 178, 13353 Berlin. Section 13.8 shall be deemed amended accordingly.
|
11. |
Appendix 5 (Isis Core Technology Patents) and Appendix 7 (Isis Product-Specific Patents) shall be deleted in their entirety and replaced by Appendix 5A (Ionis Core Technology Patents) and Appendix 7A (Ionis Product-Specific Patents) attached hereto this Amendment.
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12. |
Miscellaneous
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12.1 |
All provisions of the Agreement not altered by this Amendment shall remain in force unaltered. All provisions of the Agreement altered by this Amendment shall only be altered as far as expressly stated in this Amendment.
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12.2 |
The miscellaneous clauses as set out in Section 13 of the Agreement shall apply mutatis mutandis to this Amendment.
|
Berlin,
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Feb 13, 2017
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Carlsbad, CA USA
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February 10, 2017
|
(Place)
|
(Date)
|
(Place)
|
(Date)
|
Bayer AG
|
Ionis Pharmaceuticals, Inc.
|
||
ppa. /s/ Julio Triana
|
/s/ B. Lynne Parshall
|
||
Name: Julio Triana
|
Name: B. Lynne Parshall
|
||
Function/Title: Chief Financial Officer
|
Function/Title: Chief Operating Officer
|
||
i. V. /s/ Xin Ma
|
|||
Name: Dr. Xin Ma
|
|||
Function/Title:
|
Head of New Product | ||
Commercialization &
|
|||
Portfolio Strategy
|
1. |
“Amendment-Clinical Studies” has the meaning set forth in Section 2.3 above.
|
2. |
“Amendment Data Package” has the meaning set forth in Section 2 above.
|
3. |
“Continuation Notice” has the meaning set forth in Section 4 above.
|
4. |
“CS1 Study” has the meaning set forth in Section 2.3 above.
|
5. |
“CS5 Study” has the meaning set forth in Section 2.3 above.
|
6. |
“Decision Deadline” has the meaning set forth in Section 4 above.
|
7. |
“Ionis Development Activities” has the meaning set forth in Section 2.3 above.
|
8. |
“ISIS-FXIRx-2” means the Compound known as [***] having the following sequence and chemistry:
|
9. |
“ISIS-FXIRx-2 Decision” has the meaning set forth in Section 4 above.
|
10. |
“Non-Clinical Studies” has the meaning set forth in Section 2.3 above.
|
11. |
“Termination Notice” has the meaning set forth in Section 4 above.
|
Dated: May 9, 2017
|
|
|
|
/s/ STANLEY T. CROOKE
|
|
|
|
Stanley T. Crooke, M.D., Ph.D.
|
|
Chief Executive Officer
|
|
Dated: May 9, 2017
|
|
|
|
/s/ ELIZABETH L. HOUGEN
|
|
|
|
Elizabeth L. Hougen
|
|
Chief Financial Officer
|
|
1.
|
The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2017, 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.
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Dated: May 9, 2017
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|
|
|
|
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/s/ STANLEY T. CROOKE
|
|
/s/ ELIZABETH L. HOUGEN
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Stanley T. Crooke, M.D., Ph.D.
|
|
Elizabeth L. Hougen
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Chief Executive Officer
|
|
Chief Financial Officer
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
May 02, 2017 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | IONIS PHARMACEUTICALS INC | |
Entity Central Index Key | 0000874015 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 123,965,560 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 123,880,559 | 120,351,480 |
Common stock, shares outstanding (in shares) | 123,880,559 | 120,351,480 |
1 Percent Convertible Senior Notes [Member] | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Interest rate on convertible senior notes | 1.00% | 1.00% |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) [Abstract] | ||
Net income (loss) | $ 3,468 | $ (62,917) |
Unrealized gains (losses) on securities, net of tax | 266 | (2,550) |
Reclassification adjustment for realized gains included in net income (loss) | (374) | 0 |
Currency translation adjustment | (6) | 0 |
Comprehensive income (loss) | $ 3,354 | $ (65,467) |
Basis of Presentation |
3 Months Ended | |||
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Mar. 31, 2017 | ||||
Basis of Presentation [Abstract] | ||||
Basis of Presentation |
We prepared the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2017 and 2016 on the same basis as the audited financial statements for the year ended December 31, 2016. We included all normal recurring adjustments in the financial statements, which we considered necessary for a fair presentation of our financial position at such dates and our operating results and cash flows for those periods. Results for the interim periods are not necessarily indicative of the results for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited financial statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC. In the condensed consolidated financial statements we included the accounts of Ionis Pharmaceuticals, Inc. and our wholly owned subsidiary, Akcea Therapeutics, Inc., which we formed in December 2014 and its wholly owned subsidiaries, Akcea Therapeutics UK Ltd, which Akcea formed in August 2016 and Akcea Intl Ltd., which Akcea formed in February 2017. Unless the context requires otherwise, “Ionis”, “Company,” “we,” “our,” and “us” refers to Ionis Pharmaceuticals, Inc. and its wholly owned subsidiary, Akcea Therapeutics, Inc. |
Significant Accounting Policies |
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Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies |
Revenue Recognition We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our consolidated condensed balance sheet. Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue We often enter into agreements to license and sell our proprietary patent rights on an exclusive or non-exclusive basis in exchange for upfront fees, milestone payments and/or royalties. We generally recognize as revenue immediately license payments with stand-alone value when the license is delivered and for which we are reasonably assured of collecting the resulting receivable. We recognize royalty revenue in the period in which the counterparty sells the related product, unless we are unable to obtain information to estimate the royalty. For example, for the first quarter of 2017 we recorded SPINRAZA royalty revenue of $5.2 million. Research and development revenue under collaborative agreements Arrangements with multiple deliverables Our collaboration agreements typically contain multiple elements, or deliverables, including technology licenses or options to obtain technology licenses, research and development services, and in certain cases manufacturing services, and we allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. Amendments to agreements From time to time we amend our collaboration agreements. For these agreements, before we identify our deliverables and allocate consideration to each unit of accounting, we must determine if the amendment should be accounted for as a separate agreement, or if the amendment and any undelivered elements for the original agreement should be accounted for as a single new arrangement. For example, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXIRx for the prevention of thrombosis. As part of the agreement, Bayer paid us a $100 million upfront payment in the second quarter of 2015. At the onset of the agreement, we were responsible for completing a Phase 2 study of IONIS-FXIRx in patients with end-stage renal disease on hemodialysis and for providing an initial supply of active pharmaceutical ingredient, or API. In February 2017, we amended our agreement with Bayer to advance IONIS-FXIRx and to initiate development of IONIS-FXI-LRx, which Bayer licensed. As part of the 2017 amendment, Bayer paid us $75 million, which we received in April 2017. We are also eligible to receive milestone payments and tiered royalties on gross margins of IONIS-FXIRx and IONIS-FXI-LRx. We concluded that the February 2017 amendment should be evaluated with the undelivered elements of the original agreement as a single new arrangement. Under the amendment, there was a substantial increase in the consideration we are eligible to receive and it included a significant change in the deliverables we will provide. As a result, we evaluated our original and 2017 amended agreements with Bayer together to determine our deliverables. We concluded that the 2017 amendment did not impact the items we already delivered to Bayer. Identifying deliverables and units of accounting We evaluate the deliverables in our collaboration agreements to determine whether they meet the criteria to be accounted for as separate units of accounting or whether they should be combined with other deliverables and accounted for as a single unit of accounting. When the delivered items in an arrangement have "stand-alone value" to our customer, we account for the deliverables as separate units of accounting. Delivered items have stand-alone value if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis. For example, our 2017 amended agreement with Bayer has multiple elements. We evaluated the deliverables in this arrangement when we entered into the 2017 amended agreement and determined that certain deliverables have stand-alone value. Below is a list of the three units of accounting under our 2017 amended agreement:
We determined that each of these three units of accounting have stand-alone value. The license we granted to Bayer has stand-alone value because it gives Bayer the exclusive right to develop IONIS-FXI-LRx or to sublicense its rights. The development services and the remaining undelivered supply of API each have stand-alone value because Bayer or another third party could provide these items without our assistance. Measurement and allocation of arrangement consideration Our collaborations may provide for various types of payments to us including upfront payments, funding of research and development, milestone payments, licensing fees and royalties on product sales. We initially allocate the amount of consideration that is fixed and determinable at the time the agreement is entered into and exclude contingent consideration. We allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. We use the following hierarchy of values to estimate the selling price of each deliverable: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price, or BESP. BESP reflects our best estimate of what the selling price would be if we regularly sold the deliverable on a stand-alone basis. We recognize the revenue allocated to each unit of accounting as we deliver the related goods or services. If we determine that we should treat certain deliverables as a single unit of accounting, then we recognize the revenue ratably over our estimated period of performance. We determined that the allocable arrangement consideration for the 2017 amended Bayer collaboration was $76.3 million, comprised of the $75 million we received as part of the amendment and the remaining amount of the $100 million upfront payment we had not yet recognized into revenue, related to the undelivered API. We allocated the consideration based on the relative BESP of each unit of accounting. We engaged a third party, independent valuation specialist to assist us with determining BESP. We estimated the selling price of the license granted for IONIS-FXI-LRx by using the relief from royalty method. Under this method, we estimated the amount of income, net of taxes, for IONIS-FXI-LRx. We then discounted the projected income to present value. The significant inputs we used to determine the projected income of the license included:
We estimated the selling price of the development services by using our internal estimates of the cost to perform the specific services and estimates of expected cash outflows to third parties for services and supplies over the expected period that we will perform the development services. The significant inputs we used to determine the selling price of the development services included:
For purposes of determining BESP of the services we will perform and the API we will deliver in our 2017 amended Bayer transaction, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the 2017 amended agreement, we allocated the $76.3 million of allocable consideration as follows:
Assuming a constant selling price for the other elements in the arrangement, if there was an assumed ten percent increase or decrease in the estimated selling price of the IONIS-FXI-LRx license, we determined that the revenue we would have allocated to the IONIS-FXI-LRx license would change by approximately one percent, or $0.7 million, from the amount we recorded. Timing of revenue recognition We recognize revenue as we deliver each item under the arrangement and the related revenue is realizable and earned. For example, we recognized revenue for the exclusive license we granted Bayer for IONIS-FX-LRx in the first quarter of 2017 because that was when we delivered the license. We also recognize revenue over time as we provide services. Our collaborative agreements typically include a research and/or development project plan outlining the activities the agreement requires each party to perform during the collaboration. We estimate our period of performance at the inception of the agreement when the agreements we enter into do not clearly define such information. We then recognize revenue from development services ratably over such period. In certain instances, the period of performance may change as the development plans for our drugs progress. If our estimates and judgments change over the course of our collaboration agreements, it may affect the timing and amount of revenue that we recognize in future periods. Any changes in estimates are recognized on a prospective basis. The following are the periods over which we are recognizing revenue for each of our units of accounting under our 2017 amended Bayer agreement:
Multiple agreements From time to time, we may enter into separate agreements at or near the same time with the same partner. We evaluate such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. For example, in the first quarter of 2017, we and our wholly owned subsidiary, Akcea, entered into two separate agreements with Novartis at the same time: a collaboration agreement and a stock purchase agreement, or SPA. Akcea entered into a collaboration agreement with Novartis to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Under the collaboration agreement, Akcea received a $75 million upfront payment. For each drug, Akcea is responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the FDA and delivering API. Under the collaboration agreement, Novartis has an exclusive option to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. If Novartis exercises an option for one of these drugs, Novartis will pay us a license fee and will assume all further global development, regulatory and commercialization activities for the licensed drug. Akcea is also eligible to receive a development milestone payment, milestone payments if Novartis achieves pre-specified regulatory milestones, commercial milestones and tiered royalties on net sales from each drug under the collaboration. Under the SPA, Novartis purchased 1.6 million shares of Ionis’ common stock for $100 million in the first quarter of 2017 and paid a premium over the weighted average trading price at the time of purchase. Additionally, the SPA requires Novartis to purchase an additional $50 million of common stock in the future. We evaluated the Novartis agreements to determine whether we should treat the agreements separately or as a single arrangement. We considered that the agreements were negotiated concurrently and in contemplation of one another. Additionally, the same individuals were involved in the negotiations of both agreements. Based on these facts and circumstances, we concluded that we should treat both agreements as a single arrangement and evaluate the provisions of the agreements on a combined basis. Refer to Note 6, Collaborative Arrangements and Licensing Agreements for further discussion of the accounting treatment for the Novartis collaboration. Milestone payments Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and/ or commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. Prior to the first stage in the life-cycle of our drugs, we perform a significant amount of work using our proprietary antisense technology to design chemical compounds that interact with specific genes that are good targets for drug discovery. From these research efforts, we hope to identify a development candidate. The designation of a development candidate is the first stage in the life-cycle of our drugs. A development candidate is a chemical compound that has demonstrated the necessary safety and efficacy in preclinical animal studies to warrant further study in humans. During the first step of the development stage, we or our partners study our drugs in Investigational New Drug, or IND,-enabling studies, which are animal studies intended to support an IND application and/or the foreign equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining the efficacy of the development candidate. The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to request marketing authorization from the Food and Drug Administration, or FDA, and/or foreign equivalents. The Phase 3 studies typically involve larger numbers of patients and can take up to several years to complete. If the data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partner will submit an application to the FDA and/or its foreign equivalents for marketing authorization. This stage of the drug’s life-cycle is the regulatory stage. If a drug achieves marketing authorization, it moves into the commercialization stage, during which our partner will market and sell the drug to patients. Although our partner will ultimately be responsible for marketing and selling the partnered drug, our efforts to discover and develop a drug that is safe, effective and reliable contributes significantly to our partner’s ability to successfully sell the drug. The FDA and its foreign equivalents have the authority to impose significant restrictions on an approved drug through the product label and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the necessary animal and human studies are critical to obtaining claims in the product label from the regulatory agencies that would allow us or our partner to successfully commercialize our drug. Further, the patent protection afforded our drugs as a result of our initial patent applications and related prosecution activities in the United States and foreign jurisdictions are critical to our partner’s ability to sell our drugs without competition from generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size of the patient population, market penetration of the drug, and the price charged for the drug. Generally, the milestone events contained in our partnership agreements coincide with the progression of our drugs from development, to marketing authorization and then to commercialization. The process of successfully discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases. Development milestones in our partnerships may include the following types of events:
Regulatory milestones in our partnerships may include the following types of events:
Commercialization milestones in our partnerships may include the following types of events:
We assess whether a substantive milestone exists at the inception of our agreements. When a substantive milestone is achieved, we recognize revenue related to the milestone payment immediately. For our existing licensing and collaboration agreements in which we are involved in the discovery and/or development of the related drug or provide the partner with access to new technologies we discover, we have determined that the majority of future development, regulatory and commercialization milestones are substantive. For example, we consider most of the milestones associated with our strategic alliance with Biogen substantive because we are using our antisense drug discovery platform to discover and develop new drugs against targets for neurological diseases. In evaluating if a milestone is substantive we consider whether:
If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over our estimated period of performance, if any. Further information about our collaborative arrangements can be found in Note 6, Collaborative Arrangements and Licensing Agreements. Option to license In several of our collaboration agreements, we provide our partner with an option to obtain a license to one or more of our drugs. When we have a multiple element arrangement that includes an option to obtain a license, we evaluate if the option is a deliverable at the inception of the arrangement. We do not consider the option to be a deliverable if we conclude that it is substantive and not priced at a significant and incremental discount. We consider an option substantive if, at the inception of the arrangement, we are at risk as to whether our collaborative partner will choose to exercise its option to obtain the license. In those circumstances, we do not include the associated license fee in the allocable consideration at the inception of the agreement. Rather, we account for the license fee when our partner exercises its option. For example, during 2016, we earned license fee revenue when three of our partners, AstraZeneca, Biogen and Janssen, exercised their option to license three of our drugs, which under the respective agreements we concluded to be substantive options at inception. As a result, in 2016 we recognized the related revenue immediately in research and development revenue under collaborative agreements on our statement of operations as these amounts relate to drugs in development under research and collaboration arrangements. Cash, cash equivalents and short-term investments We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term investments as “available-for-sale” and carry them at fair market value based upon prices for identical or similar items on the last day of the fiscal period. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments. We use the specific identification method to determine the cost of securities sold. We have equity investments in privately and publicly held biotechnology companies that we have received as part of a technology license or partner agreement. At March 31, 2017, we held ownership interests of less than 20 percent in each of the respective companies. We account for our equity investments in publicly held companies at fair value and record unrealized gains and losses related to temporary increases and decreases in the stock of these publicly-held companies as a separate component of comprehensive income (loss). At March 31, 2017, we held equity investments in one publicly held company, Antisense Therapeutics Limited. We account for equity investments in privately held companies under the cost method of accounting because we own less than 20 percent and do not have significant influence over their operations. At March 31, 2017, we held cost method investments in three companies, Atlantic Pharmaceuticals Limited, Kastle Therapeutics and Dynacure SAS. Realization of our equity position in these private companies is uncertain. When realization of our investment is uncertain, we record a full valuation allowance. In determining if and when a decrease in market value below our cost in our equity positions is temporary or other-than-temporary, we examine historical trends in the stock price, the financial condition of the company, near term prospects of the company and our current need for cash. If we determine that a decline in value in either a public or private investment is other-than-temporary, we recognize an impairment loss in the period in which the other-than-temporary decline occurs. Inventory valuation We capitalize the costs of raw materials that we purchase for use in producing our drugs because until we use these raw materials they have alternative future uses. We include in inventory raw material costs for drugs that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single drug. For example, if one of our drugs failed, we could use the raw materials for that drug to manufacture our other drugs. We expense these costs when we deliver the drugs to our partners, or as we provide these drugs for our own clinical trials. We reflect our inventory on the balance sheet at the lower of cost or market value under the first-in, first-out method, or FIFO. We review inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value. We consider several factors in estimating the net realizable value, including shelf life of raw materials, alternative uses for our drugs and clinical trial materials, and historical write-offs. We did not record any inventory write-offs for the three months ended March 31, 2017 and 2016. Total inventory was $6.8 million and $7.5 million as of March 31, 2017 and December 31, 2016, respectively. Research, development and patent expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided. We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the United States Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. We evaluate patents and patent applications that we are not actively pursuing and write off any associated costs. Long-lived assets We evaluate long-lived assets, which include property, plant and equipment and patent costs acquired from third parties, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets. Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Basic and diluted net income (loss) per share We compute basic net income (loss) per share by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2017, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended March 31, 2017, consisted of the following (in thousands except per share amounts):
For the three months ended March 31, 2017, the calculation excludes the 1 percent and 2¾ percent notes because the effect on diluted earnings per share was anti-dilutive. For the three months ended March 31, 2016, we incurred a net loss; therefore, we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share:
Accumulated other comprehensive loss Accumulated other comprehensive loss is primarily comprised of unrealized gains and losses on investments, net of taxes and adjustments we made to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):
Convertible debt We account for convertible debt instruments, including our 1 percent and 2¾ percent notes, that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing rate. We determine the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If no similar debt instrument exists, we estimate fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions are judgmental in nature and could have a significant impact on the determination of the debt component, and the associated non-cash interest expense. We assigned a value to the debt component of our convertible notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in us recording our debt at a discount. We are amortizing our debt issuance costs and debt discount over the life of the convertible notes as additional non-cash interest expense utilizing the effective interest method. Segment information We have two operating segments, our Ionis Core segment and Akcea Therapeutics, which includes the operations of our wholly owned subsidiary, Akcea Therapeutics, Inc. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. We provide segment financial information and results for our Ionis Core segment and our Akcea Therapeutics segment based on the segregation of revenues and expenses that our chief decision maker reviews to assess operating performance and to make operating decisions. We use judgments and estimates in determining the allocation of shared expenses to the two segments. Stock-based compensation expense We measure stock-based compensation expense for equity-classified awards, principally related to stock options, restricted stock units, or RSUs, and stock purchase rights under our ESPP, based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the three months ended March 31, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options:
ESPP:
The fair value of RSUs is based on the market price of our common stock on the date of grant. RSUs vest annually over a four-year period. The weighted-average grant date fair value of RSUs granted to employees for the three months ended March 31, 2017 was $48.09 per share. We did not grant stock options or RSUs to our Board of Directors during the three months ended March 31, 2017 and 2016. The following table summarizes stock-based compensation expense for the three months ended March 31, 2017 and 2016 (in thousands). Our consolidated non-cash stock-based compensation expense includes $3.2 million of stock-based compensation expense for Akcea employees for each of the three months ended March 31, 2017 and 2016.
