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Published: 2008-03-26

Patent Rights Purchase Agreement - Isis Pharmaceuticals Inc. and Gilead Sciences Inc.



                          PATENT RIGHTS PURCHASE AGREEMENT

               This Patent Rights Purchase Agreement (this 'Agreement') is 
made and entered into as of December 18, 1998 (the 'Effective Date') between 
Isis Pharmaceuticals, Inc. ('Isis'), and Gilead Sciences, Inc. ('Gilead'). 

               1.     DEFINITIONS.  

                      1.1     'Cationic Lipid' means those compounds 
described in United States Patent Nos. 5,777,153 and 5,705,693; United States 
Patent Application Serial No. 08/672,206; and European Patent Application No. 
97931462.2, to the extent such compounds are not Codeblocker Compounds. 

                      1.2     'Codeblocker Compound' means an oligonucleotide 
that binds directly to DNA or RNA within a cell on a selective basis 
determined by the nucleotide sequence of the target DNA or RNA and exerts its 
biological activity predominantly through binding to DNA or RNA to inhibit 
the transcription or replication of the target DNA or RNA or binding to RNA 
to inhibit the translation, processing, packaging or regulatory activity of 
the target RNA.  A Codeblocker Compound may also have a mechanism of action 
or biological activity other than one conferred through direct binding to RNA 
or DNA provided that (i) the compound originally was designed to bind a 
target DNA or RNA and (ii) the final compound or any compounds used to derive 
the final compound were not identified using selective purification and 
polymerase amplification in any fashion.  An oligonucleotide, is any oligomer 
or polymer made up [***]  An oligonucleotide includes RNA or DNA fragments, 
and may be composed of naturally occurring or non-naturally occurring bases, 
sugars or intersugar linkages.  An oligonucleotide may have the bases, sugars 
or intersugar linkages partially or completely absent.  Oligonucleotides may 
be made such that adjacent nucleoside or nucleoside fragments are linked 
together by phosphate groups or modified or non-naturally occurring 
internucleoside linkages to form the internucleoside backbone of the 
oligomer, whether or not such linkages retain a phosphorous atom in the 
linkage.

                      1.3     'Oligonucleotide Delivery System' means any 
carrier, targeting entity, excipient, formulation, device, prodrug, covalent 
or noncovalent conjugate, encapsulating vesicle, microcapsule, micro- or 
nanosphere, emulsion, or microemulsion, lipid, liposome, virosome, or 
artificial vial envelope which was developed by Gilead on or prior to the 
Effective Date, and which (i) enhances the cellular penetration or 
circulating half-life of a Codeblocker Compound, (ii) selectively delivers a 
Codeblocker compound to the intended target tissue, cell or subcellular 
compartment, (iii) provides sustained release of a Codeblocker Compound from 
a depot formulation, or (iv) otherwise favorably alters the absorption, 
distribution, metabolism or excretion of a Codeblocker Compound so as to 
enhance its pharmacological activity of clinical value.  'Oligonucleotide 
Delivery System' includes cationic lipids.

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                                       1.



                      1.4     'Patent Rights' means the patents and patent 
applications listed in Exhibit A attached hereto.

               2.     ASSIGNMENTS AND LICENSES.     

                      2.1     Gilead hereby sells and assigns to Isis all of 
Gilead's right, title and interest in Patent Rights, subject to the rights of 
Glaxo Wellcome Inc. ('Glaxo') under the Collaborative Research Agreement 
between Glaxo and Gilead dated March 25, 1996 (the 'Glaxo Agreement'), 
provided however, that the assignment of U.S. Patent Number 5,256,775 shall 
be subject to the condition precedent that Gilead settle the interference 
involving this patent on conditions of Gilead's choosing (including conceding 
priority). Gilead hereby grants Isis an exclusive, royalty-free, worldwide, 
assignable license (with the right to grant sublicenses) to U.S. Patent 
Number 5,256,775 beginning on the Effective Date and continuing until such 
time that Gilead settles the interference and the assignment to Isis becomes 
effective.

                      2.2     Gilead hereby assigns and delegates to Isis 
(and Isis accepts and agrees to perform) all of Gilead's rights and 
obligations under the License Agreement between Glen Research Corporation 
('Glen Research') and Gilead dated January 1, 1994 and amended on November 
19, 1996.  A copy of the written consent to such assignment and delegation 
signed by Glen Research is attached hereto as Exhibit B.  In the event that 
Isis, by reason of this Agreement, is required to indemnify Glen Research 
under Section 8.1 (b) of the Glen Research License Agreement, Gilead will 
indemnify Isis up to a maximum amount equal to one hundred percent (100%) of 
total royalties received by Gilead from Glen Research; thereafter, Gilead 
will not have any indemnity obligations to Isis related to such Agreement.  
Gilead will continue to honor its obligations to Glen Research for activities 
preceding the Effective Date of this Agreement. 

