Delaware
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33-0336973
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(State or other jurisdiction of
incorporation or organization) |
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(IRS Employer Identification No.)
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
(Do not check if a smaller reporting company) |
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Smaller reporting company
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* | Excludes 19,641,255 shares of common stock held by directors and officers and by stockholders whose beneficial ownership is known by the Registrant to exceed 10% of the common stock outstanding at June 30, 2014. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of the management or policies of the Registrant, or that such person is controlled by or under common control with the Registrant. |
PART I
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Page
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Item 1.
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Business
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4 |
Item 1A.
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Risk Factors
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60 |
Item 1B.
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Unresolved Staff Comments
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69 |
Item 2.
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Properties
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70 |
Item 3.
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Legal Proceedings
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70 |
Item 4.
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Mine Safety Disclosures
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71 |
PART II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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71 |
Item 6.
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Selected Financial Data
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73 |
Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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74 |
Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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98 |
Item 8.
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Financial Statements and Supplementary Data
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98 |
Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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98 |
Item 9A.
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Controls and Procedures
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98 |
Item 9B.
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Other Information
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101 |
PART III
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||
Item 10.
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Directors, Executive Officers and Corporate Governance
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101 |
Item 11.
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Executive Compensation
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104 |
Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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137 |
Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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141 |
Item 14.
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Principal Accounting Fees and Services
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143 |
PART IV
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||
Item 15.
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Exhibits, Financial Statement Schedules
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144 |
Signatures
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145 | |
| We and Genzyme reported data from a Phase 3 long-term extension study in patients treated with KYNAMRO (mipomersen sodium) injection. In the study, a retrospective analysis of 104 patients with familial hypercholesterolemia treated with KYNAMRO for a mean of one or two years had a significant reduction in major adverse cardiovascular events, or MACE, compared to two years prior to therapy. |
o | At the European Society of Cardiology Congress, our KYNAMRO advisor, John Kastelein, M.D., Ph.D., presented an analysis of patients treated with KYNAMRO for one year. These patients experienced a reduction in MACE of 4.85/1000 compared to 25.72/1000 months (in the two years prior to KYNAMRO treatment). |
o | At the American Heart Association Meeting, a KYNAMRO principal investigator, P. Bart Duell, M.D., presented an analysis of patients treated with KYNAMRO for two years. These patients experienced a seven-fold reduction in MACE of 3.6/1000 compared to 25.72/1000 months (in the two years prior to KYNAMRO treatment). |
| We reported Phase 2 data on ISIS-APOCIIIRx in patients with high to extremely high triglyceride levels, in patients with type 2 diabetes and high triglycerides and as a single agent as well as in combination with fibrates. |
o | At the American College of Cardiology meeting, we presented Phase 2 data on ISIS-APOCIIIRx in combination with fibrates in patients with high triglycerides. In this study, patients achieved statistically significant reductions in triglycerides, apoC-III protein and statistically significant increases in HDL-cholesterol, on top of improvements achieved with each patient's existing therapeutic regimen of triglyceride-lowering drugs. |
o | At the Arteriosclerosis, Thrombosis and Vascular Biology meeting, we presented Phase 2 data on ISIS-APOCIIIRx in patients with type 2 diabetes and high triglycerides. In this study, patients with diabetes experienced statistically significant decreases in triglyceride levels and statistically significant improvements in glucose control with trends toward enhanced insulin sensitivity. |
o | At the National Lipid Association meeting, we presented Phase 2 data on ISIS-APOCIIIRx in patients with FCS. FCS is a rare genetic disorder characterized by severely elevated levels of triglycerides. Current treatment options are inadequate and, as a result, patients with FCS have an increased risk of recurrent and potentially fatal pancreatitis and other complications. In this study, patients with extremely high triglycerides experienced substantial reductions of triglycerides that correlated with substantial reductions in triglyceride-rich chylomicrons. We published these data in the New England Journal of Medicine. |
o | At the 2014 European Society of Cardiology Congress, our collaborator, John Kastelein, M.D., Ph.D. presented an overview of the ISIS-APOCIIIRx Phase 2 program in which treatment with ISIS-APOCIIIRx produced consistent, robust and statistically significant reductions in triglycerides, apoC-III and non-HDL-cholesterol and increases in HDL-cholesterol in all patient populations evaluated. |
●
|
At the European Society of Cardiology Congress, Dr. Sotirios Tsimikas, M.D. presented data from the Phase 1 study of ISIS-APO(a)Rx in healthy volunteers. In this study, ISIS-APO(a)Rx treatment produced dose-dependent and significant reductions in Lp(a) levels in these subjects.
|
| We reported positive clinical results for ISIS-SMNRx from two open-label Phase 2 studies in infants and children with SMA, which were consistent with data reported earlier in the year at the American Academy of Neurology meeting. SMA is a severe genetic disease that is the leading genetic cause of infant mortality. |
o | At the World Muscle Society Congress, we reported the median event-free age of infants with SMA as of September 2, 2014, which compared favorably to that of infants with SMA in the PNCR natural history study. Time- and dose-dependent increases in muscle function scores were observed in both infants and children with SMA in the on-going study. We presented clinical data showing that ISIS-SMNRx is distributed throughout the spinal cord and neurons with greater amounts of full-length SMN2 mRNA and SMN protein in tissues from ISIS-SMNRx-treated infants compared to the amounts of full-length SMN2 mRNA and SMN protein in the tissues analyzed from untreated SMA infants. |
| At the American Diabetes Association Scientific Sessions, we reported Phase 2 data on ISIS-GCGRRx demonstrating that patients with type 2 diabetes uncontrolled on stable metformin therapy experienced up to a 2.25 percentage point mean reduction in HbA1c levels after 13 weeks of treatment with ISIS-GCGRRx. |
| We reported top-line Phase 2 data on ISIS-PTP1BRx demonstrating that patients with type 2 diabetes who are uncontrolled on metformin with or without sulfonylurea experienced statistically significant mean reductions in body weight and HbA1c (0.7 percentage point) at 36 weeks. |
| At the American Society of Hematology annual meeting, we reported Phase 2 clinical results for ISIS-FXIRx in patients undergoing total knee replacement. The results showed that ISIS-FXIRx-treated patients experienced a seven-fold lower incidence of venous thromboembolism and numerically fewer bleeding events compared to patients treated with enoxaparin. |
o | These data demonstrate that ISIS-FXIRx can dissociate the antithrombotic effect from the bleeding risk in patients. This is the first time an antithrombotic drug has demonstrated this profile. We published the Phase 2 clinical data of ISIS-FXIRx in the New England Journal of Medicine |
| We reported Phase 2 results showing that ISIS-CRPRx produced statistically significant mean reductions of CRP protein of 65% with reductions as great as 84% in patients with AF. In addition, two patients who had elevated levels of CRP (>5 mg/L) experienced a reduction of CRP that was associated with a decline to zero in overall AF burden while on treatment. |
| ATL reported Phase 2 data on ATL1103 in patients with acromegaly. In this study, ATL reported that treatment with ATL1103 produced a statistically significant average reduction in IGF-1, levels at the 400 mg per week dose. |
| OncoGenex reported top-line Phase 2 data on apatorsen (OGX-427) in patients with metastatic bladder cancer. In this study, the Borealis-1 study, OncoGenex reported that treatment with apatorsen in combination with gemcitabine/cisplatin at the 600 mg dose showed a 14 percent reduction in risk of death and a 17 percent reduction in progressive disease and death. |
●
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AstraZeneca presented data from a Phase 1/2 clinical study of ISIS-STAT3-2.5Rx (AZD9150) at the 26th European Organization for Research and Treatment of Cancer. In this study, preliminary evidence of antitumor activity was observed in patients with cancer, including advanced/metastatic hepatocellular carcinoma. Additional data presented at the conference demonstrated that ISIS-STAT3-2.5Rx reduced STAT3 levels in multiple cell types relevant to cancer growth and survival, clinically and pre-clinically. AstraZeneca also presented preclinical data on ISIS-AR-2.5Rx (AZD5312) showing that the drug is active in several tumor models.
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●
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We reported Phase 1 results showing that ISIS-PKKRx produced significant, dose-dependent reductions of PKK of up to 95 percent in healthy volunteers.
|
| Regulus reported results from a completed clinical study on RG-101, an anti-miR drug in development to treat patients with hepatitis C virus, or HCV. In this study, a single dose of either 2 mg/kg or 4 mg/kg of RG-101 demonstrated a substantial mean reduction in viral load in patients with varied HCV genotypes and treatment history. |
| Together with our partners, we continued to advance our pipeline of drugs. |
o | We initiated ENDEAR and CHERISH, Phase 3 studies evaluating ISIS-SMNRx in infants and children with SMA, respectively. |
o | We initiated APPROACH, the Phase 3 study evaluating ISIS-APOCIIIRx in patients with familial chylomicronemia syndrome. |
o | Achaogen initiated a Phase 3 study of plazomicin in patients with serious multi-drug resistant, gram-negative bacterial infections. |
o | We initiated a Phase 2 study of ISIS-APO(a)Rx in patients with high levels of lipoprotein(a), an independent risk factor for cardiovascular disease. |
o | We initiated a Phase 2 study for ISIS-GCCRRx in patients with type 2 diabetes. |
o | AstraZeneca initiated a Phase 2 study for ISIS-STAT3-2.5Rx in patients with hepatocellular carcinoma. |
o | OncoGenex initiated a Phase 2 study for apatorsen in patients with non-small cell lung cancer. |
o | We initiated a Phase 1/2 study of ISIS-DMPK-2.5Rx in healthy volunteers and in patients with myotonic dystrophy type 1. |
o | Regulus initiated a Phase 1/2 study for RG-101 in healthy volunteers and in patients with HCV. |
o | We initiated a Phase 1 study of ISIS-ANGPTL3Rx and ISIS-PKKRx in healthy volunteers. |
| We added twelve drugs to our pipeline. |
●
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We received European Orphan Drug Designation for ISIS-APOCIIIRx for the treatment of patients with familial chylomicronemia syndrome and for ISIS-TTRRx for the treatment of patients with TTR amyloidosis. We received FDA Orphan Drug Designation for ISIS-DMPK-2.5Rx for the treatment of patients with DM1.
|
| We formed a wholly owned subsidiary, Akcea, to develop and commercialize our lipid drugs, ISIS-APOCIIIRx, ISIS-APO(a)Rx, ISIS-ANGPTL3Rx and any follow on drugs for these programs. |
o | We appointed Paula Soteropoulos as president and chief executive officer of Akcea. Ms. Soteropoulos will utilize her expertise in commercializing drugs for severe, rare and cardiovascular diseases in global markets to advance Akcea's novel lipid franchise through development and commercialization. |
| We formed an alliance with Janssen to discover and develop antisense drugs to treat autoimmune disorders of the GI tract. We received $35 million in upfront payments and are eligible to receive nearly $800 million in development, regulatory and sales milestone payments and license fees for the programs under this alliance. We will also receive tiered royalties up to the low double-digits on sales of drugs successfully commercialized. |
| We formed an alliance with AstraZeneca to discover and develop novel delivery methods for antisense oligonucleotides. The agreement builds on an existing collaboration between us and AstraZeneca, and supports AstraZeneca's research and development capabilities in the area of antisense oligonucleotide-based therapeutics and RNA biology. |
| We strengthened our management team with the addition of Sarah Boyce as chief business officer. Ms. Boyce will provide strategic marketing and business expertise from a commercial background to our management team. |
| Abbott obtained CE Mark and launched the Ibis Biosciences diagnostic platform, now called IRIDICA, in Europe. IRIDICA is available in Europe and other CE-Mark recognized countries. IRIDICA was developed from technology discovered by us and transferred to Ibis Biosciences. |
| We and Alnylam formed a new agreement that included a cross-license of intellectual property on four disease targets, providing each company with exclusive RNA therapeutic license rights for two programs. |
| We successfully completed an offering of $500 million aggregate principal amount of 1 percent convertible senior notes due in 2021 in a private placement. We used a significant amount of the net proceeds from the offering to repurchase a large portion of our 2¾ percent convertible senior notes due 2019. |
| We generated more than $250 million in payments from our partners, including the following: |
o | $118 million from Biogen Idec, including payments related to advancing ISIS-SMNRx, initiating a Phase 1 study of ISIS-DMPK-2.5Rx, validating two undisclosed targets to treat neurological disorders, and selecting two development candidates, ISIS-BIIB3Rx and ISIS-BIIB4Rx, to move into our pipeline. |
o | $36 million from GSK related to the development of ISIS-TTRRx, ISIS-HBVRx, ISIS-GSK4-LRx and ISIS-RHO-2.5Rx, formerly ISIS-GSK5-2.5Rx. |
o | $35 million from Janssen related to our alliance to treat autoimmune disorders of the GI tract. |
o | $23 million from AstraZeneca related to the development of ISIS-AR-2.5Rx and ISIS-STAT3-2.5Rx. |
o | $10 million from Alnylam related to Alnylam's license of our technology to its partners. |
o | $4 million from Achaogen for the initiation of a Phase 3 study of Plazomicin. |
| We received cash through the sale of stock we owned in our satellite company partners of more than $25 million, including more than $20 million from the sale of a portion of our Regulus stock. |
| We and our partners were recognized by the drug development community for our innovative and collaborative alliances and our commitment to developing drugs to treat patients with serious, unmet medical needs. |
o | We and Genzyme received the 2014 Partners in Progress Corporate Award from the National Organization for Rare Disorders, or NORD, for the development and approval of KYNAMRO, a drug selected for being a very important orphan therapy to reach the market in the United States. This award honors companies that have brought important and innovative treatments to market for patients with rare disorders. |
o | Our innovative collaboration with Biogen Idec was voted breakthrough alliance of 2014 by Thomson Reuters Recap. |
| We added Joseph Loscalzo, M.D., Ph.D. to our Board of Directors. |
| Our senior vice president of research, Frank Bennett, Ph.D., was awarded the Commitment to a Cure Award by the ALS Association for his research and commitment to develop a treatment for ALS. |
| Our founder, CEO and chairman of the board of directors, Stanley T. Crooke, M.D., Ph.D., was recognized with several awards. |
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DNA evidence confirming the presence of specific gene mutations associated with a genetic diagnosis of HoFH. However, DNA evidence is generally not necessary for diagnosis and genetic analysis may be inconclusive;
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Family history, if known, of premature coronary heart disease and hypercholesterolemia;
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Presence of premature heart disease;
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Elevated plasma levels of total cholesterol and LDL-C;
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Physical examination for signs of cholesterol deposits, including xanthomas on the backs of hands, fingers, face and other areas of the skin. Xanthomas may not be present in every patient; and
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Suboptimal response to lipid lowering therapy.
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Drug
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Indication
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Partner
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ISIS-HTTRx
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Huntington's Disease
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Roche
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ISIS-BIIB3Rx
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Neurodegenerative Disease
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Biogen Idec
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ISIS-BIIB4Rx
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Neurodegenerative Disease
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Biogen Idec
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RG-012
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Alport Syndrome
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Regulus
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ISIS-RHO-2.5Rx
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Autosomal Dominant Retinitis Pigmentosa
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GSK
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ISIS-GHR-LRx
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Acromegaly
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Isis owned
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Drug
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Indication
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Partner
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ISIS-AGT-LRx
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Treatment-Resistant Hypertension
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Isis owned
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ISIS-ANGPTL3-LRx
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Hyperlipidemia Disease
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Akcea
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ISIS-APO(a)-LRx
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Very High Lp(a)
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Akcea
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ISIS-APOCIII-LRx
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Severely High TGs
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Akcea
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ISIS-TMPRSS6-LRx
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b-Thalassemia
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Isis owned
|
Drug
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Indication
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Partner
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ISIS-DGAT2Rx
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NASH
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Isis owned
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● | Borealis-2 is a study in patients with advanced or metastatic bladder cancer in combination with docetaxel. OncoGenex began enrolling in this study in April 2013. |
● | Pacific is an investigator-sponsored study in combination with Zytiga and prednisone in patients with metastatic CRPC who have PSA progression. Enrollment is estimated to be 80 patients and began in December 2012. |
● | Spruce is an investigator-sponsored study in combination with carboplatin/pemetrexed therapy in patients with previously untreated Stage IV non-squamous NSCLC. Enrollment is estimated to be 155 patients and began in August 2013. |
● | Cedar is an investigator-sponsored study in combination with carboplatin/gemcitabine therapy in patients with previously untreated advanced Non-squamous lung cancer. Enrollment is estimated to be 140 patients and began in August 2014. |
● | Rainier is an investigator-sponsored study in combination with ABRAXANE and gemcitabine therapy in patients with previously untreated metastatic pancreatic cancer. Enrollment is estimated to be 130 patients and began in August 2013. |
Drug
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Indication
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Partner
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ISIS-GSK4-LRx
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Ocular Disease
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GSK
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ISIS-GSK6-LRx
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Antiviral
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GSK
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| $11.2 million related to the ISIS-AR-2.5Rx program, which we amortized through March 2014; |
| $7.6 million related to the option to license three drugs under a separate research program, which we are amortizing through December 2016; and |
| $0.7 million related to the ISIS-STAT3-2.5Rx program, which we amortized through February 2015. |
| AstraZeneca may terminate the agreement or any program at any time by providing written notice to us; |
| AstraZeneca may terminate the agreement or any program by providing written notice if we undergo a change of control with a third party; and |
| Either we or AstraZeneca may terminate the agreement or any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent. |
● | $3.8 million related to the Phase 2 studies in children and infants with SMA, which we amortized through July 2014; and |
● | $7.5 million related to an open-label extension study in children with SMA, which we are amortizing through March 2015. |
| Biogen Idec may terminate the agreement or any program at any time by providing written notice to us; |
| Under specific circumstances, if we are acquired by a third party with a product that directly competes with a compound being developed under the agreement, Biogen Idec may terminate the affected program by providing written notice to us; |
| If, within a specified period of time, any required clearance of a transaction contemplated by an agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is not received, then either we or Biogen Idec may terminate the affected program by providing written notice to the other party; and |
| Either we or Biogen Idec may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
| Genzyme may terminate the license and co-development agreement at any time by providing written notice to Isis; |
| We may terminate the license and co-development agreement on a country-by-country basis or in its entirety upon Genzyme's uncured failure to use commercially reasonable efforts to develop and commercialize KYNAMRO in the United States, France, Germany, Italy, Spain, the United Kingdom, Japan and Canada; and |
| Either we or Genzyme may terminate the license and co-development agreement upon the other party's uncured failure to perform a material obligation under the agreement. |
| GSK may terminate any program, other than the ISIS-TTRRx program, at any time by providing written notice to us; |
| GSK may terminate the ISIS-TTRRx program by providing written notice to us after reviewing specific data from the Phase 3 study for the program; and |
| Either we or GSK may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
●
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Janssen may terminate the agreement or any program at any time by providing written notice to us; and
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●
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Either we or Janssen may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent.
|
| Roche may terminate the agreement at any time by providing written notice to us; |
| Either we or Roche may terminate the agreement by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement or if the other party becomes insolvent; and |
| Either we or Roche may terminate the brain shuttle program if at least one development candidate is not designated under such program by a mutually agreed deadline. |
Type of Patent Claim
|
Breadth |
Description
|
Broadly Applicable | ||
Chemically Modified Nucleosides and Oligonucleotides
Antisense Drug Design Motifs
Therapeutic Methods
Antisense Sequence
Drug Composition
|
Target and sequence independent
Sequence independent
Chemistry independent
Specific claim to drug candidates
|
|
Specific | ||
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
|
|
|
|
|
|
|
|
|
United States
|
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7,101,993
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|
OLIGONUCLEOTIDES CONTAINING 2'O-MODIFIED PURINES
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|
2023
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Covers certain MOE nucleosides and oligonucleotides containing said nucleotides.
|
United States
|
|
7,399,845
|
|
6-MODIFIED BICYCLIC NUCLEIC ACID ANALOGS
|
|
2027
|
|
Covers our cEt nucleosides and oligonucleotides containing these nucleoside analogs.
|
United States
|
|
7,741,457
|
|
6-MODIFIED BICYCLIC NUCLEIC ACID ANALOGS
|
|
2027
|
|
Covers our cEt nucleosides and oligonucleotides containing these nucleoside analogs.
|
United States
|
|
8,022,193
|
|
6-MODIFIED BICYCLIC NUCLEIC ACID ANALOGS
|
|
2027
|
|
Covers our cEt nucleosides and oligonucleotides containing these nucleoside analogs.
|
United States
|
7,569,686
|
COMPOUNDS AND METHODS FOR SYNTHESIS OF BICYCLIC NUCLEIC ACID ANALOGS
|
2027
|
Covers methods of synthesizing our cEt nucleosides.
|
||||
Europe
|
EP1984381
|
6-MODIFIED BICYCLIC NUCLEIC ACID ANALOGS
|
2027
|
Covers our cEt nucleosides and oligonucleotides containing these nucleoside analogs.
|
Jurisdiction
|
|
Patent/
Application No. |
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
7,015,315
|
|
GAPPED OLIGONUCLEOTIDES
|
|
2023
|
|
Covers 2'-O-alkyl-O-alkyl gapmer oligonucleotides.
|
Jurisdiction
|
|
Patent/
Application No. |
|
Title
|
|
Expiration
|
|
Description of Claims
|
Europe
|
|
EP2021472
|
|
COMPOUNDS AND METHODS FOR MODULATING GENE EXPRESSION
|
|
2027
|
|
Short gapmer oligonucleotides, 10 to 14 nucleotides in length, with bicyclic nucleosides, which includes cEt locked nucleic acids, in the wings for the treatment of cardiovascular or metabolic disorders
|
United States
|
|
7,750,131
|
|
6-MODIFIED BICYCLIC NUCLEIC ACID ANALOGS
|
|
2027
|
|
Covers cEt containing gapmer compounds
|
Europe
|
|
EP2092065
|
|
ANTISENSE COMPOUNDS
|
|
2027
|
|
Gapmer compounds having wings comprised of 2'-MOE and bicyclic nucleosides
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
7,407,943
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2021
|
|
Methods of inhibiting expression of apoB, decreasing serum cholesterol, decreasing lipoprotein levels, decreasing serum triglycerides in a human with an antisense compound 12 to 30 nucleotide in length and 100% complementary to human apoB wherein the compound is not a ribozyme.
|
Australia
|
|
2002-326481
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2021
|
|
An isolated oligonucleotide compound 12 to 30 nucleobases in length 100% complementary to at least a 12-nucleobase portion of a nucleic acid molecule having nucleotides 151-12820 of SEQ ID 3 (apoB) which is not a ribozyme and use of such compound in therapy
|
Japan
|
|
4471650
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2021
|
|
Use of an antisense oligonucleotide 12 to 30 nucleobases in length and 100% complementary to human apoB having one or more modifications and inhibiting expression of apoB by at least 90% in primary hepatocytes when present at a concentration of 300 nM for preparation of a medicament for decreasing serum cholesterol, and decreasing lipoprotein levels in a human
|
United States
|
|
7,511,131
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2025
|
|
Antisense sequence and composition of matter of KYNAMRO
|
Europe
|
|
EP1569695
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2023
|
|
Antisense sequence and composition of matter of KYNAMRO
|
Europe
|
|
EP2336318
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2023
|
|
Antisense sequence and composition of matter of KYNAMRO
|
India
|
|
219847
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2023
|
|
Antisense sequence and composition of matter of KYNAMRO
|
Australia
|
|
2003294281
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2023
|
|
Antisense sequence and composition of matter of KYNAMRO
|
South Africa
|
|
2005/03690
|
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
|
2023
|
|
Antisense sequence and composition of matter of KYNAMRO
|
Japan
|
4986109
|
ANTISENSE MODULATION OF APOLIPOPROTEIN B EXPRESSION
|
2023
|
Antisense sequence and composition of matter of KYNAMRO
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
7,598,227
|
|
MODULATION OF APOLIPOPROTEIN C-III EXPRESSION
|
|
2023
|
|
Methods of treating hyperlipidemia, lowering cholesterol levels and lowering triglyceride levels with an antisense compound comprising an antisense oligonucleotide 15-30 linked nucleosides specifically hybridizable within nucleotides 3253-3558 of SEQ ID 4 (apoCIII)
|
United States
|
|
7,750,141
|
|
MODULATION OF APOLIPOPROTEIN C-III EXPRESSION
|
|
2023
|
|
Antisense sequence and chemistry of ISIS-APOCIIIRx
|
Europe
|
|
EP1622597
|
|
MODULATION OF APOLIPOPROTEIN C-III EXPRESSION
|
|
2023
|
|
Antisense sequence and chemistry of ISIS-APOCIIIRx
|
Australia
|
|
2004231550
|
|
MODULATION OF APOLIPOPROTEIN C-III EXPRESSION
|
|
2023
|
|
Compounds 12-50 nucleobases in length specifically hybridizable with SEQ ID 4 (apoCIII), the antisense sequence and chemistry of ISIS-APOCIIIRx and methods of their use in treating hyperlipidemia, lowering cholesterol levels and lowering triglyceride levels
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
6,210,892
|
|
ALTERATION OF CELLULAR BEHAVIOR BY MODULATION OF MRNA PROCESSING
|
|
2018
|
|
Broad claims of altering mRNA processing with a fully-modified 2'MOE oligonucleotide.
|
United States
|
|
8,361,977
|
|
COMPOSITIONS AND METHODS FOR MODULATION OF SMN2 SPLICING
|
|
2030
|
|
Sequence and chemistry (full 2'-MOE) of ISIS-SMNRx
|
Europe
|
|
1910395
|
|
COMPOSITIONS AND METHODS FOR MODULATION OF SMN2 SPLICING
|
|
2026
|
|
Sequence and chemistry (full 2'-MOE) of ISIS-SMNRx
|
United States
|
|
7,838,657
|
|
SPINAL MUSCULAR ATROPHY (SMA) TREATMENT VIA TARGETING OF SMN2 SPLICE SITE INHIBITORY SEQUENCES
|
|
2027
|
|
Oligonucleotides having sequence of ISIS-SMNRx (chemistry independent)
|
United States
|
|
8,110,560
|
|
SPINAL MUSCULAR ATROPHY (SMA) TREATMENT VIA TARGETING OF SMN2 SPLICE SITE INHIBITORY SEQUENCES
|
|
2025
|
|
Methods of using antisense oligonucleotides having sequence of SMNRx to alter splicing of SMN2 and/or to treat SMA
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
8,101,743
|
|
MODULATION OF TRANSTHYRETIN EXPRESSION
|
|
2025
|
|
Antisense sequence and chemistry of ISIS-TTRRx
|
United States
|
|
8,697,860
|
|
DIAGNOSIS AND TREATMENT OF DISEASE
|
|
2031
|
|
Composition of ISIS-TTRRx
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
5,898,031
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Oligonucleotides comprising regions of RNA nucleosides and regions of nucleosides having stabilizing chemical modifications. Such oligonucleotides are suitable for use in single- and double-stranded applications.
|
United States
|
|
6,107,094
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Compounds and methods that use oligonucleotides having both RNA nucleosides and chemically modified nucleosides, including methods that rely on a dsRNAse to reduce target RNA and compounds having nucleosides with improved affinity and/or stability.
|
United States
|
|
7,432,249
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Pharmaceutical compositions comprising a diluent or carrier and a single-stranded antisense oligonucleotide having a plurality of RNA nucleosides and at least one sugar modification.
|
United States
|
|
7,432,250
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Methods for treating a patient by administering an antisense compound having a plurality of RNA nucleosides and at least one sugar modification.
|
United States
|
|
7,629,321
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Methods for cleaving a target RNA in a cell by contacting the cell with a single-stranded antisense compound having a plurality of RNA nucleosides and at least one sugar modification.
|
United States
|
|
7,695,902
|
|
OLIGORIBONUCLEOTIDES FOR CLEAVING RNA
|
|
2016
|
|
Methods of activating a dsRNase by contacting the dsRNase with a double-stranded antisense oligonucleotide where at least one strand has a plurality of RNA nucleosides and at least one sugar modification. The methods may be performed inside a cell.
|
Jurisdiction
|
|
Patent No.
|
|
Title
|
|
Expiration
|
|
Description of Claims
|
United States
|
|
6,900,187
|
|
TRPM-2 ANTISENSE THERAPY USING AN OLIOGNUCLEOTIDE HAVING 2'-O-(2-METHOXY)ETHYL MODIFICATIONS
|
|
2021
|
|
Antisense sequence and composition of custirsen
|
Name
|
|
Age
|
|
Position
|
Stanley T. Crooke, M.D., Ph.D.
|
|
69
|
|
Chairman, Chief Executive Officer and President
|
B. Lynne Parshall, J.D.
|
|
60
|
|
Director, Chief Operating Officer and Secretary
|
C. Frank Bennett, Ph.D.
|
|
58
|
|
Senior Vice President, Antisense Research
|
Sarah Boyce
|
43
|
Chief Business Officer
|
||
Richard S. Geary, Ph.D.
|
|
57
|
|
Senior Vice President, Development
|
Elizabeth L. Hougen
|
|
53
|
|
Senior Vice President, Finance and Chief Financial Officer
|
Brett P. Monia, Ph.D.
|
|
53
|
|
Senior Vice President, Drug Discovery and Corporate Development
|
Patrick R. O'Neil, Esq.
|
|
41
|
|
Senior Vice President, Legal and General Counsel
|
● | receipt and scope of regulatory approvals; |
● | establishment and demonstration in the medical and patient community of the efficacy and safety of our drugs and their potential advantages over competing products; |
● | cost and effectiveness of our drugs compared to other available therapies; |
● | patient convenience of the dosing regimen for our drugs; and |
● | reimbursement policies of government and third-party payors. |
● | priced lower than our drugs; |
● | safer than our drugs; |
● | more effective than our drugs; or |
● | more convenient to use than our drugs. |
● | KYNAMRO is approved in the United States as an adjunct to lipid-lowering medications and diet to reduce low density lipoprotein-cholesterol, apolipoprotein B, total cholesterol, and non-high density lipoprotein-cholesterol in patients with HoFH; |
● | the KYNAMRO label contains a Boxed Warning citing a risk of hepatic toxicity; and |
● | KYNAMRO is available only through a Risk Evaluation and Mitigation Strategy called the KYNAMRO REMS. |
● | fund some of our development activities for KYNAMRO; |
● | seek and obtain regulatory approvals for KYNAMRO; and |
● | successfully commercialize KYNAMRO. |
● | the clinical study may produce negative or inconclusive results; |
● | regulators may require that we hold, suspend or terminate clinical research for noncompliance with regulatory requirements; |
● | we, our partners, the FDA or foreign regulatory authorities could suspend or terminate a clinical study due to adverse side effects of a drug on subjects in the trial; |
● | we may decide, or regulators may require us, to conduct additional preclinical testing or clinical studies; |
● | enrollment in our clinical studies may be slower than we anticipate; |
● | the cost of our clinical studies may be greater than we anticipate; and |
● | the supply or quality of our drugs or other materials necessary to conduct our clinical studies may be insufficient, inadequate or delayed. |
● | conduct clinical studies; |
● | seek and obtain regulatory approvals; and |
● | manufacture, market and sell our drugs. |
● | pursue alternative technologies or develop alternative products that may be competitive with the drug that is part of the collaboration with us; |
● | pursue higher-priority programs or change the focus of its own development programs; or |
● | choose to devote fewer resources to our drugs than it does for its own drugs. |
● | additional marketing approvals and successful commercial launch of KYNAMRO; |
● | changes in existing collaborative relationships and our ability to establish and maintain additional collaborative arrangements; |
● | continued scientific progress in our research, drug discovery and development programs; |
● | the size of our programs and progress with preclinical and clinical studies; |
● | the time and costs involved in obtaining regulatory approvals; |
● | competing technological and market developments, including the introduction by others of new therapies that address our markets; and |
● | the profile and launch timing of our drugs, including ISIS-APOCIIIRx, ISIS-SMNRx and ISIS-TTRRx. |
● | interruption of our research, development and manufacturing efforts; |
● | injury to our employees and others; |
● | environmental damage resulting in costly clean up; and |
● | liabilities under federal, state and local laws and regulations governing health and human safety, as well as the use, storage, handling and disposal of these materials and resultant waste products. |
Item 1B. | Unresolved Staff Comments |
Item 5. | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
|
HIGH
|
LOW
|
||||||
2014
|
||||||||
First Quarter
|
$
|
62.66
|
$
|
38.04
|
||||
Second Quarter
|
$
|
45.04
|
$
|
22.25
|
||||
Third Quarter
|
$
|
43.42
|
$
|
27.37
|
||||
Fourth Quarter
|
$
|
67.12
|
$
|
35.26
|
||||
2013
|
||||||||
First Quarter
|
$
|
19.53
|
$
|
10.36
|
||||
Second Quarter
|
$
|
28.66
|
$
|
15.92
|
||||
Third Quarter
|
$
|
39.83
|
$
|
23.63
|
||||
Fourth Quarter
|
$
|
42.69
|
$
|
29.41
|
|
Dec-09
|
Dec-10
|
Dec-11
|
Dec-12
|
Dec-13
|
Dec-14
|
||||||||||||||||||
Isis Pharmaceuticals, Inc.