As of March 31, 2017, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options and RSUs was $91.8 million and $25.6 million, respectively. We will adjust total unrecognized compensation cost for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to non-vested stock options and RSUs over a weighted average amortization period of 1.5 years and 1.8 years, respectively. Impact of recently issued accounting standards In May 2014, the FASB issued accounting guidance on the recognition of revenue from customers. Under this guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects to receive in exchange for the goods or services. Under the current accounting guidance, we recognize revenue from milestone payments we earn under the milestone method. Under the new guidance, the milestone method of revenue recognition is eliminated. This new guidance also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance as originally issued is effective for fiscal years, and interim periods within that year, beginning after December 15, 2016. In July 2015, the FASB issued updated accounting guidance to allow for an optional one year deferral from the original effective date. As a result, we will adopt this guidance beginning on January 1, 2018. The guidance allows us to select one of two methods of adoption, either the full retrospective approach, meaning the guidance would be applied to all periods presented, or modified retrospective approach, meaning the cumulative effect of applying the guidance would be recognized as an adjustment to our opening accumulated deficit balance. As we have a significant number of collaborations that span several years with associated revenue, we are currently evaluating which adoption method we will use and assessing the impact the adoption will have on our consolidated financial statements and disclosures. In January 2016, the FASB issued amended accounting guidance related to the recognition, measurement, presentation, and disclosure of certain financial instruments. The amended guidance requires us to measure and record equity investments, except those accounted for under the equity method of accounting that have a readily determinable fair value, at fair value and for us to recognize the changes in fair value in our net income (loss), instead of recognizing unrealized gains and losses through accumulated other comprehensive income, as we currently do under the existing guidance. The amended guidance also changes several disclosure requirements for financial instruments, including the methods and significant assumptions we use to estimate fair value. The guidance is effective for fiscal years, and interim periods within that year, beginning after December 15, 2017. We will adopt this guidance on January 1, 2018 and we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently determining the effects the adoption will have on our consolidated financial statements and disclosures. In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if our leases are operating or financing leases, similar to current accounting guidance. We will record expense for operating type leases on a straight-line basis as an operating expense and we will record expense for finance type leases as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We must adopt the new standard on a modified retrospective basis, which requires us to reflect our leases on our consolidated balance sheet for the earliest comparative period presented. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis we do not expect to collect. This change will result in us remeasuring our allowance in each reporting period we have credit losses. The new standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. When we adopt the new standard, we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. |
Investments |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments |
As of March 31, 2017, we had primarily invested our excess cash in debt instruments of the U.S. Treasury, financial institutions, corporations, and U.S. government agencies with strong credit ratings and an investment grade rating at or above A-1, P-1 or F-1 by Moody’s, Standard & Poor’s, or S&P, or Fitch, respectively. We have established guidelines relative to diversification and maturities that maintain safety and liquidity. We periodically review and modify these guidelines to maximize trends in yields and interest rates without compromising safety and liquidity. The following table summarizes the contract maturity of the available-for-sale securities we held as of March 31, 2017:
As illustrated above, at March 31, 2017, 88 percent of our available-for-sale securities had a maturity of less than two years. All of our available-for-sale securities are available to us for use in our current operations. As a result, we categorize all of these securities as current assets even though the stated maturity of some individual securities may be one year or more beyond the balance sheet date. At March 31, 2017, we had an ownership interest of less than 20 percent in three private companies and one public company with which we conduct business. The privately-held companies are Atlantic Pharmaceuticals Limited, Kastle and Dynacure and the publicly-traded company is Antisense Therapeutics Limited. We account for equity investments in the privately-held companies under the cost method of accounting and we account for equity investments in the publicly-traded company at fair value. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments. The following is a summary of our investments (in thousands):
Investments we consider to be temporarily impaired at March 31, 2017 were as follows (in thousands):
We believe that the decline in value of these securities is temporary and is primarily related to the change in market interest rates since purchase. We believe it is more likely than not that we will be able to hold our debt securities to maturity. Therefore, we anticipate full recovery of our debt securities’ amortized cost basis at maturity. |
Fair Value Measurements |
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Fair Value Measurements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements |
We use a three-tier fair value hierarchy to prioritize the inputs used in our fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets, which includes our money market funds and treasury securities classified as available-for-sale securities and our investment in equity securities in publicly-held biotechnology companies; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, which includes our fixed income securities and commercial paper classified as available-for-sale securities; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring us to develop our own assumptions. We classify the majority of our securities as Level 2. We obtain the fair value of our Level 2 investments from our custodian bank or from a professional pricing service. We validate the fair value of our Level 2 investments by understanding the pricing model used by the custodian banks or professional pricing service provider and comparing that fair value to the fair value based on observable market prices. During the three months ended March 31, 2017, there were no transfers between our Level 1 and Level 2 investments. When we recognize transfers between levels of the fair value hierarchy, we recognize the transfer on the date the event or change in circumstances that caused the transfer occurs. The following tables present the major security types we held at March 31, 2017 and December 31, 2016 that are regularly measured and carried at fair value. The tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands):
Other Fair Value Disclosures Novartis Future Stock Purchase In January 2017, we and Akcea entered into a SPA with Novartis. As part of the SPA, Novartis is required to purchase $50 million of common stock in the future. Novartis will make this purchase either in Akcea’s common stock at the IPO price if an IPO occurs under certain conditions, in our common stock at a premium if an IPO does not occur by April 2018, or in a combination of both of these under certain conditions. If an IPO does not occur within the required timeframe, Novartis is required to purchase our common stock at a premium calculated in the same manner as Novartis’ initial investment. Therefore, at the inception of the SPA, we recorded a $5.0 million asset representing the fair value of the potential future premium we will receive if Novartis purchases our common stock. We determined the fair value of the future premium by calculating the value based on the stated premium in the SPA and estimating the probability of an Akcea IPO. We also included a lack of marketability discount when we determined the fair value of the premium because we will issue unregistered shares to Novartis if they purchase our common stock. We measured this asset using Level 3 inputs and recorded it in other assets on our condensed consolidated balance sheet. At the end of each period prior to an Akcea IPO or the purchase by Novartis of our common stock, we will remeasure the fair value of this asset and record an adjustment to other income/expense on our condensed consolidated statement of operations for the change in value. The following is a reconciliation of the potential premium we may receive measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 (in thousands):
At December 31, 2016 we did not have any financial instruments that were valued using Level 3 inputs. Convertible Notes Our 1 percent notes had a fair value of $661.9 million at March 31, 2017. We determine the fair value of our notes based on quoted market prices for these notes, which are Level 2 measurements because the notes do not trade regularly. |
Line of Credit Arrangement |
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Line of Credit Arrangement | 5. Line of Credit Arrangement In June 2015, we entered into a five-year revolving line of credit agreement with Morgan Stanley Private Bank, National Association, or Morgan Stanley. We amended the credit agreement in February 2016 to increase the amount available for us to borrow. Under the amended credit agreement, we can borrow up to a maximum of $30 million of revolving credit for general working capital purposes. Under the credit agreement interest is payable monthly in arrears on the outstanding principal at a borrowing rate based on our option of:
Additionally, we pay 0.25 percent per annum, payable quarterly in arrears, for any amount unused under the credit facility. As of March 31, 2017 we had $12.5 million in outstanding borrowings under the credit facility with a 2.31 percent fixed interest rate and a maturity date of September 2019, which we used to fund our capital equipment needs consistent with our historical practice to finance these costs. The credit agreement includes customary affirmative and negative covenants and restrictions. We are in compliance with all covenants of the credit agreement. |
Collaborative Arrangements and Licensing Agreements |
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Collaborative Arrangements and Licensing Agreements | 6. Collaborative Arrangements and Licensing Agreements Below, we have included our collaborations with substantive changes during the first three months of 2017 from those included in Note 6 of our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2016. Strategic Partnership Biogen We have several strategic collaborations with Biogen focused on using antisense technology to advance the treatment of neurological disorders. These collaborations combine our expertise in creating antisense drugs with Biogen's expertise in developing therapies for neurological disorders. We developed and licensed to Biogen SPINRAZA, our approved drug to treat pediatric and adult patients with SMA. Additionally, we and Biogen are currently developing four other drugs to treat neurodegenerative diseases under these collaborations, including IONIS-SOD1Rx, IONIS-MAPTRx (formerly IONIS-BIIB4Rx) and two drugs to treat undisclosed neurodegenerative diseases, IONIS-BIIB5Rx and IONIS-BIIB6Rx. In addition to these drugs, we and Biogen are evaluating numerous additional targets to develop drugs to treat neurological diseases. From inception through March 2017, we have received over $550 million from our Biogen collaborations. During the three months ended March 31, 2017, we earned revenue of $20.4 million from our relationship with Biogen, including $5 million we earned in the first quarter of 2017 for validation of an undisclosed neurological disease target and SPINRAZA royalties. Our revenue from Biogen represented 18 percent of our total revenue for the three months ended March 31, 2017. In comparison, we earned revenue of $21.3 million for the same period in 2016, which represented 58 percent of our total revenue for that period. Our condensed consolidated balance sheet at March 31, 2017 included deferred revenue of $57.7 million related to our relationship with Biogen. Research, Development and Commercialization Partners Bayer In May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXIRx for the prevention of thrombosis. We were responsible for completing a Phase 2 study of IONIS-FXIRx in patients with end-stage renal disease on hemodialysis. Under the terms of the agreement, we received a $100 million upfront payment in the second quarter of 2015. We recorded revenue of $91.2 million related to the license for IONIS-FXIRx in June 2015 and we recognized the majority of the remaining amount related to development activities for IONIS-FXIRx through November 2016. In February 2017, we amended our agreement with Bayer to advance IONIS-FXIRx and to initiate development of IONIS-FXI-LRx, which Bayer licensed. In conjunction with the decision to advance these programs, we received a $75 million payment from Bayer in April 2017. We recorded revenue of $64.9 million related to the license for IONIS-FXI-LRx in February 2017 and we are recognizing the remaining amount over the period we are performing the ongoing development activities for IONIS-FXI-LRx and IONIS-FXIRx through May 2019. We plan to conduct a Phase 2b study evaluating IONIS-FXIRx in patients with end-stage renal disease on hemodialysis to finalize dose selection. Additionally, we plan to rapidly develop IONIS-FXI-LRx through Phase 1. Following these studies and Bayer's decision to further advance these programs, Bayer will be responsible for all global development, regulatory and commercialization activities for both drugs. We are eligible to receive additional milestone payments as each drug advances toward the market. In total over the term of our collaboration, we are eligible to receive up to $385 million in license fees, substantive milestone payments and other payments, including up to $125 million for the achievement of development milestones and up to $110 million for the achievement of commercialization milestones. In addition, we are eligible to receive tiered royalties in the low to high 20 percent range on gross margins of both drugs combined. We will earn the next milestone payment of $10 million if we advance a program under this collaboration. During the three months ended March 31, 2017, we earned revenue of $65.5 million from our