                      2.3     Subject to the rights of Glen Research above, 
Isis hereby grants to Gilead an exclusive, perpetual, irrevocable,  
royalty-free, worldwide, assignable license (with the right to grant 
sublicenses) to directly or indirectly make, have made, use, import, export 
or sell compounds and other subject matter falling within the scope of Patent 
Rights which are [***]

                      2.4     Gilead hereby grants to Isis a nonexclusive, 
perpetual, royalty-free, worldwide, assignable license (with the right to 
grant sublicenses) to compounds and other subject matter which are within the 
scope of Patent Rights, solely for use as intermediates in the manufacture of 
Codeblocker Compounds or oligomers [***]

                      2.5     Isis hereby grants to Gilead a non-exclusive, 
non-sublicensable, non-assignable, perpetual, irrevocable, royalty-free, 
worldwide license under Patent Rights to make and use Codeblocker Compounds 
and Oligonucleotide Delivery Systems for internal research purposes, but not 
for any commercial purpose.

                      2.6     Isis will not have any obligations to Gilead 
relating to Codeblocker Compounds or this Agreement to the extent arising 
prior to the Effective Date. 

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                                       2.



                      2.7     Each party hereby agrees to execute such 
documents and to take such other actions as shall be necessary or appropriate 
to effectuate the assignments and licenses set forth in this Section 2.

               3.     REPRESENTATIONS AND WARRANTIES BY GILEAD.

Gilead makes the following representations and warranties to Isis, each of 
which will survive the Effective Date:

                      3.1     To the best of Gilead's knowledge, the Patent 
Rights include all of the patents and patent applications owned or controlled 
by Gilead on or prior to the Effective Date that cover Codeblocker Compounds 
and Oligonucleotide Delivery Systems, their manufacture or use. There are no 
other US or unpublished foreign filings owned or controlled by Gilead filed 
prior to the Effective Date which claim Codeblocker Compounds or 
Oligonucleotide Delivery Systems other than as set forth in Exhibit A, nor 
does Gilead have any present intention to make such filings.  If Gilead 
becomes aware of any patents or patent applications that (i) are owned or 
controlled by Gilead, (ii) claim inventions made prior to the Effective Date, 
(iii) cover Codeblocker Compounds or Oligonucleotide Delivery Systems, and 
(iv) are not included in Exhibit A, Gilead will promptly notify Isis in 
writing and execute appropriate documents to transfer such patents and patent 
applications to Isis.

                      3.2     Gilead represents and Isis acknowledges that 
(i) the Glaxo Agreement remains in effect and Gilead and Glaxo have ongoing 
rights and obligations thereunder, modified to the extent specifically set 
forth in this Agreement and (ii) this Agreement is not an assignment of 
Gilead's rights or obligations under the Glaxo Agreement and that Isis 
assumes no rights or obligations to Glaxo under this Agreement.  Gilead 
represents that the Research Term and all rights, obligations and funding 
relating thereto under the Glaxo Agreement have been terminated.  Gilead will 
not enter into any future amendments to the Glaxo Agreement which in any way 
affect the rights of Isis hereunder.

                      3.3     The Glaxo Agreement and the license to Glen 
Research referenced in Section 2.2 above are the only licenses and Gilead is 
not aware of any other third party rights of any kind affecting the Patent 
Rights. Except with respect to U.S. Patent Number 5,256,775, which is subject 
to an interference proceeding, the Patent Rights are not the subject of any 
pending interference, cancellation or other protest proceeding not otherwise 
known to Isis, or otherwise subject to rights or obligations to any third 
party other than Glaxo and Glen Research.  The complete terms and conditions 
of such rights and obligations relating to Glaxo and Glen Research have been 
disclosed to Isis.

                      3.4     There are no Collaboration Compounds (as 
defined in Section 1.7 of the Glaxo Agreement) and none were developed during 
the Research Term under the Glaxo Agreement.  Gilead does not owe any 
royalties to Glaxo or any third party under the Glaxo Agreement nor does 
Gilead have any known or pending claims against Glaxo arising out of the 
Glaxo Agreement.  To the best of Gilead's knowledge, (i) Glaxo does not owe 
any royalties to Gilead or any third party under the Glaxo Agreement, (ii) 
nor does Glaxo have any known or pending claims against Gilead arising out of 
the Glaxo Agreement.


                                       3.