|
$
|
100.00
|
$
|
91.09
|
$
|
64.90
|
$
|
93.97
|
$
|
358.60
|
$
|
555.72
|
||||||||||||
NASDAQ Composite Index
|
$
|
100.00
|
$
|
117.61
|
$
|
118.70
|
$
|
139.00
|
$
|
196.83
|
$
|
223.74
|
||||||||||||
NASDAQ Biotechnology Index
|
$
|
100.00
|
$
|
106.73
|
$
|
122.40
|
$
|
166.72
|
$
|
286.55
|
$
|
379.71
|
(1) | This section is not "soliciting material," is not deemed "filed" with the SEC, is not subject to the liabilities of Section 18 of the Exchange Act and is not to be incorporated by reference in any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
|
Years Ended December 31,
|
|||||||||||||||||||
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||
Consolidated Statement of Operations Data:
|
||||||||||||||||||||
Revenue
|
$
|
214,161
|
$
|
147,285
|
$
|
102,049
|
$
|
99,086
|
$
|
108,473
|
||||||||||
Research, development and patent expenses
|
$
|
241,751
|
$
|
184,033
|
$
|
158,458
|
$
|
157,397
|
$
|
145,160
|
||||||||||
Net loss attributable to Isis Pharmaceuticals, Inc. common stockholders
|
$
|
(38,984
|
)
|
$
|
(60,644
|
)
|
$
|
(65,478
|
)
|
$
|
(84,801
|
)
|
$
|
(61,251
|
)
|
|||||
Basic and diluted net loss per share attributable to Isis Pharmaceuticals, Inc. common stockholders
|
$
|
(0.33
|
)
|
$
|
(0.55
|
)
|
$
|
(0.65
|
)
|
$
|
(0.85
|
)
|
$
|
(0.62
|
)
|
|||||
Shares used in computing basic and diluted net loss per share
|
117,691
|
110,502
|
100,576
|
99,656
|
99,143
|
|
As of December 31,
|
|||||||||||||||||||
|
2014
|
2013
|
2012
|
2011
|
2010
|
|||||||||||||||
Consolidated Balance Sheet:
|
||||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$
|
728,832
|
$
|
656,761
|
$
|
374,446
|
$
|
343,664
|
$
|
472,353
|
||||||||||
Working capital
|
$
|
721,265
|
$
|
637,698
|
$
|
349,116
|
$
|
284,027
|
$
|
377,247
|
||||||||||
Investment in Regulus Therapeutics Inc.(1)
|
$
|
81,881
|
$
|
52,096
|
$
|
33,622
|
$
|
4,424
|
$
|
870
|
||||||||||
Total assets
|
$
|
955,809
|
$
|
847,156
|
$
|
545,686
|
$
|
484,894
|
$
|
550,477
|
||||||||||
Long-term debt and other obligations, less current portion
|
$
|
582,697
|
$
|
370,954
|
$
|
288,598
|
$
|
232,924
|
$
|
199,175
|
||||||||||
Accumulated deficit
|
$
|
(1,006,594
|
)
|
$
|
(967,610
|
)
|
$
|
(906,966
|
)
|
$
|
(841,488
|
)
|
$
|
(756,687
|
)
|
|||||
Stockholders' equity
|
$
|
257,780
|
$
|
378,390
|
$
|
182,766
|
$
|
171,434
|
$
|
244,542
|
(1) | In October 2012, Regulus completed an IPO and we changed to accounting for our investment in Regulus at fair value from the equity method because our ownership in Regulus dropped below 20 percent and we no longer had significant influence over Regulus' operating and financial policies. For additional information, see Note 2, Investment in Regulus Therapeutics Inc.in the Notes to the Consolidated Financial Statements. |
| Assessing the propriety of revenue recognition and associated deferred revenue; |
| Determining the proper valuation of investments in marketable securities and other equity investments; |
| Assessing the recoverability of long-lived assets, including property and equipment, intellectual property and licensed technology; |
| Determining the appropriate cost estimates for unbilled preclinical studies and clinical development activities; |
| Estimating our net deferred income tax asset valuation allowance; and |
| Determining the fair value of convertible debt without the conversion feature. |
| The exclusive license we granted to AstraZeneca to develop and commercialize ISIS-STAT3-2.5Rx for the treatment of cancer; |
| The development services we are performing for ISIS-STAT3-2.5Rx; |
| The exclusive license we granted to AstraZeneca to develop and commercialize ISIS-AR-2.5Rx and the research services we performed for ISIS-AR-2.5Rx; and |
| The option to license up to three drugs under a research program and the research services we are performing for this program. |
| 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 number and cost of studies we will perform; |
| The estimated number and cost of studies that we will contract with third parties to perform; and |
| The estimated cost of drug product we will use in the studies. |
| In January 2012, we entered into a collaboration agreement with Biogen Idec to develop and commercialize ISIS-SMNRx for SMA. As part of the collaboration, we received a $29 million upfront payment and we are responsible for global development of ISIS-SMNRx through completion of Phase 2/3 clinical trials. |
| In June 2012, we entered into a second and separate collaboration agreement with Biogen Idec to develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible for global development of the drug through the completion of a Phase 2 clinical trial. |
| In December 2012, we entered into a third and separate collaboration agreement with Biogen Idec to discover and develop antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we received a $30 million upfront payment and we are responsible for the discovery of a lead antisense drug for each of three targets. |
| In September 2013, we entered into a fourth and separate collaboration agreement with Biogen Idec to leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen Idec exclusive rights to the use of our antisense technology to develop therapies for neurological diseases as part of this broad collaboration. We received a $100 million upfront payment and we are responsible for discovery and early development through the completion of a Phase 2 clinical trial for each antisense drug identified during the six year term of this collaboration, while Biogen Idec is responsible for the creation and development of small molecule treatments and biologics. |
| Designation of a development candidate. Following the designation of a development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete; |
| Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete; |
| Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; |
| Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete. |
| Filing of regulatory applications for marketing approval such as a NDA in the United States or a MAA in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings. |
| Marketing approval in a major market, such as the United States, Europe or Japan. Generally it takes one to two years after an application is submitted to obtain approval from the applicable regulatory agency. |
| First commercial sale in a particular market, such as in the United States or Europe. |
| Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. |
| Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; |
| The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on our performance or the occurrence of a specific outcome resulting from our performance; |
| The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items; |
| There is no future performance required to earn the milestone; and |
| The consideration is reasonable relative to all deliverables and payment terms in the arrangement. |
| Evidence of decreases in market value; |
| Changes in the extent or manner in which we use an asset; |
| Adverse changes in legal factors or in the business climate that would affect the value of an asset; |
| An adverse action or assessment by a regulator; |
| An accumulation of costs significantly in excess of amounts originally expected to acquire or construct an asset; |
| Current period operating or cash flow loss combined with a history of operating or cash flow losses associated with an asset used for the purpose of producing revenue; and |
| Challenges or potential challenges to our existing patents, the likelihood that the United States Patent and Trademark Office, or foreign equivalent, will issue an application and the scope of our issued patents. |
| $80 million from Biogen Idec, for advancing ISIS-SMNRx, including initiating two Phase 3 studies, initiating a Phase 1 study of ISIS-DMPK-2.5Rx, validating two undisclosed targets to treat neurological disorders under our neurology collaborations, and advancing a third drug into development; |
| $28.5 million from GSK related to advancing the Phase 2/3 study of ISIS-TTRRx, and further advancing ISIS-HBVRx, ISIS-GSK4-LRx, and ISIS-RHO-2.5Rx; |
| $22.1 million from AstraZeneca related to the initiation of a Phase 1 clinical study of ISIS-AR-2.5Rx and advancing ISIS-STAT3-2.5Rx; and |
| $4 million from Achaogen when Achaogen initiated a Phase 3 study of plazomicin. |
|
Year Ended
December 31, |
|||||||
|
2014
|
2013
|
||||||
Research, development and patent expenses
|
$
|
215,908
|
$
|
174,360
|
||||
Non-cash compensation expense related to equity awards
|
25,843
|
9,673
|
||||||
Total research, development and patent expenses
|
$
|
241,751
|
$
|
184,033
|
|
Year Ended
December 31, |
|||||||
|
2014
|
2013
|
||||||
Antisense drug discovery expenses
|
$
|
43,620
|
$
|
42,402
|
||||
Non-cash compensation expense related to equity awards
|
7,290
|
2,878
|
||||||
Total antisense drug discovery
|
$
|
50,910
|
$
|
45,280
|
|
Year Ended
December 31, |
|||||||
|
2014
|
2013
|
||||||
KYNAMRO
|
$
|
5,359
|
$
|
7,653
|
||||
ISIS-TTRRx
|
10,927
|
4,174
|
||||||
ISIS-SMNRx
|
19,064
|
6,938
|
||||||
ISIS-APOCIIIRx
|
9,337
|
5,730
|
||||||
Other antisense development products
|
44,913
|
29,129
|
||||||
Development overhead costs
|
31,318
|
24,171
|
||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards
|
120,918
|
77,795
|
||||||
Non-cash compensation expense related to equity awards
|
9,640
|
3,202
|
||||||
Total antisense drug development
|
$
|
130,558
|
$
|
80,997
|
|
Year Ended
December 31, |
|||||
|
2014
|
2013
|
||||
Manufacturing and operations
|
$ |
24,763
|
$ |
20,509
|
||
Non-cash compensation expense related to equity awards
|
2,934
|
1,295
|
||||
Total manufacturing and operations
|
$ |
27,697
|
$ |
21,804
|
|
Year Ended
December 31, |
|||||||
|
2014
|
2013
|
||||||
Personnel costs
|
$
|
9,875
|
$
|
9,571
|
||||
Occupancy
|
7,357
|
6,897
|
||||||
Patent expenses
|
2,933
|
10,321
|
||||||
Depreciation and amortization
|
2,243
|
2,464
|
||||||
Insurance
|
1,197
|
1,108
|
||||||
Other
|
3,002
|
3,293
|
||||||
Total R&D support costs, excluding non-cash compensation expense related to equity awards
|
26,607
|
33,654
|
||||||
Non-cash compensation expense related to equity awards
|
5,979
|
2,298
|
||||||
Total R&D support costs
|
$
|
32,586
|
$
|
35,952
|
|
Year Ended
December 31, |
|||||
|
2014
|
2013
|
||||
General and administrative expenses
|
$ |
14,600
|
$ |
13,173
|
||
Non-cash compensation expense related to equity awards
|
5,540
|
1,745
|
||||
Total general and administrative
|
$ |
20,140
|
$ |
14,918
|
|
Year Ended
December 31, |
|||||||
|
2014
|
2013
|
||||||
2¾ % convertible notes:
|
||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
$
|
7,211
|
$
|
6,758
|
||||
Interest expense payable in cash
|
5,074
|
5,534
|
||||||
1 % convertible notes:
|
||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
2,365
|
—
|
||||||
Interest expense payable in cash
|
597
|
—
|
||||||
Non-cash interest expense for long-term financing liability
|
6,622
|
6,568
|
||||||
Other
|
340
|
495
|
||||||
Total interest expense
|
$
|
22,209
|
$
|
19,355
|
| $26.5 million from GSK because we advanced ISIS-TTRRx, ISIS-HBVRx, formerly ISIS-GSK3Rx, and ISIS-GSK4-LRx in development; |
| $25 million from Genzyme when the FDA approved the KYNAMRO NDA; |
| $10 million when AstraZeneca added a second development candidate, ISIS-AR-2.5Rx, to our collaboration; |
| $17 million from Biogen Idec because we advanced the Phase 2 study of ISIS-SMNRx in infants and for selecting and advancing ISIS-DMPK-2.5Rx in development; and |
| $3.5 million when Xenon licensed XEN701. |
|
Year Ended
December 31, |
|||||
|
2013
|
2012
|
||||
Research, development and patent expenses
|
$ |
174,360
|
$ |
151,212
|
||
Non-cash compensation expense related to equity awards
|
9,673
|
7,246
|
||||
Total research, development and patent expenses
|
$ |
184,033
|
$ |
158,458
|
|
Year Ended
December 31, |
|||||
|
2013
|
2012
|
||||
Antisense drug discovery expenses
|
$ |
42,402
|
$ |
34,035
|
||
Non-cash compensation expense related to equity awards
|
2,878
|
2,108
|
||||
Total antisense drug discovery
|
$ |
45,280
|
$ |
36,143
|
|
Year Ended
December 31, |
|||||||
|
2013
|
2012
|
||||||
KYNAMRO
|
$
|
7,653
|
$
|
9,451
|
||||
ISIS-TTRRx
|
4,174
|
5,034
|
||||||
ISIS-SMNRx
|
6,938
|
3,903
|
||||||
ISIS-APOCIIIRx
|
5,730
|
3,104
|
||||||
Other antisense development products
|
29,129
|
27,959
|
||||||
Development overhead costs
|
24,171
|
21,110
|
||||||
Total antisense drug development, excluding non-cash compensation expense related to equity awards
|
77,795
|
70,561
|
||||||
Non-cash compensation expense related to equity awards
|
3,202
|
2,482
|
||||||
Total antisense drug development
|
$
|
80,997
|
$
|
73,043
|
|
Year Ended
December 31, |
|||||||
|
2013
|
2012
|
||||||
Manufacturing and operations
|
$
|
20,509
|
$
|
19,232
|
||||
Non-cash compensation expense related to equity awards
|
1,295
|
999
|
||||||
Total manufacturing and operations
|
$
|
21,804
|
$
|
20,231
|
|
Year Ended
December 31, |
|||||||
|
2013
|
2012
|
||||||
Personnel costs
|
$
|
9,571
|
$
|
9,231
|
||||
Occupancy
|
6,897
|
6,909
|
||||||
Patent expenses
|
10,321
|
3,868
|
||||||
Depreciation and amortization
|
2,464
|
3,129
|
||||||
Insurance
|
1,108
|
1,143
|
||||||
Other
|
3,293
|
3,104
|
||||||
Total R&D support costs, excluding non-cash compensation expense related to equity awards
|
33,654
|
27,384
|
||||||
Non-cash compensation expense related to equity awards
|
2,298
|
1,657
|
||||||
Total R&D support costs
|
$
|
35,952
|
$
|
29,041
|
|
Year Ended
December 31, |
|||||||
|
2013
|
2012
|
||||||
General and administrative expenses
|
$
|
13,173
|
$
|
11,190
|
||||
Non-cash compensation expense related to equity awards
|
1,745
|
1,325
|
||||||
Total general and administrative
|
$
|
14,918
|
$
|
12,515
|
|
Year Ended
December 31, |
|||||||
|
2013
|
2012
|
||||||
Convertible Notes:
|
||||||||
Non-cash amortization of the debt discount and debt issuance costs
|
$
|
6,758
|
$
|
9,846
|
||||
Interest expense payable in cash
|
5,534
|
4,306
|
||||||
Non-cash interest expense for long-term financing liability
|
6,568
|
6,502
|
||||||
Other
|
495
|
498
|
||||||
Total interest expense
|
$
|
19,355
|
$
|
21,152
|
| $18.4 million gain we realized in 2012 because of the increase in Regulus' valuation resulting from its IPO; and |
| $4.8 million loss, $3.6 million of which was non-cash, we recorded in 2012 on the early retirement of our 2⅝ percent convertible subordinated notes. |
|
Payments Due by Period (in millions)
|
|||||||||||||||||||
Contractual Obligations
(selected balances described below) |
Total
|
Less than
1 year |
1-3 years
|
3-5 years
|
After
5 years |
|||||||||||||||
1 percent convertible senior notes (principal and interest payable)
|
$
|
535.0
|
$
|
5.0
|
$
|
10.0
|
$
|
10.0
|
$
|
510.0
|
||||||||||
2¾ percent convertible senior notes (principal and interest payable)
|
$
|
69.5
|
$
|
1.5
|
$
|
3.4
|
$
|
64.6
|
$
|
—
|
||||||||||
Facility rent payments
|
$
|
131.8
|
$
|
6.2
|
$
|
13.1
|
$
|
13.9
|
$
|
98.6
|
||||||||||
Equipment financing arrangements (principal and interest payable)
|
$
|
3.3
|
$
|
2.8
|
$
|
0.5
|
$
|
—
|
$
|
—
|
||||||||||
Other obligations (principal and interest payable)
|
$
|
1.3
|
$
|
0.1
|
$
|
0.1
|
$
|
0.1
|
$
|
1.0
|
||||||||||
Capital lease
|
$
|
0.2
|
$
|
0.2
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||
Operating leases
|
$
|
25.1
|
$
|
1.6
|
$
|
3.0
|
$
|
3.0
|
$
|
17.5
|
||||||||||
Total
|
$
|
766.2
|
$
|
17.4
|
$
|
30.1
|
$
|
91.6
|
$
|
627.1
|
1 Percent Convertible
Senior Notes
|
2¾ Percent Convertible
Senior Notes
|
|||||||
Outstanding principal balance
|
$
|
500.0
|
$
|
61.2
|
||||
Issue date
|
November 2014
|
August 2012
|
||||||
Maturity date
|
November 2021
|
October 2019
|
||||||
Interest rate
|
1 percent
|
2¾ percent
|
||||||
Conversion price per share
|
$
|
66.81
|
$
|
16.63
|
||||
Total shares of common stock subject to conversion
|
7.5
|
3.7
|
|
/s/ ERNST & YOUNG LLP
|
|
|
San Diego, California
|
|
February 27, 2015
|
|
Since inception, the Isis mission has been to create a new, more efficient technology for drug discovery and development, antisense technology, and exploit that technology to create a pipeline of first-in-class medicines to treat a wide range of diseases. Today, thanks to the innovation and perseverance of Isis, we believe antisense technology is taking its place as the third platform for drug discovery alongside small molecules and protein therapeutics.
|
Through the efficiency of our technology platform and business strategy we have built a pipeline of 38 drugs in development with under 400 employees, representing a ratio of 1 drug: 12 employees.
|
|
Isis is focused on innovation. Isis has implemented a unique business strategy that is intended to support long-term innovation based on the efficiency of antisense technology. Isis has created a unique innovation-focused, science–driven, culture that couples with the technology and business model to ensure long-term productivity and a commitment to the patients we serve.
|
| create and constantly advance a new, more efficient drug discovery platform, antisense technology; |
| create a unique business model and culture committed to creating long-term value through innovation; |
| broaden, deepen and advance our pipeline of antisense drugs; |
| demand more of every employee - more commitment, more knowledge, more intensity, more innovation and more productivity; |
| aggressively manage average and below average performance so every employee produces more; and |
| demand great performance and pay for that performance. |
What We Do
|
What We Don't Do
|
Demand more of every employee: more commitment, more knowledge, more intensity, more innovation, more productivity
|
Do not guarantee a cash bonus – cash bonuses can, and have been, zero
|
Reward productivity and performance
|
Do not provide perquisites for any employees
|
Recognize the value of long-term employees and low turnover
|
Do not provide "gross-up" payments, other than for relocation
|
Use a balanced mix of fixed and variable cash incentives and long-term equity incentives
|
Do not allow pledging, shorting or hedging against our stock
|
Evaluate compensation compared to the 50th percentile of our peer group
|
Do not reprice or "cash-out" stock options without stockholder approval
|
Design our compensation philosophy and objectives to mitigate unnecessary or imprudent business risk taking
|
|
Set explicit and demanding objectives at the beginning of each year from which we measure performance for the year
|
|
Place a m aximum limit on Performance MBOs
|
|
Set a strict budget for equity awards and salary increases
|
|
Set the size of equity awards based on individual and company performance
|
|
Require minimum vesting periods for equity awards
|
|
Maintain equity holding periods that require our named executive officers and non-employee Board members to hold shares received from their RSUs until they meet certain ownership thresholds or no longer serve the company
|
|
Maintain equity holding periods that require our employees to hold ESPP shares for a minimum of six months
|
|
Require our executive officers and VPs to trade Isis' stock through Rule 10b5-1 trading plans
|
|
Use a "double trigger" for cash payments for change of control
|
|
Use an executive "claw-back" policy
|
|
Use an independent compensation consultant engaged by the Compensation Committee
|
| reviewing and approving overall compensation strategy; |
| reviewing and approving corporate performance goals and objectives relevant to the compensation of our executive officers; |
| evaluating and recommending to the Board the compensation plans and programs advisable for Isis, as well as modifying or terminating existing plans and programs; |
| establishing policies with respect to stock compensation arrangements; |
| reviewing and approving compensation arrangements for our executive officers, including our Chief Executive Officer; |
| reviewing and approving compensation arrangements for our Directors; |
| administering our stock-based awards and ESPP; |
| evaluating risks associated with our compensation policies and practices and assessing whether these risks are reasonably likely to have a material adverse effect on us; |
| selecting and retaining a qualified, independent compensation consultant; |
| performing other functions as may be necessary or convenient in the efficient discharge of the foregoing; and |
| reporting to the Board of Directors from time to time, or whenever it is called upon to do so. |
| monitor the SEC's adoption of the final rules and definitions; and |
| adjust Isis' compensation policies as necessary to satisfy the new rules. |
| selecting the 2014 Executive Peer Group; |
| evaluating the pay mix for our named executive officers; and |
| evaluating short-term and long-term incentives for our executive officers. |
| create and constantly advance a new, more efficient drug discovery platform, antisense technology; |
| create a unique business model and culture committed to creating long-term value through innovation; |
| broaden, deepen and advance our pipeline of antisense drugs; |
| demand more of every employee - more commitment, more knowledge, more intensity, more innovation, more productivity; |
| aggressively manage average and below average performance so that every employee produces more; and |
| demand great performance and pay for that performance. |
Drug discovery and development across a portfolio of many drugs (currently 38 for Isis) is a long process that spans many years, where decisions we make today can have a positive or negative consequence five years, ten years, and even further into the future. As such, it is essential we set goals that incentivize our employees to execute our long-term strategy, because we believe our long-term strategy should continue to reward our stockholders into the future.
|
Given the uniqueness and complexity of our technology, it is critical to retain the knowledge and experience of outstanding long service employees.
|
| Long tenure among a dedicated and highly skilled workforce, combined with the highest performance standards, contributes to our leadership in the industry and serves the interests of stockholders. |
| Our focus on retention is coupled to a strong belief that executive talent most often should be developed and promoted from within Isis. |
| The long tenure of high-performing executive officers reflects this strategy at all levels of the organization. |
o | Our named executive officers, or NEOs, who served in 2014 have tenures at Isis ranging from 14 years to 26 years. |
o | Our other officers who served in 2014 have on average 12 years of tenure at Isis. |
| Each of the executive officers has been carefully evaluated and selected through a rigorous performance assessment process over a long career. In their current assignments, they remain subject to a challenging annual performance assessment in which they must continue to meet the highest standards or be reassigned or separated from the Company. |
Employees in our organization do not share either accountability or responsibility equally for strategic and/or tactical decisions. It is well ingrained in our culture that not everyone should share the same level of risk/reward for the consequences of these decisions. As a result, we have structured the various components of our compensation system to reflect accountability both for the successes and failures (both long-term and short-term) of Isis and our employees. We pay our senior management team for results and their use of judgment in executing the strategies they have established. Therefore, the more senior a person becomes within Isis, the more the person's cash compensation will be "at risk." We compensate the more junior employees for accomplishing their work well and, therefore, a lower portion of their cash compensation is "at risk."
|
The more senior role a person plays, the more that person's cash compensation will be "at risk."
|
(1) | base salary, |
(2) | MBO – Performance Based – At Risk Cash Compensation, no portion of which is guaranteed, |
(3) | stock-based compensation, and |
(4) | the same benefits, including 401(k) matching, that we provide to all employees. |
| company-wide performance, including achievement of corporate objectives; |
| the Compensation Committee's assessment of our CEO's and executive officers' individual performance; |
| competitive compensation practices; |
| increased efficiencies and process improvements; |
| effective collaboration and teamwork; |
| individual expertise, skills and knowledge; |
| the need to retain and motivate; |
| the impact an individual's judgment has on our success or failure; and |
| the advice of the Compensation Committee's independent compensation consultant. |
| are similar to Isis in terms of certain factors, including one or more of the following: size (i.e., revenue, market capitalization), industry, and stage of development; |
| have named executive officer positions that are comparable to ours in terms of breadth, complexity and scope of responsibilities; and |
| compete with us for executive talent. |
Company (ticker)
|
Annual Revenues
(in millions)
|
Market Capitalization
(in millions)
|
Stage of Lead Drug
|
||||||
Accorda Therapeutics (ACOR)
|
$
|
336.4
|
$
|
1,589.2
|
Market
|
||||
Akorn (AKRX)
|
$
|
317.7
|
$
|
2,094.5
|
Market
|
||||
Alkermes (ALKS)
|
$
|
575.6
|
$
|
6,400.5
|
Market
|
||||
Alnylam Pharmaceuticals (ALNY)
|
$
|
47.2
|
$
|
4,194.2
|
Phase III
|
||||
Arena Pharmaceuticals (ARNA)
|
$
|
81.4
|
$
|
1,462.5
|
Market
|
||||
Ariad Pharmaceuticals (ARIA)
|
$
|
45.6
|
$
|
1,501.8
|
Market
|
||||
Auxilium Pharmaceuticals (AUXL)
|
$
|
400.7
|
$
|
1,406.3
|
Market
|
||||
Exelixis (EXEL)
|
$
|
31.3
|
$
|
718.1
|
Market
|
||||
Halozyme Therapeutics (HALO)
|
$
|
54.8
|
$
|
1,505.4
|
Market
|
||||
ImmunoGen (IMGN)
|
$
|
35.5
|
$
|
1,255.1
|
Market
|
||||
Incyte Corporation (INCY)
|
$
|
354.9
|
$
|
9,015.1
|
Market
|
||||
InterMune (ITMN)
|
$
|
70.3
|
$
|
3,307.2
|
Phase III
|
||||
Jazz Pharmaceuticals (JAZZ)
|
$
|
872.4
|
$
|
8,137.7
|
Market
|
||||
Lexicon Pharmaceuticals (LXRX)
|
$
|
2.2
|
$
|
930.0
|
Phase III
|
||||
MannKind (MNKD)
|
$
|
0.0
|
$
|
2,636.7
|
Phase III
|
||||
Medivation (MDVN)
|
$
|
272.9
|
$
|
4,980.0
|
Market
|
||||
Momenta Pharmaceuticals (MNTA)
|
$
|
35.5
|
$
|
606.1
|
Market
|
||||
Nektar Therapeutics (NKTR)
|
$
|
148.9
|
$
|
1,590.7
|
Market
|
||||
NPS Pharmaceuticals (NPSP)
|
$
|
155.6
|
$
|
3,104.1
|
Market
|
||||
Pacira (PCRX)
|
$
|
85.6
|
$
|
2,326.9
|
Market
|
||||
Pharmacyclics (PCYC)
|
$
|
260.2
|
$
|
7,644.9
|
Market
|
||||
Seattle Genetics (SGEN)
|
$
|
269.3
|
$
|
5,400.2
|
Market
|
||||
The Medicines Company (MDCO)
|
$
|
687.9
|
$
|
1,620.8
|
Market
|
||||
Theravance (THRX)
|
$
|
4.8
|
$
|
3,437.7
|
Market
|
||||
United Therapeutics (UTHR)
|
$
|
1,117.0
|
$
|
4,874.6
|
Market
|
||||
Isis Pharmaceuticals, Inc. (ISIS)
|
$
|
147.3
|
$
|
4,958.2
|
Market
|
||||
Isis' Ranking
|
14
|
7
|
NA
|
||||||
Isis' Percentile Rank
|
46
|
%
|
75
|
%
|
NA
|
2014 Total Cash Compensation
(in thousands)
|
2014 Total Direct Compensation
(in thousands)
|
|||||||||||||||
Name
|
NEO
|
50th Percentile of Executive Peer Group
|
NEO
|
50th Percentile of Executive Peer Group
|
||||||||||||
Stanley T. Crooke
|
$
|
1,488,488
|
$
|
1,327,900
|
$
|
6,228,143
|
$
|
4,126,200
|
||||||||
Elizabeth L. Hougen
|
$
|
584,600
|
$
|
585,100
|
$
|
1,741,542
|
$
|
1,425,900
|
||||||||
B. Lynne Parshall
|
$
|
1,130,924
|
$
|
855,100
|
$
|
3,232,043
|
$
|
2,864,500
|
||||||||
Richard Geary
|
$
|
636,066
|
$
|
372,300
|
$
|
1,785,888
|
$
|
575,200
|
||||||||
Brett Monia
|
$
|
630,139
|
*
|
$
|
1,787,115
|
*
|
Drugs in Clinical Development per Employee
|
Patents per Employee |
|
Isis' Ranking
|
1st
|
2nd
|
Executive Peer Group Median
|
1 drug for every 41 employees
|
1.22 patents per employee
|
Peer Leader for Drugs in Clinical Development per Employee (ImmunoGen)
|
1 drug for every 19 employees
|
NA
|
Peer Leader for Patents per Employee (Alnylam)
|
NA
|
4 patents per employee
|
Isis Pharmaceuticals, Inc. (ISIS)
|
1 drug for every 12 employees
|
3 patents per employee
|
| Salaries were frozen for most NEOs from 2011-2013. The Compensation Committee did not increase salaries for the CEO and most of our NEOs for each of 2011, 2012 and 2013 to allow an increasing percentage of total compensation to be at risk; |
| A significant portion of cash compensation is at risk. The Compensation Committee structures cash compensation such that a significant proportion of our CEO's, COO's and other NEO's cash compensation is at risk; and |
| More of total compensation is long-term equity. The Compensation Committee adjusted the total pay mix for our CEO and other NEOs such that more of their compensation is in the form of long-term equity compensation. |
Name |
Year |
Base Salary |
Annual Performance MBO |
Long-Term Equity |
Base Salary
% |
Annual Performance
MBO % |
Long-Term Equity
% |
||||||||||||||||||
Stanley T. Crooke
|
2013
|
$
|
735,169
|
$
|
803,907
|
$
|
1,203,708
|
27
|
%
|
29
|
%
|
44
|
%
|
||||||||||||
CEO & COB
|
2014
|
$
|
768,252
|
$
|
720,236
|
$
|
4,720,669
|
12
|
%
|
12
|
%
|
76
|
%
|
||||||||||||
Elizabeth L. Hougen
|
2013
|
$
|
365,496
|
$
|
215,871
|
$
|
167,880
|
49
|
%
|
29
|
%
|
22
|
%
|
||||||||||||
CFO
|
2014
|
$
|
377,923
|
$
|
206,677
|
$
|
1,132,961
|
22
|
%
|
12
|
%
|
66
|
%
|
||||||||||||
B. Lynne Parshall
|
2013
|
$
|
641,574
|
$
|
526,171
|
$
|
562,945
|
37
|
%
|
30
|
%
|
33
|
%
|
||||||||||||
COO
|
2014
|
$
|
664,029
|
$
|
466,895
|
$
|
2,077,096
|
21
|
%
|
15
|
%
|
65
|
%
|
||||||||||||
Richard Geary
|
2013
|
$
|
398,444
|
$
|
225,918
|
$
|
562,945
|
34
|
%
|
19
|
%
|
47
|
%
|
||||||||||||
SVP, Development
|
2014
|
$
|
411,194
|
$
|
224,872
|
$
|
1,132,961
|
23
|
%
|
13
|
%
|
64
|
%
|
||||||||||||
Brett Monia
|
2013
|
$
|
381,288
|
$
|
142,983
|
$
|
307,226
|
46
|
%
|
17
|
%
|
37
|
%
|
||||||||||||
SVP, Drug Discovery
|
2014
|
$
|
396,158
|
$
|
233,981
|
$
|
1,132,961
|
23
|
%
|
13
|
%
|
64
|
%
|
We determine base compensation levels for all our employees primarily by market forces. Accordingly, the Compensation Committee believes that it is important when making its compensation decisions to be informed as to the current practices of comparable publicly held companies with which we compete for top talent. To this end, the Compensation Committee reviews market and peer company data, which includes competitive information relating to the mix and levels of compensation for executives in the life sciences industry. We obtain this information for the Executive Peer Group based on recent public filings with the SEC. In addition, we also review data from the Radford Global Life Sciences Survey, which is a summary of compensation data submitted by over 500 life sciences companies. The Committee uses these data to inform and shape its decision-making but does not strictly adhere to quantitative benchmarks. In addition, we assess whether the scope of job responsibilities and internal equity warrant a given base salary.
|
Base salaries for CEO and COO were frozen for 2011-2013.
|
● Current Base Salary (x) Merit Increase = Increase to Base Salary
|
Performance MBOs can be, and have in the past been, zero.
|
|
● Current Base Salary (x) Increase to Base Salary = New Base Salary |
Performance MBOs have a maximum limit.
|
2014 Base Salary
|
(x)
|
Merit Increase
|
=
|
Increase to Base Salary
|
$768,252
|
(x)
|
4.2%
|
=
|
$32,266
|
Current Base Salary
|
(+)
|
Increase to Base Salary
|
=
|
New Base Salary in 2015
|
$768,252
|
(+)
|
$32,266
|
=
|
$800,518
|
| We have a maximum Company Performance Factor of 200% and a maximum Individual Performance Factor of 160%. This range represents the boundary conditions for our Performance Factors and ensures we reward our employees consistent with Isis' success. |
| We base Target MBO Percentages on position levels within Isis. The Target MBO percentages for 2014 were: Directors 15%; Executive Directors 20%; Vice Presidents 25% or 30%; Senior Vice Presidents 35%, COO 45%; and CEO 60%. |
Name
|
Minimum MBO
Percentage of Salary
|
Maximum MBO
Percentage of Salary
|
Stanley T. Crooke
|
0%
|
192%
|
Elizabeth L. Hougen
|
0%
|
112%
|
B. Lynne Parshall
|
0%
|
144%
|
Richard Geary
|
0%
|
112%
|
Brett Monia
|
0%
|
112%
|
| Isis' achievement of the approved corporate objectives for the year. At the end of each year, the Compensation Committee meets to evaluate Isis' overall performance. As described below in the chart called "Evaluation of 2014 Corporate Objectives," the Compensation Committee measures Isis' performance based upon the achievement of goals that were set at the beginning of the year and agreed upon by our Board and upper management. |
| In addition, the Compensation Committee considers our one-, three- and five-year total stockholder returns, and based on these returns may reduce the Individual Performance Factors for our executive officers. |
| The Compensation Committee then reviews the Company Performance Factor history from the prior ten years to form a comparison for our current year's successes and/or failures. |
| Finally, the Compensation Committee approves each executive officer's Individual Performance Factor based on the individual's performance. |
Evaluation of 2014 Corporate Objectives
|
||
Objective & Pre-Approved Measures
|
Evaluation
|
|
1
|
Advance Pipeline:
Add four new drugs into pipeline
Initiate Phase 2 Clinical Trials on four drugs
Report positive Phase 2 clinical data on at least three drugs
Initiate Phase 3 Clinical Trials on ISIS-SMNRx (two patient populations)
Initiate Phase 3 Clinical Trials on ISIS-APOCIIIRx (two patient populations)
Continue to advance ongoing Phase 3 clinical trial for ISIS-TTRRx
Complete discussions with FDA and EMA that are supportive of advancing ISIS-SMNRx and ISIS-APOCIIIRx into Phase 3 clinical trials
|
Isis exceeded this objective:
Isis added six drugs to its pipeline
Isis and its partners initiated Phase 2 clinical studies for four drugs
Isis reported positive Phase 2 clinical data on seven drugs
Isis initiated ENDEAR and CHERISH, Phase 3 studies for ISIS-SMNRx
Isis initiated APPROACH, a Phase 3 study for ISIS-APOCIIIRx
Isis successfully advanced the ongoing Phase 3 Clinical Trial for ISIS-TTRRx
Discussions with FDA and EMA were supportive of advancing ISIS-SMNRx and ISIS-APOCIIIRx into Phase 3 clinical trials
|
2
|
Stock price increase by a percentage greater than or equal to median of the companies listed in the NASDAQ Biotechnology Index
|
Isis exceeded this objective:
Isis' stock price increased over 50% for the year while the median stock price change for companies listed in the NASDAQ Biotechnology Index increased 17%
|
3
|
Meet budget and financial projections for the year
|
Isis exceeded this objective:
Isis met its budget
Isis significantly exceeded its financial guidance for the year
|
Objective & Pre-Approved Measures
|
Evaluation
|
|
4
|
Make Biogen Idec relationship successful:
Target sanction of at least two targets
Initiate Phase 1 clinical trial for ISIS-DMPKRx
Identify at least two Collaboration Targets
Identify at least two Development Candidates
Achieve $120 million in revenue from relationship
|
Isis exceeded this objective:
Isis achieved target sanction for two targets under its Biogen Idec collaborations
Isis initiated a Phase 1/2 study of ISIS-DMPK-2.5Rx
Isis identified two collaboration targets under its Biogen Idec collaborations
Isis identified two Development Candidates under its Biogen Idec collaborations
Isis recognized over $123 million in revenue during 2014 under its Biogen Idec collaborations
|
5
|
Advance at least one LICA development candidate through IND-enabling toxicology studies
|
Isis met this objective:
Isis completed IND-enabling toxicology studies for a LICA development candidate
|
6
|
Strengthen clinical leadership and organization
Successfully integrate new medical leadership
|
Isis exceeded this objective:
Isis hired five new medical doctors into its clinical organization and successfully integrated them
|
7
|
Develop and execute long term commercialization/partnering strategy for ISIS-APOCIIIRx
|
Isis met this objective:
Isis established Akcea Therapeutics to develop and commercialize the drugs from its lipid franchise
|
8
|
Complete an additional strategic partnership
|
Isis met this objective:
Isis formed an alliance with Janssen Biotech, Inc. to discover and develop antisense drugs to treat autoimmune disorders of the GI tract.
|
9
|
Achieve $18 million milestone for ISIS-TTRRx
|
Isis received an $18 million milestone payment from GSK related to advancing the Phase 2/3 study of ISIS-TTRRx
|
Unplanned Accomplishments for 2014
|
||
10
|
Isis successfully completed an offering of $500 million aggregate principal amount of Convertible Senior Notes due 2021 in a private placement. Isis used a significant amount of the net proceeds from the offering to repurchase a large portion of its 2 ¾% Convertible Senior Notes due 2019.
|
|
11
|
Isis appointed Paula Soteropoulos as president and chief executive officer of Akcea Therapeutics.
|
|
12
|
Isis strengthened its management team with the addition of Sarah Boyce as chief business officer.
|
|
13
|
Isis published the Phase 2 clinical data of ISIS-APOCIIIRx in patients with familial chylomicronemia in the New England Journal of Medicine.
|
|
14
|
Isis published the Phase 2 clinical data of ISIS-FXIRx in the New England Journal of Medicine.
|
|
15
|
Isis formed an alliance with AstraZeneca to discover and develop novel delivery methods for antisense oligonucleotides.
|
|
16
|
Isis generated cash from the sale of stock Isis owned in its satellite company partners of more than $25 million, including more than $20 million from the sale of Regulus stock.
|
|
17
|
Isis favorably negotiated a tax benefit from the State of California Franchise Tax Board.
|
Name
|
Base Salary
|
Target MBO %
|
Company Performance Factor
|
Individual Performance Factor
|
Resulting Performance MBO
|
Results Considered When Setting Individual Performance Factor(1)
|
||||||||||||||||||
Stanley T. Crooke(2)
|
$
|
768,252
|
60
|
%
|
125
|
%
|
125
|
%
|
$
|
720,236
|
1-17
|
|||||||||||||
Elizabeth L. Hougen
|
$
|
377,923
|
35
|
%
|
125
|
%
|
125
|
%
|
$
|
206,677
|
2,3,7,8,10 & 15-17
|
|||||||||||||
B. Lynne Parshall(2)
|
$
|
664,029
|
45
|
%
|
125
|
%
|
125
|
%
|
$
|
466,895
|
1-17
|
|||||||||||||
Richard S Geary
|
$
|
411,194
|
35
|
%
|
125
|
%
|
125
|
%
|
$
|
224,872
|
1-6, 9, 13 & 14
|
|||||||||||||
Brett Monia
|
$
|
396,158
|
35
|
%
|
125
|
%
|
135
|
%
|
$
|
233,981
|
1-5, 8, 9 & 13-15
|
(1) | The numbers correspond to the enumerated objectives in the table entitled "Evaluation of 2014 Corporate Objectives" on pages 119 through 120. The Compensation Committee reviews the individual's contribution towards the corporate objective when setting the Individual Performance Factor. |
(2) | Since our CEO and COO are ultimately responsible for the Company's performance, their Individual Performance Factors are usually the same as the Company Performance Factor. |
We use stock options and RSUs to give all employees, including Isis' executive officers, an economic interest in the long-term appreciation of our common stock. We believe awarding a combination of stock options and RSUs provides a number of benefits. Stock options provide a way to align employee interests with those of upper management and the stockholders because as our stock price increases, so too does the employee's compensation. In 2012, we started granting RSUs as part of the annual merit equity awards. RSUs are a strong retention vehicle for employees as the RSUs vest in annual installments over four years and have value upon vesting, but at the same time, require fewer shares than option awards.
|
Our Stock Awards reward performance and incentivize long-term stock appreciation and increased stockholder returns.