relationship with Bayer, which represented 59 percent of our total revenue for that period. In comparison, we earned revenue of $1.3 million for the same period in 2016, which represented three percent of our total revenue for that period. Our condensed consolidated balance sheet at March 31, 2017 included no deferred revenue related to our relationship with Bayer because we received the $75 million payment in April 2017. Novartis In January 2017, we and Akcea initiated a collaboration with Novartis to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Under the collaboration agreement, Novartis has an exclusive option to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Akcea is responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the FDA and providing API for each drug. If Novartis exercises an option for one of these drugs, Novartis will be responsible for all further global development, regulatory and commercialization activities for such drug. Akcea received a $75 million upfront payment in the first quarter of 2017, of which it will retain $60 million and will pay us $15 million as a sublicense fee. If Novartis exercises its option for a drug, Novartis will pay Akcea a license fee equal to $150 million for each drug it licenses. In addition, for AKCEA-APO(a)-LRx, Akcea is eligible to receive up to $600 million in substantive milestone payments, including $25 million for the achievement of a development milestone, up to $290 million for the achievement of regulatory milestones and up to $285 million for the achievement of commercialization milestones. In addition, for AKCEA-APOCIII-LRx, Akcea is eligible to receive up to $530 million in substantive milestone payments, including $25 million for the achievement of a development milestone, up to $240 million for the achievement of regulatory milestones and up to $265 million for the achievement of commercialization milestones. Akcea plans to co-commercialize any licensed drug commercialized by Novartis in selected markets, under terms and conditions that it plans to negotiate with Novartis in the future, through the specialized sales force Akcea is building to commercialize volanesorsen. Following Novartis’ exercise of its option for either drug, Akcea will earn the next milestone payment of $25 million if Novartis advances the Phase 3 study for either drug. Akcea is also eligible to receive tiered royalties in the mid-teens to low 20 percent range on net sales of AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Akcea will pay 50 percent of these license fees, milestone payments and royalties to us as a sublicense fee. The agreement with Novartis will continue until the earlier of the date that all of Novartis’ options to obtain the exclusive licenses under the agreement expire unexercised or, if Novartis exercises its options, until the expiration of all payment obligations under the agreement. In addition, the agreement as a whole or with respect to any drug under the agreement, may terminate early under the following situations:
In conjunction with this collaboration, we and Akcea entered into a SPA with Novartis. As part of the SPA, Novartis purchased 1.6 million shares of our common stock for $100 million in the first quarter of 2017. Additionally, the SPA requires Novartis to purchase an additional $50 million of common stock in the future. Subject to the terms of the SPA, Novartis will make this purchase either in Akcea’s common stock at the IPO price if an IPO occurs under certain conditions, in our common stock at a premium if an IPO does not occur by April 2018, or in a combination of both of these under certain conditions. If an IPO does not occur within the required timeframe, Novartis is required to purchase our common stock at a premium calculated in the same manner as Novartis' initial investment. To determine the amount of revenue to recognize under our agreements with Novartis, we first concluded that we would account for the collaboration and SPA agreements as a single multiple element arrangement. We next identified four separate units of accounting under the arrangement, each with stand-alone value.:
We then determined the total consideration under the arrangement was $180.0 million, which included the following:
We first allocated $71.6 million of the consideration to equity based on the fair value of our common stock Novartis purchased. Next, we allocated the remaining consideration of $108.4 million based on the relative stand-alone selling price of each unit of accounting as follows:
We are recognizing the amount attributed to the development services for AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx over the period of time we are performing the services, currently estimated to be through August 2018 and May 2019, respectively. We will recognize the amount attributed to the API supply as we deliver it to Novartis. We determined at the inception that all milestones under its Novartis collaboration are substantive milestones and we will recognize any future exercise of an option to license a drug under the Novartis agreement in full in the period the option is exercised. Akcea is responsible for the development activities under this collaboration. As such, Akcea is recognizing the associated revenue in its statement of operations. Akcea pays us sublicense fees for payments that it receives under the collaboration and we recognize those fees as revenue and Akcea recognizes the fees as R&D expense. On a consolidated basis, the sublicense fees are eliminated. During the three months ended March 31, 2017, we earned revenue of $9.6 million from our relationship with Novartis. Our condensed consolidated balance sheet at March 31, 2017 included deferred revenue of $98.8 million related to our relationship with Novartis. |
Segment Information and Concentration of Business Risk |
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Segment Information and Concentration of Business Risk |
We have two reportable segments Ionis Core and Akcea Therapeutics, our wholly owned subsidiary. Segment income (loss) from operations includes revenue less operating expenses attributable to each segment. In our Ionis Core segment we are exploiting a novel drug discovery platform we created to generate a broad pipeline of first-in-class and/or best-in-class drugs for us and our partners. Our Ionis Core segment generates revenue from a multifaceted partnering strategy. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. Moving our lipid drugs into a company that we own ensures that our core focus at Ionis remains on innovation while allowing us to maintain control over and retain more value from our lipid drugs. The following table shows our segment revenue and loss from operations for the three months ended March 31, 2017 and March 31, 2016 (in thousands), respectively.
The following table shows our total assets by segment at March 31, 2017 and December 31, 2016 (in thousands), respectively.
We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows:
Contracts receivables from one significant partner comprised approximately 92 percent of our contracts receivables at March 31, 2017. Contracts receivables from two significant partners comprised approximately 92 percent of our contracts receivables at December 31, 2016. |
Significant Accounting Policies (Policies) |
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Revenue Recognition | Revenue Recognition We generally recognize revenue when we have satisfied all contractual obligations and are reasonably assured of collecting the resulting receivable. We are often entitled to bill our customers and receive payment from our customers in advance of recognizing the revenue. In the instances in which we have received payment from our customers in advance of recognizing revenue, we include the amounts in deferred revenue on our consolidated condensed balance sheet. Commercial Revenue: SPINRAZA royalties and Licensing and other royalty revenue We often enter into agreements to license and sell our proprietary patent rights on an exclusive or non-exclusive basis in exchange for upfront fees, milestone payments and/or royalties. We generally recognize as revenue immediately license payments with stand-alone value when the license is delivered and for which we are reasonably assured of collecting the resulting receivable. We recognize royalty revenue in the period in which the counterparty sells the related product, unless we are unable to obtain information to estimate the royalty. For example, for the first quarter of 2017 we recorded SPINRAZA royalty revenue of $5.2 million. Research and development revenue under collaborative agreements Arrangements with multiple deliverables Our collaboration agreements typically contain multiple elements, or deliverables, including technology licenses or options to obtain technology licenses, research and development services, and in certain cases manufacturing services, and we allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. Amendments to agreements From time to time we amend our collaboration agreements. For these agreements, before we identify our deliverables and allocate consideration to each unit of accounting, we must determine if the amendment should be accounted for as a separate agreement, or if the amendment and any undelivered elements for the original agreement should be accounted for as a single new arrangement. For example, in May 2015, we entered into an exclusive license agreement with Bayer to develop and commercialize IONIS-FXIRx for the prevention of thrombosis. As part of the agreement, Bayer paid us a $100 million upfront payment in the second quarter of 2015. At the onset of the agreement, we were responsible for completing a Phase 2 study of IONIS-FXIRx in patients with end-stage renal disease on hemodialysis and for providing an initial supply of active pharmaceutical ingredient, or API. In February 2017, we amended our agreement with Bayer to advance IONIS-FXIRx and to initiate development of IONIS-FXI-LRx, which Bayer licensed. As part of the 2017 amendment, Bayer paid us $75 million, which we received in April 2017. We are also eligible to receive milestone payments and tiered royalties on gross margins of IONIS-FXIRx and IONIS-FXI-LRx. We concluded that the February 2017 amendment should be evaluated with the undelivered elements of the original agreement as a single new arrangement. Under the amendment, there was a substantial increase in the consideration we are eligible to receive and it included a significant change in the deliverables we will provide. As a result, we evaluated our original and 2017 amended agreements with Bayer together to determine our deliverables. We concluded that the 2017 amendment did not impact the items we already delivered to Bayer. Identifying deliverables and units of accounting We evaluate the deliverables in our collaboration agreements to determine whether they meet the criteria to be accounted for as separate units of accounting or whether they should be combined with other deliverables and accounted for as a single unit of accounting. When the delivered items in an arrangement have "stand-alone value" to our customer, we account for the deliverables as separate units of accounting. Delivered items have stand-alone value if they are sold separately by any vendor or the customer could resell the delivered items on a stand-alone basis. For example, our 2017 amended agreement with Bayer has multiple elements. We evaluated the deliverables in this arrangement when we entered into the 2017 amended agreement and determined that certain deliverables have stand-alone value. Below is a list of the three units of accounting under our 2017 amended agreement:
We determined that each of these three units of accounting have stand-alone value. The license we granted to Bayer has stand-alone value because it gives Bayer the exclusive right to develop IONIS-FXI-LRx or to sublicense its rights. The development services and the remaining undelivered supply of API each have stand-alone value because Bayer or another third party could provide these items without our assistance. Measurement and allocation of arrangement consideration Our collaborations may provide for various types of payments to us including upfront payments, funding of research and development, milestone payments, licensing fees and royalties on product sales. We initially allocate the amount of consideration that is fixed and determinable at the time the agreement is entered into and exclude contingent consideration. We allocate the consideration to each unit of accounting based on the relative selling price of each deliverable. We use the following hierarchy of values to estimate the selling price of each deliverable: (i) vendor-specific objective evidence of fair value; (ii) third-party evidence of selling price; and (iii) best estimate of selling price, or BESP. BESP reflects our best estimate of what the selling price would be if we regularly sold the deliverable on a stand-alone basis. We recognize the revenue allocated to each unit of accounting as we deliver the related goods or services. If we determine that we should treat certain deliverables as a single unit of accounting, then we recognize the revenue ratably over our estimated period of performance. We determined that the allocable arrangement consideration for the 2017 amended Bayer collaboration was $76.3 million, comprised of the $75 million we received as part of the amendment and the remaining amount of the $100 million upfront payment we had not yet recognized into revenue, related to the undelivered API. We allocated the consideration based on the relative BESP of each unit of accounting. We engaged a third party, independent valuation specialist to assist us with determining BESP. We estimated the selling price of the license granted for IONIS-FXI-LRx by using the relief from royalty method. Under this method, we estimated the amount of income, net of taxes, for IONIS-FXI-LRx. We then discounted the projected income to present value. The significant inputs we used to determine the projected income of the license included:
We estimated the selling price of the development services by using our internal estimates of the cost to perform the specific services and estimates of expected cash outflows to third parties for services and supplies over the expected period that we will perform the development services. The significant inputs we used to determine the selling price of the development services included:
For purposes of determining BESP of the services we will perform and the API we will deliver in our 2017 amended Bayer transaction, accounting guidance required us to include a markup for a reasonable profit margin. Based on the units of accounting under the 2017 amended agreement, we allocated the $76.3 million of allocable consideration as follows:
Assuming a constant selling price for the other elements in the arrangement, if there was an assumed ten percent increase or decrease in the estimated selling price of the IONIS-FXI-LRx license, we determined that the revenue we would have allocated to the IONIS-FXI-LRx license would change by approximately one percent, or $0.7 million, from the amount we recorded. Timing of revenue recognition We recognize revenue as we deliver each item under the arrangement and the related revenue is realizable and earned. For example, we recognized revenue for the exclusive license we granted Bayer for IONIS-FX-LRx in the first quarter of 2017 because that was when we delivered the license. We also recognize revenue over time as we provide services. Our collaborative agreements typically include a research and/or development project plan outlining the activities the agreement requires each party to perform during the collaboration. We estimate our period of performance at the inception of the agreement when the agreements we enter into do not clearly define such information. We then recognize revenue from development services ratably over such period. In certain instances, the period of performance may change as the development plans for our drugs progress. If our estimates and judgments change over the course of our collaboration agreements, it may affect the timing and amount of revenue that we recognize in future periods. Any changes in estimates are recognized on a prospective basis. The following are the periods over which we are recognizing revenue for each of our units of accounting under our 2017 amended Bayer agreement:
Multiple agreements From time to time, we may enter into separate agreements at or near the same time with the same partner. We evaluate such agreements to determine whether they should be accounted for individually as distinct arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables are interrelated or interdependent, whether fees in one arrangement are tied to performance in another arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation involves significant judgment to determine whether a group of agreements might be so closely related that they are, in effect, part of a single arrangement. For example, in the first quarter of 2017, we and our wholly owned subsidiary, Akcea, entered into two separate agreements with Novartis at the same time: a collaboration agreement and a stock purchase agreement, or SPA. Akcea entered into a collaboration agreement with Novartis to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. Under the collaboration agreement, Akcea received a $75 million upfront payment. For each drug, Akcea is responsible for completing a Phase 2 program, conducting an end-of-Phase 2 meeting with the FDA and delivering API. Under the collaboration agreement, Novartis has an exclusive option to develop and commercialize AKCEA-APO(a)-LRx and AKCEA-APOCIII-LRx. If Novartis exercises an option for one of these drugs, Novartis will pay us a license fee and will assume all further global development, regulatory and commercialization activities for the licensed drug. Akcea is also eligible to receive a development milestone payment, milestone payments if Novartis achieves pre-specified regulatory milestones, commercial milestones and tiered royalties on net sales from each drug under the collaboration. Under the SPA, Novartis purchased 1.6 million shares of Ionis’ common stock for $100 million in the first quarter of 2017 and paid a premium over the weighted average trading price at the time of purchase. Additionally, the SPA requires Novartis to purchase an additional $50 million of common stock in the future. We evaluated the Novartis agreements to determine whether we should treat the agreements separately or as a single arrangement. We considered that the agreements were negotiated concurrently and in contemplation of one another. Additionally, the same individuals were involved in the negotiations of both agreements. Based on these facts and circumstances, we concluded that we should treat both agreements as a single arrangement and evaluate the provisions of the agreements on a combined basis. Refer to Note 6, Collaborative Arrangements and Licensing Agreements for further discussion of the accounting treatment for the Novartis collaboration. Milestone payments Our collaborations often include contractual milestones, which typically relate to the achievement of pre-specified development, regulatory and/ or commercialization events. These three categories of milestone events reflect the three stages of the life-cycle of our drugs, which we describe in more detail in the following paragraphs. Prior to the first stage in the life-cycle of our drugs, we perform a significant amount of work using our proprietary antisense technology to design chemical compounds that interact with specific genes that are good targets for drug discovery. From these research efforts, we hope to identify a development candidate. The designation of a development candidate is the first stage in the life-cycle of our drugs. A development candidate is a chemical compound that has demonstrated the necessary safety and efficacy in preclinical animal studies to warrant further study in humans. During the first step of the development stage, we or our partners study our drugs in Investigational New Drug, or IND,-enabling studies, which are animal studies intended to support an IND application and/or the foreign equivalent. An approved IND allows us or our partners to study our development candidate in humans. If the regulatory agency approves the IND, we or our partners initiate Phase 1 clinical trials in which we typically enroll a small number of healthy volunteers to ensure the development candidate is safe for use in patients. If we or our partners determine that a development candidate is safe based on the Phase 1 data, we or our partners initiate Phase 2 studies that are generally larger scale studies in patients with the primary intent of determining the efficacy of the development candidate. The final step in the development stage is Phase 3 studies to gather the necessary safety and efficacy data to request marketing authorization from the Food and Drug Administration, or FDA, and/or foreign equivalents. The Phase 3 studies typically involve larger numbers of patients and can take up to several years to complete. If the data gathered during the trials demonstrates acceptable safety and efficacy results, we or our partner will submit an application to the FDA and/or its foreign equivalents for marketing authorization. This stage of the drug’s life-cycle is the regulatory stage. If a drug achieves marketing authorization, it moves into the commercialization stage, during which our partner will market and sell the drug to patients. Although our partner will ultimately be responsible for marketing and selling the partnered drug, our efforts to discover and develop a drug that is safe, effective and reliable contributes significantly to our partner’s ability to successfully sell the drug. The FDA and its foreign equivalents have the authority to impose significant restrictions on an approved drug through the product label and on advertising, promotional and distribution activities. Therefore, our efforts designing and executing the necessary animal and human studies are critical to obtaining claims in the product label from the regulatory agencies that would allow us or our partner to successfully commercialize our drug. Further, the patent protection afforded our drugs as a result of our initial patent applications and related prosecution activities in the United States and foreign jurisdictions are critical to our partner’s ability to sell our drugs without competition from generic drugs. The potential sales volume of an approved drug is dependent on several factors including the size of the patient population, market penetration of the drug, and the price charged for the drug. Generally, the milestone events contained in our partnership agreements coincide with the progression of our drugs from development, to marketing authorization and then to commercialization. The process of successfully discovering a new development candidate, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments we may earn from our partners involve a significant degree of risk to achieve. Therefore, as a drug progresses through the stages of its life-cycle, the value of the drug generally increases. Development milestones in our partnerships may include the following types of events:
Regulatory milestones in our partnerships may include the following types of events:
Commercialization milestones in our partnerships may include the following types of events:
We assess whether a substantive milestone exists at the inception of our agreements. When a substantive milestone is achieved, we recognize revenue related to the milestone payment immediately. For our existing licensing and collaboration agreements in which we are involved in the discovery and/or development of the related drug or provide the partner with access to new technologies we discover, we have determined that the majority of future development, regulatory and commercialization milestones are substantive. For example, we consider most of the milestones associated with our strategic alliance with Biogen substantive because we are using our antisense drug discovery platform to discover and develop new drugs against targets for neurological diseases. In evaluating if a milestone is substantive we consider whether:
If any of these conditions are not met, we do not consider the milestone to be substantive and we defer recognition of the milestone payment and recognize it as revenue over our estimated period of performance, if any. Further information about our collaborative arrangements can be found in Note 6, Collaborative Arrangements and Licensing Agreements. Option to license In several of our collaboration agreements, we provide our partner with an option to obtain a license to one or more of our drugs. When we have a multiple element arrangement that includes an option to obtain a license, we evaluate if the option is a deliverable at the inception of the arrangement. We do not consider the option to be a deliverable if we conclude that it is substantive and not priced at a significant and incremental discount. We consider an option substantive if, at the inception of the arrangement, we are at risk as to whether our collaborative partner will choose to exercise its option to obtain the license. In those circumstances, we do not include the associated license fee in the allocable consideration at the inception of the agreement. Rather, we account for the license fee when our partner exercises its option. For example, during 2016, we earned license fee revenue when three of our partners, AstraZeneca, Biogen and Janssen, exercised their option to license three of our drugs, which under the respective agreements we concluded to be substantive options at inception. As a result, in 2016 we recognized the related revenue immediately in research and development revenue under collaborative agreements on our statement of operations as these amounts relate to drugs in development under research and collaboration arrangements. |
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Cash, Cash Equivalents and Short-Term Investments | Cash, cash equivalents and short-term investments We consider all liquid investments with maturities of three months or less when we purchase them to be cash equivalents. Our short-term investments have initial maturities of greater than three months from date of purchase. We classify our short-term investments as “available-for-sale” and carry them at fair market value based upon prices for identical or similar items on the last day of the fiscal period. We record unrealized gains and losses as a separate component of comprehensive income (loss) and include net realized gains and losses in gain (loss) on investments. We use the specific identification method to determine the cost of securities sold. We have equity investments in privately and publicly held biotechnology companies that we have received as part of a technology license or partner agreement. At March 31, 2017, we held ownership interests of less than 20 percent in each of the respective companies. We account for our equity investments in publicly held companies at fair value and record unrealized gains and losses related to temporary increases and decreases in the stock of these publicly-held companies as a separate component of comprehensive income (loss). At March 31, 2017, we held equity investments in one publicly held company, Antisense Therapeutics Limited. We account for equity investments in privately held companies under the cost method of accounting because we own less than 20 percent and do not have significant influence over their operations. At March 31, 2017, we held cost method investments in three companies, Atlantic Pharmaceuticals Limited, Kastle Therapeutics and Dynacure SAS. Realization of our equity position in these private companies is uncertain. When realization of our investment is uncertain, we record a full valuation allowance. In determining if and when a decrease in market value below our cost in our equity positions is temporary or other-than-temporary, we examine historical trends in the stock price, the financial condition of the company, near term prospects of the company and our current need for cash. If we determine that a decline in value in either a public or private investment is other-than-temporary, we recognize an impairment loss in the period in which the other-than-temporary decline occurs. |
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Inventory Valuation | Inventory valuation We capitalize the costs of raw materials that we purchase for use in producing our drugs because until we use these raw materials they have alternative future uses. We include in inventory raw material costs for drugs that we manufacture for our partners under contractual terms and that we use primarily in our clinical development activities and drug products. We can use each of our raw materials in multiple products and, as a result, each raw material has future economic value independent of the development status of any single drug. For example, if one of our drugs failed, we could use the raw materials for that drug to manufacture our other drugs. We expense these costs when we deliver the drugs to our partners, or as we provide these drugs for our own clinical trials. We reflect our inventory on the balance sheet at the lower of cost or market value under the first-in, first-out method, or FIFO. We review inventory periodically and reduce the carrying value of items we consider to be slow moving or obsolete to their estimated net realizable value. We consider several factors in estimating the net realizable value, including shelf life of raw materials, alternative uses for our drugs and clinical trial materials, and historical write-offs. We did not record any inventory write-offs for the three months ended March 31, 2017 and 2016. Total inventory was $6.8 million and $7.5 million as of March 31, 2017 and December 31, 2016, respectively. |