|
Executive Officer/Director |
Stock Ownership Guideline
(as a multiple of base salary/annual cash retainer)
|
CEO(1)
|
3 times Base Salary
|
COO
|
2 times Base Salary
|
All other executive officers
|
1 times Base Salary
|
Non-employee Directors
|
4 times Annual Cash Retainer
|
(1) | Dr. Crooke currently meets these ownership guidelines. |
| any bonus or other incentive-based or equity-based compensation received by that person from Isis during the 12-month period following the first public issuance or filing with the SEC (whichever first occurs) of the financial document embodying such financial reporting requirement; and |
| any profits realized from such executive's sale of Isis' securities during that 12-month period. |
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus(1)
($)
|
Stock Awards(2)
($)
|
Option Awards(2)
($)
|
All Other Compensation(3)
($)
|
Total
($)
|
||||||||||||||||||
Stanley T. Crooke
Chairman, President, Chief Executive Officer
|
2014
|
$
|
768,252
|
$
|
720,236
|
$
|
1,489,375
|
$
|
3,231,294
|
$
|
18,986
|
$
|
6,228,143
|
||||||||||||
2013
|
$
|
735,169
|
$
|
803,907
|
$
|
325,971
|
$
|
877,737
|
$
|
15,752
|
$
|
2,758,536
|
|||||||||||||
2012
|
$
|
735,169
|
$
|
367,585
|
$
|
90,516
|
$
|
344,921
|
$
|
17,815
|
$
|
1,556,006
|
|||||||||||||
Elizabeth L. Hougen
Senior Vice President, Finance and Chief Financial Officer
|
2014
|
$
|
377,923
|
$
|
206,677
|
$
|
357,450
|
$
|
775,511
|
$
|
23,981
|
$
|
1,741,542
|
||||||||||||
2013
|
$
|
365,496
|
$
|
215,871
|
$ |
(4) 54,419
|
|
$ |
(4) 113,461
|
|
$
|
20,618
|
$
|
769,865
|
|||||||||||
2012
|
$
|
337,036
|
$
|
131,444
|
$
|
16,462
|
$
|
62,741
|
$
|
21,148
|
$
|
568,831
|
|||||||||||||
B. Lynne Parshall
Director, Chief Operating Officer
|
2014
|
$
|
664,029
|
$
|
466,895
|
$
|
655,325
|
$
|
1,421,771
|
$
|
24,023
|
$
|
3,232,043
|
||||||||||||
2013
|
$
|
641,574
|
$
|
526,171
|
$
|
152,482
|
$
|
410,463
|
$
|
20,636
|
$
|
1,751,326
|
|||||||||||||
2012
|
$
|
641,574
|
$
|
256,630
|
$
|
52,136
|
$
|
198,675
|
$
|
22,600
|
$
|
1,171,615
|
|||||||||||||
Richard S. Geary
Senior Vice President, Development
|
2014
|
$
|
411,194
|
$
|
224,872
|
$
|
357,450
|
$
|
775,511
|
$
|
16,861
|
$
|
1,785,888
|
||||||||||||
2013
|
$
|
398,444
|
$
|
225,918
|
$
|
82,117
|
$
|
221,049
|
$
|
14,695
|
$
|
942,223
|
|||||||||||||
2012
|
$
|
398,444
|
$
|
143,440
|
$
|
23,583
|
$
|
89,879
|
$
|
17,048
|
$
|
672,394
|
|||||||||||||
Brett Monia(5) Senior Vice President, Drug Discovery and Corporate Development
|
2014
|
$
|
396,158
|
$
|
233,981
|
$
|
357,450
|
$
|
775,511
|
$
|
24,015
|
$
|
1,787,115
|
||||||||||||
2013
|
$
|
381,288
|
$
|
142,983
|
$
|
83,145
|
$
|
224,081
|
$
|
22,834
|
$
|
854,331
|
(1) | We present bonuses in the years they were earned, not in the year paid. Bonuses represent compensation for achievements and are not necessarily paid in the year they are earned; for example, in January 2015 we paid bonuses for 2014 performance. |
(2) | Amounts represent the aggregate expense recognized for financial statement reporting purposes in accordance with FASB Topic ASC 718 ("ASC 718") for stock and option awards granted to our named executive officers. ASC 718 expense for the option awards is based on the fair value of the awards on the date of grant using an option-pricing model. The fair value of RSUs is based on the market price of our common stock on the date of grant. For more information, please see Note 5, Stockholders' Equity, regarding assumptions underlying valuation of equity awards. |
(3) | Includes AD&D, Basic Life, Medical, Dental, Vision, and 401(k) matching contributions which are available to all employees. |
(4) | Ms. Hougen received additional stock options and stock awards due to her promotion to Chief Financial Officer in January 2013. |
(5) | Mr. Monia was not a named executive officer in 2012 or 2013. We are not disclosing compensation for 2012 as permitted by SEC regulations. |
Name
|
Grant Date
|
All Other Stock Awards: Number of Shares of Stock or Units
(#)
|
All Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise or Base Price of Option Awards
($/Sh)
|
Grant Date Fair Value of Stock and Option Awards(1)
($)
|
||||||||||||
Stanley T. Crooke
|
1/2/14
|
187,500
|
$
|
39.87
|
$
|
3,231,294
|
|||||||||||
1/15/14
|
31,250
|
$
|
1,489,375
|
||||||||||||||
Elizabeth L. Hougen
|
1/2/14
|
45,000
|
$
|
39.87
|
$
|
775,511
|
|||||||||||
1/15/14
|
7,500
|
$
|
357,450
|
||||||||||||||
B. Lynne Parshall
|
1/2/14
|
82,500
|
$
|
39.87
|
$
|
1,421,771
|
|||||||||||
1/15/14
|
13,750
|
$
|
655,325
|
||||||||||||||
Brett Monia
|
1/2/14
|
45,000
|
$
|
39.87
|
$
|
775,511
|
|||||||||||
1/15/14
|
7,500
|
$
|
357,450
|
||||||||||||||
Richard S. Geary
|
1/2/14
|
45,000
|
$
|
39.87
|
$
|
775,511
|
|||||||||||
1/15/14
|
7,500
|
$
|
357,450
|
(1) | Amounts represent the aggregate expense recognized for financial statement reporting purposes in accordance with FASB Topic ASC 718 ("ASC 718") for stock and option awards granted to our named executive Officers. ASC 718 expense for the option awards is based on the fair value of the awards on the date of grant using an option-pricing model. The fair value of RSUs is based on the market price of our common stock on the date of grant. For more information, please see Note 5, Stockholders' Equity, regarding assumptions underlying valuation of equity awards. |
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||
Name
|
Grant Date
|
Number of Securities Underlying Unexercised Options (#) Exercisable(1)
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock that Have Not Vested(2
|
Market Value of Shares or Units of Stock that Have Not Vested(3) ($)
|
||||||||||||||||||
Stanley T. Crooke
|
1/4/2010
|
109,163
|
--
|
$
|
11.27
|
1/3/2017
|
--
|
--
|
|||||||||||||||||
1/3/2011
|
119,552
|
2,544
|
$
|
10.29
|
1/2/2018
|
--
|
--
|
||||||||||||||||||
1/3/2012
|
78,169
|
29,034
|
$
|
7.25
|
1/2/2019
|
--
|
--
|
||||||||||||||||||
1/30/2013
|
63,815
|
69,365
|
$
|
14.69
|
1/29/2020
|
--
|
--
|
||||||||||||||||||
1/2/2014
|
--
|
187,500
|
$
|
39.87
|
1/1/2021
|
--
|
--
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
5,954
|
$
|
367,600
|
||||||||||||||||||
1/30/2013
|
--
|
--
|
--
|
--
|
16,642
|
$
|
1,027,477
|
||||||||||||||||||
1/15/2014
|
--
|
--
|
--
|
--
|
31,250
|
$
|
1,929,375
|
||||||||||||||||||
Elizabeth L. Hougen
|
1/2/2009
|
12,657
|
--
|
$
|
14.47
|
1/1/2016
|
--
|
--
|
|||||||||||||||||
1/4/2010
|
20,000
|
--
|
$
|
11.27
|
1/3/2017
|
--
|
--
|
||||||||||||||||||
1/3/2011
|
21,541
|
459
|
$
|
10.29
|
1/2/2018
|
--
|
--
|
||||||||||||||||||
1/3/2012
|
14,218
|
5,282
|
$
|
7.25
|
1/2/2019
|
--
|
--
|
||||||||||||||||||
1/2/2013
|
7,522
|
8,178
|
$
|
10.82
|
1/1/2020
|
--
|
--
|
||||||||||||||||||
1/2/2013
|
3,593
|
3,907
|
$
|
10.82
|
1/1/2020
|
--
|
--
|
||||||||||||||||||
1/2/2014
|
—--
|
45,000
|
$
|
39.87
|
1/1/2021
|
--
|
--
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
1,082
|
$
|
66,803
|
||||||||||||||||||
1/15/2013
|
--
|
--
|
--
|
--
|
937
|
$
|
57,850
|
||||||||||||||||||
1/15/2013
|
--
|
--
|
--
|
--
|
1,961
|
$
|
121,072
|
||||||||||||||||||
1/15/2014
|
--
|
--
|
--
|
--
|
1,082
|
$
|
66,803
|
||||||||||||||||||
B. Lynne Parshall
|
1/3/2011
|
6,074
|
1,519
|
$
|
10.29
|
1/2/2018
|
--
|
--
|
|||||||||||||||||
1/3/2012
|
5,146
|
16,724
|
$
|
7.25
|
1/2/2019
|
--
|
--
|
||||||||||||||||||
1/30/2013
|
27,332
|
32,438
|
$
|
14.69
|
1/29/2020
|
--
|
--
|
||||||||||||||||||
1/2/2014
|
0
|
82,500
|
$
|
39.87
|
1/2/2021
|
--
|
--
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
3,430
|
$
|
211,768
|
||||||||||||||||||
1/30/2013
|
--
|
--
|
--
|
--
|
7,785
|
$
|
480,646
|
||||||||||||||||||
1/30/2014
|
--
|
--
|
--
|
--
|
13,750
|
$
|
848,925
|
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||
Name
|
Grant Date
|
Number of Securities Underlying Unexercised Options (#) Exercisable(1)
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Option Exercise Price ($)
|
Option Expiration Date
|
Number of Shares or Units of Stock that Have Not Vested(2
|
Market Value of Shares or Units of Stock that Have Not Vested(3) ($)
|
||||||||||||||||||
Brett P. Monia
|
1/3/2011
|
7,129
|
471
|
$
|
10.29
|
1/2/2018
|
--
|
--
|
|||||||||||||||||
1/1/2012
|
5,468
|
2,032
|
$
|
7.21
|
12/31/2018
|
--
|
--
|
||||||||||||||||||
1/3/2012
|
3,849
|
5,144
|
$
|
7.25
|
1/2/2019
|
--
|
--
|
||||||||||||||||||
1/30/2013
|
16,291
|
17,709
|
$
|
14.69
|
1/29/2020
|
--
|
--
|
||||||||||||||||||
1/2/2014
|
0
|
45,000
|
$
|
39.87
|
1/1/2021
|
--
|
--
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
1,054
|
$
|
65,074
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
416
|
$
|
25,684
|
||||||||||||||||||
1/30/2013
|
--
|
--
|
--
|
--
|
4,245
|
$
|
262,086
|
||||||||||||||||||
1/15/2014
|
--
|
--
|
--
|
--
|
7,500
|
$
|
463,050
|
||||||||||||||||||
Richard S. Geary
|
1/4/2010
|
80
|
--
|
$
|
11.27
|
1/3/2017
|
--
|
--
|
|||||||||||||||||
1/3/2011
|
7,729
|
697
|
$
|
10.29
|
1/2/2018
|
--
|
--
|
||||||||||||||||||
1/3/2012
|
6,470
|
7,565
|
$
|
7.25
|
1/2/2019
|
--
|
--
|
||||||||||||||||||
1/30/2013
|
7,771
|
17,469
|
$
|
14.69
|
1/29/2020
|
--
|
--
|
||||||||||||||||||
1/2/2014
|
0
|
45,000
|
$
|
39.87
|
1/1/2021
|
--
|
--
|
||||||||||||||||||
1/15/2012
|
--
|
--
|
--
|
--
|
1,551
|
$
|
95,759
|
||||||||||||||||||
1/30/2013
|
--
|
--
|
--
|
--
|
4,192
|
$
|
258,814
|
||||||||||||||||||
1/15/2014
|
--
|
--
|
--
|
--
|
7,500
|
$
|
463,050
|
(1) | The options have a term of seven years and vest at the rate of 25% for the first year and then at the rate of 2.08% per month for 36 months thereafter during the optionee's employment. |
(2) | The RSUs were granted out of our 2011 Equity Incentive Plan. The RSUs vest at the rate of 25% per year over four years. |
(3) | Market value of stock awards was determined by multiplying the number of unvested shares by $61.74, which was the closing market price of our common stock on the Nasdaq Global Select Market on December 31, 2014, the last trading day of fiscal 2014. |
Option Awards
|
Stock Awards
|
|||||||||||||||
Name
|
Number of Shares Acquired on Exercise (#)(1)
|
Value Realized on Exercise ($)
|
Number of Shares Acquired on Vesting (#)
|
Value Realized on Vesting ($)
|
||||||||||||
Stanley T. Crooke
|
10,000
|
$
|
309,500
|
8,526
|
$
|
406,349
|
||||||||||
3,000
|
$
|
83,250
|
||||||||||||||
13,000
|
$
|
325,221
|
||||||||||||||
20,000
|
$
|
468,820
|
||||||||||||||
15,500
|
$
|
325,252
|
||||||||||||||
15,000
|
$
|
240,825
|
||||||||||||||
5,000
|
$
|
105,200
|
||||||||||||||
3,000
|
$
|
63,240
|
||||||||||||||
2,500
|
$
|
52,950
|
||||||||||||||
3,000
|
$
|
63,390
|
||||||||||||||
2,000
|
$
|
42,220
|
||||||||||||||
11,000
|
$
|
226,941
|
||||||||||||||
10,000
|
$
|
189,850
|
||||||||||||||
7,000
|
$
|
204,246
|
||||||||||||||
11,000
|
$
|
281,402
|
||||||||||||||
4,000
|
$
|
102,120
|
||||||||||||||
25,000
|
$
|
619,575
|
||||||||||||||
Elizabeth L. Hougen
|
- -
|
- -
|
1,509
|
$
|
71,919
|
|||||||||||
B. Lynne Parshall(2)
|
2,510
|
$
|
76,382
|
|||||||||||||
3,972
|
$
|
149,097
|
||||||||||||||
8,561
|
$
|
324,214
|
||||||||||||||
443
|
$
|
14,615
|
||||||||||||||
15,875
|
$
|
684,435
|
||||||||||||||
10,628
|
$
|
318,318
|
4,310
|
$
|
205,415
|
|||||||||||
23,635
|
$
|
947,149
|
||||||||||||||
31,028
|
$
|
1,195,105
|
||||||||||||||
Brett Monia
|
15,000
|
$
|
417,810
|
2,151
|
$
|
102,517
|
||||||||||
2,344
|
$
|
62,993
|
||||||||||||||
10,000
|
$
|
308,940
|
||||||||||||||
Richard S. Geary
|
8,300
|
$
|
293,455
|
2,174
|
$
|
103,613
|
||||||||||
7,400
|
$
|
203,966
|
||||||||||||||
13,900
|
$
|
594,864
|
||||||||||||||
7,600
|
$
|
241,148
|
(1) | Each individual executed each option exercise and resulting sales pursuant to the individual's Rule 10b5-1 trading plan. |
(2) | Includes options exercised by Ms. Parshall's daughters and son-in-law. |
- | Dr. Crooke will be eligible to receive a lump sum severance payment equal to 36 months of his then-current base salary in the event his employment is terminated as a result of a change of control of Isis; and |
- | Ms. Parshall will be eligible to receive a lump sum severance payment equal to: |
|
Termination Event
|
|||||||
Name
|
Termination Without Cause
|
Termination in a Change of Control
|
||||||
Stanley T. Crooke
|
--
|
$
|
2,304,756
|
|||||
B. Lynne Parshall
|
$
|
996,044
|
$
|
1,660,073
|
Role
|
2014 Cash Compensation
|
|||
Board Member (Base)
|
$
|
50,000
|
||
Committee Chairs (Additional)
|
||||
Audit
|
$
|
24,000
|
||
Compensation
|
$
|
15,000
|
||
Nominating & Gov.
|
$
|
10,000
|
||
Agenda
|
$
|
10,000
|
||
Committee Member (Additional)
|
||||
Audit
|
$
|
10,000
|
||
Compensation
|
$
|
7,500
|
||
Nominating & Gov.
|
$
|
5,000
|
||
Agenda
|
$
|
5,000
|
||
Scientific/Medical
|
$
|
10,000
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)(1)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
Spencer R. Berthelsen
|
$
|
85,000
|
$
|
94,759
|
$
|
316,388
|
--
|
$
|
496,147
|
|||||||||||
Breaux B. Castleman
|
$
|
60,000
|
$
|
94,759
|
$
|
316,388
|
--
|
$
|
471,147
|
|||||||||||
Joseph Klein
|
$
|
60,000
|
$
|
94,759
|
$
|
316,388
|
--
|
$
|
471,147
|
|||||||||||
Joseph Loscalzo (2)
|
$
|
65,000
|
$
|
278,846
|
$
|
932,098
|
--
|
$
|
1,275,944
|
|||||||||||
Frederick T. Muto
|
$
|
55,000
|
$
|
94,759
|
$
|
316,388
|
--
|
$
|
466,147
|
|||||||||||
Joseph H. Wender
|
$
|
86,500
|
$
|
94,759
|
$
|
316,388
|
--
|
$
|
497,647
|
(1) | Amounts represent the aggregate expense recognized for financial statement reporting purposes in accordance with FASB Topic ASC 718 ("ASC 718") for stock and option awards granted to the Directors. ASC 718 expense for the option awards is based on the fair value of the awards on the date of grant using an option-pricing model. The fair value of RSUs is based on the market price of our common stock on the date of grant. For more information, please see Note 5, Stockholders' Equity, of the consolidated financial statements in this Form 10-K regarding assumptions underlying valuation of equity awards. |
(2) | Includes an option to purchase 22,500 shares of our common stock and an RSU for 3,750 shares of our common stock, which were automatically granted to Dr. Loscalzo under the Directors' Plan when he joined our Board. |
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||
Name
|
Number of Securities Underlying Unexercised Options (#)
Exercisable(1)
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option Exercise Price
($)
|
Option
Expiration
Date
|
Number of Shares or Units of Stock that Have Not Vested(2) (3)
|
Market Value of Shares or Units of Stock that Have Not Vested (4)
($)
|
|||||||||||||||
Spencer R. Berthelsen
|
10,000
|
0
|
$
|
3.95
|
6/30/15
|
4,697
|
$
|
289,993
|
|||||||||||||
12,500
|
0
|
$
|
5.93
|
7/2/16
|
|||||||||||||||||
12,500
|
0
|
$
|
9.77
|
7/1/17
|
|||||||||||||||||
15,000
|
0
|
$
|
13.88
|
6/30/18
|
|||||||||||||||||
15,000
|
0
|
$
|
16.32
|
6/30/19
|
|||||||||||||||||
15,000
|
0
|
$
|
9.22
|
6/30/20
|
|||||||||||||||||
11,250
|
3,750
|
$
|
9.30
|
6/30/21
|
|||||||||||||||||
5,626
|
5,624
|
$
|
12.94
|
7/1/22
|
|||||||||||||||||
2,813
|
8,437
|
$
|
28.47
|
6/30/23
|
|||||||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
|||||||||||||||||
Breaux B. Castleman
|
5,625
|
16,875
|
$
|
26.66
|
6/24/23
|
6,885
|
$
|
425,080
|
|||||||||||||
2,813
|
8,437
|
$
|
28.47
|
6/30/23
|
|||||||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
|||||||||||||||||
Joseph Klein
|
3,750
|
0
|
$
|
9.22
|
6/30/20
|
4,697
|
$
|
289,993
|
|||||||||||||
3,750
|
$
|
9.30
|
6/30/21
|
||||||||||||||||||
2,813
|
5,624
|
$
|
12.94
|
7/1/22
|
|||||||||||||||||
2,813
|
8,437
|
$
|
28.47
|
6/30/23
|
|||||||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
|||||||||||||||||
Joseph Loscalzo
|
0
|
22,500
|
$
|
49.09
|
2/2/24
|
6,417
|
$
|
396,186
|
|||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
|||||||||||||||||
Frederick T. Muto
|
10,000
|
0
|
$
|
3.95
|
6/30/15
|
4,697
|
$
|
289,993
|
|||||||||||||
12,500
|
0
|
$
|
5.93
|
7/2/16
|
|||||||||||||||||
12,500
|
0
|
$
|
9.77
|
7/1/17
|
|||||||||||||||||
15,000
|
0
|
$
|
13.88
|
6/30/18
|
|||||||||||||||||
15,000
|
0
|
$
|
16.32
|
6/30/19
|
|||||||||||||||||
15,000
|
0
|
$
|
9.22
|
6/30/20
|
|||||||||||||||||
11,250
|
3,750
|
$
|
9.30
|
6/30/21
|
|||||||||||||||||
5,626
|
5,624
|
$
|
12.94
|
7/1/22
|
|||||||||||||||||
2,813
|
8,437
|
$
|
28.47
|
6/30/23
|
|||||||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
|||||||||||||||||
Joseph H. Wender
|
10,000
|
0
|
$
|
3.95
|
6/30/15
|
4,697
|
$
|
289,993
|
|||||||||||||
12,500
|
0
|
$
|
5.93
|
7/2/16
|
|||||||||||||||||
12,500
|
0
|
$
|
9.77
|
7/1/17
|
|||||||||||||||||
15,000
|
0
|
$
|
13.88
|
6/30/18
|
|||||||||||||||||
15,000
|
0
|
$
|
9.22
|
6/30/20
|
|||||||||||||||||
11,250
|
3,750
|
$
|
9.30
|
6/30/21
|
|||||||||||||||||
5,626
|
5,624
|
$
|
12.94
|
7/1/22
|
|||||||||||||||||
2,813
|
8,437
|
$
|
28.47
|
6/30/23
|
|||||||||||||||||
0
|
16,000
|
$
|
35.53
|
6/30/24
|
(1) | The options were granted out of our Directors' Plan and have a term of ten years and vest at the rate of 25% per year over four years. |
(2) | The RSUs were granted out of our Directors' Plan and vest at the rate of 25% per year over four years. |
(3) | All of our non-employee Directors are subject to our Stock Holding and Ownership Guidelines for RSU Shares, which requires each non-employee Director to accumulate and maintain shares of Common Stock issued pursuant to RSUs until he has accumulated shares of Common Stock equal to four times such non-employee Director's base annual cash retainer for service as a Director (but not for service on a Board committee), or until his termination of service. |
(4) | Market value of stock awards was determined by multiplying the number of unvested shares by $61.74, which was the closing market price of our common stock on the Nasdaq Select Market on December 31, 2014, the last trading day of fiscal 2014. |
|
Option Awards
|
Stock Awards
|
||||||||||||||
Name
|
Number of
Shares
Acquired
on Exercise
(#)
|
Value Realized
on Exercise
($)
|
Number of
Shares
Acquired
on Vesting
(#)
|
Value Realized
on Vesting
($)
|
||||||||||||
Spencer R. Berthelsen
|
10,000
|
$
|
282,900
|
782
|
$
|
27,728
|
||||||||||
Breaux B. Castleman
|
--
|
--
|
1,407
|
$
|
49,991
|
|||||||||||
Joseph Klein, III
|
10,313
|
$
|
343,039
|
782
|
$
|
27,728
|
||||||||||
Frederick T. Muto
|
10,000
|
$
|
228,700
|
782
|
$
|
27,728
|
||||||||||
Joseph H. Wender
|
10,000
|
$
|
418,437
|
782
|
$
|
27,728
|
||||||||||
Joseph Loscalzo
|
--
|
--
|
--
|
--
|
| reviewed and discussed the Compensation Discussion and Analysis included in this Form 10-K with management; and |
| based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Form 10-K. |
* | This Section is not "soliciting material," is not deemed filed with the SEC and is not to be incorporated by reference in any filing of Isis under the Securities Act or the Exchange Act. |
| each Director; |
| each executive officer named in the Summary Compensation Table under "Executive Compensation--Compensation of Executive Officers"; |
| all Directors and executive officers as a group; and |
| every entity that we know beneficially owns more than five percent of our common stock. |
|
|
Beneficial Ownership(1)
|
|
|||||
Beneficial Owner
|
|
Number of Shares
|
|
|
Percent of Total(2)
|
|
||
FMR LLC(3)
|
|
|
17,892,555
|
|
|
|
15.04
|
|
245 Summer Street
|
|
|
|
|
|
|
|
|
Boston, MA 02210
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock, Inc.(4)
|
|
|
9,541,651
|
|
|
8.02
|
|
|
55 East 52nd Street
|
|
|
|
|
|
|
|
|
New York, NY 10022
|
|
|
|
|
|
|
|
|
ClearBridge Investments, LLC(5)
|
|
|
9,034,520
|
|
|
|
7.59
|
|
620 8th Avenue
|
|
|
|
|
|
|
|
|
New York, NY 10018
|
|
|
|
|
|
|
|
|
The Vanguard Group(6)
|
|
|
7,271,871
|
|
|
|
6.11
|
|
100 Vanguard Boulevard
|
|
|
|
|
|
|
|
|
Malvern, PA 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BB Biotech AG(7)
|
|
|
5,976,526
|
|
|
|
5.02
|
|
Vordergasse 3
|
|
|
|
|
|
|
|
|
CH-8200 Schaffhausen, Switzerland
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spencer R. Berthelsen(8)
|
|
|
150,154
|
|
|
|
*
|
|
Breaux B. Castleman(9)
|
|
|
9,845
|
|
|
|
*
|
|
Stanley T. Crooke(10)
|
|
|
1,198,094
|
|
|
|
1.0
|
|
Joseph Klein, III(11)
|
|
|
14,321
|
|
|
|
*
|
|
Joseph Loscalzo(12)
|
|
|
6,563
|
|
|
|
*
|
|
Frederick T. Muto(13)
|
|
|
102,284
|
|
|
|
*
|
|
B. Lynne Parshall(14)
|
|
|
73,060
|
|
|
|
*
|
|
Joseph H. Wender(15)
|
|
|
111,906
|
|
|
|
*
|
|
Brett Monia(16)
|
|
|
56,738
|
|
|
|
*
|
|
Richard S. Geary(17)
|
|
|
49,501
|
|
|
|
*
|
|
Elizabeth L. Hougen(18)
|
|
|
100,998
|
|
|
|
*
|
|
All Directors and executive officers as a group (fourteen persons)(19)
|
|
|
2,066,615
|
|
|
|
1.7
|
|
(1) | We base this table upon information supplied by officers, Directors, principal stockholders and Form 3s, Form 4s, Form 5s, Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned. |
(2) | Applicable percentages are based on 118,974,465 shares of common stock outstanding on February 18, 2015, adjusted as required by rules promulgated by the SEC. |
(3) | Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the family of Edward C. Johnson 3d, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. |
(4) | Various persons at BlackRock, Inc. have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of shares of our common stock. |
(5) | ClearBridge Advisors, LLC, is an investment adviser registered under the Investment Advisers Act. ClearBridge Advisors has sole voting power to direct the vote of 8,778,431 shares and sole power to dispose or direct the disposition of 9,034,520 shares. |
(6) | The Vanguard Group has sole voting power to direct the vote of 158,221 shares, sole power to dispose or direct the disposition of 7,124,050 shares, and shared dispositive power for 147,821 shares. Vanguard Fiduciary Trust Company , a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 147,821 shares or 0.12% of the Common Stock outstanding of Isis as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 10,400 shares of Isis' Common Stock outstanding as a result of its serving as investment manager of Australian investment offerings. |
(7) | BB Biotech AG shares voting and dispositive powers with its wholly owned subsidiary, Biotech Target N.V. |
(8) | Includes 70 shares owned by Dr. Berthelsen's daughter for which he disclaims beneficial ownership. Includes 99,689 shares of common stock issuable upon exercise of options held by Dr. Berthelsen that are exercisable on or before April 19, 2015. |
(9) | Includes 8,438 shares of common stock issuable upon exercise of options held by Mr. Castleman that are exercisable on or before April 19, 2015. |
(10) | Includes shares of common stock held by Dr. Crooke and 411,868 shares of common stock issuable upon exercise of options held by Dr. Crooke that are exercisable on or before April 19, 2015. Also includes 1,297 shares of common stock and 44,896 shares of common stock issuable upon exercise of options held by Rosanne Crooke, Dr. Crooke's wife, which are exercisable on or before April 19, 2015. Dr. Crooke disclaims beneficial ownership of the shares of common stock owned and issuable upon exercise of options held by his wife. |
(11) | Includes 100 shares of common stock beneficially owned by Mr. Klein's son and 13,126 shares of common stock issuable upon exercise of options held by Mr. Klein that are exercisable on or before April 19, 2015. |
(12) | Includes 5,625 shares of common stock issuable upon exercise of options held by Mr. Loscalzo that are exercisable on or before April 19, 2015. |
(13) | Includes 1,500 shares of common stock beneficially owned through the Cooley LLP Salary Deferral and Profit Sharing Plan and 99,689 shares of common stock issuable upon exercise of options held by Mr. Muto that are exercisable on or before April 19, 2015. |
(14) | Includes 64,988 shares of common stock issuable upon exercise of options held by Ms. Parshall that are exercisable on or before April 19, 2015. |
(15) | Includes 74,689 shares of common stock issuable upon exercise of options held by Mr. Wender that are exercisable on or before April 19, 2015. |
(16) | Includes 52,312 shares of common stock issuable upon exercise of options held by Dr. Monia that are exercisable on or before April 19, 2015. |
(17) | Includes 41,931 shares of common stock issuable upon exercise of options held by Dr. Geary that are exercisable on or before April 19, 2015. |
(18) | Includes 100,998 shares of common stock issuable upon exercise of options held by Ms. Hougen that are exercisable on or before April 19, 2015. |
(19) | Includes an aggregate of 1,194,610 shares issuable upon exercise of options held by all current Directors and executive officers as a group that are exercisable on or before April 19, 2015. |
Plan Category
|
Number of Shares
to be Issued Upon Exercise of Outstanding Options |
Weighted Average
Exercise Price of Outstanding Options |
Number of Shares
Remaining Available for Future Issuance |
|||||||||
Equity compensation plans approved by stockholders(a)
|
7,122,771
|
$
|
$19.69
|
3,208,151
|
(c)
|
|||||||
Equity compensation plans not approved by stockholders(b)
|
256,176
|
$
|
14.75
|
-
|
||||||||
Total
|
7,378,947
|
$
|
19.52
|
3,208,151
|
(a) | Consists of four Isis plans: 1989 Stock Option Plan, Amended and Restated 2002 Non-Employee Directors' Stock Option Plan, 2011 Equity Incentive Plan and Employee Stock Purchase Plan, or ESPP. |
(b) | Consists of the 2000 Broad-Based Equity Incentive Plan, more fully described below. The 2000 Broad-Based Equity Incentive Plan expired on January 5, 2010. |
(c) | Of these shares, 370,136 remained available for purchase under the ESPP as of December 31, 2014. The ESPP incorporates an evergreen formula pursuant to which on January 1 of each year, we automatically increase the aggregate number of shares reserved for issuance under the plan by 150,000 shares. |
| a sale, lease or other disposition of all or substantially all of our assets; |
| a merger or consolidation in which we are not the surviving corporation; or |
| reverse merger in which we are the surviving corporation but the shares of common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; |
Name and Principal
Position
|
Year
|
Salary
($)
|
Bonus(1)
($)
|
Stock Awards(2)
($)
|
Option Awards(2)(4)
($)
|
All Other Compensation(3)
($)
|
Total
($)
|
||||||||||||||||||
Rosanne Crooke
Vice President, Cardiovascular Diseases Drug Discovery Research
|
2014
|
$
|
210,814
|
$
|
82,349
|
$
|
67,487
|
$
|
146,488
|
$
|
5,912
|
$
|
513,050
|
||||||||||||
2013
|
$
|
203,685
|
$
|
89,367
|
$
|
23,457
|
$
|
48,906
|
$
|
3,777
|
$
|
369,192
|
|||||||||||||
2012
|
$
|
197,369
|
$
|
59,211
|
$
|
9,622
|
$
|
36,692
|
$
|
4,517
|
$
|
307,411
|
(1) | We present bonuses in the years they were earned, not in the year paid. Bonuses represent compensation for achievements and are not necessarily paid in the year they are earned; for example, in January 2015 we paid bonuses for 2014 performance. |
(2) | Amounts represent the aggregate expense recognized for financial statement reporting purposes in accordance with FASB Topic ASC 718 ("ASC 718") for stock and option awards granted to Dr. Crooke. ASC 718 expense for the option awards is based on the fair value of the awards on the date of grant using an option-pricing model. The fair value of RSUs is based on the market price of our common stock on the date of grant. For more information, please see Note 5, Stockholders' Equity, regarding assumptions underlying valuation of equity awards. |
(3) | Includes AD&D, Basic Life, Medical, Dental, Vision, and 401(k) matching contributions which are available to all employees. |
(4) | These amounts represent the estimated fair values of stock option grants we recognized as share-based compensation expense. The estimated fair value amounts were determined using the Black-Scholes option-valuation model and are not indicative of whether Dr. Rosanne Crooke will realize the estimated fair value or any financial benefits from the award. The applicable amounts represent: |
| 11,404 shares at $7.25 per share received on January 3, 2012; |
| 10,000 shares at $10.82 per share received on January 2, 2013; and |
| 8,500 shares at $39.87 per share received on January 2, 2014. |
|
ISIS PHARMACEUTICALS, INC.
|
|
|
|
|
|
By:
|
/s/ STANLEY T. CROOKE
|
|
|
Stanley T. Crooke, M.D., Ph.D.
|
|
|
Chairman of the Board, President and Chief Executive Officer (Principal executive officer)
|
Signatures
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ STANLEY T. CROOKE
|
|
Chairman of the Board, President, and Chief Executive Officer
|
|
February 27, 2015
|
Stanley T. Crooke, M.D., Ph.D.
|
|
(Principal executive officer)
|
|
|
|
|
|
|
|
/s/ B. LYNNE PARSHALL
|
|
Director, Chief Operating Officer and Secretary
|
|
February 27, 2015
|
B. Lynne Parshall, J.D.
|
|
|
|
|
|
|
|
|
|
/s/ ELIZABETH L. HOUGEN
|
|
Senior Vice President, Finance and Chief Financial Officer
|
|
February 27, 2015
|
Elizabeth L. Hougen
|
|
(Principal financial and accounting officer)
|
|
|
|
|
|
|
|
/s/ SPENCER R. BERTHELSEN
|
|
Director
|
|
February 27, 2015
|
Spencer R. Berthelsen, M.D.
|
|
|
|
|
|
|
|
|
|
/s/ BREAUX CASTLEMAN
|
|
Director
|
|
February 27, 2015
|
Breaux Castleman
|
|
|
|
|
|
|
|
|
|
/s/ JOSEPH KLEIN
|
|
Director
|
|
February 27, 2015
|
Joseph Klein, III.
|
|
|
|
|
|
|
|
|
|
/s/ JOSEPH LOSCALZO
|
|
Director
|
|
February 27, 2015
|
Joseph Loscalzo, M.D., Ph.D.
|
|
|
|
|
|
|
|
|
|
/s/ FREDERICK T. MUTO
|
|
Director
|
|
February 27, 2015
|
Frederick T. Muto, Esq.