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Research, Development and Patent Expenses | Research, development and patent expenses Our research and development expenses include wages, benefits, facilities, supplies, external services, clinical trial and manufacturing costs and other expenses that are directly related to our research and development operations. We expense research and development costs as we incur them. When we make payments for research and development services prior to the services being rendered, we record those amounts as prepaid assets on our condensed consolidated balance sheet and we expense them as the services are provided. We capitalize costs consisting principally of outside legal costs and filing fees related to obtaining patents. We amortize patent costs over the useful life of the patent, beginning with the date the United States Patent and Trademark Office, or foreign equivalent, issues the patent. We review our capitalized patent costs regularly to ensure that they include costs for patents and patent applications that have future value. We evaluate patents and patent applications that we are not actively pursuing and write off any associated costs. |
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Long-Lived Assets | Long-lived assets We evaluate long-lived assets, which include property, plant and equipment and patent costs acquired from third parties, for impairment on at least a quarterly basis and whenever events or changes in circumstances indicate that we may not be able to recover the carrying amount of such assets. |
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Use of Estimates | Use of estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
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Basic and Diluted Net Income (Loss) per Share | Basic and diluted net income (loss) per share We compute basic net income (loss) per share by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2017, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended March 31, 2017, consisted of the following (in thousands except per share amounts):
For the three months ended March 31, 2017, the calculation excludes the 1 percent and 2¾ percent notes because the effect on diluted earnings per share was anti-dilutive. For the three months ended March 31, 2016, we incurred a net loss; therefore, we did not include dilutive common equivalent shares in the computation of diluted net loss per share because the effect would have been anti-dilutive. Common stock from the following would have had an anti-dilutive effect on net loss per share:
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Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss Accumulated other comprehensive loss is primarily comprised of unrealized gains and losses on investments, net of taxes and adjustments we made to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):
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Convertible Debt | Convertible debt We account for convertible debt instruments, including our 1 percent and 2¾ percent notes, that may be settled in cash upon conversion (including partial cash settlement) by separating the liability and equity components of the instruments in a manner that reflects our nonconvertible debt borrowing rate. We determine the carrying amount of the liability component by measuring the fair value of similar debt instruments that do not have the conversion feature. If no similar debt instrument exists, we estimate fair value by using assumptions that market participants would use in pricing a debt instrument, including market interest rates, credit standing, yield curves and volatilities. Determining the fair value of the debt component requires the use of accounting estimates and assumptions. These estimates and assumptions are judgmental in nature and could have a significant impact on the determination of the debt component, and the associated non-cash interest expense. We assigned a value to the debt component of our convertible notes equal to the estimated fair value of similar debt instruments without the conversion feature, which resulted in us recording our debt at a discount. We are amortizing our debt issuance costs and debt discount over the life of the convertible notes as additional non-cash interest expense utilizing the effective interest method. |
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Segment Information | Segment information We have two operating segments, our Ionis Core segment and Akcea Therapeutics, which includes the operations of our wholly owned subsidiary, Akcea Therapeutics, Inc. We formed Akcea to develop and commercialize drugs for patients with serious cardiometabolic diseases caused by lipid disorders. We provide segment financial information and results for our Ionis Core segment and our Akcea Therapeutics segment based on the segregation of revenues and expenses that our chief decision maker reviews to assess operating performance and to make operating decisions. We use judgments and estimates in determining the allocation of shared expenses to the two segments. |
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Stock-Based Compensation Expense | Stock-based compensation expense We measure stock-based compensation expense for equity-classified awards, principally related to stock options, restricted stock units, or RSUs, and stock purchase rights under our ESPP, based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statements of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates. We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the three months ended March 31, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options:
ESPP:
The fair value of RSUs is based on the market price of our common stock on the date of grant. RSUs vest annually over a four-year period. The weighted-average grant date fair value of RSUs granted to employees for the three months ended March 31, 2017 was $48.09 per share. We did not grant stock options or RSUs to our Board of Directors during the three months ended March 31, 2017 and 2016. The following table summarizes stock-based compensation expense for the three months ended March 31, 2017 and 2016 (in thousands). Our consolidated non-cash stock-based compensation expense includes $3.2 million of stock-based compensation expense for Akcea employees for each of the three months ended March 31, 2017 and 2016.
As of March 31, 2017, total unrecognized estimated non-cash stock-based compensation expense related to non-vested stock options and RSUs was $91.8 million and $25.6 million, respectively. We will adjust total unrecognized compensation cost for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to non-vested stock options and RSUs over a weighted average amortization period of 1.5 years and 1.8 years, respectively. |
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Impact of Recently Issued Accounting Standards | Impact of recently issued accounting standards In May 2014, the FASB issued accounting guidance on the recognition of revenue from customers. Under this guidance, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects to receive in exchange for the goods or services. Under the current accounting guidance, we recognize revenue from milestone payments we earn under the milestone method. Under the new guidance, the milestone method of revenue recognition is eliminated. This new guidance also requires more detailed disclosures to enable users of the financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance as originally issued is effective for fiscal years, and interim periods within that year, beginning after December 15, 2016. In July 2015, the FASB issued updated accounting guidance to allow for an optional one year deferral from the original effective date. As a result, we will adopt this guidance beginning on January 1, 2018. The guidance allows us to select one of two methods of adoption, either the full retrospective approach, meaning the guidance would be applied to all periods presented, or modified retrospective approach, meaning the cumulative effect of applying the guidance would be recognized as an adjustment to our opening accumulated deficit balance. As we have a significant number of collaborations that span several years with associated revenue, we are currently evaluating which adoption method we will use and assessing the impact the adoption will have on our consolidated financial statements and disclosures. In January 2016, the FASB issued amended accounting guidance related to the recognition, measurement, presentation, and disclosure of certain financial instruments. The amended guidance requires us to measure and record equity investments, except those accounted for under the equity method of accounting that have a readily determinable fair value, at fair value and for us to recognize the changes in fair value in our net income (loss), instead of recognizing unrealized gains and losses through accumulated other comprehensive income, as we currently do under the existing guidance. The amended guidance also changes several disclosure requirements for financial instruments, including the methods and significant assumptions we use to estimate fair value. The guidance is effective for fiscal years, and interim periods within that year, beginning after December 15, 2017. We will adopt this guidance on January 1, 2018 and we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently determining the effects the adoption will have on our consolidated financial statements and disclosures. In February 2016, the FASB issued amended accounting guidance related to lease accounting, which requires us to record all leases with a term longer than one year on our balance sheet. When we record leases on our balance sheet under the new guidance, we will record a liability with a value equal to the present value of payments we will make over the life of the lease and an asset representing the underlying leased asset. The new accounting guidance requires us to determine if our leases are operating or financing leases, similar to current accounting guidance. We will record expense for operating type leases on a straight-line basis as an operating expense and we will record expense for finance type leases as interest expense. The new lease standard is effective for annual and interim periods beginning after December 15, 2018, with early adoption permitted. We must adopt the new standard on a modified retrospective basis, which requires us to reflect our leases on our consolidated balance sheet for the earliest comparative period presented. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. In June 2016, the FASB issued guidance that changes the measurement of credit losses for most financial assets and certain other instruments. If we have credit losses, this updated guidance requires us to record allowances for these instruments under a new expected credit loss model. This model requires us to estimate the expected credit loss of an instrument over its lifetime, which represents the portion of the amortized cost basis we do not expect to collect. This change will result in us remeasuring our allowance in each reporting period we have credit losses. The new standard is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for periods beginning after December 15, 2018. When we adopt the new standard, we will make any adjustments to beginning balances through a cumulative-effect adjustment to accumulated deficit on that date. We are currently assessing the timing of adoption as well as the effects it will have on our consolidated financial statements and disclosures. |
Significant Accounting Policies (Tables) |
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Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Net Income per Share | We compute basic net income (loss) per share by dividing the net income or loss by the weighted-average number of common shares outstanding during the period. For the three months ended March 31, 2017, we had net income. As a result, we computed diluted net income per share using the weighted-average number of common shares and dilutive common equivalent shares outstanding during those periods. Diluted common equivalent shares for the three months ended March 31, 2017, consisted of the following (in thousands except per share amounts):
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Changes in Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss is primarily comprised of unrealized gains and losses on investments, net of taxes and adjustments we made to reclassify realized gains and losses on investments from other accumulated comprehensive income (loss) to our condensed consolidated statement of operations. The following table summarizes changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2017 and 2016 (in thousands):
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Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Assumptions - ESPP | ESPP:
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Stock-Based Compensation Expense | The following table summarizes stock-based compensation expense for the three months ended March 31, 2017 and 2016 (in thousands). Our consolidated non-cash stock-based compensation expense includes $3.2 million of stock-based compensation expense for Akcea employees for each of the three months ended March 31, 2017 and 2016.
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Employee Stock Options [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted-Average Assumptions | We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. We estimate the expected term of options granted based on historical exercise patterns. For the three months ended March 31, 2017 and 2016, we used the following weighted-average assumptions in our Black-Scholes calculations: Employee Stock Options:
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Investments (Tables) |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contract Maturity of Available-for-Sale Securities | The following table summarizes the contract maturity of the available-for-sale securities we held as of March 31, 2017:
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Summary of Investments | The following is a summary of our investments (in thousands):
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Temporarily Impaired Investments | Investments we consider to be temporarily impaired at March 31, 2017 were as follows (in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Measurements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis | The following tables present the major security types we held at March 31, 2017 and December 31, 2016 that are regularly measured and carried at fair value. The tables segregate each security type by the level within the fair value hierarchy of the valuation techniques we utilized to determine the respective securities’ fair value (in thousands):
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Reconciliation of Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3) | The following is a reconciliation of the potential premium we may receive measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2017 (in thousands):
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Segment Information and Concentration of Business Risk (Tables) |
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Segment Information | The following table shows our segment revenue and loss from operations for the three months ended March 31, 2017 and March 31, 2016 (in thousands), respectively.
The following table shows our total assets by segment at March 31, 2017 and December 31, 2016 (in thousands), respectively.
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Revenue from Significant Partners | We have historically funded our operations from collaborations with corporate partners and a relatively small number of partners have accounted for a significant percentage of our revenue. Revenue from significant partners, which is defined as ten percent or more of our total revenue, was as follows:
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Significant Accounting Policies, Cash, Cash Equivalents and Short-term Investments (Details) |
Mar. 31, 2017
Company
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Cash, Cash Equivalents, and Short-term Investments [Abstract] | |
Number of publicly-held companies in which there is an equity ownership interest of less than 20% | 1 |
Number of privately-held companies in which there is an equity ownership interest of less than 20% | 3 |
Significant Accounting Policies, Inventory Valuation (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
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Inventory Valuation [Abstract] | ||
Inventories | $ 6,801 | $ 7,489 |
Significant Accounting Policies, Convertible Debt and Segment Information (Details) - Segment |
3 Months Ended | |
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Mar. 31, 2017 |
Dec. 31, 2016 |
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Segment Information [Abstract] | ||
Number of operating segments | 2 | |
1 Percent Convertible Senior Notes [Member] | ||
Convertible Debt [Abstract] | ||
Interest rate on convertible senior notes | 1.00% | 1.00% |
2 3/4 Percent Convertible Senior Notes [Member] | ||
Convertible Debt [Abstract] | ||
Interest rate on convertible senior notes | 2.75% |
Significant Accounting Policies, Stock-Based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
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Mar. 31, 2017 |
Mar. 31, 2016 |
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Stock-based Compensation Expense [Abstract] | ||
Non-cash stock-based compensation expense | $ 20,912 | $ 20,103 |
Research, Development and Patent [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Non-cash stock-based compensation expense | 16,122 | 14,770 |
Selling, General and Administrative [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Non-cash stock-based compensation expense | 4,790 | 5,333 |
Akcea Therapeutics [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Non-cash stock-based compensation expense | $ 3,200 | $ 3,200 |
Employee Stock Options [Member] | ||
Weighted-Average Assumptions [Abstract] | ||
Risk-free interest rate | 1.80% | 1.50% |
Dividend yield | 0.00% | 0.00% |
Volatility | 66.30% | 57.90% |
Expected life | 4 years 6 months | 4 years 6 months |
Unrecognized Compensation Expense [Abstract] | ||
Unrecognized compensation expense related to non-vested stock options | $ 91,800 | |
Weighted average period for recognition | 1 year 6 months | |
Employee Stock Options [Member] | Board of Directors [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Options granted (in shares) | 0 | 0 |
ESPP [Member] | ||
Weighted-Average Assumptions [Abstract] | ||
Risk-free interest rate | 0.70% | 0.50% |
Dividend yield | 0.00% | 0.00% |
Volatility | 66.50% | 69.40% |
Expected life | 6 months | 6 months |
RSUs [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Vesting period | 4 years | |
Unrecognized Compensation Expense [Abstract] | ||
Unrecognized compensation cost related to non-vested RSUs | $ 25,600 | |
Weighted average period for recognition | 1 year 9 months 18 days | |
RSUs [Member] | Employees [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Weighted-average grant date fair value (in dollars per share) | $ 48.09 | |
RSUs [Member] | Board of Directors [Member] | ||
Stock-based Compensation Expense [Abstract] | ||
Units granted (in shares) | 0 | 0 |
Investments, Contract Maturity of Available-for-Sale Securities (Details) |
Mar. 31, 2017
Company
|
---|---|
Contract Maturity of Available-for-Sale Securities [Abstract] | |
One year or less | 64.00% |
After one year but within two years | 24.00% |
After two years but within three and a half years | 12.00% |
Total | 100.00% |
Percentage of available-for-sale securities with a maturity of less than two years | 88.00% |
Ownership Interests in Private and Public Companies [Abstract] | |
Number of privately-held companies in which there is an equity ownership interest of less than 20% | 3 |
Number of publicly-held companies in which there is an equity ownership interest of less than 20% | 1 |
Investments, Summary of Investments (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
||||||
---|---|---|---|---|---|---|---|---|
Summary of Investments [Abstract] | ||||||||
Cost | $ 593,872 | |||||||
Gross unrealized gains | 348 | |||||||
Gross unrealized losses | (2,009) | |||||||
Estimated fair value | 592,211 | |||||||
Available-for-sale Securities [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | $ 758,372 | 591,739 | |||||
Gross unrealized gains | 87 | 67 | ||||||
Gross unrealized losses | (1,861) | (2,009) | ||||||
Estimated fair value | 756,598 | 589,797 | ||||||
Available-for-sale Securities [Member] | Securities with Maturity of One Year or Less [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 484,952 | 323,708 | |||||
Gross unrealized gains | 22 | 29 | ||||||
Gross unrealized losses | (612) | (319) | ||||||
Estimated fair value | 484,362 | 323,418 | ||||||
Available-for-sale Securities [Member] | Securities with Maturity of More than One Year [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 273,420 | 268,031 | |||||
Gross unrealized gains | 65 | 38 | ||||||
Gross unrealized losses | (1,249) | (1,690) | ||||||
Estimated fair value | 272,236 | 266,379 | ||||||
Corporate Debt Securities [Member] | Securities with Maturity of One Year or Less [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 341,043 | [2] | 195,087 | ||||
Gross unrealized gains | 18 | 25 | ||||||
Gross unrealized losses | (405) | (161) | ||||||
Estimated fair value | 340,656 | 194,951 | ||||||
Corporate Debt Securities [Member] | Securities with Maturity of More than One Year [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 189,152 | 202,408 | |||||
Gross unrealized gains | 49 | 36 | ||||||
Gross unrealized losses | (833) | (1,174) | ||||||
Estimated fair value | 188,368 | 201,270 | ||||||
Debt Securities issued by U.S. Government Agencies [Member] | Securities with Maturity of One Year or Less [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 64,784 | 26,548 | |||||
Gross unrealized gains | 2 | 0 | ||||||
Gross unrealized losses | (72) | (10) | ||||||
Estimated fair value | 64,714 | 26,538 | ||||||
Debt Securities issued by U.S. Government Agencies [Member] | Securities with Maturity of More than One Year [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 25,670 | 28,807 | |||||
Gross unrealized gains | 0 | 1 | ||||||
Gross unrealized losses | (124) | (167) | ||||||
Estimated fair value | 25,546 | 28,641 | ||||||
Debt Securities issued by the U.S. Treasury [Member] | Securities with Maturity of One Year or Less [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 23,297 | [2] | 29,298 | ||||
Gross unrealized gains | 0 | 2 | ||||||
Gross unrealized losses | (19) | (14) | ||||||
Estimated fair value | 23,278 | 29,286 | ||||||
Debt Securities issued by the U.S. Treasury [Member] | Securities with Maturity of More than One Year [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 3,497 | ||||||
Gross unrealized gains | 0 | |||||||
Gross unrealized losses | (1) | |||||||
Estimated fair value | 3,496 | |||||||
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Securities with Maturity of One Year or Less [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1],[2] | 55,828 | 72,775 | |||||
Gross unrealized gains | 2 | 2 | ||||||
Gross unrealized losses | (116) | (134) | ||||||
Estimated fair value | 55,714 | 72,643 | ||||||
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Securities with Maturity of More than One Year [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | [1] | 55,101 | 36,816 | |||||
Gross unrealized gains | 16 | 1 | ||||||
Gross unrealized losses | (291) | (349) | ||||||
Estimated fair value | $ 54,826 | 36,468 | ||||||
Equity Securities [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | 2,133 | |||||||
Gross unrealized gains | 281 | |||||||
Gross unrealized losses | 0 | |||||||
Estimated fair value | 2,414 | |||||||
Regulus Therapeutics Inc. [Member] | ||||||||
Summary of Investments [Abstract] | ||||||||
Cost | 2,133 | |||||||
Gross unrealized gains | 281 | |||||||
Gross unrealized losses | 0 | |||||||
Estimated fair value | $ 2,414 | |||||||
|
Investments, Investments Temporarily Impaired (Details) $ in Thousands |
Mar. 31, 2017
USD ($)
Investment
|
---|---|
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 496 |
Estimated fair value, less than 12 months of temporary impairment | $ 621,894 |
Unrealized losses, less than 12 months of temporary impairment | (1,732) |
Estimated fair value, more than 12 months of temporary impairment | 27,303 |
Unrealized losses, more than 12 months of temporary impairment | (129) |
Estimated fair value, total temporary impairment | 649,197 |
Unrealized losses, total temporary impairment | $ (1,861) |
Corporate Debt Securities [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 354 |
Estimated fair value, less than 12 months of temporary impairment | $ 421,288 |
Unrealized losses, less than 12 months of temporary impairment | (1,180) |
Estimated fair value, more than 12 months of temporary impairment | 22,387 |
Unrealized losses, more than 12 months of temporary impairment | (58) |
Estimated fair value, total temporary impairment | 443,675 |
Unrealized losses, total temporary impairment | $ (1,238) |
Debt Securities issued by U.S. Government Agencies [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 41 |
Estimated fair value, less than 12 months of temporary impairment | $ 84,017 |
Unrealized losses, less than 12 months of temporary impairment | (196) |
Estimated fair value, more than 12 months of temporary impairment | 0 |
Unrealized losses, more than 12 months of temporary impairment | 0 |
Estimated fair value, total temporary impairment | 84,017 |
Unrealized losses, total temporary impairment | $ (196) |
Debt Securities issued by the U.S. Treasury [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 4 |
Estimated fair value, less than 12 months of temporary impairment | $ 25,773 |
Unrealized losses, less than 12 months of temporary impairment | (20) |
Estimated fair value, more than 12 months of temporary impairment | 0 |
Unrealized losses, more than 12 months of temporary impairment | 0 |
Estimated fair value, total temporary impairment | 25,773 |
Unrealized losses, total temporary impairment | $ (20) |
Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | |
Temporarily Impaired Investments [Abstract] | |
Number of investments | Investment | 97 |
Estimated fair value, less than 12 months of temporary impairment | $ 90,816 |
Unrealized losses, less than 12 months of temporary impairment | (336) |
Estimated fair value, more than 12 months of temporary impairment | 4,916 |
Unrealized losses, more than 12 months of temporary impairment | (71) |
Estimated fair value, total temporary impairment | 95,732 |
Unrealized losses, total temporary impairment | $ (407) |
Fair Value Measurements, Fair Value Measurements on a Recurring Basis (Details) - USD ($) $ in Thousands |
Mar. 31, 2017 |
Dec. 31, 2016 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Fair Value Measurements [Abstract] | |||||||||||||||
Transfers from Level 1 to Level 2 | $ 0 | ||||||||||||||
Transfers from Level 2 to Level 1 | 0 | ||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | $ 592,211 | ||||||||||||||
Recurring Basis [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Cash equivalents | [1] | 100,318 | 54,137 | ||||||||||||
Investment in Regulus Therapeutics Inc. | 2,414 | ||||||||||||||
Total | 856,916 | 646,348 | |||||||||||||
Recurring Basis [Member] | Corporate Debt Securities [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 529,024 | [2] | 396,221 | [3] | |||||||||||
Recurring Basis [Member] | Corporate Debt Securities [Member] | Cash and Cash Equivalents [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 6,800 | ||||||||||||||
Recurring Basis [Member] | Debt Securities issued by U.S. Government Agencies [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | [3] | 90,260 | 55,179 | ||||||||||||