|
|
|
|
|
|
|
|
|
|
/s/ JOSEPH H. WENDER
|
|
Director
|
|
February 27, 2015
|
Joseph H. Wender
|
|
|
|
|
Exhibit
Number |
|
Description of Document
|
3.1
|
|
Amended and Restated Certificate of Incorporation filed June 19, 1991. (1)
|
|
|
|
3.2
|
|
Certificate of Amendment to Restated Certificate of Incorporation filed June 17, 2014. (42)
|
|
|
|
3.3
|
|
Amended and Restated Bylaws. (13)
|
|
|
|
4.1
|
|
Certificate of Designation of the Series C Junior Participating Preferred Stock. (12)
|
|
|
|
4.2
|
|
Specimen Common Stock Certificate. (1)
|
|
|
|
4.3
|
|
Stock Purchase Agreement between the Registrant and Genzyme Corporation dated January 7, 2008. (5)
|
|
|
|
4.4
|
|
Indenture, dated as of August 13, 2012, between the Registrant and Wells Fargo Bank, National Association, as trustee, including Form of 2 ¾ percent Convertible Senior Note due 2019. (30)
|
4.5
|
Indenture, dated as of November 17, 2014, between the Registrant and Wells Fargo Bank, National Association, as trustee, including Form of 1.00 percent Convertible Senior Note due 2021. (41)
|
|
|
|
|
10.1
|
|
Form of Indemnification Agreement entered into between the Registrant and its Directors and Officers with related schedule. (37)
|
|
|
|
10.2*
|
|
Registrant's 1989 Stock Option Plan, as amended. (27)
|
|
|
|
10.3*
|
|
Registrant's Amended and Restated Employee Stock Purchase Plan. (15)
|
|
|
|
10.4
|
|
Form of Employee Assignment of Patent Rights. (1)
|
|
|
|
10.5*
|
|
Registrant's 2000 Broad-Based Equity Incentive Stock Option Plan and related form of option agreement. (7)
|
|
|
|
10.6
|
|
Drug Development and License Option Agreement dated December 2, 2009 between the Registrant and Eli Lilly and Company. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (24)
|
|
|
|
10.7
|
|
Patent Rights Purchase Agreement between the Registrant and Gilead Sciences, Inc., dated December 18, 1998. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (6)
|
|
|
|
10.8
|
|
Collaboration and License Agreement between the Registrant and Hybridon, Inc., dated May 24, 2001. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (14)
|
|
|
|
10.9
|
|
License and Co-Development Agreement between the Registrant and Genzyme Corporation dated June 24, 2008. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (9)
|
|
|
|
10.10
|
|
Amendment #1 to the Research, Development and License Agreement dated May 11, 2011 by and between the Registrant and Glaxo Group Limited. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (10)
|
|
|
|
10.11
|
|
Amended and Restated Collaboration and License Agreement between the Registrant and Antisense Therapeutics Ltd dated February 8, 2008. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (5)
|
|
|
|
10.12
|
|
Amended and Restated License Agreement between the Registrant and Atlantic Pharmaceuticals Limited dated November 30, 2009. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (24)
|
10.13
|
|
Amended and Restated License Agreement dated July 2, 2008 between the Registrant and OncoGenex Technologies Inc. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (17)
|
|
|
|
10.14
|
|
Lease Agreement between the Registrant and BMR-Gazelle Court LLC dated March 30, 2010. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (25)
|
|
|
|
10.15
|
|
Second Amendment to Lease Agreement dated May 15, 2011 between the Registrant and BMR-Gazelle Court LLC, with First Amendment to Lease Agreement included. (10)
|
|
|
|
10.16
|
|
Registrant's Amended and Restated Isis Pharmaceuticals, Inc. 10b5-1 Trading Plan dated September 12, 2013. (34)
|
|
|
|
10.17*
|
|
Registrant's Amended and Restated 2002 Non-Employee Directors' Stock Option Plan, as amended. (42)
|
|
|
|
10.18*
|
|
Registrant's Form of 2002 Non-Employee Directors' Stock Option Agreement. (21)
|
|
|
|
10.19*
|
|
Form of Restricted Stock Unit Agreement for Restricted Stock Units granted under the Isis Pharmaceuticals, Inc. 2002 Non-Employee Directors' Stock Option Plan. (32)
|
|
|
|
10.20*
|
|
Amended and Restated Severance Agreement dated December 3, 2008 between the Registrant and Stanley T. Crooke. (16)
|
|
|
|
10.21*
|
|
Amended and Restated Severance Agreement dated December 3, 2008 between the Registrant and B. Lynne Parshall. (16)
|
|
|
|
10.22
|
|
Amended and Restated Strategic Collaboration and License Agreement dated April 28, 2009 between the Registrant and Alnylam Pharmaceuticals, Inc. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (20)
|
|
|
|
10.23*
|
|
Isis Pharmaceuticals, Inc. 2011 Equity Incentive Plan (19)
|
|
|
|
10.24
|
|
Loan Agreement dated October 15, 2008 between the Registrant and RBS Asset Finance, Inc. (23)
|
|
|
|
10.25*
|
|
Form of Option Agreement for Options granted under the 2011 Equity Incentive Plan. (29)
|
|
|
|
10.26*
|
|
Form of Restricted Stock Unit Agreement for Restricted Stock Units granted under the 2011 Equity Incentive Plan. (29)
|
|
|
|
10.27
|
|
Second Amendment to Lease Agreement between the Registrant and BMR-2282 Faraday Avenue LLC dated March 30, 2010. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (25)
|
|
|
|
10.28*
|
|
Form of Option Agreement for Options Granted after March 8, 2005 under the 1989 Stock Option Plan. (11)
|
|
|
|
10.29*
|
|
Form of Option Agreement for Options Granted after March 8, 2005 under the 2000 Broad-Based Equity Incentive Plan. (11)
|
|
|
|
10.30*
|
|
Form of Option Agreement for Options Granted after March 8, 2005 under the 2002 Non-Employee Director's Stock Option Plan. (11)
|
|
|
|
10.31
|
|
Research, Development and License Agreement between the Registrant and Glaxo Group Limited dated March 30, 2010. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (25)
|
|
|
|
10.32
|
|
First Amendment to Loan Agreement between the Registrant and RBS Asset Finance, Inc. dated September 30, 2009. (24)
|
|
|
|
10.33
|
|
Lease Agreement dated September 6, 2005 between the Registrant and BMR-2282 Faraday Avenue LLC. (18)
|
10.34
|
|
Stock Purchase Agreement dated December 17, 2008, among the Registrant, Ibis Biosciences, Inc. and Abbott Molecular Inc. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (23)
|
|
|
|
10.35
|
|
Research Agreement dated August 10, 2011 between the Registrant and CHDI Foundation, Inc. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (3)
|
|
|
|
10.36
|
|
Amended and Restated License and Collaboration Agreement among the Registrant, Alnylam Pharmaceuticals, Inc. and Regulus Therapeutics LLC dated January 1, 2009. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (4)
|
|
|
|
10.37
|
|
Amendment No. 1 to Amended and Restated License Agreement between the Registrant and OncoGenex Technologies Inc. dated December 18, 2009. (24)
|
|
|
|
10.38
|
|
Amendment Number One to the Amended and Restated License and Collaboration Agreement dated June 10, 2010 among the Registrant, Alnylam Pharmaceuticals, Inc. and Regulus Therapeutics Inc. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (26)
|
|
|
|
10.39
|
|
Second Amendment to Loan Agreement dated November 15, 2010 between the Registrant and RBS Asset Finance, Inc. (22)
|
|
|
|
10.40
|
|
Development, Option and License Agreement between the Registrant and Biogen Idec International Holding Ltd. dated January 3, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (31)
|
|
|
|
10.41
|
|
Third Amendment to Loan Agreement dated June 24, 2012 between the Registrant and RBS Asset Finance, Inc. (32)
|
|
|
|
10.42
|
|
DMPK Research, Development, Option and License Agreement between the Registrant and Biogen Idec MA Inc. dated June 27, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (32)
|
|
|
|
10.43
|
|
Letter Agreement Amendment between the Registrant and Alnylam Pharmaceuticals, Inc. dated August 27, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (33)
|
|
|
|
10.44
|
|
Amendment #2 to Research, Development and License Agreement between the Registrant and Glaxo Group Limited dated October 30, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (37)
|
|
|
|
10.45
|
|
Collaboration, License and Development Agreement between the Registrant and AstraZeneca AB dated December 7, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (37)
|
|
|
|
10.46
|
|
Neurology Drug Discovery and Development Collaboration, Option and License Agreement between the Registrant and Biogen Idec MA Inc. dated December 10, 2012. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (37)
|
|
|
|
10.47
|
|
HTT Research, Development, Option and License Agreement among the Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated April 8, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (35)
|
|
|
|
10.48
|
|
Letter Agreement between the Registrant and CHDI Foundation, Inc. dated April 8, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (35)
|
|
|
|
10.49
|
|
Strategic Neurology Drug Discovery and Development Collaboration, Option and License Agreement between the Registrant and Biogen Idec MA Inc. dated September 5, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (34)
|
10.50
|
|
Amendment #1 to Collaboration, License and Development Agreement between the Registrant and AstraZeneca AB dated August 13, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (34)
|
|
|
|
10.51
|
|
Amendment Number Three to the Amended and Restated License and Collaboration Agreement among the Registrant, Alnylam Pharmaceuticals, Inc. and Regulus Therapeutics Inc. dated August 2, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (34)
|
10.52
|
Letter Agreement Amendment between the Registrant and Biogen Idec International Holding Ltd dated January 27, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (38)
|
|
10.53
|
Amendment No. 3 to the Research, Development and License Agreement between the Registrant and Glaxo Group Limited dated July 10, 2013. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (39)
|
|
10.54
|
Amendment #4 to the Research, Development and License Agreement between the Registrant and Glaxo Group Limited dated April 10, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (39)
|
|
10.55
|
Amendment #5 to the Research, Development and License Agreement among the Registrant, Glaxo Group Limited and GlaxoSmithKline Intellectual Property Development Limited dated June 27, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (39)
|
|
10.56
|
Exclusive License Agreement between the Registrant and the University of Massachusetts dated January 14, 2010. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (40)
|
|
10.57
|
Amended and Restated Collaboration and License Agreement between the Registrant and Cold Spring Harbor Laboratory dated October 26, 2011. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (40)
|
|
10.58
|
Amendment to Amended and Restated Collaboration and License Agreement between the Registrant and Cold Spring Harbor Laboratory dated March 14, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment. (40)
|
|
10.59
|
Amendment #1 to the Development, Option and License Agreement between the Registrant and Biogen Idec International Holding Ltd. dated December 15, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment.
|
|
10.60
|
Research Collaboration, Option and License Agreement between the Registrant and Janssen Biotech Inc. dated December 22, 2014. Portions of this exhibit have been omitted and separately filed with the SEC.
|
|
10.61
|
Amendment No.2 to the Collaboration, License and Development Agreement between the Registrant and AstraZeneca AB dated October 15, 2014. Portions of this exhibit have been omitted and separately filed with the SEC with a request for confidential treatment.
|
|
|
|
|
14.1
|
|
Registrant's Code of Ethics and Business Conduct. (36)
|
|
|
|
21.1
|
|
List of Subsidiaries for the Registrant.
|
|
|
|
23.1
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
24.1
|
|
Power of Attorney. (28)
|
|
|
|
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.
|
|
|
|
99.2
|
|
Form of Confidentiality Agreement. (8)
|
|
|
|
101
|
|
The following financial statements from the Isis Pharmaceuticals, Inc. Annual Report on Form 10-K for the year ended December 31, 2014, formatted in Extensive Business Reporting Language (XBRL): (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of stockholders' equity, (iv) consolidated statements of cash flows, and (v) notes to consolidated financial statements (detail tagged).
|
(1)
|
|
Filed as an exhibit to the Registrant's Registration Statement on Form S-1 (No. 33-39640) or amendments thereto and incorporated herein by reference.
|
|
|
|
(2)
|
|
Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2006.
|
|
|
|
(3)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 and incorporated herein by reference.
|
|
|
|
(4)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 and incorporated herein by reference.
|
(5)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
|
|
|
|
(6)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1998 and incorporated herein by reference.
|
|
|
|
(7)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference.
|
|
|
|
(8)
|
|
Filed as an exhibit to the Registrant's Registration Statement on Form S-3 (No. 333-71911) or amendments thereto and incorporated herein by reference.
|
|
|
|
(9)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 and incorporated herein by reference.
|
(10)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 and incorporated herein by reference.
|
|
|
|
(11)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
|
|
|
|
(12)
|
|
Filed as an exhibit to Registrant's Report on Form 8-K dated December 8, 2000 and incorporated herein by reference.
|
|
|
|
(13)
|
|
Filed as an exhibit to the Registrant's Current Report on Form 8-K filed December 14, 2011 and incorporated herein by reference.
|
|
|
|
(14)
|
|
Filed as an exhibit to the Registrant's report on Form 10-Q as amended for the quarter ended June 30, 2001 and incorporated herein by reference.
|
|
|
|
(15)
|
|
Filed as an exhibit to Registrant's Notice of Annual Meeting and Proxy Statement for the 2009 Annual Meeting of Stockholders, filed with the SEC on April 20, 2009, and incorporated herein by reference.
|
|
|
|
(16)
|
|
Filed as an exhibit to the Registrant's Current Report on Form 8-K filed December 5, 2008 and incorporated herein by reference.
|
|
|
|
(17)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 and incorporated herein by reference.
|
|
|
|
(18)
|
|
Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005 and incorporated herein by reference.
|
|
|
|
(19)
|
|
Filed as an exhibit to the Registrant's Notice of 2011 Annual Meeting of Stockholders and Proxy Statement filed with the SEC on April 28, 2011, and incorporated herein by reference.
|
|
|
|
(20)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 and incorporated herein by reference.
|
|
|
|
(21)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2004 and incorporated herein by reference.
|
|
|
|
(22)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2010 and incorporated herein by reference.
|
|
|
|
(23)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2008 and incorporated herein by reference.
|
|
|
|
(24)
|
|
Filed as an exhibit to the Registrant's Annual Report as Form 10-K for the year ended December 31, 2009 and incorporated herein by reference.
|
|
|
|
(25)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 and incorporated herein by reference.
|
|
|
|
(26)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 and incorporated herein by reference.
|
|
|
|
(27)
|
|
Filed as an exhibit to Registrant's Notice of Annual Meeting and Proxy Statement for the 2012 Annual Meeting of Stockholders, filed with the SEC on April 16, 2012, and incorporated herein by reference.
|
|
|
|
(28)
|
|
Filed as part of the Annual Report on Form 10-K for the year ended December 31, 2013, and incorporated herein by reference.
|
|
|
|
(29)
|
|
Filed as an exhibit to the Registrant's Registration Statement on Form S-8 filed with the SEC on August 8, 2011, and incorporated herein by reference.
|
|
|
|
(30)
|
|
Filed as an exhibit to the Registrant's Report on Form 8-K filed August 13, 2012 and incorporated herein by reference.
|
(31)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 and incorporated herein by reference.
|
|
|
|
(32)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 and incorporated herein by reference.
|
|
|
|
(33)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 and incorporated herein by reference.
|
|
|
|
(34)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 and incorporated herein by reference.
|
|
|
|
(35)
|
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 and incorporated herein by reference.
|
|
|
|
(36)
|
|
Filed as an exhibit to the Registrant's Report on Form 8-K filed on December 9, 2013 and incorporated herein by reference.
|
|
|
|
(37)
|
|
Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2012 and incorporated herein by reference.
|
(38)
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 and incorporated herein by reference.
|
|
(39)
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and incorporated herein by reference.
|
|
(40)
|
Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 and incorporated herein by reference.
|
|
(41)
|
Filed as an exhibit to the Registrant's Current Report on Form 8-K filed November 17, 2014 and incorporated herein by reference.
|
|
(42)
|
Filed as an exhibit to the Registrant's Notice of Annual Meeting and Proxy Statement, for the 2014 Annual Meeting of Stockholders, filed with the SEC on April 25, 2014, and incorporated herein by reference.
|
|
*
|
|
Indicates management compensatory plans and arrangements as required to be filed as exhibits to this Report pursuant to Item 14(c).
|
|
Page
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-9
|
|
/s/ ERNST & YOUNG LLP
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
142,998
|
$
|
159,973
|
||||
Short-term investments
|
585,834
|
496,788
|
||||||
Contracts receivable
|
3,903
|
11,102
|
||||||
Inventories
|
6,290
|
8,033
|
||||||
Investment in Regulus Therapeutics Inc.
|
81,881
|
52,096
|
||||||
Other current assets
|
15,691
|
7,518
|
||||||
Total current assets
|
836,597
|
735,510
|
||||||
Property, plant and equipment, net
|
88,958
|
86,198
|
||||||
Licenses, net
|
2,690
|
4,572
|
||||||
Patents, net
|
17,186
|
15,517
|
||||||
Deposits and other assets
|
10,378
|
5,359
|
||||||
Total assets
|
$
|
955,809
|
$
|
847,156
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
17,984
|
$
|
11,009
|
||||
Accrued compensation
|
12,302
|
12,168
|
||||||
Accrued liabilities
|
30,451
|
22,092
|
||||||
Current portion of long-term obligations
|
2,882
|
4,408
|
||||||
Current portion of deferred contract revenue
|
51,713
|
48,135
|
||||||
Total current liabilities
|
115,332
|
97,812
|
||||||
Long-term deferred contract revenue
|
127,797
|
142,790
|
||||||
1 percent convertible senior notes
|
327,486
|
—
|
||||||
2¾ percent convertible senior notes
|
48,014
|
150,334
|
||||||
Long-term obligations, less current portion
|
7,669
|
6,542
|
||||||
Long-term financing liability for leased facility
|
71,731
|
71,288
|
||||||
Total liabilities
|
698,029
|
468,766
|
||||||
Stockholders' equity:
|
||||||||
Common stock, $0.001 par value; 300,000,000 shares authorized, 118,442,726 and 116,471,371 shares issued and outstanding at December 31, 2014 and December 31, 2013, respectively
|
118
|
116
|
||||||
Additional paid-in capital
|
1,224,509
|
1,324,804
|
||||||
Accumulated other comprehensive income
|
39,747
|
21,080
|
||||||
Accumulated deficit
|
(1,006,594
|
)
|
(967,610
|
)
|
||||
Total stockholders' equity
|
257,780
|
378,390
|
||||||
Total liabilities and stockholders' equity
|
$
|
955,809
|
$
|
847,156
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Revenue:
|
||||||||||||
Research and development revenue under collaborative agreements
|
$
|
202,514
|
$
|
144,194
|
$
|
96,415
|
||||||
Licensing and royalty revenue
|
11,647
|
3,091
|
5,634
|
|||||||||
Total revenue
|
214,161
|
147,285
|
102,049
|
|||||||||
Expenses:
|
||||||||||||
Research, development and patent expenses
|
241,751
|
184,033
|
158,458
|
|||||||||
General and administrative
|
20,140
|
14,918
|
12,515
|
|||||||||
Total operating expenses
|
261,891
|
198,951
|
170,973
|
|||||||||
Loss from operations
|
(47,730
|
)
|
(51,666
|
)
|
(68,924
|
)
|
||||||
Other income (expense):
|
||||||||||||
Equity in net loss of Regulus Therapeutics Inc.
|
—
|
—
|
(1,406
|
)
|
||||||||
Investment income
|
2,682
|
2,085
|
1,844
|
|||||||||
Interest expense
|
(22,209
|
)
|
(19,355
|
)
|
(21,152
|
)
|
||||||
Gain on investments, net
|
1,256
|
2,378
|
1,465
|
|||||||||
Gain on investment in Regulus Therapeutics Inc.
|
19,902
|
—
|
18,356
|
|||||||||
Loss on early retirement of debt
|
(8,292
|
)
|
—
|
(4,770
|
)
|
|||||||
Loss before income tax benefit
|
(54,391
|
)
|
(66,558
|
)
|
(74,587
|
)
|
||||||
Income tax benefit
|
15,407
|
5,914
|
9,109
|
|||||||||
Net loss
|
$
|
(38,984
|
)
|
$
|
(60,644
|
)
|
$
|
(65,478
|
)
|
|||
Basic and diluted net loss per share
|
$
|
(0.33
|
)
|
$
|
(0.55
|
)
|
$
|
(0.65
|
)
|
|||
Shares used in computing basic and diluted net loss per share
|
117,691
|
110,502
|
100,576
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Net loss
|
$
|
(38,984
|
)
|
$
|
(60,644
|
)
|
$
|
(65,478
|
)
|
|||
Unrealized gains on investments, net of tax
|
40,079
|
10,253
|
13,250
|
|||||||||
Reclassification adjustment for realized gains included in net loss
|
(21,412
|
)
|
(1,653
|
)
|
—
|
|||||||
Comprehensive loss
|
$
|
(20,317
|
)
|
$
|
(52,044
|
)
|
$
|
(52,228
|
)
|
Isis Pharmaceuticals, Inc. Stockholders' Equity
|
||||||||||||||||||||||||
Common stock
|
Additional
paid in
|
Accumulated
other
comprehensive
|
Accumulated
|
Total
stockholders'
|
||||||||||||||||||||
Description
|
Shares
|
Amount
|
capital
|
income (loss)
|
deficit
|
equity
|
||||||||||||||||||
Balance at December 31, 2011
|
100,043
|
$
|
100
|
$
|
1,013,592
|
$
|
(770
|
)
|
$
|
(841,488
|
)
|
$
|
171,434
|
|||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(65,478
|
)
|
(65,478
|
)
|
||||||||||||||||
Change in unrealized gains (losses), net of tax
|
—
|
—
|
—
|
13,250
|
—
|
13,250
|
||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
1,438
|
2
|
9,468
|
—
|
—
|
9,470
|
||||||||||||||||||
2⅝ percent convertible subordinated notes redemption, equity portion
|
—
|
—
|
(12,041
|
)
|
—
|
—
|
(12,041
|
)
|
||||||||||||||||
2¾ percent convertible senior notes, equity portion, net of issuance costs
|
—
|
—
|
57,560
|
—
|
—
|
57,560
|
||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
8,571
|
—
|
—
|
8,571
|
||||||||||||||||||
Balance at December 31, 2012
|
101,481
|
$
|
102
|
$
|
1,077,150
|
$
|
12,480
|
$
|
(906,966
|
)
|
$
|
182,766
|
||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(60,644
|
)
|
(60,644
|
)
|
||||||||||||||||
Change in unrealized gains (losses), net of tax
|
—
|
—
|
—
|
8,600
|
—
|
8,600
|
||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
5,372
|
5
|
62,953
|
—
|
—
|
62,958
|
||||||||||||||||||
Issuance of public common stock
|
9,618
|
9
|
173,283
|
—
|
—
|
173,292
|
||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
11,418
|
—
|
—
|
11,418
|
||||||||||||||||||
Balance at December 31, 2013
|
116,471
|
$
|
116
|
$
|
1,324,804
|
$
|
21,080
|
$
|
(967,610
|
)
|
$
|
378,390
|
||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
(38,984
|
)
|
(38,984
|
)
|
||||||||||||||||
Change in unrealized gains (losses), net of tax
|
—
|
—
|
—
|
18,667
|
—
|
18,667
|
||||||||||||||||||
Issuance of common stock in connection with employee stock plans
|
1,972
|
2
|
23,071
|
—
|
—
|
23,073
|
||||||||||||||||||
2¾ percent convertible senior notes repurchase, equity portion
|
—
|
—
|
(326,444
|
)
|
—
|
—
|
(326,444
|
)
|
||||||||||||||||
1 percent convertible senior notes, equity portion, net of issuance costs
|
—
|
—
|
170,232
|
—
|
—
|
170,232
|
||||||||||||||||||
Share-based compensation expense
|
—
|
—
|
31,383
|
—
|
—
|
31,383
|
||||||||||||||||||
Excess tax benefits from share-based compensation awards
|
—
|
—
|
1,463
|
—
|
—
|
1,463
|
||||||||||||||||||
Balance at December 31, 2014
|
118,443
|
$
|
118
|
$
|
1,224,509
|
$
|
39,747
|
$
|
(1,006,594
|
)
|
$
|
257,780
|
Years Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Operating activities:
|
||||||||||||
Net loss
|
$
|
(38,984
|
)
|
$
|
(60,644
|
)
|
$
|
(65,478
|
)
|
|||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||||||
Depreciation
|
6,380
|
6,591
|
7,074
|
|||||||||
Amortization of patents
|
1,142
|
1,184
|
1,224
|
|||||||||
Amortization of licenses
|
1,882
|
2,007
|
2,457
|
|||||||||
Amortization of premium on investments, net
|
7,470
|
5,572
|
4,193
|
|||||||||
Amortization of debt issuance costs
|
595
|
415
|
619
|
|||||||||
Amortization of 2⅝ percent convertible subordinated notes discount
|
—
|
—
|
6,169
|
|||||||||
Amortization of 2¾ percent convertible senior notes discount
|
6,723
|
6,344
|
2,268
|
|||||||||
Amortization of 1 percent convertible senior notes discount
|
2,256
|
—
|
—
|
|||||||||
Amortization of long-term financing liability for leased facility
|
6,622
|
6,567
|
6,503
|
|||||||||
Share-based compensation expense
|
31,383
|
11,418
|
8,571
|
|||||||||
Equity in net loss of Regulus Therapeutics Inc.
|
—
|
—
|
1,406
|
|||||||||
Gain on investment in Regulus Therapeutics Inc.
|
(19,902
|
)
|
—
|
(18,356
|
)
|
|||||||
Loss on early retirement of debt
|
8,292
|
—
|
4,770
|
|||||||||
Gain on investments, net
|
(1,256
|
)
|
(2,378
|
)
|
(1,465
|
)
|
||||||
Non-cash losses related to patents, licensing and property, plant and equipment
|
1,305
|
6,306
|
825
|
|||||||||
Tax benefit from other unrealized gains on securities
|
(12,835
|
)
|
(5,914
|
)
|
(9,111
|
)
|
||||||
Changes in operating assets and liabilities:
|
||||||||||||
Contracts receivable
|
7,199
|
(10,580
|
)
|
6,399
|
||||||||
Inventories
|
1,743
|
(1,912
|
)
|
(1,982
|
)
|
|||||||
Other current and long-term assets
|
(1,750
|
)
|
(1,091
|
)
|
279
|
|||||||
Accounts payable
|
4,824
|
66
|
1,292
|
|||||||||
Income taxes
|
(4,034
|
)
|
—
|
—
|
||||||||
Accrued compensation
|
134
|
4,290
|
(1,305
|
)
|
||||||||
Deferred rent
|
153
|
217
|
255
|
|||||||||
Accrued liabilities
|
8,358
|
6,691
|
(3,254
|
)
|
||||||||
Deferred contract revenue
|
(11,415
|
)
|
88,344
|
48,523
|
||||||||
Net cash provided by operating activities
|
6,285
|
63,493
|
1,876
|
|||||||||
Investing activities:
|
||||||||||||
Purchases of short-term investments
|
(391,883
|
)
|
(425,554
|
)
|
(217,877
|
)
|
||||||
Proceeds from the sale of short-term investments
|
294,727
|
172,762
|
242,659
|
|||||||||
Purchases of property, plant and equipment
|
(7,518
|
)
|
(1,552
|
)
|
(1,479
|
)
|
||||||
Acquisition of licenses and other assets, net
|
(3,586
|
)
|
(3,810
|
)
|
(3,691
|
)
|
||||||
Investment in Regulus Therapeutics Inc.
|
—
|
—
|
(3,000
|
)
|
||||||||
Purchases of strategic investments
|
—
|
—
|
(790
|
)
|
||||||||
Proceeds from the sale of Regulus Therapeutics, Inc.
|
22,949
|
—
|
—
|
|||||||||
Proceeds from the sale of strategic investments
|
2,463
|
2,428
|
2,177
|
|||||||||
Net cash (used in) provided by investing activities
|
(82,848
|
)
|
(255,726
|
)
|
17,999
|
|||||||
Financing activities:
|
||||||||||||
Proceeds from equity awards
|
23,071
|
62,958
|
9,470
|
|||||||||
Proceeds from issuance of 2¾ percent convertible senior notes, net of issuance costs
|
—
|
—
|
194,697
|
|||||||||
Proceeds from issuance of 1 percent convertible senior notes, net of issuance costs
|
487,035
|
—
|
—
|
|||||||||
Principal and premium payment on redemption of the 2⅝ percent convertible subordinated notes
|
—
|
—
|
(163,718
|
)
|
||||||||
Repurchase of $140 million principal amount of the 2¾ percent convertible senior notes
|
(441,394
|
)
|
—
|
—
|
||||||||
Proceeds from public common stock offering
|
—
|
173,292
|
—
|
|||||||||
Proceeds from equipment financing arrangement
|
—
|
2,513
|
9,100
|
|||||||||
Excess tax benefits from share-based compensation awards
|
1,463
|
—
|
—
|
|||||||||
Principal payments on debt and capital lease obligations
|
(10,587
|
)
|
(11,039
|
)
|
(10,419
|
)
|
||||||
Net cash provided by financing activities
|
59,588
|
227,724
|
39,130
|
|||||||||
Net (decrease) increase in cash and cash equivalents
|
(16,975
|
)
|
35,491
|
59,005
|
||||||||
Cash and cash equivalents at beginning of year
|
159,973
|
124,482
|
65,477
|
|||||||||
Cash and cash equivalents at end of year
|
$
|
142,998
|
$
|
159,973
|
$
|
124,482
|
Supplemental disclosures of cash flow information:
|
||||||||||||
Interest paid
|
$
|
6,353
|
$
|
6,000
|
$
|
5,770
|
||||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||||||
Amounts accrued for capital and patent expenditures
|
$
|
2,151
|
$
|
704
|
$
|
647
|
| 1 percent convertible senior notes; |
| 2¾ percent convertible senior notes; |
| 2⅝ percent convertible subordinated notes; |
| GSK convertible promissory notes issued by Regulus; |
| Dilutive stock options; |
| Unvested restricted stock units; and |
| Employee Stock Purchase Plan, or ESPP. |
| The exclusive license we granted to AstraZeneca to develop and commercialize ISIS-STAT3-2.5Rx for the treatment of cancer; |
| The development services we are performing for ISIS-STAT3-2.5Rx; |
| The exclusive license we granted to AstraZeneca to develop and commercialize ISIS-AR-2.5Rx and the research services we performed for ISIS-AR-2.5Rx; and |
| The option to license up to three drugs under a research program and the research services we are performing for this program. |
| 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 number and cost of studies we will perform; |
| The estimated number and cost of studies that we will contract with third parties to perform; and |
| The estimated cost of drug product we will use in the studies. |
| In January 2012, we entered into a collaboration agreement with Biogen Idec to develop and commercialize ISIS-SMNRx for spinal muscular atrophy, or SMA. As part of the collaboration, we received a $29 million upfront payment and we are responsible for global development of ISIS-SMNRx through completion of Phase 2/3 clinical trials. |
| In June 2012, we entered into a second and separate collaboration agreement with Biogen Idec to develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible for global development of the drug through the completion of a Phase 2 clinical trial. |
| In December 2012, we entered into a third and separate collaboration agreement with Biogen Idec to discover and develop antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we received a $30 million upfront payment and we are responsible for the discovery of a lead antisense drug for each of three targets. |
| In September 2013, we entered into a fourth and separate collaboration agreement with Biogen Idec to leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen Idec exclusive rights to the use of our antisense technology to develop therapies for neurological diseases as part of this broad collaboration. We received a $100 million upfront payment and we are responsible for discovery and early development through the completion of a Phase 2 clinical trial for each antisense drug identified during the six year term of this collaboration, while Biogen Idec is responsible for the creation and development of small molecule treatments and biologics. |
| Designation of a development candidate. Following the designation of a development candidate, IND-enabling animal studies for a new development candidate generally take 12 to 18 months to complete; |
| Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete; |
| Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three years to complete; |
| Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four years to complete. |
| Filing of regulatory applications for marketing approval such as a New Drug Application, or NDA, in the United States or a Marketing Authorization Application, or MAA, in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings. |
| Marketing approval in a major market, such as the United States, Europe or Japan. Generally it takes one to two years after an application is submitted to obtain approval from the applicable regulatory agency. |
| First commercial sale in a particular market, such as in the United States or Europe. |
| Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The amount of time to achieve this type of milestone depends on several factors including but not limited to the dollar amount of the threshold, the pricing of the product and the pace at which customers begin using the product. |
| Substantive uncertainty exists as to the achievement of the milestone event at the inception of the arrangement; |
| The achievement of the milestone involves substantive effort and can only be achieved based in whole or in part on our performance or the occurrence of a specific outcome resulting from our performance; |
| The amount of the milestone payment appears reasonable either in relation to the effort expended or to the enhancement of the value of the delivered items; |
| There is no future performance required to earn the milestone; and |
| The consideration is reasonable relative to all deliverables and payment terms in the arrangement. |
Years Ending December 31,
|
Amortization
|
|||
(in millions)
|
||||
2015
|
$
|
1.2
|
||
2016
|
$
|
1.1
|
||
2017
|
$
|
1.1
|
||
2018
|
$
|
0.9
|
||
2019
|
$
|
0.8
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Equipment and computer software
|
$
|
49,772
|
$
|
44,698
|
||||
Building and building systems
|
48,521
|
48,132
|
||||||
Land improvements
|
2,853
|
2,846
|
||||||
Leasehold improvements
|
37,935
|
35,282
|
||||||
Furniture and fixtures
|
5,732
|
5,473
|
||||||
144,813
|
136,431
|
|||||||
Less accumulated depreciation
|
(66,053
|
)
|
(60,431
|
)
|
||||
78,760
|
76,000
|
|||||||
Land
|
10,198
|
10,198
|
||||||
Total
|
$
|
88,958
|
$
|
86,198
|
Computer software and hardware
|
3 years
|
Other equipment
|
5-7 years
|
Furniture and fixtures
|
5-10 years
|
Manufacturing equipment
|
10 years
|
Building systems and improvements
|
10-25 years
|
Land improvements
|
20 years
|
Building
|
40 years
|
Years Ending December 31,
|
Amortization
|
|||
(in millions)
|
||||
2015
|
$
|
1.9
|
||
2016
|
$
|
0.8
|
Year Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Beginning balance accumulated other comprehensive income (loss)
|
$
|
21,080
|
$
|
12,480
|
$
|
(770
|
)
|
|||||
Other comprehensive income before reclassifications, net of tax (1)
|
40,079
|
10,253
|
13,250
|
|||||||||
Amounts reclassified from accumulated other comprehensive income (2)
|
(21,412
|
)
|
(1,653
|
)
|
—
|
|||||||
Net current period other comprehensive income
|
18,667
|
8,600
|
13,250
|
|||||||||
Ending balance accumulated other comprehensive income
|
$
|
39,747
|
$
|
21,080
|
$
|
12,480
|
(1) | Other comprehensive income includes income tax expense of $12.8 million, $5.9 million and $9.1 million for the years ended December 31, 2014 and 2013 and 2012, respectively. |
(2) | Included in gain on investments, net on our consolidated statement of operations. |
At December 31, 2014
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Cash equivalents (1)
|
$
|
104,680
|
$
|
104,680
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (2)
|
372,002
|
—
|
372,002
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (3)
|
109,855
|
—
|
109,855
|
—
|
||||||||||||
Debt securities issued by the U.S. Treasury (4)
|
19,017
|
19,017
|
—
|
—
|
||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (5)
|
105,033
|
—
|
105,033
|
—
|
||||||||||||
Investment in Regulus Therapeutics Inc.
|
81,881
|
—
|
—
|
81,881
|
||||||||||||
Total
|
$
|
792,468
|
$
|
123,697
|
$
|
586,890
|
$
|
81,881
|
At December 31, 2013
|
Quoted Prices in
Active Markets
(Level 1)
|
Significant Other
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||||
Cash equivalents (1)
|
$
|
133,233
|
$
|
133,233
|
$
|
—
|
$
|
—
|
||||||||
Corporate debt securities (7)
|
407,897
|
—
|
407,897
|
—
|
||||||||||||
Debt securities issued by U.S. government agencies (3)
|
64,432
|
—
|
64,432
|
—
|
||||||||||||
Debt securities issued by the U.S. Treasury (3)
|
15,328
|
15,328
|
—
|
—
|
||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (3)
|
22,255
|
—
|
22,255
|
—
|
||||||||||||
Investment in Regulus Therapeutics Inc.
|
52,096
|
52,096
|
—
|
—
|
||||||||||||
Equity securities (6)
|
1,276
|
1,276
|
—
|
—
|
||||||||||||
Total
|
$
|
696,517
|
$
|
201,933
|
$
|
494,584
|
$
|
—
|
(1) | Included in cash and cash equivalents on our consolidated balance sheet. |
(2) | $0.8 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet. |
(3) | Included in short-term investments on our consolidated balance sheet. |
(4) | $10.0 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet. |
(5) | $9.3 million included in cash and cash equivalents on our consolidated balance sheet, with the difference included in short-term investments on our consolidated balance sheet. |
(6) | Included in other current assets on our consolidated balance sheet. |
Year Ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Beginning balance of Level 3 investments
|
$
|
—
|
$
|
34,350
|
||||
Transfers into Level 3 investments
|
108,009
|
—
|
||||||
Total realized and unrealized gains and (losses):
|
||||||||
Included in gain on investments
|
—
|
(1,163
|
)
|
|||||
Included in accumulated other comprehensive income (loss)
|
(24,897
|
)
|
32,272
|
|||||
Transfers out of Level 3 investments
|
(1,231
|
)
|
(65,419
|
)
|
||||
Cost basis of shares sold
|
—
|
(40
|
)
|
|||||
Ending balance of Level 3 investments
|
$
|
81,881
|
$
|
—
|
One year or less
|
55%
|
|
After one year but within two years
|
31%
|
|
After two years but within three years
|
14%
|
|
Total
|
100%
|
Amortized
|
Unrealized
|
Other-Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||
December 31, 2014
|
Cost
|
Gains
|
Losses
|
Loss
|
Fair Value
|
|||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||
Corporate debt securities(1)
|
$
|
219,856
|
$
|
89
|
$
|
(89
|
)
|
$
|
—
|
$
|
219,856
|
|||||||||
Debt securities issued by U.S. government agencies
|
47,496
|
7
|
(27
|
)
|
—
|
47,476
|
||||||||||||||
Debt securities issued by the U.S. Treasury (1)
|
19,008
|
9
|
—
|
—
|
19,017
|
|||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states (1)
|
45,196
|
19
|
(53
|
)
|
—
|
45,162
|
||||||||||||||
Total securities with a maturity of one year or less
|
331,556
|
124
|
(169
|
)
|
—
|
331,511
|
||||||||||||||
Corporate debt securities
|
152,730
|
16
|
(600
|
)
|
—
|
152,146
|
||||||||||||||
Debt securities issued by U.S. government agencies
|
62,530
|
—
|
(151
|
)
|
—
|
62,379
|
||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
60,073
|
32
|
(234
|
)
|
—
|
59,871
|
||||||||||||||
Total securities with a maturity of more than one year
|
275,333
|
48
|
(985
|
)
|
—
|
274,396
|
||||||||||||||
Total available-for-sale securities
|
$
|
606,889
|
$
|
172
|
$
|
(1,154
|
)
|
$
|
—
|
$
|
605,907
|
Cost
|
Unrealized
|
Other-Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||
December 31, 2014
|
Basis
|
Gains
|
Losses
|
Loss
|
Fair Value
|
|||||||||||||||
Equity securities:
|
||||||||||||||||||||
Regulus Therapeutics Inc.
|
$
|
12,477
|
$
|
69,404
|
$
|
—
|
$
|
—
|
$
|
81,881
|
||||||||||
Total equity securities
|
$
|
12,477
|
$
|
69,404
|
$
|
—
|
$
|
—
|
$
|
81,881
|
||||||||||
Total available-for-sale and equity securities
|
$
|
619,366
|
$
|
69,576
|
$
|
(1,154
|
)
|
$
|
—
|
$
|
687,788
|
Amortized
|
Unrealized
|
Other-Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||
December 31, 2013
|
Cost
|
Gains
|
Losses
|
Loss
|
Fair Value
|
|||||||||||||||
Available-for-sale securities:
|
||||||||||||||||||||
Corporate debt securities(1)
|
$
|
142,096
|
$
|
75
|
$
|
(27
|
)
|
$
|
—
|
$
|
142,144
|
|||||||||
Debt securities issued by U.S. government agencies(1)
|
23,242
|
22
|
(16
|
)
|
—
|
23,248
|
||||||||||||||
Debt securities issued by the U.S. Treasury
|
6,239
|
6
|
—
|
—
|
6,245
|
|||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
8,082
|
6
|
(28
|
)
|
—
|
8,060
|
||||||||||||||
Total securities with a maturity of one year or less
|
179,659
|
109
|
(71
|
)
|
—
|
179,697
|
||||||||||||||
Corporate debt securities
|
265,969
|
177
|
(393
|
)
|
—
|
265,753
|
||||||||||||||
Debt securities issued by U.S. government agencies
|
41,308
|
3
|
(127
|
)
|
—
|
41,184
|
||||||||||||||
Debt securities issued by the U.S. Treasury
|
9,062
|
21
|
—
|
—
|
9,083
|
|||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
14,186
|
37
|
(28
|
)
|
—
|
14,195
|
||||||||||||||
Total securities with a maturity of more than one year
|
330,525
|
238
|
(548
|
)
|
—
|
330,215
|
||||||||||||||
Total available-for-sale securities
|
$
|
510,184
|
$
|
347
|
$
|
(619
|
)
|
$
|
—
|
$
|
509,912
|
Cost
|
Unrealized
|
Other-Than-
Temporary
Impairment
|
Estimated
|
|||||||||||||||||
December 31, 2013
|
Basis
|
Gains
|
Losses
|
Loss
|
Fair Value
|
|||||||||||||||
Equity securities:
|
||||||||||||||||||||
Regulus Therapeutics Inc.
|
$
|
15,526
|
$
|
36,570
|
$
|
—
|
$
|
—
|
$
|
52,096
|
||||||||||
Securities included in other current assets
|
1,538
|
618
|
—
|
(880
|
)
|
1,276
|
||||||||||||||
Securities included deposits and other assets
|
625
|
—
|
—
|
—
|
625
|
|||||||||||||||
Total equity securities
|
$
|
17,689
|
$
|
37,188
|
$
|
—
|
$
|
(880
|
)
|
$
|
53,997
|
|||||||||
Total available-for-sale and equity securities
|
$
|
527,873
|
$
|
37,535
|
$
|
(619
|
)
|
$
|
(880
|
)
|
$
|
563,909
|
(1) | Includes investments classified as cash equivalents on our 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
|
239
|
$
|
242,124
|
$
|
(681
|
)
|
$
|
3,503
|
$
|
(8
|
)
|
$
|
245,627
|
$
|
(689
|
)
|
||||||||||||
Debt securities issued by U.S. government agencies
|
16
|
98,342
|
(178
|
)
|
—
|
—
|
98,342
|
(178
|
)
|
|||||||||||||||||||
Debt securities issued by states of the United States and political subdivisions of the states
|
46
|
54,292
|
(237
|
)
|
225
|
(50
|
)
|
54,517
|
(287
|
)
|
||||||||||||||||||
Total temporarily impaired securities
|
301
|
$
|
394,758
|
$
|
(1,096
|
)
|
$
|
3,728
|
$
|
(58
|
)
|
$
|
398,486
|
$
|
(1,154
|
)
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
1 percent convertible senior notes
|
$
|
327,486
|
$
|
—
|
||||
2¾ percent convertible senior notes
|
48,014
|
150,334
|
||||||
Long-term financing liability for leased facility
|
71,731
|
71,288
|
||||||
Equipment financing arrangement
|
3,226
|
7,461
|
||||||
Leases and other obligations
|
7,325
|
3,489
|
||||||
Total
|
$
|
457,782
|
$
|
232,572
|
||||
Less: current portion
|
(2,882
|
)
|
(4,408
|
)
|
||||
Total Long-Term Obligations
|
$
|
454,900
|
$
|
228,164
|
1 Percent Convertible
Senior Notes
|
2¾ Percent Convertible
Senior Notes
|
|||||||
Outstanding balance
|
$
|
500
|
$
|
61.2
|
||||
Issue date
|
November 2014
|
August 2012
|
||||||
Maturity date
|
November 2021
|
October 2019
|
||||||
Interest rate
|
1 percent
|
2¾ percent
|
||||||
Conversion price per share
|
$
|
66.81
|
$
|
16.63
|
||||
Total shares of common stock subject to conversion
|
7.5
|
3.7
|
1 Percent Convertible
Senior Notes
|
2¾ Percent Convertible
Senior Notes
|
2⅝ Percent Convertible Subordinated Notes
|
|||||
Nonconvertible debt borrowing rate
|
7.4 percent
|
8.0 percent
|
9.3 percent
|
||||
Effective interest rate
|
7.8 percent
|
8.8 percent
|
9.8 percent
|
||||
Amortization period of debt discount
|
7 years
|
7 years
|
7 years
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
2¾ Percent Convertible Senior Notes
|
||||||||
Fair value of outstanding notes
|
$
|
223,900
|
$
|
505,100
|
||||
Principal amount of convertible notes outstanding
|
$
|
61,247
|
$
|
201,250
|
||||
Unamortized portion of debt discount
|
$
|
13,233
|
$
|
50,916
|
||||
Long-term debt
|
$
|
48,014
|
$
|
150,334
|
||||
Carrying value of equity component
|
$
|
18,714
|
$
|
59,528
|
||||
1 Percent Convertible Senior Notes
|
||||||||
Fair value of outstanding notes
|
$
|
568,000
|
||||||
Principal amount of convertible notes outstanding
|
$
|
500,000
|
||||||
Unamortized portion of debt discount
|
$
|
172,514
|
||||||
Long-term debt
|
$
|
327,486
|
||||||
Carrying value of equity component
|
$
|
174,770
|
2015
|
$
|
9,446
|
||
2016
|
7,268
|
|||
2017
|
6,744
|
|||
2018
|
6,744
|
|||
2019
|
67,991
|
|||
Thereafter
|
511,020
|
|||
Subtotal
|
$
|
609,213
|
||
Less: current portion
|
(2,882
|
)
|
||
Less: fixed and determinable interest
|
(44,222
|
)
|
||
Less: unamortized portion of debt discount
|
(185,747
|
)
|
||
Plus: Deferred rent
|
1,795
|
|||
Total
|
$
|
378,157
|
Operating
Leases
|
||||
2015
|
$
|
1,527
|
||
2016
|
1,538
|
|||
2017
|
1,481
|
|||
2018
|
1,451
|
|||
2019
|
1,474
|
|||
Thereafter
|
17,517
|
|||
Total minimum payments
|
$
|
24,988
|
Future Rent
Payments
|
||||
2015
|
$
|
6,179
|
||
2016
|
6,550
|
|||
2017
|
6,550
|
|||
2018
|
6,943
|
|||
2019
|
6,943
|
|||
Thereafter
|
98,565
|
|||
Total minimum payments
|
$
|
131,730
|
| a sale, lease or other disposition of all or substantially all of our assets; |
| a merger or consolidation in which we are not the surviving corporation; or |
| reverse merger in which we are the surviving corporation but the shares of common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, |
| arrange for assumption, continuation, or substitution of a stock award by a surviving or acquiring entity (or its parent company); |
| arrange for the assignment of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award to the surviving or acquiring corporation (or its parent company); |
| accelerate the vesting and exercisability of a stock award followed by the termination of the stock award; |
| arrange for the lapse of any reacquisition or repurchase rights applicable to any shares of our common stock issued pursuant to a stock award; |
| cancel or arrange for the cancellation of a stock award, to the extent not vested or not exercised prior to the effective date of the corporate transaction, in exchange for cash consideration, if any, as the Board, in its sole discretion, may consider appropriate; and |
| arrange for the surrender of a stock award in exchange for a payment equal to the excess of (a) the value of the property the holder of the stock award would have received upon the exercise of the stock award, over (b) any exercise price payable by such holder in connection with such exercise. |
Number of
Shares
|
Weighted
Average Exercise
Price
Per Share
|
Average
Remaining
Contractual Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
(Years)
|
||||||||||||||||
Outstanding at December 31, 2013
|
7,279
|
$
|
12.07
|
|||||||||||||
Granted
|
2,031
|
$
|
39.88
|
|||||||||||||
Exercised
|
(1,816
|
)
|
$
|
12.36
|
||||||||||||
Cancelled/forfeited/expired
|
(115
|
)
|
$
|
20.43
|
||||||||||||
Outstanding at December 31, 2014
|
7,379
|
$
|
19.52
|
4.41
|
$
|
311,538
|
||||||||||
Exercisable at December 31, 2014
|
3,854
|
$
|
11.18
|
3.22
|
$
|
194,858
|
Number of
Shares
|
Weighted
Average
Grant Date
Fair Value
Per Share
|
|||||||
Non-vested at December 31, 2013
|
425
|
$
|
13.67
|
|||||
Granted
|
349
|
$
|
44.94
|
|||||
Vested
|
(117
|
)
|
$
|
13.74
|
||||
Cancelled/forfeited
|
(19
|
)
|
$
|
22.41
|
||||
Non-vested at December 31, 2014
|
638
|
$
|
30.52
|
Year Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Research, development and patents
|
$
|
25,843
|
$
|
9,673
|
$
|
7,246
|
||||||
General and administrative
|
5,540
|
1,745
|
1,325
|
|||||||||
Total
|
$
|
31,383
|
$
|
11,418
|
$
|
8,571
|
December 31,
|
|||||
2014
|
2013
|
2012
|
|||
Risk-free interest rate
|
1.7%
|
1.1%
|
1.1%
|
||
Dividend yield
|
0.0%
|
0.0%
|
0.0%
|
||
Volatility
|
50.1%
|
51.1%
|
50.7%
|
||
Expected life
|
4.7 years
|
5.1 years
|
5.1 years
|
December 31,
|
|||||
2014
|
2013
|
2012
|
|||
Risk-free interest rate
|
2.2%
|
2.2%
|
1.3%
|
||
Dividend yield
|
0.0%
|
0.0%
|
0.0%
|
||
Volatility
|
54.2%
|
52.7%
|
51.3%
|
||
Expected life
|
6.9 years
|
7.2 years
|
7.6 years
|
December 31,
|
|||||
2014
|
2013
|
2012
|
|||
Risk-free interest rate
|
0.1%
|
0.1%
|
0.1%
|
||
Dividend yield
|
0.0%
|
0.0%
|
0.0%
|
||
Volatility
|
60.1%
|
62.9%
|
44.5%
|
||
Expected life
|
6 months
|
6 months
|
6 months
|
Year Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
263
|
$
|
—
|
$
|
—
|
||||||
State
|
(4,295
|
)
|
2
|
2
|
||||||||
Total current
|
(4,032
|
)
|
2
|
2
|
||||||||
Deferred:
|
||||||||||||
Federal
|
(8,948
|
)
|
(5,082
|
)
|
(7,827
|
)
|
||||||
State
|
(2,427
|
)
|
(834
|
)
|
(1,284
|
)
|
||||||
Foreign
|
—
|
—
|
—
|
|||||||||
Total deferred
|
(11,375
|
)
|
(5,916
|
)
|
(9,111
|
)
|
||||||
Income Tax Benefit
|
$
|
(15,407
|
)
|
$
|
(5,914
|
)
|
$
|
(9,109
|
)
|
Year Ended December 31,
|
||||||||||||||||||||||||
2014
|
2013
|
2012
|
||||||||||||||||||||||
Pre-tax loss
|
$
|
(54,391
|
)
|
$
|
(66,558
|
)
|
$
|
(74,587
|
)
|
|||||||||||||||
Statutory rate
|
(19,035
|
)
|
35.0
|
%
|
(23,295
|
)
|
35.0
|
%
|
(26,105
|
)
|
35.0
|
%
|
||||||||||||
State income tax net of federal benefit
|
(3,125
|
)
|
5.7
|
%
|
(3,823
|
)
|
5.7
|
%
|
(4,284
|
)
|
5.7
|
%
|
||||||||||||
Net change in valuation allowance
|
29,547
|
(54.3
|
)%
|
28,850
|
(43.3
|
)%
|
25,269
|
(33.9
|
)%
|
|||||||||||||||
Gain on Investment in Regulus Therapeutics Inc.
|
—
|
—
|
—
|
—
|
(6,353
|
)
|
8.5
|
%
|
||||||||||||||||
Loss on debt extinguishment
|
2,406
|
(4.4
|
%)
|
—
|
—
|
—
|
—
|
|||||||||||||||||
Tax credits
|
(23,525
|
)
|
43.3
|
%
|
(15,839
|
)
|
23.8
|
%
|
806
|
(1.1
|
)%
|
|||||||||||||
California franchise tax refund
|
(2,795
|
)
|
5.1
|
%
|
—
|
—
|
—
|
—
|
||||||||||||||||
Deferred tax true-up
|
874
|
(1.6
|
)%
|
8,023
|
(12.1
|
)%
|
839
|
(1.1
|
)%
|
|||||||||||||||
Other
|
246
|
(0.5
|
)%
|
170
|
(0.2
|
)%
|
719
|
(0.9
|
)%
|
|||||||||||||||
Effective rate
|
$
|
(15,407
|
)
|
28.3
|
%
|
$
|
(5,914
|
)
|
8.9
|
%
|
$
|
(9,109
|
)
|
12.2
|
%
|
Year Ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Deferred Tax Assets:
|
||||||||
Net operating loss carryovers
|
$
|
231,654
|
$
|
260,462
|
||||
R&D credits
|
93,594
|
65,600
|
||||||
Capitalized R&D
|
3,088
|
2,736
|
||||||
Deferred revenue
|
58,836
|
28,555
|
||||||
Accrued restructuring
|
2,374
|
3,304
|
||||||
Other
|
3,762
|
7,107
|
||||||
Total deferred tax assets
|
$
|
393,308
|
$
|
367,764
|
||||
Deferred Tax Liabilities:
|
||||||||
Convertible debt
|
$
|
(73,733
|
)
|
$
|
(20,895
|
)
|
||
Intangible and capital assets
|
(3,641
|
)
|
(4,614
|
)
|
||||
Net deferred tax asset
|
$
|
315,934
|
$
|
342,255
|
||||
Valuation allowance
|
(315,934
|
)
|
(342,255
|
)
|
||||
Net deferreds
|
$
|
—
|
$
|
—
|
Year Ended December 31,
|
||||||||||||
2014
|
2013
|
2012
|
||||||||||
Beginning balance of unrecognized tax benefits
|
$
|
23,964
|
$
|
10,872
|
$
|
9,834
|
||||||
Decrease for prior period tax positions
|
(1,653
|
)
|
—
|
(174
|
)
|
|||||||
Increase for prior period tax positions
|
—
|
9,821
|
791
|
|||||||||
Increase for current period tax positions
|
5,054
|
3,271
|
421
|
|||||||||
Ending balance of unrecognized tax benefits
|
$
|
27,365
|
$
|
23,964
|
$
|
10,872
|
| $11.2 million related to the ISIS-AR-2.5Rx program, which we amortized through March 2014; |
| $7.6 million related to the option to license three drugs under a separate research program, which we are amortizing through December 2016; and |
| $0.7 million related to the ISIS-STAT3-2.5Rx program, which we amortized through February 2015. |
| AstraZeneca may terminate the agreement or any program at any time by providing written notice to us; |
| AstraZeneca may terminate the agreement or any program by providing written notice if we undergo a change of control with a third party; and |
| Either we or AstraZeneca may terminate the agreement or any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent. |
● | $3.8 million related to the Phase 2 studies in children and infants with SMA, which we amortized through July 2014; and |
● | $7.5 million related to an open-label extension study in children with SMA, which we are amortizing through March 2015. |
| Biogen Idec may terminate the agreement or any program at any time by providing written notice to us; |
| Under specific circumstances, if we are acquired by a third party with a product that directly competes with a compound being developed under the agreement, Biogen Idec may terminate the affected program by providing written notice to us; |
| If, within a specified period of time, any required clearance of a transaction contemplated by an agreement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, is not received, then either we or Biogen Idec may terminate the affected program by providing written notice to the other party; and |
| Either we or Biogen Idec may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
| Genzyme may terminate the license and co-development agreement at any time by providing written notice to Isis; |
| We may terminate the license and co-development agreement on a country-by-country basis or in its entirety upon Genzyme's uncured failure to use commercially reasonable efforts to develop and commercialize KYNAMRO in the United States, France, Germany, Italy, Spain, the United Kingdom, Japan and Canada; and |
| Either we or Genzyme may terminate the license and co-development agreement upon the other party's uncured failure to perform a material obligation under the agreement. |
| GSK may terminate any program, other than the ISIS-TTRRx program, at any time by providing written notice to us; |
| GSK may terminate the ISIS-TTRRx program by providing written notice to us after reviewing specific data from the Phase 3 study for the program; and |
| Either we or GSK may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement with respect to the affected program, or the entire agreement if the other party becomes insolvent. |
●
|
Janssen may terminate the agreement or any program at any time by providing written notice to us; and
|
●
|
Either we or Janssen may terminate any program by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement, or the entire agreement if the other party becomes insolvent.
|
| Roche may terminate the agreement at any time by providing written notice to us; |
| Either we or Roche may terminate the agreement by providing written notice to the other party upon the other party's uncured failure to perform a material obligation under the agreement or if the other party becomes insolvent; and |
| Either we or Roche may terminate the brain shuttle program if at least one development candidate is not designated under such program by a mutually agreed deadline. |
2014
|
2013
|
2012
|
||||||
Partner A
|
58%
|
25%
|
8%
|
|||||
Partner B
|
17%
|
24%
|
8%
|
|||||
Partner C
|
13%
|
20%
|
9%
|
|||||
Partner D
|
0%
|
22%
|
66%
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
2014 Quarters
|
||||||||||||||||
Revenue
|
$
|
28,161
|
$
|
57,076
|
$
|
44,063
|
$
|
84,861
|
||||||||
Operating expenses
|
57,828
|
63,726
|
65,556
|
74,781
|
||||||||||||
Income (loss) from operations
|
(29,667
|
)
|
(6,650
|
)
|
(21,493
|
)
|
10,080
|
|||||||||
Net income (loss)
|
$
|
(31,280
|
)
|
$
|
(12,081
|
)
|
$
|
(26,676
|
)
|
$
|
31,053
|
|||||
Basic net income (loss) per share (1)
|
$
|
(0.27
|
)
|
$
|
(0.10
|
)
|
$
|
(0.23
|
)
|
$
|
0.26
|
|||||
Diluted net income (loss) per share (1) (2)
|
$
|
(0.27
|
)
|
$
|
(0.10
|
)
|
$
|
(0.23
|
)
|
$
|
0.25
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
|||||||||||||
2013 Quarters
|
||||||||||||||||
Revenue
|
$
|
43,360
|
$
|
38,092
|
$
|
23,585
|
$
|
42,248
|
||||||||
Operating expenses
|
41,735
|
46,020
|
49,090
|
62,106
|
||||||||||||
Income (loss) from operations
|
1,625
|
(7,928
|
)
|
(25,505
|
)
|
(19,858
|
)
|
|||||||||
Net loss
|
$
|
(1,672
|
)
|
$
|
(10,126
|
)
|
$
|
(24,570
|
)
|
$
|
(24,276
|
)
|
||||
Basic and diluted net loss per share (1)
|
$
|
(0.02
|
)
|
$
|
(0.09
|
)
|
$
|
(0.21
|
)
|
$
|
(0.21
|
)
|
(1)
|
We computed net income (loss) per share independently for each of the quarters presented. Therefore, the sum of the quarterly net income (loss) per share will not necessarily equal the total for the year.
|
(2)
|
For the fourth quarter of 2014, we had net income and 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 the period. Diluted common equivalent shares for the three months ended December 31, 2014 consisted of:
|
| 4.2 million shares issuable upon exercise of stock options |
| 0.4 million shares issuable upon restricted stock award issuance; and |
| 0.009 million shares issuable related to our ESPP. |
Sincerely,
|
|
/s/ Richard Brudnick
|
|
Richard Brudnick
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Senior Vice President, Corporate Development
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BIOGEN IDEC MA INC.
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/s/ Frederick Lawson
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Frederick Lawson, Director
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BIOGEN IDEC INTERNATIONAL GMBH
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By:
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/s/ B. Lynne Parshall
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Name:
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B. Lynne Parshall
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Title:
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Chief Operating Officer
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Date:
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Cc:
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Isis Pharmaceuticals, Inc.
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2855 Gazelle Court
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Carlsbad, CA 92010
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Attention: General Counsel
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Fax: (760) 268-4922
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1.1 | Collaboration Overview. The intent of the Collaboration is: (i) for the Parties to conduct a Drug Discovery Program, including formulation activities, for each of the Collaboration Targets and to share their respective expertise to advance the goals set out in the Drug Discovery Plan for each such Drug Discovery Program; (ii) for Isis to generate at least one Development Candidate under each Drug Discovery Program; (iii) for JBI to have an Option to obtain an exclusive license to Develop and Commercialize Products under each Drug Discovery Program in the Field; and (iv) if JBI exercises the Option for a Drug Discovery Program, the Parties will advance the Development Candidate through IND-Enabling Toxicology Studies, and thereafter JBI will continue to Develop and Commercialize the applicable Development Candidate. 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, and therefore this Section 1.1 is qualified in its entirety by the more detailed provisions of this Agreement set forth below. |
1.2 | Collaboration Targets. |
1.2.1 | Maximum Number; Initial Collaboration Target. The maximum number of Collaboration Targets will be three, subject to Section 1.2.2. The Parties agree that the first Collaboration Target is [***]. JBI will designate the second Collaboration Target within [***] of the Effective Date, and designate the third Collaboration Target within [***] of the Effective Date (each, a “Target Nomination Period”), in each case in accordance with the mechanism set forth in Section 1.2.3 below. |
1.2.2 | Optional Fourth Collaboration Target. JBI will have the right, exercisable within [***] after the Effective Date, to designate a fourth Collaboration Target (i.e., to increase the maximum number of Collaboration Targets by one) in accordance with the mechanism set forth in Section 1.2.3 below upon delivery of written notice thereof to Isis and payment to Isis of the $[***] fee pursuant to Section 6.2, provided if JBI exercises such right, JBI must (i) designate such fourth Collaboration Target within [***] after the Effective Date and (ii) JBI may extend the Drug Discovery Term, if necessary, for the time required to execute under a corresponding Drug Discovery Plan for such fourth Collaboration Target under Section 1.5.2. Any [***] shall only become due if the [***], and any [***] shall be [***], and such [***] within [***] days of [***] following the date such Drug Discovery Plan is approved. |
1.2.3 | Collaboration Target Designation Mechanism. At any time during the applicable Target Nomination Period, JBI may propose a gene target implicated in Autoimmune Disease of the gastro-intestinal tract for designation as a Collaboration Target by providing written notice of such gene target to Isis. Isis may reject a gene target proposed by JBI if, at the time of such proposal: (i) Isis believes in good faith that [***] for such target; (ii) Isis does not have the [***]; (iii) granting a license to such target would [***] to a Third Party and JBI does not [***]; (iv) [***]; (v) the proposed target is the subject of [***] for which Isis in good faith expects to [***] (although Isis will negotiate in good faith terms for JBI to gain access such a program); or (vi) the target is associated with [***] (each of (i) through (vi), a “Dispositive Rejection Condition”). If a Dispositive Rejection Condition for the gene target proposed by JBI for designation as a Collaboration Target exists, Isis may reject the proposed gene target by providing a written notice to JBI by the [***] day following Isis’ receipt of JBI’s request to designate such gene target as a Collaboration Target, in which event JBI may propose a different gene target for designation as a Collaboration Target using the process described above in this Section 1.2.3. |
1.2.4 | Collaboration Target Designation. A gene target proposed by JBI for designation as a Collaboration Target in accordance with Section 1.2.3 above will become a “Collaboration Target” if (i) Isis provides JBI a written notice accepting such gene target as a Collaboration Target or (ii) by the [***] day following Isis’ receipt of JBI’s request to designate such gene target as a Collaboration Target, Isis has not delivered a written notice to JBI rejecting such gene target based on a Dispositive Rejection Condition. |
1.2.5 | Substitution of Gene Targets. At any time prior to completion of [***] activities for a Collaboration Target, JBI may propose, in writing, a substitute gene target to replace such Collaboration Target subject to the following conditions: |
i) | JBI may propose up to [***] ([***]) substitute gene targets, unless JBI designates a Fourth Collaboration Target whereby, in which case JBI may then propose up to [***] ([***]) substitute gene targets; |
ii) | JBI shall pay the Substitution Fee for each proposed substitute gene target within [***] ([***]) days of the date the substitute gene target becomes a Collaboration Target under Section 1.2.4; and |
iii) | The designation mechanism of Section 1.2.3 shall apply for proposed substitute gene targets. |
1.3 | Drug Discovery and Development Responsibilities. |
1.3.1 | Drug Discovery Programs. Subject to the terms and conditions of this Agreement, during the Drug Discovery Term, the Parties will jointly conduct collaborative research projects directed to the research, discovery and pre-clinical development of ASOs designed to bind to and modulate the RNA of each Collaboration Target (subject to the applicable maximum number of Collaboration Targets under Section 1.2) (each, a “Drug Discovery Program”). |
1.3.2 | Drug Discovery Plans and Development Plans. |
(a) | For each Drug Discovery Program, the Parties, via the JRC, will: (i) promptly (but no later than [***] days) following the designation of such Collaboration Target, approve a written plan describing the discovery, research, and optimization activities to be conducted by each Party to achieve [***] status and to identify a Development Candidate, plus any related research activities to support such activities; and (ii) from time to time thereafter, consider and approve appropriate amendments and modifications to such plan (each such plan, as so amended, a “Drug Discovery Plan”). By separate agreement the Parties have agreed upon the initial Drug Discovery Plan for the Drug Discovery Program directed to [***]. Upon JRC approval of the Drug Discovery Plan for any other Collaboration Target, or upon JRC approval of any amendment or modification to any Drug Discovery Plan, the JRC will attach such Drug Discovery Plan, or such amendment or modification (as applicable), to the minutes of the JRC meeting at which the same is approved. |
(b) | For each Drug Discovery Program with respect to which JBI exercises the Option, JBI will share with Isis, via the JRC (or directly with Isis if the JRC has dissolved) (i) promptly (but no later than [***] days) following such Option exercise, a written plan describing the proposed Development activities to be conducted by JBI with respect to the applicable Development Candidate; and (ii) from time to time thereafter consider and make appropriate amendments and modifications to such plan (each such plan, as so amended, a “Development Plan”). The Parties, at their respective expense, shall meet and confer regarding the activities proposed under the Development Plan and, to the extent there are activities required of Isis under the Development Plan, shall agree on such activities within a reasonable amount of time but not to exceed [***] days following presentation of the Development Plan to the JRC. The JRC will attach such Development Plan or any subsequent amendments or modifications thereto (as applicable) to the minutes of the JRC meeting at which the same is agreed and approved. Each Development Plan will include a description of the pre-clinical studies, and clinical studies (including study designs) to support the further Development of such Development Candidate up to completion of PoC, including [***]. If the Parties agree Isis will conduct any activities to support the further Development of the Development Candidate, the Development Plan will include the specific activities to be performed by Isis and [***] and [***] for completion of such activities. JBI will continue to develop and refine each Development Plan as needed and will submit it to the JRC (or the Parties if the JRC has dissolved) for review and comment at least [***]. When updating each Development Plan, JBI will [***]. |
1.3.3 | Allocation of Drug Discovery and Development Responsibilities. Each Drug Discovery Plan and Drug Development Plan will specify the Party(ies) responsible for performing each activity thereunder, and each Party will use Commercially Reasonable Efforts to complete such activities; provided, however, that unless otherwise mutually agreed by the Parties in writing each Party will use Commercially Reasonable Efforts to complete the following at each respective company’s expense unless otherwise indicated: |
(a) | Isis will be responsible for [***] under each Drug Discovery Plan; |
(b) | Except as set forth in Sections (c), (d) and (f) of this Section 1.3.3, Isis will be responsible for [***] and [***], in each case to the extent stated to be conducted by Isis in the applicable Drug Discovery Plan; |
(c) | JBI will be responsible for conducting the (i) [***], and (ii) the [***] including [***], in each case to achieve [***] status and produce the Development Candidate Data Package; |
(d) | JBI will be responsible for conducting the [***], in each case to achieve [***] status, produce the Development Candidate Data Package, and to support the further Development and Commercialization of Products. Isis will provide [***] if requested by JBI and JBI will pay Isis for such support at [***] and shall invoice JBI in accordance with Section 6.10; |
(e) | During the Research Term Isis will (i) [***] and (ii) [***], in each case to the extent stated to be conducted by Isis in the applicable Drug Discovery Plan; |
(f) | JBI will be responsible for conducting [***], including [***]; and |
(g) | JBI will be responsible for conducting [***] activities for each Development Candidate, including conducting [***], except Isis will be responsible for conducting the [***] of the Development Candidate for the first Drug Discovery Program with respect to which JBI exercises the Option (the “First Development Candidate”) as specified in the applicable Development Plan. |
1.3.4 | Conduct of Drug Discovery and Development Plan Activities. Each Party will perform the activities for which it is responsible under each Drug Discovery Plan and each Development Plan in good scientific manner and in compliance with, as applicable, GLP, GCP and/or GMP, and all Applicable Laws. |
1.3.5 | Disclosure of Results. At least [***] Business Days prior to each regularly scheduled meeting of the JRC, each Party will provide to the JRC a written report (which may take the form of PowerPoint slides) for each Drug Discovery Program (i) describing the Drug Discovery Program activities performed by such Party since the date of the preceding written report delivered by such Party for such Drug Discovery Program and the status of each such activity as of the date of such report and (ii) summarizing the data and results of the Drug Discovery Program activities performed by such Party under the applicable Plan. |
1.3.6 | Development Candidate; Supplemental Information. Isis will notify JBI promptly after designating a Development Candidate and, together with such notice, Isis will provide JBI with the applicable Development Candidate Data Package. During the [***] period beginning on Isis’ delivery of the Development Candidate Data Package to JBI, JBI may request in writing additional data or information regarding the Development Candidate of a type that is consistent with the information JBI examines when selecting JBI’s own development candidates for similar programs and that JBI in good faith determines is reasonably necessary to inform JBI’s decision of whether to exercise the Option for such Drug Discovery Program (the “Supplemental Information”); provided, however, that: (i) unless Isis possesses and can reasonably provide the requested data or information, JBI will be solely responsible for conducting or having conducted by Isis ([***]) the work necessary to generate the requested Supplemental Information and for all agreed upon fees and costs incurred by it or for its account in the performance of such work; (ii) Isis will not be required to conduct any such work unless Isis and JBI agree to a plan for such work and JBI agrees to pay for such work at [***] and for both (i) and (ii) shall invoice JBI in accordance with Section 6.10. |
1.3.7 | Records and Quality. Isis will maintain complete and accurate records of all work Isis conducts in the performance of a Drug Discovery Plan and Development Plan and all results, data, inventions and developments made in the performance of such work. Such records will be in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes. Upon reasonable prior written notice, Isis will provide JBI the right to inspect such records, and will provide copies of all requested records, to the extent reasonably required for the performance of JBI’s rights and obligations under this Agreement or for JBI’s reasonable quality control purposes. Isis will cooperate in good faith with respect to the conduct of any inspections by any Regulatory Authority of an Isis site or a contractor’s site and facilities if such inspection concerns work being performed under a Drug Discovery Plan or Development Plan. [***]. In the event that during an inspection of the Isis facilities, the facilities are found by a Regulatory Authority to be non-compliant with one or more GLP, GMP, GCP or current standards for pharmacovigilance practice compliance standards and such facilities are being used to conduct work under a Drug Discovery Plan or Development Plan, Isis will [***]. If requested by JBI, Isis will allow representatives of JBI to accompany Isis as part of any audit Isis conducts of [***] for which JBI exercises its Option. |
1.3.8 | Supply of API for Drug Discovery. On a Drug Discovery Program-by-Drug Discovery Program basis, Isis will supply (on its own or through a CMO), [***], (i) the non‑GMP API necessary for Isis to select up to [***] lead Compounds for each Collaboration Target to advance to [***], plus (ii) up to [***] of non‑GMP API for each of the lead Compounds selected for each Collaboration Target to support the formulation work under the Drug Discovery Plan prior to the designation of a Development Candidate. In addition, during the Drug Discovery Term, if requested by JBI, Isis will supply [***] up to [***] of ASO non‑GMP API Isis has in its stock as of the Effective Date to support formulation activities under the Drug Discovery Plans, the selection of such non‑GMP API to be in Isis’ sole discretion. If additional quantities of non‑GLP, non‑GMP API are necessary to support such Drug Discovery Program activities, then JBI will purchase such API from Isis [***] for such non‑GLP, non‑GMP API, where [***] and [***] and where [***]. All such API provided by Isis will be [***] specific and [***] specific ASOs. If JBI desires API for ASOs that are specific to [***] then Isis will use Commercially Reasonable Efforts to design and supply such ASOs and JBI will pay Isis for such ASOs [***] and shall invoice JBI in accordance with Section 6.10. |
1.3.9 | Supply of GLP Development Candidate and Clinical Supplies by Isis. For the first Development Candidate for which JBI exercises its Option Isis will (on its own or through a CMO) supply [***] of API, not to exceed [***], to support the [***] and [***], where Isis will supply the [***] of such [***], and will, [***] supply the remainder of such [***] in [***] increments (or in [***] if, as a result of previous [***], the remaining material is [***]) if and when requested by JBI. For each additional Development Candidate for which JBI exercises its Option, Isis, [***], will (on its own or through a CMO) supply in [***] a [***] of API, not to exceed [***], to support the [***] and [***]. Except for the [***] of API for the first Development Candidate for which JBI has exercised its Option, JBI will [***] for such API [***], of which [***] within [***] days of [***]. JBI will take possession of such requested API no later than [***] days following Isis’ release of such API. |
1.4 | Program Costs and Expenses. Except as expressly set forth below or elsewhere in this ARTICLE 1, each Party will be responsible for the costs and expenses incurred by it or on its behalf in the performance of the Drug Discovery Program activities for which such Party is responsible under the applicable Drug Discovery Plan and Development Plan. |
1.5 | Drug Discovery Term; Extension. |
1.5.1 | Drug Discovery Term. The term for the conduct of the Drug Discovery Programs will begin on the Effective Date and, subject to extension in accordance with Section 1.5.2 and/or earlier termination of this Agreement in accordance with ARTICLE 10 hereof, will end upon the earlier of (i) such time as the Options with respect to all Drug Discovery Programs either have been exercised by JBI or have expired unexercised, and (ii) the [***] anniversary of the Effective Date (the “Drug Discovery Term”), provided however, that if Isis has delivered a Development Candidate Data Package to JBI for a Drug Discovery Program prior to the [***] anniversary of the Effective Date but the Option Period for such Drug Discovery Program has not expired as of the [***] anniversary of the Effective Date, the Drug Discovery Term will extend for that Drug Discovery Program only, until the earlier of (a) JBI’s exercise of such Option and (b) expiration of such Option Period. Such extension shall not be subject to the extension fee as defined in Section 1.5.2 below. |
1.5.2 | Extension of Drug Discovery Term. JBI will have the right, in its discretion, to extend the Drug Discovery Term (i) for an additional [***] period if such extension applies to more than just the [***] Collaboration Target (not to exceed [***]), or (ii) for one additional [***] period if such extension only applies to the [***] Collaboration Target (not to exceed [***]), in each case by delivering a written notice of extension to Isis and paying Isis an extension payment of $[***] per extension no later than [***] days prior to the end of the then-applicable Drug Discovery Term. |
1.5.3 | Consequences of End of Drug Discovery Term. From and after the end of the Drug Discovery Term (including any extensions thereof), (i) Isis will have no obligation to perform any further activities for any Drug Discovery Program; (ii) any Drug Discovery Programs that have not reached the Development Candidate stage will no longer be Drug Discovery Programs and the applicable gene targets associated therewith will no longer be Collaboration Targets; (iii) Isis’ obligations and JBI’s rights under this Agreement with respect to such gene target and any ASOs targeting such gene target will then terminate, and Isis will be free to Develop and Commercialize on its own or with a Third Party such gene target and any Compounds targeting such gene target; and (iv) Isis will own any data generated under the Drug Discovery Program for such gene target and any Compounds targeting such gene target. For clarity, except to the extent explicitly set forth in the foregoing, the expiration of the Drug Discovery Term will not affect either Party’s rights or obligations under this Agreement with respect to any Drug Discovery Program for which JBI exercised its Option before the end of the Drug Discovery Term, including, but not limited to, the Parties’ respective rights and obligations under ARTICLE 2, ARTICLE 4, ARTICLE 5 and ARTICLE 6 hereof. |
1.5.4 | Carryover Development Candidates. If, despite Isis’ Commercially Reasonable Efforts, by the end of the Drug Discovery Term, Isis has not designated a Development Candidate for a particular Drug Discovery Program, then if at any time during the [***] following the end of the Drug Discovery Term Isis’ RMC designates an ASO discovered by Isis that is designed to bind to the RNA that encodes the Collaboration Target that was the subject of such Drug Discovery Program as a development candidate ready to start IND-Enabling Toxicology Studies (such ASO, a “Carryover Development Candidate”), then, Isis will notify JBI and will provide JBI with the data package presented to Isis’ RMC to approve such Carryover Development Candidate. JBI will then have [***] days from its receipt of such package to elect to enter into an agreement (or amendment to this Agreement) for an option and license under the same terms as set forth in this Agreement, including the payment of the fee for [***] if not already paid by JBI (except that no additional option fee under Section 6.1 will be due). If, within [***] days after JBI’s receipt of such notice from Isis, JBI provides Isis with written notice that it accepts such offer from Isis for such Carryover Development Candidate, the Parties will execute an agreement (or amendment to this Agreement) regarding such Carryover Development Candidate containing the same terms as those described herein. If JBI either notifies Isis that it declines the offer for such Carryover Development Candidate, or JBI does not provide Isis with written notice during such [***]-day period that JBI accepts such offer from Isis for such Carryover Development Candidate, then Isis will be free to research, develop, manufacture and commercialize such Carryover Development Candidate (and/or any other ASO designed to bind to the RNA that encodes the gene target targeted by such Carryover Development Candidate) by itself or with or for a Third Party. |
1.6 | Program Management. |
1.6.1 | JRC. The Parties will establish a joint research committee (the “JRC”) to provide advice and make recommendations on the conduct of activities under each Drug Discovery Program. The JRC will consist of three representatives appointed by Isis and three representatives appointed by JBI. Each JRC member will be a senior scientific staff leader or have other experience and expertise appropriate for the stage of development of the Drug Discovery Programs. Each Party will designate one of its two representatives who is empowered by such Party to make decisions related to the performance of such Party’s obligations under this Agreement to act as the co-chair of the JRC. The co-chairs will be responsible for overseeing the activities of the JRC consistent with the responsibilities set forth in Section 1.6.2. Schedule 1.6.1 sets forth certain JRC governance matters agreed to as of the Effective Date. The JRC will determine the JRC operating procedures at its first meeting, including the JRC’s policies for replacement of JRC members, policies for participation by additional representatives or consultants invited to attend JRC meetings, and the location of meetings, which will be codified in the written minutes of the first JRC meeting. Each Party will be responsible for the costs and expenses of its own employees or consultants attending JRC meetings. |
1.6.2 | Role of the JRC. Without limiting any of the foregoing, subject to Section 1.6.3, the JRC will perform the following functions, some or all of which may be addressed directly at any given JRC meeting: |
(a) | maintain the list of Collaboration Targets, as such list may be updated from time to time in accordance with this Agreement, and attach such list to the minutes of the next JRC meeting following the designation of any additional Collaboration Target; |
(b) | review and approve the Drug Discovery Plan for each Program; |
(c) | review the overall progress of the Parties’ efforts to achieve [***] with respect to each Drug Discovery Program; |
(d) | review the overall progress of Isis’ efforts to discover, identify, optimize and select the Development Candidate for each Drug Discovery Program; |
(e) | review the overall progress of the Parties’ efforts with respect to each the Drug Discovery Plan; |
(f) | amend each Drug Discovery Plan for each Drug Discovery Program, |
(g) | such other review and advisory responsibilities as may be assigned to the JRC pursuant to this Agreement. |
1.6.3 | Decision Making. Each Party will give due consideration to, and consider in good faith, the recommendations and advice of the JRC regarding the conduct of each Drug Discovery Program. Subject to Section 1.3.1 and Section 1.3.5, (i) Isis will have the final decision-making authority regarding [***] and whether to accept and how to implement the JRC’s recommendations, and (ii) JBI will have the final decision-making authority regarding [***]; provided that, in each case, such decisions and conduct are in accordance with the applicable Drug Discovery Plan and do not increase the cost of the other Party. Except as otherwise permitted by Section 1.3.2, Section 1.3.5 and, the JRC will have no decision making authority and will act as a forum for sharing information about the activities conducted by the Parties hereunder and as an advisory body, in each case only on the matters described in, and to the extent set forth in, this Agreement. |
1.6.4 | Term of the JRC. Isis’ obligation to participate in the JRC, or any of its subcommittees, will terminate upon JBI’s exercise (or expiration) of the Option for the last Drug Discovery Program. |
1.6.5 | Alliance Managers. Each Party will 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 JRC and performing the activities listed in Schedule 1.6.5. |
1.6.6 | Information Sharing Committee. Formation and Purpose: Within [***] days after the [***], the Parties will establish an Information Sharing Committee (the “ISC”) to review the Development of Product. The ISC will review and discuss the Development activities to be undertaken with respect to the Product being Developed by JBI and will provide a forum for Isis to provide input into such Development activities. Specific Responsibilities of the ISC: As part of its overall responsibilities, the ISC will: review the progress of the Development Plan; review any changes to the Development Plan; actively seek Isis input and consider all input in good faith; and perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties |
1.6.7 | ISC Meetings: The ISC will meet at least annually or on an ad hoc basis. The first meeting of the ISC will be held as soon as reasonably practicable, but in no event later than [***] days after formation. Meetings will be held at such place or places as are mutually agreed or by teleconference or videoconference. The ISC meetings will be chaired by JBI. The chairperson of the ISC will be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting of the ISC, and preparing and issuing minutes of each meeting within [***] days thereafter; provided however, that an ISC chairperson will call a meeting promptly upon the request by Isis to convene an ISC meeting. The minutes will not be finalized until both Parties review and approve them. Each Party will bear its own costs, including travel expenses, incurred by its ISC members or by any additional non-member participants of a Party in connection with their attendance at ISC meetings and other activities related to any ISC. Notwithstanding Section 1.6.6 and the foregoing provisions of this Section 1.6.7, with respect to Isis, the formation of the ISC and participation in the ISC are rights but not obligations that Isis may cancel for any Product at any time. |