Recurring Basis [Member] | Debt Securities issued by the U.S. Treasury [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 26,774 | [4] | 29,286 | [3] | |||||||||||
Recurring Basis [Member] | Debt Securities issued by the U.S. Treasury [Member] | Cash and Cash Equivalents [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 1,000 | ||||||||||||||
Recurring Basis [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | [5] | 110,540 | 109,111 | ||||||||||||
Recurring Basis [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | Cash and Cash Equivalents [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 2,700 | 9,300 | |||||||||||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Cash equivalents | 100,318 | 54,137 | |||||||||||||
Investment in Regulus Therapeutics Inc. | 2,414 | ||||||||||||||
Total | 127,092 | 85,837 | |||||||||||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Corporate Debt Securities [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 0 | 0 | |||||||||||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by U.S. Government Agencies [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 0 | 0 | |||||||||||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by the U.S. Treasury [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 26,774 | 29,286 | |||||||||||||
Recurring Basis [Member] | Quoted Prices in Active Markets (Level 1) [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 0 | 0 | |||||||||||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Cash equivalents | 0 | 0 | |||||||||||||
Investment in Regulus Therapeutics Inc. | 0 | ||||||||||||||
Total | 729,824 | 560,511 | |||||||||||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 529,024 | 396,221 | |||||||||||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by U.S. Government Agencies [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 90,260 | 55,179 | |||||||||||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by the U.S. Treasury [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | 0 | 0 | |||||||||||||
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Debt Securities issued by States of the U.S. and Political Subdivisions of the States [Member] | |||||||||||||||
Fair Value Measurements [Abstract] | |||||||||||||||
Available-for-sale securities | $ 110,540 | $ 109,111 | |||||||||||||
|
Fair Value Measurements, Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Jan. 31, 2017 |
Dec. 31, 2016 |
|
Unobservable Inputs (Level 3) [Roll Forward] | |||
Beginning balance of Level 3 asset | $ 0 | ||
Value of the potential premium we will receive from Novartis at inception of the SPA | 5,035 | ||
Recurring fair value adjustment | (1,438) | ||
Ending balance of Level 3 asset | 3,597 | ||
Novartis [Member] | |||
Novartis Future Stock Purchase [Abstract] | |||
Additional amount of common stock required to be purchased in the future | $ 50,000 | ||
Fair value of potential future premium | $ 5,000 | ||
1 Percent Convertible Senior Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Interest rate on convertible senior notes | 1.00% | 1.00% | |
Significant Other Observable Inputs (Level 2) [Member] | 1 Percent Convertible Senior Notes [Member] | |||
Fair Value Measurements [Abstract] | |||
Fair value of convertible notes | $ 661,900 | ||
Significant Unobservable Inputs (Level 3) [Member] | |||
Fair Value Measurements [Abstract] | |||
Investments | $ 0 |
Line of Credit Arrangement (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2017
USD ($)
| |
Fixed Rate Note with Morgan Stanley [Member] | |
Line of Credit Arrangement [Abstract] | |
Outstanding borrowings | $ 12.5 |
Interest rate | 2.31% |
Maturity date | Sep. 30, 2019 |
Morgan Stanley [Member] | Revolving Line of Credit [Member] | |
Line of Credit Arrangement [Abstract] | |
Term of agreement | 5 years |
Maximum borrowing capacity | $ 30.0 |
Commitment fee percentage on unused capacity | 0.25% |
Morgan Stanley [Member] | Revolving Line of Credit [Member] | LIBOR [Member] | |
Line of Credit Arrangement [Abstract] | |
Term of variable rate | 1 month |
Basis spread on variable rate | 1.25% |
Term of fixed rate elected | one, two, three, four, six, or twelve months |
Collaborative Arrangements and Licensing Agreements, Biogen (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2017
USD ($)
Drug
|
Mar. 31, 2016
USD ($)
|
|
Collaborative Arrangement and Licensing Agreement [Abstract] | ||
Revenue earned | $ 110,304 | $ 36,874 |
Collaboration Agreements with Biogen [Member] | ||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||
Number of drugs in clinical development to treat neurological diseases | Drug | 4 | |
Number of drugs in clinical development to treat undisclosed neurodegenerative diseases | Drug | 2 | |
Revenue earned | $ 20,400 | $ 21,300 |
Milestone payment earned | 5,000 | |
Deferred revenue | $ 57,700 | |
Collaboration Agreements with Biogen [Member] | Revenue [Member] | Strategic Partner [Member] | ||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||
Concentration percentage | 18.00% | 58.00% |
Collaboration Agreements with Biogen [Member] | Minimum [Member] | ||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||
Cumulative payments received | $ 550,000 |
Collaborative Arrangements and Licensing Agreements, Bayer (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Apr. 30, 2017 |
Feb. 28, 2017 |
Jun. 30, 2015 |
Mar. 31, 2017 |
Mar. 31, 2016 |
Jun. 30, 2015 |
|
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue recorded | $ 101,546 | $ 35,214 | ||||
Revenue earned | 110,304 | 36,874 | ||||
Bayer [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Upfront payment received | $ 100,000 | |||||
Revenue recorded | $ 91,200 | |||||
Revenue earned | 65,500 | $ 1,300 | ||||
Deferred revenue | $ 0 | |||||
Bayer [Member] | Revenue [Member] | Strategic Partner [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Concentration percentage | 59.00% | 3.00% | ||||
Bayer [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Revenue recorded | $ 64,900 | |||||
Maximum amount of payments receivable for license fees and substantive milestones | $ 385,000 | |||||
Maximum amount of payments receivable for development milestones | 125,000 | |||||
Maximum amount of payments receivable for commercialization milestones | 110,000 | |||||
Next prospective milestone | $ 10,000 | |||||
Bayer [Member] | Subsequent Event [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Payment received for advancing programs | $ 75,000 | |||||
Bayer [Member] | Minimum [Member] | ||||||
Collaborative Arrangement and Licensing Agreement [Abstract] | ||||||
Royalty percentage received on gross margins of both drugs combined | 20.00% |
Collaborative Arrangements and Licensing Agreements, Novartis (Details) $ in Thousands, shares in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
AccountingUnit
Drug
shares
|
Mar. 31, 2016
USD ($)
|
Jan. 31, 2017
USD ($)
|
|
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Proceeds from sale of common stock | $ 71,640 | $ 0 | |
Revenue earned | $ 110,304 | $ 36,874 | |
Novartis [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Shares issued (in shares) | shares | 1.6 | ||
Proceeds from sale of common stock | $ 100,000 | ||
Additional amount of common stock required to be purchased in the future | $ 50,000 | ||
Number of units of accounting | AccountingUnit | 4 | ||
Total consideration under collaboration | $ 180,000 | ||
Premium received on shares issued | 28,400 | ||
Potential premium received if common stock is purchased in the future at a premium | 5,000 | ||
Consideration allocated to equity | 71,600 | ||
Consideration allocated to development services and delivery of API for AKCEA-APO(a)-L and AKCEA-APOCIII-L | 108,400 | ||
Revenue earned | 9,600 | ||
Deferred revenue | $ 98,800 | ||
Novartis [Member] | Minimum [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Number of drugs with exclusive option that could be exercised | Drug | 1 | ||
Novartis [Member] | AKCEA-APO(a)-L [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Consideration allocated to development activities | $ 64,000 | ||
Consideration allocated to delivery of API | 1,500 | ||
Novartis [Member] | AKCEA-APOCIII-L [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Consideration allocated to development activities | 40,100 | ||
Consideration allocated to delivery of API | 2,800 | ||
Akcea [Member] | Novartis [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Upfront payment received | 75,000 | ||
Portion of upfront payment retained | 60,000 | ||
Portion of upfront payment paid as a sublicense fee | 15,000 | ||
License fee receivable per drug | 150,000 | ||
Next prospective milestone | $ 25,000 | ||
Percentage of license fees, milestone payments and royalties paid as sublicense fee | 50.00% | ||
Akcea [Member] | Novartis [Member] | AKCEA-APO(a)-L [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Maximum amount of payments receivable for milestones | $ 600,000 | ||
Maximum amount of payments receivable for development milestones | 25,000 | ||
Maximum amount of payments receivable for regulatory milestones | 290,000 | ||
Maximum amount of payments receivable for commercialization milestones | $ 285,000 | ||
Royalty percentage received on sales of drug | 20.00% | ||
Akcea [Member] | Novartis [Member] | AKCEA-APOCIII-L [Member] | |||
Collaborative Arrangement and Licensing Agreement [Abstract] | |||
Maximum amount of payments receivable for milestones | $ 530,000 | ||
Maximum amount of payments receivable for development milestones | 25,000 | ||
Maximum amount of payments receivable for regulatory milestones | 240,000 | ||
Maximum amount of payments receivable for commercialization milestones | $ 265,000 | ||
Royalty percentage received on sales of drug | 20.00% |
Segment Information and Concentration of Business Risk, Segment Information (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017
USD ($)
Segment
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Segment Information and Concentration of Business Risk [Abstract] | |||
Number of reportable segments | Segment | 2 | ||
Commercial Revenue [Abstract] | |||
SPINRAZA royalties | $ 5,211 | $ 0 | |
Licensing and other royalty revenue | 3,547 | 1,660 | |
Total commercial revenue | 8,758 | 1,660 | |
R&D revenue under collaborative agreements | 101,546 | 35,214 | |
Total segment revenue | 110,304 | 36,874 | |
Income (loss) from operations | 13,989 | (54,652) | |
Total assets | 1,083,996 | $ 912,467 | |
Operating Segments [Member] | Ionis Core [Member] | |||
Commercial Revenue [Abstract] | |||
SPINRAZA royalties | 5,211 | ||
Licensing and other royalty revenue | 3,547 | 1,660 | |
Total commercial revenue | 8,758 | ||
R&D revenue under collaborative agreements | 143,425 | 35,214 | |
Total segment revenue | 152,183 | 36,874 | |
Income (loss) from operations | 73,832 | (38,567) | |
Total assets | 1,202,164 | 1,067,770 | |
Operating Segments [Member] | Akcea Therapeutics [Member] | |||
Commercial Revenue [Abstract] | |||
SPINRAZA royalties | 0 | ||
Licensing and other royalty revenue | 0 | 0 | |
Total commercial revenue | 0 | ||
R&D revenue under collaborative agreements | 9,597 | 0 | |
Total segment revenue | 9,597 | 0 | |
Income (loss) from operations | (59,873) | (16,049) | |
Total assets | 132,982 | 10,684 | |
Elimination of Intercompany Activity [Member] | |||
Commercial Revenue [Abstract] | |||
SPINRAZA royalties | 0 | ||
Licensing and other royalty revenue | 0 | 0 | |
Total commercial revenue | 0 | ||
R&D revenue under collaborative agreements | (51,476) | 0 | |
Total segment revenue | (51,476) | 0 | |
Income (loss) from operations | 30 | $ (36) | |
Total assets | $ (251,150) | $ (165,987) |
Segment Information and Concentration of Business Risk, Revenue from Significant Partners (Details) - Partner |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2016 |
Dec. 31, 2016 |
|
Revenue [Member] | Customer Concentration [Member] | Partner A [Member] | |||
Significant Partners [Abstract] | |||
Concentration percentage | 59.00% | 3.00% | |
Revenue [Member] | Customer Concentration [Member] | Partner B [Member] | |||
Significant Partners [Abstract] | |||
Concentration percentage | 18.00% | 58.00% | |
Revenue [Member] | Customer Concentration [Member] | Partner C [Member] | |||
Significant Partners [Abstract] | |||
Concentration percentage | 4.00% | 14.00% | |
Contracts Receivables [Member] | Credit Concentration [Member] | Significant Partners [Member] | |||
Significant Partners [Abstract] | |||
Concentration percentage | 92.00% | 92.00% | |
Number of significant partners | 1 | 2 |
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