1.6.8 | Reduction of ISC Reporting. If JBI declines to pursue any Follow-On Compounds targeting a particular Collaboration Target and Isis pursues a Follow-On Compound for such Collaboration Target, the ISC shall cease all ISC reporting activities relating to Products that modulate such Collaboration Target. |
1.7 | Materials Transfer. To facilitate the activities under the Drug Discovery Programs, either Party may provide certain materials for use by the other Party. All such materials will be used by the receiving Party in accordance with terms of this Agreement solely for purposes of exercising its rights and performing its obligations under this Agreement, and the receiving Party will not transfer such materials to any Third Party except with the written consent of the supplying Party. Except as expressly set forth herein, THE MATERIALS ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY. |
2.1 | Exclusivity; Right of First Negotiation. |
2.1.1 | Exclusivity Covenants. |
(a) | The Parties’ Exclusivity Covenants for Collaboration Targets During the Option Period. On a Collaboration Target-by-Collaboration Target basis, each Party agrees that, except in the performance of its obligations under this Agreement and except as set forth in Section 2.1.2, Section 2.1.3, Section 10.3.2 or Section 10.3.4, it will not work independently or for or with any of its Affiliates or any Third Party (including the grant of any license to any Third Party) with respect to discovery, research, development, manufacture or commercialization of an ASO that is designed to bind to the RNA that encodes such Collaboration Target in the Field from the Effective Date through the expiration of the applicable Option Period or the earlier termination of the applicable Option. |
(b) | Isis’ Exclusivity Covenant After Option Exercise. On a Collaboration Target-by-Collaboration Target basis, except as set forth in Section 2.1.2, Section 2.1.3, Section 10.3.2 or Section 10.3.4, if JBI exercises the Option in accordance with this Agreement, then Isis will not work independently or for or with any of its Affiliates or any Third Party (including the grant of any license to any Third Party) with respect to: |
(i) | discovery, research or development of an ASO that is designed to bind to the RNA that encodes such Collaboration Target in the Field until [***] for a Product targeting such Collaboration Target; and |
(ii) | on a country-by-country basis, commercializing an ASO that is designed to bind to the RNA that encodes such Collaboration Target in the Field until [***] with respect to such Collaboration Target. |
(c) | JBI’s Exclusivity Covenant After Option Exercise. After Option exercise, JBI’s exclusivity obligations under Section 2.1.1(a) will be extended and will continue for so long as and to the extent of Isis’ exclusivity obligations under Section 2.1.1(b), and except as otherwise described in Section 2.1.3. |
2.1.2 | Right of First Negotiation for Follow-On Compounds. On a Drug Discovery Program-by-Drug Discovery Program basis, during the period commencing on the date JBI exercises the applicable Option in accordance with this Agreement and ending upon [***] (such period, the “ROFN Period”), Isis hereby grants to JBI a right of first negotiation to develop and commercialize any Follow-On Compound developed by or on behalf of Isis, which right of first negotiation is granted on the following terms and conditions: |
(a) | At any time prior to the [***] following the [***] for the applicable Product, JBI may provide Isis with a non-binding, good faith written notice expressing JBI’s desire for Isis to identify a Follow-On Compound (a “Follow-On Interest Notice”). If (i) JBI does not provide Isis with a Follow-On Interest Notice before the [***] following the [***] for the applicable Product, or (ii) JBI does timely provide Isis with a Follow-On Interest Notice but the Parties do not agree on a [***] related to such Follow-On Compound by 5:00 pm (Eastern Time) on the [***] following the [***] for the applicable Product, then, Isis may work independently or with any of its Affiliates or any Third Party with respect to the discovery, research, development and manufacture of a Follow-On Compound; provided, however, that during [***], Isis will not grant any license (or an option to obtain such a license) under any intellectual property owned, controlled or licensed by Isis to make, use or sell any Follow-On Compound (a “Follow-On Agreement”) unless and until Isis provides a written notice to JBI (a “Follow-On Negotiation Notice”), which notice [***]. Isis will not enter into such a Follow-On Agreement with any Third Party until the earlier to occur of: (A) [***] (each, a “ROFN Termination Event”). |
(b) | Following a ROFN Termination Event, subject to JBI’s right under Section 1.6.8 to stop sharing information, Isis will have no further obligation to negotiate with JBI or its Affiliates with respect to such Follow-On Agreement, and Isis will be free to negotiate and enter an agreement with a Third Party with respect to a Follow-On Agreement. Any Follow-On Agreement entered into by Isis with a Third Party in accordance with this Section 2.1.2(b) will be a Permitted License to the extent related to the Follow-On Compound. |
2.1.3 | Limitations and Exceptions to Exclusivity Covenants. Notwithstanding anything to the contrary in this Agreement, each Party’s practice of the following will not violate Section 2.1.1 and/or Section 2.1.2: |
(a) | Any activities conducted pursuant to the Prior Agreements as in effect on the Effective Date; provided, [***]; |
(b) | The granting by Isis of, or performance of obligations under, Permitted Licenses; |
(c) | Up to and including the date of the [one year anniversary following the Option Period for a designated Collaboration Target, JBI may acquire, by license or otherwise, any Third Party asset that modulates a Collaboration Target so long as such Third Party asset has at least entered a Phase II Clinical Trial at the time of such acquisition; and |
(d) | After the date of the [***] for a designated Collaboration Target, JBI may [***], any Third Party [***] so long as such Third Party [***]. |
2.2 | Effect of Exclusivity on Indications. The Compounds are designed to bind to the RNA that encodes a Collaboration Target in the Field with the intent of treating Autoimmune Diseases of the gut. Isis and JBI are subject to exclusivity obligations under Section 2.1; however, the Parties acknowledge and agree that each Party (on its own or with a Third Party) may continue to discover, research, develop, manufacture and commercialize products that are designed to bind to the RNA that encodes any gene that is not a Collaboration Target for any indication, even if such products are designed to treat Autoimmune Disease. |
3.1 | Option Grant and Option Deadline. On a Drug Discovery Program-by-Drug Discovery Program basis, Isis hereby grants to JBI with respect to each Drug Discovery Program an exclusive option to obtain the license set forth in Section 4.1.1 with respect to such Drug Discovery Program (each an “Option”). JBI (i) shall provide Isis with written notice of its intent to exercise its Option within [***] days of receipt of the Development Candidate package for the application Drug Discovery Program and (ii) JBI shall pay the Option Fee described in Section 6.4 no later than the [***] day following JBI’s notice of its intent to exercise its Option (the “Option Deadline”). |
3.2 | Effect of Option Exercise or Expiration. If, by the Option Deadline, JBI or its designated Affiliate (i) notifies Isis in writing that it wishes to exercise the applicable Option, and (ii) pays to Isis the license fee set forth in Section 6.4, Isis will, and hereby does, grant to JBI or its designated Affiliate the license set forth in Section 4.1.1. If, by the applicable Option Deadline, JBI or its designated Affiliate has not both (y) provided Isis a written notice stating that JBI is exercising its Option, and (z) paid Isis the license fee in accordance with Section 6.4, then JBI’s Option for the applicable Drug Discovery Program will expire. |
4.1 | License Grants to JBI. |
4.1.1 | Development and Commercialization License. Subject to the terms and conditions of this Agreement, on a Drug Discovery Program-by-Drug Discovery Program basis, effective upon JBI’s exercise of the Option for a particular Drug Discovery Program in accordance with this Agreement, Isis grants to JBI (i) a worldwide, exclusive, royalty-bearing, sublicensable (in accordance with Section 4.1.2 below) license under the Isis Product Specific Patents to Research, Develop, Manufacture, have Manufactured (in accordance with Section 4.1.2 below), register, market and Commercialize Products under such Drug Discovery Program in the Field, and (ii) a worldwide, exclusive, royalty-bearing, sublicensable (in accordance with Section 4.1.2 below) license under the Licensed Technology other than the Isis Product Specific Patents to Research, Develop, Manufacture, have Manufactured (in accordance with Section 4.1.2 below), register, market and Commercialize Products under such Drug Discovery Program in the Field. The grant described in subsection (ii) in no way limits Isis’ ability to grant additional licenses to Third Parties under the Licensed Technology, other than the Isis Product Specific Patents, to Research, Develop, Manufacture, have Manufactured register, market and Commercialize Third Party products that are not Product(s). |
4.1.2 | Sublicense Rights; CMO Licenses. |
(a) | Subject to the terms and conditions of this Agreement, JBI will have the right to grant sublicenses under the license granted under Section 4.1.1 above: |
(i) | under the Isis Core Technology Patents, Isis Product-Specific Patents, Isis Formulation Patents and Isis Know-How, to an Affiliate of JBI or a Third Party; and |
(ii) | under the Isis Manufacturing and Analytical Patents and Isis Manufacturing and Analytical Know-How, solely to (y) [***] or (z) [***]; |
(b) | In connection with [***], or supply API and Finished Drug Product for Commercialization, Isis will, at JBI’s option, either (1) [***], which Isis agrees it will [***], or, (2) permit JBI to [***]. Each such manufacturing agreement between JBI and [***] will contain provisions permitting Isis to elect to have such agreements assigned to Isis to the extent such agreement relates to the applicable Clinical Supplies or Finished Drug Product in the event of a termination of this Agreement with respect to a particular Drug Discovery Program. JBI will provide Isis with a true and complete copy of any manufacturing agreement entered into with [***] within [***] days after the execution thereof. Notwithstanding the foregoing, if Isis fails to comply with the terms of this Section 4.1.2(b) and does not cure such failure within [***] days after written notice from JBI specifying the details of any such failure, JBI will have the right to grant a sublicense under the Isis Manufacturing and Analytical Patents and Isis Manufacturing and Analytical Know-How to [***]. |
(c) | Effect of Termination on Sublicenses. If this Agreement terminates for any reason, any Sublicensee will, from the effective date of such termination, automatically become a direct licensee of Isis with respect to the rights sublicensed to the Sublicensee by JBI; so long as (i) such Sublicensee is not in breach of its sublicense agreement, (ii) such Sublicensee agrees in writing to comply with all of the terms of this Agreement to the extent applicable to the rights originally sublicensed to it by JBI, and (iii) such Sublicensee agrees to pay directly to Isis such Sublicensee’s payments under this Agreement to the extent applicable to the rights sublicensed to it by JBI. JBI agrees that it will confirm clause (i) of the foregoing in writing at the request and for the benefit of Isis and if requested, the Sublicensee. |
4.1.3 | No Implied Licenses. All rights in and to Licensed Technology not expressly licensed to JBI under this Agreement are hereby retained by Isis or its Affiliates. All rights in and to JBI Technology not expressly licensed or assigned to Isis under this Agreement, are hereby retained by JBI or its Affiliates. Except as expressly provided in this Agreement, no Party will be deemed by estoppel or implication to have granted the other Party any license or other right with respect to any intellectual property. |
4.1.4 | License Conditions; Limitations. Subject to Section 6.9, any license granted under Section 4.1.1 and the sublicense rights under Section 4.1.2 are subject to and limited by (i) any applicable Third Party Obligations, (ii) the Prior Agreements, and (iii) the Isis In-License Agreements, in each case to the extent the provisions of such obligations or agreements are specifically disclosed to JBI in writing (or via electronic data room) prior to JBI’s exercise of the applicable Option. Isis will disclose to JBI any Third Party Obligations Isis believes apply to applicable Products each time [***], and JBI will have the right to elect to exclude any Third Party Patent Rights and Know-How to which such Third Party Obligations apply by providing Isis written notice prior to Option exercise. If, prior to an Option exercise, JBI provides Isis with such a written notice to exclude certain Third Party Patent Rights and Know-How, such Third Party Patent Rights and Know-How will not be included in the Licensed Technology licensed with respect to the applicable Products under this Agreement. If JBI does not provide Isis with such a written notice to exclude such Third Party Patent Rights and Know-How prior to an Option exercise, such Third Party Patent Rights and Know-How (and any Third Party Obligations to the extent applicable to Products) will be included in the Licensed Technology licensed with respect to the applicable Products under this Agreement. |
4.1.5 | Trademarks for Products. JBI or its designated Affiliate will be solely responsible for developing, selecting, searching, registering and maintaining, and, subject to Section 10.3, will be the exclusive owner of, all trademarks, trade dress, logos, slogans, designs, copyrights and domain names used on or in connection with Products. |
4.2 | Assignment of Isis Product-Specific Patents; Grant Back to Isis. |
4.2.1 | After JBI has (a) exercised its Option for a particular Product and obtained the license under Section 4.1.1, and (b) [***], then following review and consideration by each Party’s patent representatives, Isis will assign to JBI or one or more of its designated Affiliates, Isis’ ownership interest in (i) all Isis Product-Specific Patents related to such Product in the Field that are owned by Isis (whether solely owned or jointly owned with one or more Third Parties), and (ii) any Jointly-Owned Program Patents Covering such Product, and thereafter, subject to Section 7.2.4, Isis will have no further right to control any aspect of the Prosecution and Maintenance of such Isis Product Specific Patents and such Jointly-Owned Program Patents. The assignment of Patent Rights assigned in this Section 4.2.1 will occur within 30 days of JBI paying Isis the milestone for Completion of a PoC for the applicable Product. |
4.2.2 | JBI grants to Isis a fully-paid, royalty-free, worldwide, exclusive, sublicensable license under any Isis Product Specific Patents and Jointly-Owned Program Patents assigned to JBI under Section 4.2.1, (i) [***], (ii) to [***] and (iii) to [***] to the extent permitted by this Agreement. |
4.3 | Subcontracting. Subject to the terms of this Section 4.3, 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. |
4.4 | Technology Transfer after Option Exercise. On a Drug Discovery Program-by-Drug Discovery Program basis, Isis will promptly, but no later than [***] days after JBI exercises its Option for such Drug Discovery Program hereunder, deliver to JBI or one or more designated Affiliates: |
4.4.1 | Isis Know-How. All Isis Know-How in Isis’ possession that has not previously been provided hereunder, for use solely in accordance with the licenses granted under Section 4.1.1 and Section 10.3.2, including transferring the IND for the applicable Development Candidate to JBI together with all regulatory documentation (including drafts) related to the applicable Development Candidate. |
4.4.2 | Isis Manufacturing and Analytical Know-How. Solely for use by JBI, its Affiliates or a Third Party acting on JBI’s behalf to Manufacture API in JBI’s own or an Affiliate’s manufacturing facility, all Isis Manufacturing and Analytical Know-How in Isis’ Control relating to applicable Products, which is necessary for the exercise by JBI, its Affiliates or a Third Party of the Manufacturing rights granted under Section 4.1.1, in each case solely to Manufacture API, Clinical Supplies or Finished Drug Product in accordance with the terms of this Agreement. |
4.4.3 | Isis Contribution of FTEs for Know-How Transfer. Isis will provide up to [***] hours of its time [***] to JBI for each Drug Discovery Program to transfer such Isis Know-How and Manufacturing and Analytical Know-How under Section 4.4.1 and Section 4.4.2. Thereafter, if requested by JBI, Isis will provide JBI with a reasonable level of assistance in connection with such transfer, which JBI will reimburse Isis for its time incurred in providing such assistance at [***] incurred by Isis in providing such assistance and shall invoice JBI in accordance with Section 6.10. |
4.4.4 | API and Product. Upon JBI’s written request, Isis will sell to JBI any bulk API in Isis’ possession at the time of Option exercise, at a price equal to [***]. |
4.5 | Cross-Licenses Under Program Technology. |
4.5.1 | Enabling Patent Licenses from JBI to Isis. Subject to the terms and conditions of this Agreement (including Isis’ exclusivity obligations under Section 2.1.1), JBI hereby grants Isis a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicenseable license under any JBI Program Technology to research, develop, manufacture, have manufactured and commercialize [***]. |
4.5.2 | Enabling Patent Licenses from Isis to JBI. Subject to the terms and conditions of this Agreement (including JBI’s exclusivity obligations under Section 2.1.1), Isis hereby grants JBI a fully-paid, royalty-free, irrevocable, worldwide, non-exclusive, sublicenseable license under any Isis Program Technology to research, develop, manufacture, have manufactured and commercialize [***]. |
5.1 | JBI Diligence. Following an Option exercise, JBI will be solely responsible for all Development, Manufacturing and Commercialization activities, and for all costs and expenses associated therewith, with respect to the Development, Manufacture and Commercialization of applicable Products; and JBI will use Commercially Reasonable Efforts to Develop, Manufacture and Commercialize in each and every Major Market at least one Product from each Drug Discovery Program for which an Option has been exercised. |
5.2 | Specific Performance Milestone Events. Without limiting any of the foregoing, following an Option exercise, JBI will use Commercially Reasonable Efforts to achieve the specific performance milestone events set forth in Schedule 5.2 (“Specific Performance Milestone Events”) for a Product on the timeline set forth in Schedule 5.2; provided, however, if [***]. |
5.3 | Integrated Development Plan. On a Product-by-Product basis, JBI will prepare a Development and global integrated Development plan outlining key aspects of the Development of each Product through Approval (each, an “Integrated Development Plan” or “IDP”). JBI will prepare the IDP no later than [***] after [***], and the IDP will contain information consistent with JBI’s Development plans for its similar products at similar stages of development. Once JBI has prepared such plans, JBI will update the IDP consistent with JBI’s standard practice and provide such updates to Isis annually via the ISC. |
5.4 | Regulatory. |
5.4.1 | Ownership of and Assistance with Regulatory Filings. |
(a) | For each Product for which JBI has exercised its Option, JBI will be the sponsor and will be responsible for filing the IND. Once a Development Candidate is designated under this Agreement, the JRC will work to establish a plan for IND filing support and activities, which plan will include a timeline and responsibilities for filing the IND. |
(b) | [***] begin to prepare a plan, for drafting and reviewing the sections of the NDA and MAA for the applicable Product (including establishing responsibilities for drafting and reviewing common technical document (“CTD”) modules, authorship, plan activity timelines and associated costs and expenses). The Parties will act in good faith and mutually agree upon each such plan, provided, however, that, after exercising an Option for the applicable Drug Discovery Program, JBI will have final decision making authority with respect to the contents of such plan that do not require Isis’ participation. |
(c) | [***] regulatory filings for the Product, [***] and JBI, including [***] plus any reasonable [***] providing such assistance and will specify that JBI will [***] designated responsibilities in connection with the applicable regulatory filing [***] in accordance with Section [***]; provided there will be no additional [***] conducted under a Development Plan where [***]. |
5.4.2 | [***] Meetings with FDA. For each Product, JBI shall [***] meetings with the FDA to discuss (i) pre-IND filing matters; (ii) end of Phase II matters; or (iii) pre-NDA filing matters. [***]. |
5.4.3 | [***] Regulatory Meetings. JBI will [***] of any meetings JBI has or plans to have with a Regulatory Authority regarding pre-approval or Approval matters for a Product or that directly relate to [***], and may allow [***]. In addition, JBI will provide Isis with as much advance written notice as practicable of any [***] Regulatory Authorities, and JBI [***]. |
5.4.4 | Regulatory Communications. [***], JBI [***] provide Isis with copies of documents and communications submitted to, or received from, Regulatory Authorities [***] that materially impact the Development or Commercialization of Products for [***], and JBI will [***] such documents and communications. |
5.4.5 | Class Generic Claims. To the extent JBI intends to make any claims in a Product label or regulatory filing that are class generic to ASOs, JBI will provide such claims and regulatory filings to Isis in advance and will consider in good faith any proposals and comments made by Isis. |
5.4.6 | End of Obligations if [***]. JBI’s obligations under Section 5.4.2, Section 5.4.3, and Section 5.4.4 will cease with respect to a particular Product if [***]. |
5.5 | Applicable Laws. JBI will use commercially reasonable efforts perform its activities pursuant to this Agreement in compliance with GLP, GCP and 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. |
5.6 | Isis’ Antisense Safety Database. |
(a) | JBI will provide Isis with copies of [***] and the [***] within [***] days following the date such information is [***], as applicable. JBI will [***]. All such information disclosed by JBI to Isis will be JBI Confidential Information. JBI will deliver all such information to Isis Pharmaceuticals, Inc., 2855 Gazelle Court, Carlsbad, California 92010, Attention: Chief Medical Officer (or to such other address/contact designated in writing by Isis). JBI will also cause its Affiliates and Sublicensees to comply with this Section 5.6(a). |
(b) | During the term of this Agreement, if requested by JBI, JBI and Isis will [***]. |
6.1 | Option Fee. In partial consideration for JBI’s Options hereunder, within five Business Days following the Effective Date, JBI will pay Isis an Option fee equal to $10,000,000 for each of the three Drug Discovery Programs for an aggregate payment of $30,000,000. |
6.2 | Fourth Target Fee. If JBI elects to designate a fourth target, JBI will pay Isis $[***] within [***] days of JBI’s written notice to Isis designating such target. |
6.3 | Milestone Payments for Achievement of Pre-Licensing Milestone Event. As further consideration for JBI’s Options and Licenses hereunder, on a Collaboration Target-by-Collaboration Target basis, JBI will pay to Isis a milestone payment of $[***] for achievement of [***] for such Collaboration Target (each, a “Pre-Licensing Milestone Event”). Isis shall provide JBI with written notice of achievement of [***] and JBI shall make such payment within [***] days of receipt of such notification. With respect to [***], the Parties agree that [***] is deemed to have been achieved so that Isis may [***], and JBI will make the associated payment under this Section 6.3 within [***] days of the Effective Date; provided such payment does not limit the Parties’ obligation to conduct the activities set forth in the Drug Discovery Plan for [***]. |
6.4 | License Fee. On an Option-by-Option basis, together with JBI’s written notice to Isis stating that JBI is exercising the Option with respect to the Drug Discovery Program for a Collaboration Target in accordance with this Agreement, JBI will pay to Isis the applicable one-time license fee set forth in Table 1 below (each, a “License Fee”): |
Table 1
|
|
Option
|
License Fee
|
[***]
|
$[***]
|
[***]
|
$[***]
|
6.5 | Milestone Payments for Achievement of Post-Licensing Milestone Events. On a Drug Discovery Program-by-Drug Discovery Program basis, JBI will pay to Isis the applicable milestone payment set forth in Table 2 below for the first achievement of the corresponding milestone event in Table 2 (each, a “Post-Licensing Milestone Event”) by the first Product against such Collaboration Target to achieve such Post-Licensing Milestone Event: |
Table 2
|
|
Post-Licensing Milestone Event
|
Milestone Event Payment
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]*
|
$[***]*
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
[***]
|
$[***]
|
6.6 | Limitations on Milestone Payments; Exceptions; Notice. |
6.6.1 | Each milestone payment set forth in Table 2 above will be paid only once per Drug Discovery Program upon the first achievement of the applicable Post-Licensing Milestone Event, regardless of how many Products under a Drug Discovery Program achieve such Milestone Event. |
6.6.2 | If a particular Post-Licensing Milestone Event is not achieved because Development activities transpired such that achievement of such earlier Milestone Event was unnecessary or did not otherwise occur, then upon achievement of the next Post-Licensing Milestone Event to be achieved, the Post-Licensing Milestone Event payment applicable to such earlier Post-Licensing Milestone Event will also be due. For example, if a Party proceeds directly to [***] without achieving the [***] then upon achieving the [***] Milestone Event, both the [***] and [***] Milestone Event payments are due. |
6.6.3 | Each time a Post-Licensing Milestone Event is achieved under this ARTICLE 6, JBI will send Isis, or Isis will send JBI, as the case may be, a written notice thereof promptly (but no later than [***]) following the date of achievement of such Milestone Event, and such payment will be due within [***] of the date such notice was delivered. |
6.7 | Net Sales Milestone Payments. On a Drug Discovery Program-by-Drug Discovery Program basis, for the first Calendar Year in which Annual worldwide Net Sales of the first Product progressed from a Drug Discovery Program that achieves or exceeds each of the levels of Annual worldwide Net Sales set forth in Table 3 below (each, a “Sales Milestone Event”), JBI will pay Isis the corresponding one-time Sales Milestone Event payment within [***] days of the end of the Calendar Quarter during such Calendar Year in which such Sales Milestone Event occurs. \ |
Table 3
|
|
Annual Worldwide Net Sales
|
Sales Milestone Event Payment
|
≥ $[***]
|
$[***]
|
≥ $[***]
|
$[***]
|
≥ $[***]
|
$[***]
|
6.8 | Royalty Payments to Isis. |
6.8.1 | JBI Royalty. As partial consideration for the rights granted to JBI hereunder, subject to the provisions of this Section 6.8.1 and Section 6.8.2, JBI will pay to Isis royalties on a Product-by-Product basis, on Annual worldwide Net Sales of Products included in the applicable Drug Discovery Program sold by JBI, its Affiliates or Sublicensees, on a country-by-country basis, in each case in the amounts as follows in Table 4 below (the “JBI Royalty”): |
Table 4
|
||
Royalty
Tier
|
Annual Worldwide Net Sales of Products
|
Royalty
Rate
|
1
|
For the portion of Annual Worldwide Net Sales
< $[***]
|
[***]%
|
2
|
For the portion of Annual Worldwide Net Sales
> $[***] but < $[***]
|
[***]%
|
3
|
For the portion of Annual Worldwide Net Sales
> $[***]
|
[***]%
|
(a) | Annual worldwide Net Sales will be calculated by [***]. |
(b) | For purposes of clarification, any Isis Product-Specific Patents and Jointly-Owned Program Patents assigned to JBI as set forth in Section 4.2.1 will still be royalty-bearing and considered Isis Product-Specific Patents and Jointly-Owned Program Patents, respectively, for determining the royalty term and applicable royalty rates under this ARTICLE 6. |
6.8.2 | Application of Royalty Rates. All royalties set forth under Section 6.8.1 are subject to the provisions of this Section 6.8.2, and are payable as follows: |
(a) | Royalty Period. JBI’s obligation to pay Isis the JBI Royalty above with respect to Products will continue on a country-by-country and Product-by-Product basis from the date of First Commercial Sale of such Product in a country until the later of the date of expiration of (i) the last Valid Claim within the Licensed Patents or Program Patents Covering such Product in the country in which such Product is made, used or sold, [***] (such royalty period, the “Royalty Period”). |
(b) | Royalty Reduction – U.S. Loss of Patent Rights. If (i) there is no longer a Valid Claim within the Licensed Patents or Program Patents Covering a Product in the U.S., and [***], then JBI may reduce the royalty payments for sales in the U.S. described in Table 4 by [***] ([***]) percent. JBI shall make the reduced royalty payments to Isis for the remainder of the Royalty Period. |
(c) | Royalty Reduction – Early Generic Product Entry. If after the [***] anniversary of the First Commercial Sale of a Product, in a given country within the Territory, entry of a Generic Product has occurred prior to the expiry of the last Licensed Patent or Program Patent with a Valid Claim covering a Product, and either (i) subsequently the sales of the Product have declined by [***] percent ([***]%) or more but less than [***] percent ([***]%) as compared to the [***] Calendar Quarters [***] prior to such Generic Product entry, then JBI may reduce the royalty payments for sales in such country described in Table 4 by [***] percent ([***]%), or (ii) subsequently the sales of the Product have declined by [***] percent ([***]%) or more as compared to the [***] Calendar Quarters [***] prior to such Generic Product entry, then no further royalty payments shall be due to Isis for such Product in such country; provided, if JBI reduced or ceased paying the royalty payments under this Section, and thereafter a court of competent jurisdiction determines that the Licensed Patent is valid and infringed by the Generic Product, JBI shall resume making royalty payments at the full amount as of the date of such court order. |
(d) | Limitation on Aggregate Reduction for JBI Royalties. |
(i) | In no event will the aggregate royalty offsets under Section 6.9.3(b) reduce the royalties payable to Isis on Net Sales of a Product in any given period to [***]% of the JBI Royalty rates listed in Table 4. |
(ii) | In addition, in no event will the aggregate royalty offsets and reductions under Section 6.8.2(c) (as applicable) and Section 6.9.3(b) reduce the royalties payable to Isis on Net Sales of a Product in any given period to less than [***]. |
(e) | End of Royalty Obligation. On a country-by-country and Product-by-Product basis JBI’s obligation to make royalty payments hereunder for such Product in such country will end on the expiration of the Royalty Period at which time JBI will have a fully paid up license under the Licensed Patents; provided [***]. |
6.9 | Third Party Payment Obligations. |
6.9.1 | Existing Isis In-License Agreements. |
(a) | Certain of the Licensed Technology Controlled by Isis as of the Effective Date licensed to JBI under Section 4.1.1 was in-licensed or was acquired by Isis under the agreements with Third Party licensors or sellers listed on Schedule 6.9.1 (all such license or purchase agreements being the “Isis In-License Agreements”). Certain license fees, maintenance fees, milestone payments, royalties or similar payments that apply to Products may become payable by Isis to such Third Parties under the Isis In-License Agreements based on the Development and Commercialization of a Product by JBI under this Agreement. |
(b) | Any payment obligations arising under the Isis In-License Agreements as existing on the Effective Date and up until JBI exercises an Option under this Agreement, as they apply to the Isis Core Technology used by Products developed under this Agreement will be paid by [***], and [***], as [***]. In the event JBI determines that it wishes to obtain a sublicense under the Isis In-License Agreements, [***]. |
6.9.2 | New In-Licensed Isis Product-Specific Patents. If after the Effective Date, Isis obtains Third Party Patent Rights necessary or useful to Develop, Manufacture or Commercialize a Product that would have been considered an Isis Product-Specific Patent had Isis Controlled such Patent Rights on the Effective Date, to the extent Controlled by Isis, Isis will include such Third Party Patent Rights in the license granted to JBI under Section 4.1.1 if JBI agrees in writing to pay Isis (i) [***] and (ii) [***]. In the event JBI declines to pay Isis [***], nothing in this Agreement [***]. |
6.9.3 | Additional Core IP In-License Agreements. |
(a) | JBI will promptly provide Isis written notice of any Additional Core IP JBI believes it has identified and Isis will have the first right, but not the obligation, to negotiate with, and obtain a license from the Third Party Controlling such Additional Core IP. If Isis obtains such a Third Party license, Isis will include such Additional Core IP in the license granted to JBI under Section 4.1.1, and any financial obligations under such Third Party agreement will be [***]. |
(b) | If, however, Isis elects not to obtain such a license to such Third Party intellectual property, Isis will so notify JBI, and JBI may obtain such a Third Party license and, subject to Section 6.8.2(d), JBI may offset an amount equal to [***]% of any [***] paid by JBI under such Third Party license against any [***] of this Agreement in such country for [***]. |
(c) | If it is unclear whether certain intellectual property identified by JBI pursuant to Section 6.9.3(a) is Additional Core IP under Section 6.9.3(b), Isis will send written notice to such effect to JBI, and the Parties will engage a mutually agreed upon independent Third Party intellectual property lawyer with expertise in the patenting of ASOs, and appropriate professional credentials in the relevant jurisdiction, to determine the question of whether or not such Third Party intellectual property is Additional Core IP. The determination of the Third Party expert engaged under the preceding sentence will be binding on the Parties solely for purposes of determining whether JBI is permitted to [***]. The costs of any Third Party expert engaged under this Section 6.9.3(c) will be paid by the Party against whose position the Third Party lawyer’s determination is made. |
6.9.4 | Other Third Party Payments. |
(a) | Isis’ Third Party Agreements. Except as otherwise expressly agreed to by JBI under Section 6.9.2, after Option exercise, JBI will be responsible for paying [***]% of the [***] arising under any Third Party agreements entered into by Isis. |
(b) | JBI’s Third Party Agreements. Without limiting any applicable [***] under Section 6.9.3(b), JBI will be responsible for paying [***]% of the [***] arising under any Third Party agreements entered into by JBI as they apply to Products. |
6.10 | Invoices. Unless otherwise specified hereunder, JBI shall make payments required hereunder to Isis within [***] ([***]) days from the date an invoice is received by JBI provided that any invoiced costs are for fees or services that have been rendered by Isis plus Out of Pocket Expenses incurred by Isis and further subject to the invoice having been received by JBI. All invoices must reference a valid Purchase Order (PO) Number which JBI shall provide to Isis within [***] ([***]) days of any such contracted service after the Effective Date. Isis’ invoices will include Isis’ good faith estimate of the FTE cost incurred by Isis in performing the services and the amount of Out-of Pocket Expenses incurred and charged by Isis. Before Isis commences work, JBI and Isis will agree to a budget for the work JBI requests Isis to perform that will include Isis’ good faith estimate of the FTE cost plus Out of Pocket Expenses. Isis shall provide reasonable support for each invoice. Reasonable support means [***]. Invoices shall be sent to: Johnson & Johnson Shared Services, P.O. Box 16540, New Brunswick, NJ 08906-6540, United States, with a copy to Immunology TA Controller, c/o J&J PRD, PO Box 766, Welsh & McKean Road, Spring House 19477, or via www.ap.jnj.com if Isis is established with a web invoice account. JBI reserves the right to return to Isis unprocessed and unpaid those invoices that do not reference a valid P.O. number. |
6.11 | Payments. |
6.11.1 | Commencement. Beginning with the Calendar Quarter in which the First Commercial Sale for a Product is made and for each Calendar Quarter thereafter, JBI will make royalty payments to Isis under this Agreement within [***] days following the end of each such Calendar Quarter. Each royalty payment will be accompanied by a report showing on a Product-by Product and country-by-country basis the gross sales, the Net Sales, and a calculation of the amount of royalty due on such Net Sales. This report shall also include the exchange rates and other methodology used in converting Net Sales into US dollars from the currencies in which sales were made in order to determine the appropriate royalty tier and royalty. If no royalties are payable in respect of a given Calendar Quarter, JBI will submit a written royalty report to Isis so indicating together with an explanation as to why no such royalties are payable. In addition, on a Product-by-Product basis, beginning with the Calendar Quarter in which the First Commercial Sale for such Product is made and for each Calendar Quarter thereafter for the next [***] ([***]) years, JBI will (based on information JBI collects, and in a format JBI uses for its own internal planning and reporting purposes) provide Isis a preliminary non-binding report estimating the total Net Sales of, and royalties payable to Isis for Products projected for such Calendar Quarter. JBI will endeavor to provide such preliminary non-binding report within [***] Business Days following the end of each such Calendar Quarter; provided JBI will provide such preliminary non-binding report no later than [***] Business Days following the end of each such Calendar Quarter. |
6.11.2 | 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 Isis in writing, and (iii) non-creditable, irrevocable and non-refundable. With respect to sales of Product invoiced in a currency other than USD, such amounts and the amounts payable hereunder shall be expressed in their USD equivalent calculated as follows: For the upcoming Calendar Year, JBI shall provide: 1) a Currency Hedge Rate(s) to be used for the local currency of each country of the Territory and 2) the details of such Currency Hedge Rate(s) in writing to Isis not later than [***] business days after the Currency Hedge Rate(s) are available from the GTSC or its Affiliates, which is customarily at the end of October. Such Currency Hedge Rate(s) will remain constant throughout the upcoming calendar year. JBI shall use the Currency Hedge Rate(s) to convert Net Sales to USD for the purpose of calculating royalties and Sales Milestones. |
6.11.3 | Records Retention. Commencing with the First Commercial Sale of a Product, JBI will keep complete and accurate records pertaining to the sale of Products for a period of [***] Calendar Years after the year in which such sales occurred, and in sufficient detail to permit Isis to confirm the accuracy of the Net Sales or royalties paid by JBI hereunder. |
6.12 | Audits. After Option exercise, during the Agreement Term and for a period of [***] Calendar Years thereafter, at the written request and expense of Isis, JBI will permit an independent certified public accountant of nationally recognized standing appointed by Isis and reasonably acceptable to JBI, at reasonable times and upon reasonable notice, but in no case more than [***], to examine such records at the location where such records are maintained as may be necessary for the sole purpose of verifying the calculation and reporting of milestones and Net Sales, and the correctness of any milestone and royalty payments made under this Agreement for any period within the preceding [***] Calendar Years. As a condition to examining any records of JBI, such auditor will sign a nondisclosure agreement reasonably acceptable to JBI in form and substance. Any and all records of JBI examined by such independent certified public accountant will be deemed JBI’s Confidential Information. The report of the independent public accountant shall be shared with JBI prior to distribution to Isis such that JBI can provide the independent public accountant with justifying remarks for inclusion in the report prior to sharing the conclusions of such independent public audit with Isis. Upon completion of the audit, the accounting firm will provide both JBI and Isis with a written report disclosing whether the royalty payments made by JBI are correct or incorrect, whether any milestone payment that became due during the audited period was timely reported and paid, and the specific details concerning any discrepancies (“Audit Report”). If, as a result of any inspection of the books and records of JBI, it is shown that JBI’s royalty payments under this Agreement were less than the royalty amount which should have been paid, and/or that any milestone payment was not paid when due or at all, then JBI will make all payments required to be made by paying Isis the difference between such amounts to eliminate any discrepancy revealed by said inspection within [***] days of receiving the Audit Report, with interest calculated in accordance with Section 6.14. If, as a result of any inspection of the books and records of JBI, it is shown that JBI’s payments under this Agreement were greater than the royalty amount which should have been paid, then JBI will receive a credit against future royalty payments due under Section 6.8 equal to the difference between the amounts paid by JBI and the royalty amounts which should have been paid. Isis will pay for such audit, except that if JBI is found to have underpaid Isis by more than [***]% of the amount that should have been paid, and/or not to have paid any milestone that should have been paid, JBI will reimburse Isis’ reasonable costs of the audit. |
6.13 | Taxes. |
6.13.1 | Taxes on Income. Each Party will be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the activities of the Parties under this Agreement. |
6.13.2 | Isis will provide JBI with any and all tax forms in advance of the due dates that may be reasonably necessary in order for JBI to lawfully not withhold tax or to withhold tax at a reduced rate under an applicable bilateral income tax treaty. Following JBI’s timely receipt of such tax forms from Isis, JBI 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 6.13.2. |
6.13.3 | JBI will make all payments to Isis under this Agreement without deduction or withholding for Taxes except to the extent that any such deduction or withholding is required by law in effect at the time of payment. |
6.13.4 | Any Tax required to be withheld on amounts payable under this Agreement will be paid by JBI on behalf of Isis to the appropriate governmental authority, and JBI will furnish Isis with proof of payment of such Tax. Any such Tax required to be withheld will be an expense of and borne by Isis. If any such Tax is assessed against and paid by JBI, then Isis will indemnify and hold harmless JBI from and against such Tax unless the assessment and payment of such Tax is a result of acts or omissions by JBI. |
6.13.5 | JBI and Isis will cooperate with one another and use reasonable efforts to lawfully avoid or reduce withholding or similar obligations in respect of royalties, milestone payments and other payments made by the paying Party to the receiving party under this agreement, including but not limited to all documentation required by any taxing authority or reasonably requested by either Party to secure a reduction in the rate of applicable withholding Taxes or similar obligations. Within five Business Days of the Effective Date of this Agreement, Isis will deliver to JBI an accurate and complete Internal Revenue Service Form W-9. |
6.13.6 | The provisions of this Section 6.13 Are to be read in conjunction with the provisions of Section 12.4 below. |
6.14 | Interest. Any undisputed payments to be made hereunder that are not paid on or before the date such payments are due under this Agreement 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 1% or (ii) the maximum rate permissible under applicable law. |
6.15 | Paying Agent. Janssen Research & Development, L.L.C., an Affiliate of JBI acting as a paying agent for JBI, may make certain payments due under this Agreement. |
7.1 | Ownership. |
7.1.1 | Isis Technology and JBI Technology. As between the Parties, Isis will own and retain all of its rights, title and interest in and to the Licensed Know-How and Licensed Patents and JBI will own and retain all of its rights, title and interest in and to the JBI Know-How and JBI Patents, subject to any assignments, rights or licenses expressly granted by one Party to the other Party under this Agreement. |
7.1.2 | Agreement Technology. As between the Parties, JBI is the sole owner of any Know-How discovered, developed, invented or created solely by or on behalf of JBI or its Affiliates during the Drug Discovery Term (“JBI Program Know-How”) and any Patent Rights that claim or cover JBI Program Know-How (“JBI Program Patents” and together with the JBI Program Know-How, the “JBI Program Technology”), and will retain all of its rights, title and interest thereto, subject to any rights or licenses expressly granted by JBI to Isis under this Agreement. As between the Parties, Isis is the sole owner of any Know-How discovered, developed, invented or created solely by or on behalf of Isis or its Affiliates during the Drug Discovery Term (“Isis Program Know-How”) and any Patent Rights that claim or cover such Know-How (“Isis Program Patents” and together with the Isis Program Know-How, the “Isis Program Technology”), and will retain all of its rights, title and interest thereto, subject to any assignment, rights or licenses expressly granted by Isis to JBI under this Agreement. Any Know-How discovered, developed, invented or created jointly during the Drug Discovery Term 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 JBI and Isis on an equal and undivided basis, including all rights, title and interest thereto, subject to any rights or licenses expressly granted by one Party to the other Party under this Agreement. Except as expressly provided in this Agreement, neither Party will have any obligation to account to the other for profits with respect to, or to obtain any consent of the other Party to license or exploit, Jointly-Owned Program Technology by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such consent or accounting. Each Party will promptly disclose to the other Party in writing, and will cause its Affiliates to so disclose, the discovery, development, invention or creation of any Jointly-Owned Program Technology. The JBI Program Patents, Isis Program Patents and Jointly-Owned Program Patents are collectively referred to herein as the “Program Patents.” |
7.1.3 | Joint Patent Committee. |
(a) | The Parties will establish a “Joint Patent Committee” or “JPC.” 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 7.1.3. Isis’ obligation to participate in the JPC will terminate upon the end of the Drug Discovery Term. Thereafter, Isis will have the right, but not the obligation, to participate in JPC meetings. If the JPC dissolves, each Party will designate a patent attorney who will be responsible for intellectual property matters under this Agreement. A strategy will be discussed with regard to (i) prosecution and maintenance, defense and enforcement of Isis Product-Specific Patents that would be or are licensed to JBI under Section 4.1.1 in connection with a Product and JBI 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 Drug Discovery Program, in each case to the extent such matter would be reasonably likely to have a material impact on the Agreement or the licenses granted hereunder, which strategy will be considered in good faith by the Party entitled to prosecute, enforce and defend such Patent Rights, as applicable, hereunder, but will not be binding on such Party. |
(b) | In addition, the Joint Patent Committee will be responsible for the determination of inventorship of Program Patents in accordance with United States patent laws. In case of a dispute in the Joint Patent Committee (or otherwise between Isis and JBI) over inventorship of Program Patents, if the Joint Patent Committee cannot resolve such dispute, even after seeking the JRC’s input, such dispute will be resolved by independent patent counsel not engaged or regularly employed in the past two years by either Party and reasonably acceptable to both Parties. The decision of such independent patent counsel will be binding on the Parties. Expenses of such patent counsel will be shared equally by the Parties. |
(c) | The JPC will comprise an equal number of members from each Party. The Joint Patent Committee will meet as often as agreed by them (and at least semi-Annually), to discuss matters arising out of the activities set forth in this 7.1.3. The JPC will determine the JPC operating procedures at its first meeting, including the JPC’s policies for replacement of JPC members, and the location of meetings, which will be codified in the written minutes of the first JPC meeting. To the extent reasonably requested by either Party, the Joint Patent Committee will solicit the involvement of more senior members of their respective legal departments (up to the most senior intellectual property attorney, where appropriate) with respect to critical issues, and may escalate issues to the Executives for input and resolution pursuant to Section 12.1. Each Party’s representatives on the Joint Patent Committee will consider comments and suggestions made by the other in good faith. If either Party deems it reasonably advisable, the Parties will enter into a mutually agreeable common interest agreement covering the matters contemplated by this Agreement. Each party shall bear their own cost of participation on the JPC. |
7.2 | Prosecution and Maintenance of Patents. |
7.2.1 | Patent Filings. The Party responsible for Prosecution and Maintenance of any Patent Rights as set forth in Section 7.2.2 and Section 7.2.3 will endeavor to obtain patent protection for the applicable Product as it Prosecutes and Maintains its other patents Covering products in development, using counsel of its own choice but reasonably acceptable to the other Party, in such countries as the responsible Party sees fit. |
7.2.2 | Licensed Patents and JBI Patents. |
(a) | Licensed Patents In General. Prior to exercise of an Option, Isis will control and be responsible for all aspects of the Prosecution and Maintenance of all Licensed Patents that are the subject of such Option, subject to Section 7.2.2(b), Section 7.2.3 and Section 7.2.4. During the Agreement Term, Isis will control and be responsible for all aspects of the Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, and Isis Formulation Patents. |
(b) | Licensed Patents After Option Exercise. After JBI exercises its Option for a particular Drug Discovery Program, JBI will control and be responsible for all aspects of the Prosecution and Maintenance of all Isis Product-Specific Patents and Jointly-Owned Program Patents that cover Products under such Research project to the same extent Isis had the right to control and was responsible for such Prosecution and Maintenance immediately prior to such Option exercise, subject to Section 7.2.3 and Section 7.2.4, and will grant Isis the license set forth in Section 4.2.2. |
(c) | JBI Patents. JBI will control and be responsible for all aspects of the Prosecution and Maintenance of all JBI Patents, subject to Section 7.2.3 and Section 7.2.4. |
7.2.3 | Jointly-Owned Program Patents. Isis will control and be responsible for all aspects of the Prosecution and Maintenance of Jointly-Owned Program Patents that are not Product Specific Patents. Prior to exercise of an Option, Isis will control and be responsible for all aspects of the Prosecution and Maintenance of Jointly-Owned Program Patents that are Product Specific Patents and the subject of such Option. After exercise of an Option, JBI will control and be responsible for all aspects of the Prosecution and Maintenance of Jointly-Owned Program Patents that are Product Specific Patents and are the subject of such exercised Option. |
7.2.4 | Other Matters Pertaining to Prosecution and Maintenance of Patents. |
(a) | Each Party will keep the other Party informed through the Joint Patent Committee 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 7.2.2, Section 7.2.3 or this Section 7.2.4, including by providing copies of material data as it arises, any office actions or office action responses or other correspondence that such Party provides to or receives from any patent office, including notice of all interferences, reissues, re-examinations, oppositions or requests for patent term extensions, and all patent-related filings, and by providing the other Party the timely opportunity to have reasonable input into the strategic aspects of such Prosecution and Maintenance. |
(b) | If JBI elects (a) not to file and prosecute patent applications for the Jointly-Owned Program Patent Rights or Isis Product-Specific Patents that have been licensed or assigned to JBI under this Agreement or the JBI Product-Specific Patents (“JBI-Prosecuted Patents”) in a particular country, (b) not to continue the prosecution (including any interferences, oppositions, reissue proceedings, re-examinations, and patent term extensions, adjustments, and restorations) or maintenance of any JBI-Prosecuted Patent in a particular country, or (c) not to file and prosecute patent applications for the JBI-Prosecuted Patent in a particular country following a written request from Isis to file and prosecute in such country, then JBI will so notify Isis promptly in writing of its intention (including a reasonably detailed rationale for doing so) in good time to enable Isis to meet any deadlines by which an action must be taken to establish or preserve any such Patent Right in such country; and Isis will have the right, but not the obligation, to file, prosecute, maintain, enforce, or otherwise pursue such JBI-Prosecuted Patent in the applicable country at its own expense with counsel of its own choice. In such case, JBI will cooperate with Isis to file for, or continue to Prosecute and Maintain or enforce, or otherwise pursue such JBI-Prosecuted Patent in such country in Isis’ own name, but only to the extent that JBI is not required to take any position with respect to such abandoned JBI-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 JBI under this Agreement. Notwithstanding anything to the contrary in this Agreement, if Isis assumes responsibility for the Prosecution and Maintenance of any such JBI-Prosecuted Patent under this Section 7.2.4(b), Isis will have no obligation to notify JBI if Isis intends to abandon such JBI-Prosecuted Patent. |
(c) | If, during the Agreement Term, Isis intends to abandon any Isis Product-Specific Patent for which Isis is responsible for Prosecution and Maintenance without first filing a continuation or substitution, then, if the applicable Option Deadline has not passed, Isis will notify JBI of such intention at least 60 days before such Patent Right will become abandoned, and JBI will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense (subject to Section 7.3.1) with counsel of its own choice. Notwithstanding anything to the contrary in this Agreement, if JBI assumes responsibility for the Prosecution and Maintenance of any such Isis Product-Specific Patent under this Section 7.2.4(c), JBI will have no obligation to notify Isis if JBI intends to abandon such Isis Product-Specific Patent. |
(d) | The Parties, through the Joint Patent Committee, will cooperate in good faith to determine if and when any divisional or continuation applications will be filed with respect to any Program Patents or Product-Specific Patents, and where a divisional or continuation patent application filing would be practical and reasonable, then such a divisional or continuation filing will be made. |
(e) | If the Party responsible for Prosecution and Maintenance pursuant to Section 7.2.3 intends to abandon such Jointly-Owned Program Patent without first filing a continuation or substitution, then such Party will notify the other Party of such intention at least 60 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 7.3.1) with counsel of its own choice, in which case the abandoning Party will, and will cause its Affiliates to, assign to the other Party (or, if such assignment is not possible, grant a fully-paid exclusive license in) all of their rights, title and interest in and to such Jointly-Owned Program Patents. If a Party assumes responsibility for the Prosecution and Maintenance of any such Jointly-Owned Program Patents under this Section 7.2.4(e), such Party will have no obligation to notify the other Party of any intention of such Party to abandon such Jointly-Owned Program Patents. |
(f) | In addition, the Parties will consult, through the Joint Patent Committee, and take into consideration the comments of the other Party for all matters relating to interferences, reissues, re-examinations and oppositions with respect to those Patent Rights in which such other Party (i) has an ownership interest, (ii) has received a license thereunder in accordance with this Agreement, or (iii) may in the future, in accordance with this Agreement, obtain a license or sublicense thereunder. |
7.3 | Patent Costs. |
7.3.1 | Jointly-Owned Program Patents. Unless the Parties agree otherwise, Isis and JBI will share equally the Patent Costs associated with the Prosecution and Maintenance of Jointly-Owned Program Patents; provided that, either Party may decline to pay its share of costs for filing, prosecuting and maintaining any Jointly-Owned Program Patents in a particular country or particular countries, in which case the declining Party will, and will cause its Affiliates to, assign to the other Party (or, if such assignment is not possible, grant a fully-paid exclusive license in) all of their rights, titles and interests in and to such Jointly-Owned Program Patents. |
7.3.2 | Licensed Patents and JBI Patents. Except as set forth in Section 7.2.4 and Section 7.3.1, each Party will be responsible for all Patent Costs incurred by such Party prior to and after the Effective Date in all countries in the Prosecution and Maintenance of Patent Rights for which such Party is responsible under Section 7.2; provided, however, that after Option exercise, JBI will be solely responsible for Patent Costs arising from the Prosecution and Maintenance of the Isis Product-Specific Patents. |
7.4 | Defense of Claims Brought by Third Parties. |
7.4.1 | 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 a Product, (a) Isis will have the first right, but not the obligation, to defend against any such Proceeding initiated prior to Option exercise at its sole cost and expense and (b) JBI will have the first right, but not the obligation, to defend against any such Proceeding initiated after Option exercise at its sole cost and expense. If the Party having the first right to defend against such Proceeding (the “Lead Party”) elects to defend against such Proceeding, then the Lead Party 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 the other Party, not to be unreasonably withheld, conditioned or delayed). The other Party will reasonably assist the Lead Party in defending such Proceeding and cooperate in any such litigation at the request and expense of the Lead Party. The Lead Party will provide the other Party with prompt written notice of the commencement of any such Proceeding that is of the type described in this Section 7.4, and the Lead Party will keep the other Party apprised of the progress of such Proceeding. If the Lead Party elects not to defend against a Proceeding, then the Lead Party will so notify the other Party in writing within 60 days after the Lead Party first receives written notice of the initiation of such Proceeding, and the other Party (the “Step-In Party”) will have the right, but not the obligation, to defend against such Proceeding at its sole cost and expense and thereafter the Step-In Party will have the sole right to direct the defense thereof, including the right to settle such claim. In any event, the Party not defending such Proceeding will reasonably assist the other Party and cooperate in any such litigation at the request and expense of the Party defending such Proceeding. Each Party may at its own expense and with its own counsel join any defense initiated or directed by the other Party under this Section 7.4. Each Party will provide the other Party with prompt written notice of the commencement of any such Proceeding under this Section 7.4, and such Party will promptly furnish the other Party with a copy of each communication relating to the alleged infringement that is received by such Party. |
7.4.2 | Discontinued Product. If a Third Party initiates a Proceeding claiming that any Patent Right or Know-How owned by or licensed to such Third Party is infringed by the Development, Manufacture or Commercialization of a Discontinued Product, Isis will have the first right, but not the obligation, to defend against and settle such Proceeding at its sole cost and expense. JBI will reasonably assist Isis in defending such Proceeding and cooperate in any such litigation at the request and expense of Isis. Each Party may at its own expense and with its own counsel join any defense directed by the other Party. Isis will provide JBI with prompt written notice of the commencement of any such Proceeding, or of any allegation of infringement of which Isis becomes aware and that is of the type described in this Section 7.4.2, and Isis will promptly furnish JBI with a copy of each communication relating to the alleged infringement received by Isis. |
7.4.3 | Interplay Between Enforcement of IP and Defense of Third Party Claims. Notwithstanding the provisions of Section 7.4.1 and Section 7.4.2, to the extent that a Party’s defense against a Third Party claim of infringement under this Section 7.4 involves (i) the enforcement of the other Party’s Know-How or Patent Rights, or (ii) the defense of an invalidity claim with respect to such other Party’s Know-How or Patent Rights, then, in each case, the general concepts of Section 7.5 will apply to the enforcement of such other Party’s Know-How or Patent Rights or the defense of such invalidity claim (i.e., each Party has the right to enforce its own intellectual property, except that the relevant Commercializing Party will have the initial right, to the extent provided in Section 7.5, to enforce such Know-How or Patent Rights or defend such invalidity claim, and the other Party will have a step-in right, to the extent provided in Section 7.5, to enforce such Know-How or Patent Rights or defend such invalidity claim). |
7.5 | Enforcement of Patents Against Competitive Infringement. |
7.5.1 | Duty to Notify of Competitive Infringement. If either Party learns of an infringement, unauthorized use, misappropriation or threatened infringement by a Third Party to which such Party does not owe any obligation of confidentiality with respect to any Product-Specific Patents by reason of the development, manufacture, use or commercialization of a product directed against the RNA that encodes a Collaboration Target in the Field (“Competitive Infringement”), such Party will promptly notify the other Party in writing and will provide such other Party with available evidence of such Competitive Infringement; provided, however, that for cases of Competitive Infringement under Section 7.5.7 below, such written notice will be given within 10 days. |
7.5.2 | Prior to Option Exercise. For any Competitive Infringement with respect to a Product occurring after the Effective Date but before Option exercise, Isis 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, and JBI will have the right to be represented in that action by counsel of its own choice at its own expense, however, Isis will have the sole right to control such litigation. Isis will provide JBI with prompt written notice of the commencement of any such Proceeding, and Isis will keep JBI apprised of the progress of such Proceeding. If Isis fails to initiate a Proceeding within a period of 90 days after receipt of written notice of such Competitive Infringement (subject to a 90 day extension to conclude negotiations, which extension will apply only in the event that Isis has commenced good faith negotiations with an alleged infringer for elimination of such Competitive Infringement within such 90 day period), JBI will have the right to initiate and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice; provided that Isis will have the right to be represented in any such action by counsel of its own choice at its own expense. Notwithstanding the foregoing, Isis will at all times have the sole right to institute, prosecute, and control any Proceeding under this Section 7.5.2 to the extent involving any the Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, or Isis Formulation Patents. |
7.5.3 | Following Option Exercise. For any Competitive Infringement with respect to a particular Product (except for a Discontinued Product) occurring after Option exercise, so long as part of such Proceeding JBI also enforces any Patent Rights Controlled by JBI being infringed that Cover the Product, then JBI will have the first right, but not the obligation, to institute, prosecute, and control a Proceeding to enforce the Isis Product Specific Patents with respect thereto by counsel of its own choice at its own expense, and Isis will have the right, at its own expense, to be represented in that action by counsel of its own choice, however, JBI will have the right to control such litigation. If JBI fails to initiate a Proceeding within a period of 90 days after receipt of written notice of such Competitive Infringement (subject to a 90-day extension to conclude negotiations, if JBI has commenced good faith negotiations with an alleged infringer for elimination of such Competitive Infringement within such 90 day period), Isis will have the right to initiate and control a Proceeding with respect to such Competitive Infringement by counsel of its own choice, and JBI will have the right to be represented in any such action by counsel of its own choice at its own expense. Isis will at all times have the sole right to institute, prosecute, and control any Proceeding under this Section 7.5.3 to the extent involving any Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, or Isis Formulation Patents. |
7.5.4 | Joinder. |
(a) | If a Party initiates a Proceeding in accordance with this Section 7.5, 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 7.5.5, the costs and expenses of each Party incurred pursuant to this Section 7.5.4(a) will be borne by the Party initiating such Proceeding. |
(b) | If one Party initiates a Proceeding in accordance with this Section 7.5.4, 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. |
7.5.5 | Share of Recoveries. Any damages or other monetary awards recovered with respect to a Proceeding brought pursuant to this Section 7.5 will be shared as follows: |
(a) | the amount of such recovery will first be applied to the Parties’ reasonable Out-of-Pocket Costs incurred in connection with such Proceeding (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses); then |
(b) | any remaining proceeds constituting direct or actual damages for acts of infringement occurring prior to JBI’s exercise of the Option will be (i) [***]; or (ii) [***]; then |
(c) | any remaining proceeds constituting direct or actual damages for acts of infringement occurring after JBI’s exercise of the Option [***]; then |
(d) | any remaining proceeds constituting punitive or treble damages will be allocated between the Parties as follows: the Party initiating the Proceeding will receive and retain [***]% of such proceeds and the other Party will receive and retain [***]% of such proceeds. |
7.5.6 | Settlement. Notwithstanding anything to the contrary under this Section 7.5.6 neither Party may enter a settlement, consent judgment or other voluntary final disposition of a suit under this 7.5.6 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. |
7.5.7 | 35 USC 271(e)(2) Infringement. Notwithstanding anything to the contrary in this Section 7.5, solely with respect to Licensed Patents that have not been assigned to JBI under this Agreement for a Competitive Infringement under 35 USC 271(e)(2), the time period set forth in Section 7.5.2 during which a Party will have the initial right to bring a Proceeding will be shortened to a total of 25 days, so that, to the extent the other Party has the right, pursuant to such Section to initiate a Proceeding if the first Party does not initiate a Proceeding, such other Party will have such right if the first Party does not initiate a Proceeding within 25 days after such first Party’s receipt of written notice of such Competitive Infringement. |
7.6 | Other Infringement. |
7.6.1 | 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 7.6.1 will be shared as follows: (i) the amount of such recovery will first be applied to the Parties’ reasonable Out-of-Pocket costs incurred in connection with such Proceeding (which amounts will be allocated pro rata if insufficient to cover the totality of such expenses); (ii) any remaining proceeds constituting direct damages will be [***], and (iii) any remaining proceeds constituting punitive or treble damages will be allocated as follows: (A) if the Parties jointly initiate a Proceeding pursuant to this Section 7.6.1, each Party will receive [***]% of such proceeds; and (B) if only one Party initiates the Proceeding pursuant to this Section 7.6.1, such Party will receive [***]% of such proceeds and the other Party will receive [***]% of such proceeds. |
7.6.2 | Patents Solely Owned by Isis. Isis will retain all rights to pursue an infringement of any Patent Right solely owned by Isis which is other than a Competitive Infringement and Isis will retain all recoveries with respect thereto. |
7.6.3 | Patents Solely Owned by JBI. JBI will retain all rights to pursue an infringement of any Patent Right solely owned by JBI which is other than a Competitive Infringement and JBI will retain all recoveries with respect thereto. |
7.7 | Patent Listing. JBI will promptly, accurately and completely list, with the applicable Regulatory Authorities during the Agreement Term, all applicable Patent Rights that Cover a Product. Prior to such listings, the Parties will meet, through the Joint Patent Committee, to evaluate and identify all applicable Patent Rights, and JBI will have the right to review, where reasonable, original records relating to any invention for which Patent Rights are being considered by the Joint Patent Committee for any such listing. Notwithstanding the preceding sentence, JBI will retain final decision-making authority as to the listing of all applicable Patent Rights for the Product that are not Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, or Isis Formulation Patents, regardless of which Party owns such Patent Rights. |
7.8 | Joint research agreement under the Leahy-Smith America Invents Act. In the event that a Party intends to so invoke the Leahy-Smith America Invents Act, once agreed to by the other Party, it will notify the other Party and the Parties shall 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) |
7.9 | Obligations to Third Parties. Notwithstanding any of the foregoing, each Party’s rights and obligations with respect to Licensed Technology under this Section 7.9 will be subject to the Third Party rights and obligations under any (i) New Third Party License the restrictions and obligations of which JBI has agreed to under Section 6.9.2, (ii) Prior Agreements, and (iii) Isis In-License Agreements; provided, however, that, to the extent that Isis has a non-transferable right to prosecute, maintain or enforce any Patent Rights licensed to JBI hereunder and, this Agreement purports to grant any such rights to JBI, Isis will act in such regard with respect to such Patent Rights at JBI’s direction. |
7.10 | Additional Right and Exceptions. Notwithstanding any provision of this Section 7.10, Isis retains the sole right to Prosecute and Maintain Isis Core Technology Patents and Isis Manufacturing and Analytical Patents during the Agreement Term and to control any enforcement of Isis Core Technology Patents and Isis Manufacturing and Analytical Patents, and will take the lead on such enforcement solely to the extent that the scope or validity of any Patent Rights Controlled by Isis and Covering the Isis Core Technology Patents or Isis Manufacturing and Analytical Patents is at risk. |
7.11 | Patent Term Extension. The Parties will cooperate with each other in gaining patent term extension wherever applicable to the Product. After exercising an Option, JBI will determine which relevant patents will be extended. |
7.12 | Rights in Bankruptcy. All rights and licenses granted under or pursuant to any section of this Agreement are and will otherwise be deemed to be for purposes of Section 365(n) of Title 11, United States Code (the "Bankruptcy Code") licenses of rights to "intellectual property" as defined in Section 101(56) of the Bankruptcy Code. The Parties will retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. Upon the bankruptcy of any Party, the non-bankrupt Party will further be entitled to a complete duplicate of, or complete access to, any such intellectual property, and such, if not already in its possession, will be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects in writing to continue, and continues, to perform all of its obligations under this Agreement. |
8.1 | Representations and Warranties of Both Parties. Each Party hereby represents and warrants to the other Party, as of the Effective Date, that: |
8.1.1 | such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof; |
8.1.2 | such Party has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; |
8.1.3 | this Agreement has been duly executed and delivered on behalf of such Party, and constitutes a legal, valid and binding obligation, enforceable against it in accordance with the terms hereof; |
8.1.4 | the execution, delivery and performance of this Agreement by such Party will not constitute a default under or conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it is bound, or violate any law or regulation of any court, governmental body or administrative or other agency having jurisdiction over such Party; |
8.1.5 | no government authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, under any applicable laws, rules or regulations currently in effect, is or will be necessary for, or in connection with, the transaction contemplated by this Agreement or any other agreement or instrument executed in connection herewith, or for the performance by it of its obligations under this Agreement and such other agreements; and |
8.1.6 | it has not employed (and, to the best of its knowledge, has not used a contractor or consultant that has employed) and in the future will not employ (or, to the best of its knowledge, use any contractor or consultant that employs, provided that such Party may reasonably rely on a representation made by such contractor or consultant) any Person debarred by the FDA (or subject to a similar sanction of EMA or foreign equivalent), or any Person which is the subject of an FDA debarment investigation or proceeding (or similar proceeding of EMA or foreign equivalent), in the conduct of the Pre-Clinical Studies or Clinical Studies of the Product and its activities under each Drug Discovery Program. |
8.2 | Representations and Warranties of Isis. Isis hereby represents and warrants to JBI, as of the Effective Date, that: |
8.2.1 | To the best of its knowledge and belief, there are no additional licenses (beyond those that would be granted to JBI under Section 4.1.1 upon the exercise of the Option for a Product arising under the Drug Discovery Programs) under any intellectual property owned or Controlled by Isis or its Affiliates as of the Effective Date that would be required in order for JBI to further Develop and Commercialize a Product. |
8.2.2 | Schedule 8.2.2(a), Schedule 8.2.2(b), Schedule 8.2.2(c) and Schedule 8.2.2(d) set forth true, correct and complete lists of all Isis Core Technology Patents, Isis Manufacturing and Analytical Patents, and Isis Formulation Patents that apply to the Compounds contemplated under the Drug Discovery Programs as of the Effective Date (the “Isis Platform Technology”), respectively, and indicates whether each such Patent Right is owned by Isis or licensed by Isis from a Third Party and if so, identifies the licensor or sublicensor from which the Patent Right is licensed. Isis Controls such Patent Rights existing as of the Effective Date and is entitled to grant all rights and licenses (or sublicenses, as the case may be) under such Patent Rights it purports to grant to JBI under this Agreement. |
8.2.3 | There are no claims, judgments or settlements against or owed by Isis or its Affiliates or pending against Isis or, to the best of Isis’ knowledge, threatened against Isis, in each case relating to the Isis Platform Technology or Collaboration Targets that would prevent Isis from performing the activities under this Agreement or from granting JBI the licenses under Section 4.1. To the best of Isis’ knowledge, there are no claims, judgments or settlements against or owed by any Third Party that is party to a Prior Agreement, or pending or threatened claims or litigation against any Third Party that is party to a Prior Agreement, in each case relating to the Isis Platform Technology or Collaboration Targets that would prevent Isis from performing the activities under this Agreement or from granting JBI the licenses under Section 4.1. |
8.2.4 | At the Effective Date (a) there is no fact or circumstance known by Isis that would cause Isis to reasonably conclude that any Isis Core Technology Patent or Isis Manufacturing and Analytical Patent is invalid or un-enforceable, (b) there is no fact or circumstance known by Isis that would cause Isis to reasonably conclude the inventorship of each Isis Core Technology Patent or Isis Manufacturing and Analytical Patent is not properly identified on each patent, and (c) all official fees, maintenance fees and annuities for the Isis Core Technology Patent or Isis Manufacturing and Analytical Patent have been paid. |
8.2.5 | All Isis In-License Agreements are in full force and effect and have not been modified or amended. Neither Isis nor, to the best knowledge of Isis, the Third Party licensor in an Isis In-License Agreement is in default with respect to a material obligation under such Isis In-License Agreement, and neither such party has claimed or has grounds upon which to claim that the other party is in default with respect to a material obligation under, any Isis In-License Agreement. |
8.3 | Isis Covenants. Isis hereby covenants to JBI that, except as expressly permitted under this Agreement: |
8.3.1 | Isis will promptly amend Schedule 8.2.2(a), Schedule 8.2.2(b) and Schedule 8.2.2(c) and submit such amended Schedules to JBI if Isis becomes aware that any Isis Core Technology Patents, Isis Manufacturing and Analytical Patents or Isis Product-Specific Patents are not properly identified on such Schedule. |
8.3.2 | During the Agreement Term, Isis will maintain and not breach any Isis In-License Agreements and any agreements with Third Parties entered into after the Effective Date (“New Third Party Licenses”) that provide a grant of rights from such Third Party to Isis that are Controlled by Isis and are licensed or that Isis believes may become subject to a license from Isis to JBI for the Development Candidate under this Agreement; |
8.3.3 | Isis will promptly notify JBI of any material breach by Isis or a Third Party of any New Third Party License, and in the event of a breach by Isis, will permit JBI to cure such breach on Isis’ behalf upon JBI’s request; |
8.3.4 | Isis will not amend, modify or terminate any Isis In-License Agreement or New Third Party License in a manner that would adversely affect JBI’s rights hereunder without first obtaining JBI’s written consent, which consent may be withheld in JBI’s sole discretion; and |
8.3.5 | all of Isis’ employees performing activities hereunder on behalf of Isis will be obligated to assign all right, title and interest in and to any inventions developed by them, whether or not patentable, to Isis as the sole owner thereof. |
8.4 | DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY NOR ITS AFFILIATES MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. JBI AND ISIS UNDERSTAND THAT EACH PRODUCT IS THE SUBJECT OF ONGOING RESEARCH AND DEVELOPMENT AND THAT NEITHER PARTY CAN ASSURE THE SAFETY, USEFULNESS OR COMMERCIAL OR TECHNICAL VIABILITY OF EACH PRODUCT. |
9.1 | Indemnification by JBI. JBI will indemnify, defend and hold harmless Isis and its Affiliates, and its or their respective directors, officers, employees and agents, from and against any and all liabilities, damages, losses, costs and expenses including the reasonable fees of attorneys (collectively “Losses”) arising out of or resulting from any and all Third Party suits, claims, actions, proceedings or demands (“Claims”) based upon: |
9.1.1 | the gross negligence or willful misconduct of JBI, its Affiliates or Sublicensees and its or their respective directors, officers, employees and agents, in connection with JBI’s performance of its obligations or exercise of its rights under this Agreement; |
9.1.2 | any breach of any representation or warranty or express covenant made by JBI under ARTICLE 8 or any other provision under this Agreement; |
9.1.3 | the Development or Manufacturing activities that are conducted by or on behalf of JBI or its Affiliates or Sublicensees; or |
9.1.4 | the Commercialization of a Product by or on behalf of JBI or its Affiliates or Sublicensees; |
9.2 | Indemnification by Isis. Isis will indemnify, defend and hold harmless JBI and its Affiliates, and its or their respective directors, officers, employees and agents, from and against any and all Losses arising out of or resulting from any and all Claims based upon: |
9.2.1 | the gross negligence or willful misconduct of Isis, its Affiliates or Sublicensees or its or their respective directors, officers, employees and agents, in connection with Isis’ performance of its obligations or exercise of its rights under this Agreement; |
9.2.2 | any breach of any representation or warranty or express covenant made by Isis under ARTICLE 8 or any other provision under this Agreement; or |
9.2.3 | any development, manufacturing or commercialization activities that are conducted by or on behalf of Isis or its Affiliates or Sublicensees with respect to a Discontinued Product. |
9.3 | Procedure. If a Person entitled to indemnification under Section 9.1 or Section 9.2 (an “Indemnitee”) seeks such indemnification, such Indemnitee will (i) inform the indemnifying Party in writing of a Claim as soon as reasonably practicable after such Indemnitee receives notice of such Claim, (ii) permit the indemnifying Party to assume direction and control of the defense of the Claim (including the sole right to settle such Claim at the sole discretion of the indemnifying Party, provided that (A) such settlement or compromise does not admit any fault or negligence on the part of the Indemnitee, or impose any obligation on, or otherwise materially adversely affect, the Indemnitee or other Party and (B) the indemnifying Party first obtain the written consent of the Indemnitee with respect to such settlement, which consent will not be unreasonably withheld), (iii) cooperate as reasonably requested (at the expense of the indemnifying Party) in the defense of the Claim, and (iv) undertake reasonable steps to mitigate any Losses with respect to the Claim. The provisions of Section 7.4 will govern the procedures for responding to a Claim of infringement described therein. Notwithstanding anything in this Agreement to the contrary, the indemnifying Party will have no liability under Section 9.1 or Section 9.2, as the case may be, for Claims settled or compromised by the Indemnitee without the indemnifying Party’s prior written consent. |
9.4 | Insurance. |
9.4.1 | Isis’ Insurance Obligations. Isis will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement. |
9.4.2 | JBI’s Insurance Obligations. JBI will maintain, at its cost, reasonable insurance against liability and other risks associated with its activities contemplated by this Agreement, provided, that, at a minimum, JBI will maintain, in force from [***] days prior to enrollment of the first patient in a Clinical Study, a clinical trials/product liability insurance policy providing coverage of at least $[***] per claim and $[***] Annual aggregate and, provided further that such coverage is increased to at least $[***] at least [***] days before JBI initiates the First Commercial Sale of a Product hereunder. JBI will furnish to Isis evidence of such insurance upon request. Notwithstanding the foregoing, JBI may self-insure to the extent that it self-insures for its other products, but at a minimum will self-insure at levels that are consistent with levels customarily maintained against similar risks by similar companies in JBI’s industry. |
9.5 | LIMITATION OF CONSEQUENTIAL DAMAGES. EXCEPT FOR (a) CLAIMS OF A THIRD PARTY THAT ARE SUBJECT TO INDEMNIFICATION UNDER THIS ARTICLE 9, (b) CLAIMS ARISING OUT OF A PARTY’S WILLFUL MISCONDUCT UNDER THIS AGREEMENT, (c) A PARTY’S BREACH OF ARTICLE 2, OR A BREACH OF SECTION 10.3.4(a) BY JBI OR ITS AFFILIATES OR (d) 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. |
10.1 | Agreement Term; Expiration. This Agreement is effective as of the Effective Date and, unless earlier terminated pursuant to the other provisions of this ARTICLE 10, will continue in full force and effect until the expiration of all payment obligations under this Agreement with respect to all Products in all countries; provided, however, that if every Option either (a) has expired as a result of JBI not providing Isis a written notice stating JBI is exercising such Option and paying Isis the applicable license fee under Section 6.4 by the applicable Option Deadline, or (b) has been terminated prior to Option exercise pursuant to Section 10.2.1 or 10.2.2, then this Agreement will expire on the expiration or termination, as applicable, of the last Option. |
10.2 | Termination of the Agreement. |
10.2.1 | JBI’s Termination for Convenience. At any time following payment by JBI of the upfront fee under Section 6.1, subject to Section 10.3.1 below, JBI will be entitled to terminate this Agreement as a whole, or terminate this Agreement in part with respect to a particular Drug Discovery Program and applicable Collaboration Target, for convenience by providing 90 days written notice to Isis of such termination. |
10.2.2 | Termination for Material Breach. |
(a) | JBI’s Right to Terminate. If JBI believes that Isis is in material breach of this Agreement (other than with respect to a failure to use Commercially Reasonable Efforts under Section 1.2.5, which is governed by Section 10.2.3 below), then JBI may deliver notice of such material breach to Isis. If the breach is curable, Isis will have 60 days to cure such breach. If Isis fails to cure such breach within the 60 day period, or if the breach is not subject to cure, JBI may terminate this Agreement as a whole, or terminate this Agreement in part with respect to the particular Program affected by such breach, and the applicable Collaboration Target, by providing written notice to Isis. Without limiting the foregoing, breach by a Party of ARTICLE 2 of this Agreement constitutes a material breach of this Agreement with respect to the Program affected by such breach and the applicable Collaboration Target. |
(b) | Isis’ Right to Terminate. If Isis believes that JBI is in material breach of this Agreement (other than with respect to a failure to use Commercially Reasonable Efforts under Section 1.2.5, Section 5.1 or Section 5.2, which is governed by Section 10.2.3 below), then Isis may deliver notice of such material breach to JBI. If the breach is curable, JBI will have 60 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 30 days following such notice). If JBI fails to cure such breach within the 60 day or 30 day period, as applicable, or if the breach is not subject to cure, Isis in its sole discretion may terminate this Agreement with respect to the Drug Discovery Program(s) and the applicable Collaboration Target(s) affected by such breach by providing written notice thereof to JBI. To the extent such material breach is uncured for one Drug Discovery Program, the remaining active Drug Discovery Programs for which there is no uncured material breach shall remain in effect. |
10.2.3 | Remedies for Failure to Use Commercially Reasonable Efforts. |
(a) | If Isis, in JBI’s reasonable determination, fails to use Commercially Reasonable Efforts in the activities contemplated in Section 1.2.5 prior to Option exercise with respect to a particular Drug Discovery Program or with respect to other agreed-upon activities to be performed by Isis associated with the research, Development, or Commercialization of a Product, under this Agreement, JBI will notify Isis and, within 30 days thereafter, Isis and JBI 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 Isis’ use of Commercially Reasonable Efforts in Section 1.2.5 or for activities otherwise agreed upon by Isis under this Agreement. Following such a meeting, if Isis fails to use Commercially Reasonable Efforts as contemplated by Section 1.2.5 with respect to such Drug Discovery Program, then subject to Section 10.2.4 below, JBI will have the right to terminate this Agreement as it relates to the applicable Drug Discovery Program. |
(b) | If JBI, in Isis’ reasonable determination, fails to use Commercially Reasonable Efforts under Section 1.2.5, Section 5.1 or Section 5.2 with respect to a Product or Drug Discovery Program above, Isis will notify JBI and, within 30 days thereafter, Isis and JBI 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 JBI’s use of Commercially Reasonable Efforts in Section 1.2.5, Section 5.1 or Section 5.2. Following such a meeting, if JBI fails to use Commercially Reasonable Efforts with respect to the applicable Product or Drug Discovery Program as contemplated by Section 1.2.5, Section 5.1 or Section 5.2, then subject to Section 10.2.4 below, Isis will have the right, at its sole discretion, to terminate this Agreement as it relates to such Product or Drug Discovery Program. |
10.2.4 | Disputes Regarding Material Breach. Notwithstanding the foregoing, if the Breaching Party in Section 10.2.2 or Section 10.2.3 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 60 day period, the Non-Breaching Party will not have the right to terminate this Agreement in accordance with Section 10.2.2 or Section 10.2.3, as applicable, unless and until it has been determined in accordance with Section 12.1 that this Agreement was materially breached by the Breaching Party and the Breaching Party fails to cure such breach within 30 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. |
10.2.5 | Termination for Patent Challenge. Isis may terminate this Agreement, if JBI disputes, [***] validity [***], provided however that, [***] Isis shall not have the right to terminate if [***]: |
10.2.6 | Termination for Insolvency. Either Party may terminate this Agreement if, at any time, the other Party files in any court or agency pursuant to any statute or regulation of any state or country a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of substantially all of its assets; or if the other Party proposes a written agreement of composition or extension of substantially all of its debts; or if the other Party will be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition will not be dismissed within 90 days after the filing thereof; or if the other Party will propose or be a party to any dissolution or liquidation; or if the other Party will make an assignment of substantially all of its assets for the benefit of creditors. |
10.3 | Consequences of Expiration or Termination of the Agreement. |
10.3.1 | In General. If this Agreement expires or is terminated by a Party in accordance with this ARTICLE 10 at any time and for any reason, the following terms will apply to any Drug Discovery Program that is the subject of such expiration or termination: |
(a) | 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, except to the extent such Confidential Information is necessary or useful to conduct activities under a surviving Drug Discovery Program. 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. |
(b) | Accrued Rights. Termination or expiration of this Agreement for any reason will be without prejudice to any rights or financial compensation that will have accrued to the benefit of a Party prior to such termination or expiration. Such termination or expiration will not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement. For purposes of clarification, milestone payments under ARTICLE 6 accrue as of the date the applicable Milestone Event is achieved even if the payment is not due at that time. |
(c) | Survival. The following provisions of this Agreement will survive the expiration or termination of this Agreement: Section 4.1.2(c) (Effect of Termination on Sublicenses), Section 4.2.2, Section 6.11.3 (Records Retention), Section 6.12 (Audits), Section 7.1.1 (Isis Technology and JBI Technology), Section 7.1.2 (Agreement Technology), Section 8.4 (Disclaimer), ARTICLE 9 (Indemnification; Insurance), Section 10.2.5 (Termination for Insolvency), Section 10.3 (Consequences of Expiration or Termination of the Agreement), ARTICLE 11 (Confidentiality), ARTICLE 12 (Miscellaneous) and Appendix 1 (Definitions) (to the extent definitions are embodied in the foregoing listed Articles and Sections). |
10.3.2 | Perpetual, Royalty-Free Non-Exclusive License. If JBI has exercised its Option for a particular Drug Discovery Program, then upon expiration of the Royalty Period in all countries in which the applicable Products are being or have been sold, Isis will and hereby does grant to JBI a perpetual, nonexclusive, worldwide, royalty-free, fully paid-up, sublicensable license under the Isis Know-How to Manufacture, Develop and Commercialize any Product under such Drug Discovery Program. |
10.3.3 | Termination Before Option Exercise. If this Agreement expires or is terminated by a Party in accordance with this ARTICLE 10 before Option exercise, then, in addition to the terms set forth in Section 10.3.1, the following terms will apply to each Drug Discovery Program that is the subject of such expiration or termination: |
(a) | JBI’s Option under Section 3.1 will expire and Isis will be free to Develop and Commercialize Compounds included in such Drug Discovery Program on its own or with a Third Party. |
(b) | Neither Party will have any further obligations under Section 2.1 of this Agreement with respect to the terminated Drug Discovery Program(s). |
(c) | To the extent requested by Isis, JBI will promptly transfer to Isis all data, results and information (including JBI’s Confidential Information and any regulatory documentation (including drafts)) related to the terminated Drug Discovery Program(s) in the possession of JBI and its contractors to the extent such data, results and information were generated by or on behalf of JBI under this Agreement. |
(d) | Except as explicitly set forth in Section 10.3.1(a), Section 10.3.1(b) or Section 10.3.1(c), JBI will have no further rights and Isis will have no further obligations with respect to each terminated Drug Discovery Program. |
10.3.4 | Termination After Option Exercise. If this Agreement is terminated by a Party in accordance with this ARTICLE 10 after Option exercise, then, in addition to the terms set forth in Section 10.3.1, the following terms will apply to any Pre-Clinical Development Program that is the subject of such termination: |
(a) | The applicable licenses granted by Isis to JBI under this Agreement will terminate and JBI, its Affiliates and Sublicensees will cease selling the applicable Products. |
(b) | Neither Party will have any further obligations under Section 2.1 of this Agreement with respect to the terminated Pre-Clinical Development Program(s). |
(c) | Except as explicitly set forth in Section 10.3.1(a), JBI will have no further rights and Isis will have no further obligations with respect to the terminated Pre-Clinical Development Program. |
(d) | If (y) JBI terminates the Agreement under Section 10.2.1 (JBI’s Termination for Convenience) or (z) Isis terminates this Agreement under Section 10.2.2(b) (Isis’ Right to Terminate) or Section 10.2.3 (Remedies for Failure to Use Commercially Reasonable Efforts), then the following additional terms will also apply solely with respect to the terminated Pre-Clinical Development Program(s): |
(i) | JBI will grant to Isis a sublicensable, worldwide, royalty bearing exclusive license or sublicense, as the case may be, to all JBI Technology Controlled by JBI as of the date of such reversion that Covers the applicable Discontinued Product(s) solely as necessary to Develop, make, have made, use, sell, offer for sale, have sold, import and otherwise Commercialize the applicable Discontinued Product(s) in the Field (such license will be sublicensable by Isis in accordance with Section 4.1.2, mutatis mutandis); |
(ii) | For each Discontinued Product for which JBI, its Affiliate or Sublicensee has [***], Isis or any sublicensee or collaborator shall pay to JBI a royalty on net sales made by Isis or its Affiliates or sublicensee of such Discontinued Product according to the following: (a) if neither [***] prior to termination: [***]% of Net Sales, (b) if JBI, its Affiliate or Sublicensee [***] for such Discontinued Product prior to termination: [***]% of Net Sales, (c) if JBI, its Affiliate or Sublicensee [***] for such Discontinued Product prior to termination: [***]% of Net Sales, and (d) if JBI, its Affiliate or Sublicensee [***] for such Discontinued Product prior to termination: [***]% of Net Sales; provided (A) if (i) Isis enters an arms-length license agreement with a Third Party with respect to a Discontinued Product and (ii) the definition of Net Sales is different in such license agreement than as described above, then, the Parties will use the definition described in the Third Party license for the calculation of royalties under this Section 10.3.4(d)(ii); and (B) Sections 6.8.2, 6.10, 6.12 and 6.14 will govern the payment of royalties from Isis to JBI under this Section 10.3.4(d)(ii), mutatis mutandis. |
(iii) | JBI will assign to Isis any Product-Specific Patent Rights and Isis’ interest in any Jointly-Owned Program Patents that, in each case relate to the applicable Discontinued Product(s) previously assigned by Isis to JBI under this Agreement; |
(iv) | JBI will transfer to Isis for use with respect to the Development and Commercialization of the applicable Discontinued Product(s), any Know-How data, results, regulatory information, filings, and files in the possession of JBI as of the date of such reversion to the extent related to such Discontinued Product(s), and any other information or material specified in Section 4.4; |
(v) | JBI will license to Isis any trademarks that are specific to a Discontinued Product(s) solely for use with such Discontinued Product(s), in accordance with Section 4.1.5, mutatis mutandis; provided, however, that in no event will JBI have any obligation to license to Isis any trademarks used by JBI both in connection with the Product and in connection with the sale of any other product or service, including any JBI- or JBI-formative marks; and |
(vi) | Isis will control and be responsible for all aspects of the Prosecution and Maintenance of all Jointly-Owned Program Patents arising from the terminated Pre-Clinical Development Program (or the corresponding Drug Discovery Program), and JBI will provide Isis with (and will instruct its counsel to provide Isis with) all of the information and records in JBI’s and its counsel’s possession related to the Prosecution and Maintenance of such Jointly-Owned Program Patents; provided, however, if Isis intends to abandon any such Jointly-Owned Program Patents without first filing a continuation or substitution, then Isis will notify JBI of such intention at least 60 days before such Patent Right will become abandoned, and JBI will have the right, but not the obligation, to assume responsibility for the Prosecution and Maintenance thereof at its own expense with counsel of its own choice. |
(e) | If Isis terminates this Agreement due to JBI’s material breach or JBI terminates this Agreement for convenience, upon Isis’ written request pursuant to a mutually agreed supply agreement, JBI will sell to Isis any bulk API, Clinical Supplies and Finished Drug Product in JBI’s possession at the time of such termination, at a price equal to JBI’s cost at the time of manufacture. |
(f) | To the extent requested by Isis, JBI will promptly assign to Isis any manufacturing agreements identified by Isis solely to the extent related to the applicable Discontinued Products to which JBI is a party. |
11.1 | 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 or proprietary information or materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) which is disclosed to it by the other Party (the “Disclosing Party”) or its Affiliates or otherwise received or accessed by a Receiving Party in the course of performing its obligations or exercising its rights under this Agreement, including trade secrets, Know-How, inventions or discoveries, proprietary information, formulae, processes, techniques and information relating to the past, present and future marketing, financial, and research and development activities of any product or potential product or useful technology of the Disclosing Party or its Affiliates and the pricing thereof (collectively, “Confidential Information”). |
11.2 | Prior Confidentiality Agreement Superseded. As of the Effective Date, this Agreement supersedes the Confidential Disclosure Agreement executed by Isis and JBI on July 30, 2014 (including any and all amendments thereto). All information exchanged between the Parties under such Confidential Disclosure Agreement will be deemed Confidential Information hereunder and will be subject to the terms of this ARTICLE 11. |
11.3 | Authorized Disclosure. Except as expressly provided otherwise in this Agreement, a Receiving Party or its Affiliates may use and disclose to Third Parties Confidential Information of the Disclosing Party as follows: (i) solely in connection with the performance of its obligations or exercise of rights granted or reserved in this Agreement under confidentiality provisions no less restrictive than those in this Agreement, provided, that Confidential Information may be disclosed by a Receiving Party to a governmental entity or agency without requiring such entity or agency to enter into a confidentiality agreement; (ii) to the extent reasonably necessary to file or prosecute patent, copyright and trademark applications (subject to Section 11.4 below), complying with applicable governmental regulations, obtaining Approvals, conducting Pre-Clinical Studies or Clinical Studies, marketing the Product, or as otherwise required by applicable law, regulation, rule or legal process (including the rules of the SEC and any stock exchange); provided, however, that if a Receiving Party or any of its Affiliates is required by law or regulation to make any such disclosure of a Disclosing Party’s Confidential Information it will, except where impracticable for necessary disclosures, give reasonable advance notice to the Disclosing Party of such disclosure requirement and will use its reasonable efforts to secure confidential treatment of such Confidential Information required to be disclosed; (iii) in communication with actual or potential lenders, investors, merger partners, acquirers, consultants, or professional advisors on a need-to-know basis, in each case under confidentiality provisions no less restrictive than those of this Agreement; (iv) to the extent such disclosure is required to comply with existing expressly stated contractual obligations owed to such Party’s or its Affiliates’ licensor with respect to any intellectual property licensed to the other Party under this Agreement; or (v) as mutually agreed to in writing by the Parties. |
11.4 | Press Release; Publications; Disclosure of Agreement. |
11.4.1 | Announcement of Transaction. On or promptly after the Effective Date, the Parties will issue a public announcement of the execution of this Agreement in form and substance mutually agreed by the Parties and included in Schedule 11.4. |
11.4.2 | Other Disclosures. Except to the extent required to comply with applicable law, regulation, rule or legal process or as otherwise permitted in accordance with this Section 11.4, neither Party nor such Party’s Affiliates will make any public announcements, press releases or other public disclosures concerning a Drug Discovery Program, a Product, this Agreement or the terms or the subject matter hereof without the prior written consent of the other, which will not be unreasonably withheld, conditioned or delayed. |
11.4.3 | Use of Name. Except as set forth in Section 11.4.8, 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. |
11.4.4 | Notice of Significant Events. Each party will immediately notify (and provide as much advance notice as possible, but at a minimum two Business Days advance notice to) the other Party of any event materially related to a Product (including in such notice any disclosure of starting/stopping of a Clinical Study, clinical data or results, material regulatory discussions, filings, Approval or JBI’s sales projections) so the Parties may analyze the need for or desirability of publicly disclosing or reporting such event. |
11.4.5 | JBI Disclosures After Option Exercise. After Option if JBI intends to make a press release or similar public communication disclosing regulatory discussions, the efficacy or safety data or results related to such Product or JBI’s sales projections, (i) JBI will submit such proposed communication to Isis for review at least two Business Days in advance of such proposed public disclosure, (ii) Isis will have the right to review and recommend changes to such communication, and (iii) JBI will in good faith consider any changes that are timely recommended by Isis. |
11.4.6 | Scientific or Clinical Presentations. The Parties agree to use Commercially Reasonable Efforts to control public scientific disclosures of results of the Development activities under this Agreement to prevent any potential adverse effect of any premature public disclosure of such results. The Parties will establish a procedure for publication review and each Party will first submit to the other Party through the Joint Patent Committee an early draft of all such publications or presentations, whether they are to be presented orally or in written form, at least 45 days prior to submission for publication including to facilitate the publication of any summaries of Clinical Studies data and results as required on the clinical trial registry of each respective Party. Each Party will review such proposed publication in order to avoid the unauthorized disclosure of a Party’s Confidential Information and to preserve the patentability of inventions arising from the Drug Discovery Programs. If, during such 45-day period, the other Party informs such Party that its proposed publication contains Confidential Information of the other Party, then such Party will delete such Confidential Information from its proposed publication. In addition, if at any time during such 45-day period, the other Party informs such Party that its proposed publication discloses inventions made by either Party in the course of the Development under this Agreement that have not yet been protected through the filing of a patent application, or the public disclosure of such proposed publication could be expected to have a material adverse effect on any Patent Rights or Know-How solely owned or Controlled by such other Party, then such Party will either (i) delay such proposed publication for up to 60 days from the date the other Party informed such Party of its objection to the proposed publication, to permit the timely preparation and first filing of patent application(s) on the information involved or (ii) remove the identified disclosures prior to publication. |
11.4.7 | Subsequent Disclosure. Notwithstanding the foregoing, to the extent information regarding this Agreement or the 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. |
11.4.8 | Acknowledgment. JBI will acknowledge in any press release, public presentation or publication regarding the collaboration or a Product, Isis’ role in discovering and developing the Product, that the Product is under license from Isis and otherwise acknowledge Isis’ contributions, and Isis’ stock ticker symbol (Nasdaq: ISIS). Isis may include the Product (and identify JBI as its partner for the Product) in Isis’ drug pipeline. |
12.1 | Dispute Resolution. |
12.1.1 | General. The Parties recognize that a dispute may arise relating to this Agreement ("Dispute"). Except as set forth in Section 12.1.5 any Dispute, including Disputes that may involve the parent company, subsidiaries, or affiliates under common control of any Party, shall be resolved in accordance with this Section 12. |
12.1.2 | 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 Section 10, all rights and obligations of the Parties shall continue until such time as any Dispute has been resolved in accordance with the provisions of this Section 12. |
12.1.3 | Escalation. Subject to Section 12.1.5, any claim, Dispute, or controversy as to the breach, enforcement, interpretation or validity of this Agreement will be referred to the Global Therapeutic Area Head, Immunology of JBI and the Chief Operating Officer of Isis (the “Executives”) for attempted resolution. In the event the Executives are unable to resolve such Dispute within 30 days of such Dispute being referred to them, then, upon the written request of either Party to the other Party, the Dispute shall be subject to arbitration in accordance with Section 12.1.4, except as expressly set forth in Section 12.1.5 or Section 12.3. |
12.1.4 | Arbitration. |
(a) | If the Parties fail to resolve the Dispute through Escalation, and a Party desires to pursue resolution of the Dispute, the Dispute shall be submitted by either Party for resolution in arbitration pursuant to the then current CPR Non-Administered Arbitration Rules ("CPR Rules") (www.cpradr.org), except where they conflict with these provisions, in which case these provisions control. The arbitration will be held in Chicago, Illinois. All aspects of the arbitration shall be treated as confidential. |
(b) | The arbitrators will be chosen from the CPR Panel of Distinguished Neutrals, unless a candidate not on such panel is approved by both Parties. Each arbitrator shall be a lawyer with at least 15 years of experience with a law firm or corporate law department of over 25 lawyers or who was a judge of a court of general jurisdiction. To the extent that the Dispute requires special expertise, the Parties will so inform CPR prior to the beginning of the selection process. |
(c) | The arbitration tribunal shall consist of three arbitrators, of whom each Party shall designate one in accordance with the "screened" appointment procedure provided in CPR Rule 5.4. The chair will be chosen in accordance with CPR Rule 6.4. |
(d) | If, however, the aggregate award sought by the Parties is less than $5 million and equitable relief is not sought, a single arbitrator shall be chosen in accordance with the CPR Rules. |
(e) | Candidates for the arbitrator position(s) may be interviewed by representatives of the Parties in advance of their selection, provided that all Parties are represented. |
(f) | The Parties agree to select the arbitrator(s) within 45 days of initiation of the arbitration. The hearing will be concluded within nine (9) months after selection of the arbitrator(s) and the award will be rendered within 60 days of the conclusion of the hearing, or of any post hearing briefing, which briefing will be completed by both sides within 45 days after the conclusion of the hearing. In the event the Parties cannot agree upon a schedule, then the arbitrator(s) shall set the schedule following the time limits set forth above as closely as practical. |
(g) | The hearing will be concluded in ten hearing days or less. Multiple hearing days will be scheduled consecutively to the greatest extent possible. A transcript of the testimony adduced at the hearing shall be made and shall be made available to each Party. |
(h) | The arbitrator(s) shall be guided, but not bound, by the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration (www.cpradr.org) ("Protocol"). The Parties will attempt to agree on modes of document disclosure, electronic discovery, witness presentation, etc. within the parameters of the Protocol. If the Parties cannot agree on discovery and presentation issues, the arbitrator(s) shall decide on presentation modes and provide for discovery within the Protocol, understanding that the Parties contemplate reasonable discovery. |
(i) | The arbitrator(s) shall decide the merits of any Dispute in accordance with the law governing this Agreement, without application of any principle of conflict of laws that would result in reference to a different law. The arbitrator(s) may not apply principles such as "amiable compositeur" or "natural justice and equity." |
(j) | The arbitrator(s) are expressly empowered to decide dispositive motions in advance of any hearing and shall endeavor to decide such motions as would a United States District Court Judge sitting in the jurisdiction whose substantive law governs. |
(k) | The arbitrator(s) shall render a written opinion stating the reasons upon which the award is based. The Parties consent to the jurisdiction of the United States District Court for the district in which the arbitration is held for the enforcement of these provisions and the entry of judgment on any award rendered hereunder. Should such court for any reason lack jurisdiction, any court with jurisdiction may act in the same fashion. |
(l) | Each Party has the right to seek from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the status quo, or preserve the subject matter of the Dispute. Rule 14 of the CPR Rules does not apply to this Agreement. |
(m) | EXCEPT IN THE CASE OF COURT ACTIONS PERMITTED BY SECTION 12.1.5 AND FOR CLAIMS NOT SUBJECT TO ARBITRATION PURSUANT TO SECTION 12.1.4 AS SET FORTH IN SECTION 12.1.5, 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. |
(n) | Each Party will bear its own attorney’s fees, costs, and disbursements arising out of the arbitration, and will pay an equal share of the fees and costs of the arbitrator; provided, however, the arbitrator 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 Administrator and the arbitrator. |
12.1.5 | 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 would be appropriate remedy. In addition, either Party may bring an action in any court of competent jurisdiction to resolve disputes pertaining to the validity, construction, scope, enforceability, infringement or other violations of Patent Rights or other intellectual property rights, and no such claim will be subject to arbitration pursuant to Section 12.1.4. |
12.2 | 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. |
12.3 | 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 9.1 or Section 9.2, and the offsets under Section 6.9.3(c)). Except for the offsets and credits explicitly set forth in Section 6.12, and Section 6.9.3(b) 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. |
12.4 | Assignment and Successors. Neither this Agreement nor any obligation of a Party hereunder may be assigned by either Party without the prior written consent of the other, which will not be unreasonably withheld, delayed or conditioned, except that (i) Isis may assign or transfer its rights to receive payments under this Agreement (but no liabilities), without JBI’s consent, to an Affiliate or to a Third Party in connection with a payment factoring transaction, and (ii) each Party may assign this Agreement and the rights, obligations and interests of such Party hereunder, without the other Party’s consent to any Third Party 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 with a Third Party, provided that in the event of any such transaction (whether this Agreement is actually assigned or is assumed by the acquiring Third Party or the successor corporation (as applicable) by operation of law (e.g., in the context of a reverse triangular merger)), intellectual property rights of the acquiring Third Party that existed prior to such transaction shall not be included in the technology licensed hereunder or otherwise subject to this Agreement; provided that if JBI transfers or assigns this Agreement to [***] described in this Agreement, then JBI (or such Affiliate), will [***] due Isis under ARTICLE 6 for the [***] (defined below) such that Isis receives [***]. |
12.5 | 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; acts, regulations, or laws of any government; war; terrorism; civil commotion; fire, flood, earthquake, tornado, tsunami, explosion or storm; pandemic; epidemic and failure of public utilities or common carriers. In such event the Party so failing or delaying will immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice will be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled for up to a maximum of 90 days, after which time the Parties will negotiate in good faith any modifications of the terms of this Agreement that may be necessary to arrive at an equitable solution, unless the Party giving such notice has set out a reasonable timeframe and plan to resolve the effects of such force majeure and executes such plan within such timeframe. To the extent possible, each Party will use reasonable efforts to minimize the duration of any force majeure. |
12.6 | Notices. Any notice or request required or permitted to be given under or in connection with this Agreement will be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below: |
If to Isis, addressed to: | Isis Pharmaceuticals, Inc. |
with a copy to: | Isis Pharmaceuticals, Inc. |
If to JBI, addressed to: | Janssen Research & Development, LLC |
12.7 | ISIS Reporting of This Agreement. Isis shall provide JBI with at least [***] ([***]) days written notice of any disclosure of this document to a Third Party or to a governmental authority. The Parties agree to promptly convene to discuss such disclosure and discuss, inter alia, the subject matter that may be redacted prior to such submission. Notwithstanding the foregoing, Isis may (i) disclose this Agreement to Isis’ legal counsel, auditors, and other professional advisors on a need-to-know basis, in each case where such advisors have agreed to confidentiality provisions no less restrictive than those of this Agreement, and (ii) may disclose the publicly available redacted version of this Agreement once such redacted version has been filed publicly with the SEC. |
12.8 | Export Clause. Each Party acknowledges that the laws and regulations of the United States restrict the export and re-export of commodities and technical data of United States origin. Each Party agrees that it will not export or re-export restricted commodities or the technical data of the other Party in any form without the appropriate United States and foreign government licenses. |
12.9 | Waiver. Neither Party may waive or release any of its rights or interests in this Agreement except in writing. The failure of either Party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement will not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition. No waiver by either Party of any condition or term in any one or more instances will be construed as a continuing waiver or subsequent waiver of such condition or term or of another condition or term. |
12.10 | 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. |
12.11 | Entire Agreement. This Agreement, together with the Schedules and Appendices hereto, sets forth all the covenants, promises, agreements, warranties, representations, conditions and understandings between the Parties and supersedes and terminates all prior agreements and understanding between the Parties. There are no covenants, promises, agreements, warranties, representations, conditions or understandings, either oral or written, between the Parties other than as set forth herein and therein. No subsequent alteration, amendment, change or addition to this Agreement will be binding upon the Parties hereto unless reduced to writing and signed by the respective authorized officers of the Parties. |
12.12 | 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. |
12.13 | Interpretation. Except as otherwise explicitly specified to the contrary, (a) references to a section, exhibit or schedule means a section of, or schedule or exhibit to this Agreement, unless another agreement is specified, (b) the word “including” (in its various forms) means “including without limitation,” (c) the words “shall” and “will” have the same meaning, (d) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulation, in each case as amended or otherwise modified from time to time, (e) words in the singular or plural form include the plural and singular form, respectively, (f) references to a particular Person include such Person’s successors and assigns to the extent not prohibited by this Agreement, (g) unless otherwise specified, “$” is in reference to United States dollars, and (h) the headings contained in this Agreement, in any exhibit or schedule to this Agreement and in the table of contents 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. |
12.14 | 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 U.S. Generally Accepted Accounting Principles (or any successor standard), consistently applied. |
12.15 | 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. |
12.16 | 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. |
12.17 | 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 Schedules 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. |
12.18 | Counterparts. This Agreement may be signed in counterparts, each of which will be deemed an original, notwithstanding variations in format or file designation which may result from the electronic transmission, storage and printing of copies of this Agreement from separate computers or printers. Facsimile signatures and signatures transmitted via electronic mail in PDF format will be treated as original signatures. |
12.19 | Compliance with Laws. Each Party will, and will ensure that its Affiliates and Sublicensees will, comply with all relevant laws and regulations in exercising its rights and fulfilling its obligations under this Agreement. |
By:
|
/s/ B. Lynne Parshall
|
Name: | B. Lynne Parshall |
Title: | Chief Operating Officer |
By:
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/s/ John Wilson
|
Name: | John Wilson |
Title: | Vice President, Janssen Biotech Inc. |
(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; |
(b) | 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; |
(c) | 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 |
(d) | 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) | normal and customary trade, cash and/or quantity discounts, allowances, and credits allowed or paid, in the form of deductions actually allowed or fees actually paid with respect to sales of such Product (to the extent not already reflected in the amount invoiced) excluding commissions for commercialization; |
b) | excise taxes, use taxes, tariffs, sales taxes and customs duties, and/or other government charges imposed on the sale of Product to the extent included in the price and separately itemized on the invoice price (but specifically excluding, for clarity, any income taxes assessed against the income arising from such sale) (including VAT, but only to the extent that such VAT taxes are not reimbursable or refundable); |
c) | outbound freight, shipment and insurance costs to the extent included in the price and separately itemized on the invoice price; |
d) | compulsory payments and cash rebates related to the sales of such Product paid to a Governmental Authority (or agent thereof) pursuant to governmental regulations by reason of any national or local health insurance program or similar program, to the extent allowed and taken; including Government levied fees as a result of Healthcare Reform policies |
e) | retroactive price reductions, credits or allowances actually granted upon rejections or returns of Product, including for recalls or damaged good and billing errors; and |
f) | rebates, chargebacks, and discounts (or equivalent thereof) actually granted to managed health care organizations, pharmacy benefit managers (or equivalent thereof), federal, state/provincial, local or other governments, or their agencies or purchasers, reimbursers, or trade customers. |
a) | Sales of Product by and between JBI and its Affiliates and sublicenses so long as such Product is subsequently resold to a Third-party end user where such resale to such Third-party end user is included in Net Sales |
b) | Sales of Product for the use in conducting clinical trials, pre-clinical studies or other research or development activities in a country in order to obtain Regulatory Approval of Product in such country |
c) | Product provided free of charge for a bona fide charitable purpose |
d) | Product used for commercially reasonable free sampling programs. |
e) | Sales of Product free of charge for Compassionate |
f) | Sales of Product for Named Patient Sales where such Product is sold at a significant discount to the proposed price for the Product following Approval. |
(a) | The JRC will determine the JRC operating procedures, including frequency of meetings (at least quarterly), location of meetings, and responsibilities for agendas and minutes. The JRC will codify these operating procedures in the written minutes of the first meeting. |
(b) | The JRC may hold meetings in person or by audio or video conference as determined by the JRC; but at least two meetings per year will be in person (one held at Isis’ facilities, and the other held at JBI’s facilities in the U.S.). Alliance Managers will attend JRC meetings as participating non-members. In addition, upon prior approval of the other Party, each Party may invite its employees or consultants to attend JRC meetings, including any subject matter expert(s) with valuable knowledge of Collaboration Targets or the diseases associated with such Collaboration Targets. |
(c) | The co-chairs will be responsible for ensuring that activities occur as set forth in this Agreement, including ensuring that JRC meetings occur, JRC recommendations are properly reflected in the minutes, and any dispute is given prompt attention and resolved in accordance with Section 1.6.3, Section 7.1.3 and Section 12.1, as applicable. |
(d) | The JRC members from the same Party will collectively have one vote. The JRC will strive to make recommendations with approval of both Isis members and JBI members, and record such recommendations in the minutes of the applicable JRC meeting. |
(e) | The JRC may form subcommittees and working groups as it determines in order to carry out its activities under this Agreement, all of which will dissolve when the JRC dissolves. |
(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 100 days after the Effective Date to support the Drug Discovery Programs; |
(c) | Organizing JRC meetings, including agendas, drafting minutes, and publishing final minutes; |
(d) | Supporting the co-chairs of the JRC with organization of meetings, information exchange, meeting minutes, and facilitating dispute resolution as necessary; |
(e) | Preparing status and progress reports on the above as determined necessary by the JRC; |
(f) | Ensuring compliance in maintaining the Isis Internal ASO Safety Database as outlined in Section 5.6; |
(g) | Ensuring proper approval of publications prior to submission as required in Section 11.4; and |
(h) | Understanding and communicating the components contained in the relationship-management document provided by Isis to JBI, to assist JBI in understanding and complying with the contractual obligations under the Isis In-License Agreements after Option exercise. |
D. Wade Walke, Ph.D.
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Amy Blackley, Ph.D.
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Vice President, Corporate Communications and Investor Relations
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Associate Director, Corporate Communications
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760-603-2741
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760-603-2772
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(1)
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ASTRAZENECA AB, a company incorporated in Sweden under no. 556011-7482 with its registered office at 151 85 Södertälje, Sweden and with offices at SE-43 183 Mölndal, Sweden (“AstraZeneca”)
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(2)
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Isis Pharmaceuticals, Inc., a Delaware corporation, having its principal place of business at 2855 Gazelle Court, Carlsbad, CA 92010 (“Isis”)
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1.
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Definitions
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2.
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Modifications
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Table 1 | ||||||||
STAT3 Product Milestone Event
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Column 1
STAT3 Product Milestone Event Payment for High Response Outcome
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Column 2
STAT3 Product Milestone Event Payment for Medium Response Outcome or Low Response Outcome
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||||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
||||
[***]
|
$
|
[***]
|
$
|
[***]
|
3.
|
Amendment Effective Date
|
4.
|
Entire Agreement
|
ASTRAZENECA AB
|
ISIS Pharmaceuticals, INC
|
||||
Signature :
|
/s/ M. Schindler
|
Signature :
|
/s/ B. Lynne Parshall
|
||
Name :
|
M. Schindler
|
Name :
|
B. Lynne Parshall
|
||
Title :
|
16 10 14
|
Title :
|
Chief Operating Officer
|
|
/s/ ERNST & YOUNG LLP
|
|
|
San Diego, California
|
|
February 27, 2015
|
|
/s/ STANLEY T. CROOKE
|
|
Stanley T. Crooke, M.D., Ph.D.
|
|
Chief Executive Officer
|
|
/s/ ELIZABETH L. HOUGEN
|
|
Elizabeth L. Hougen
|
|
Chief Financial Officer
|
|
/s/ STANLEY T. CROOKE
|
|
/s/ ELIZABETH L. HOUGEN
|
Stanley T. Crooke, M.D., Ph.D.
|
|
Elizabeth L. Hougen
|
Chief Executive Officer
|
|
Chief Financial Officer
|
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