               4.     TECHNOLOGY TRANSFER.

                      4.1     Gilead and Isis will cooperate in the filing 
and execution of any and all documents necessary to effectuate the assignment 
to Isis of the Patent Rights, including the filing of assignments or other 
transfer of title covenants with the U.S. Patent and Trademark Office and 
foreign patent offices as applicable to the Patent Rights.  Within thirty 
(30) days from the Effective Date, Gilead will notify all attorneys handling 
the prosecution of the Patent Rights to contact the Isis Patent Department to 
provide an immediate status update on the Patent Rights and to prepare the 
documents necessary to transfer the Patent Rights to Isis.  The cost of 
recording assignments of the Patent Rights will be borne by Isis.  Within 
forty-five (45) days from the Effective Date, Gilead and its counsel will use 
their reasonable best efforts to transfer all files and supporting documents 
relating to the Patent Rights to Isis, including but not limited to, all 
initial invention disclosure documents, all documents sent to the U.S. Patent 
and Trademark Office regarding inventions and claims, all draft patent 
applications, all filing or prosecution documents submitted to the patent 
offices, and all file wrappers.  Conception notebooks and all other documents 
in the possession or under the control of Gilead or its counsel relating to 
conception and/or reduction to practice, such as scientist notebooks shall be 
obtained in accord with Gilead's ordinary document retention and made 
available to Isis upon Isis' reasonable request.  All documents to be 
provided to Isis hereunder are to be sent by expedited delivery service.

                      4.2     Gilead will make appropriate scientific staff 
available to Isis for a scientific tutorial on the subject matter of this 
Agreement, such tutorial not to exceed more than [***] from Gilead's staff 
and not to obligate Gilead to disclose any third party confidential 
information. 

               5.     PATENT MAINTENANCE AND PROSECUTION RESPONSIBILITIES.

                      5.1     On and after the Effective Date, Isis will take 
responsibility for any action or proceeding involving Patent Rights.  The 
cost of recording the assignment of Patent Rights shall be borne solely by 
Isis.  If Isis elects not to take such responsibility involving Patent 
Right(s) in a particular country then Isis will timely notify Gilead and 
Glaxo 30 days before the time future action is due, and thereafter Gilead or 
Glaxo shall undertake such responsibility.  If Gilead or Glaxo elects to do 
so, Isis will grant any necessary authority to Gilead.  Gilead will determine 
whether Gilead or Glaxo shall take such responsibility at their expense.  
Isis assumes no obligation to Glaxo as a result of its agreement with Gilead 
in this Section 5.1.

                      5.2     NOTICE OF INFRINGEMENT.  Isis shall promptly 
notify Gilead in writing of any infringement of any assigned Patent Right(s) 
of which it becomes aware.

                      5.3     ENFORCEMENT OF PATENTS.  Except as otherwise 
set forth in this Section, Isis may, but shall not be required to, prosecute 
any alleged infringement or threatened infringement of any assigned Patent 
Right(s) of which it is aware or which is brought to its attention.  Isis 
shall act in its own name and at its own expense.  If Isis has failed to 
prosecute under the first sentence of this paragraph with respect to alleged 
or threatened infringement 

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[***]=CONFIDENTIAL TREATMENT REQUESTED


                                       4.



relating to any Patent Right(s) (i) two months after it has been notified in 
writing of such alleged infringement, or (ii) one month before the time 
limit, if any, set forth in the appropriate laws and regulations for the 
filing of such actions, whichever comes first, Gilead (or at its election 
Glaxo) may, but shall not be required to, prosecute any such alleged 
infringement or threatened infringement of a Patent within the Patent Rights. 
In any such event, Gilead or Glaxo shall be free to act in its own name and 
at its own expense.  Notwithstanding the foregoing and as between the 
parties, Gilead shall have the sole and exclusive right of enforcement with 
respect to any alleged or threatened infringement of any right within the 
scope of the license granted in Section 2.3 of this Agreement.  Isis shall 
cooperate fully with Gilead or Glaxo in any action by Gilead or Glaxo, 
respectively, under this paragraph, including if required in order to bring 
such an action, the furnishing of a power of attorney.

               6.     INDEMNITY AND WARRANTY.

                      6.1     INDEMNITY BY ISIS. Isis will indemnify, save, 
defend and hold Gilead and its agents, directors and employees harmless from 
and against any and all suits, claims, actions, demands, liabilities, 
expenses and/or loss, including reasonable legal expense and attorneys fees, 
resulting from activities under this agreement by Isis.  

                      6.2     INDEMNITY BY GILEAD.  Gilead will indemnify, 
save, defend and hold Isis and its agents, directors and employees harmless 
from and against any and all suits, claims, actions, demands, liabilities, 
expenses and/or loss, including reasonable legal expense and attorney fees, 
resulting from (i) Gilead's, Gilead's sublicensee's or Gilead's assignee's 
activities under the licenses provided for in Sections 2.3 and 2.5; (ii) 
Gilead's contractual obligations to third parties including Glaxo and Glen 
Research, except to the extent resulting from Isis' activities under this 
Agreement; or (iii) Gilead's exercise of the Patent Rights prior to the 
Effective Date.

                      6.3     WARRANTY.  Gilead warrants that it has 
sufficient right and title to enter into and to perform its obligations under 
this Agreement. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PARTIES 
DISCLAIM ALL WARRANTIES OF ANY NATURE, EXPRESS OR IMPLIED, INCLUDING WITHOUT 
LIMITATION WARRANTIES OF VALIDITY, MERCHANTABILITY, NONINFRINGEMENT, AND 
FITNESS FOR A PARTICULAR PURPOSE.

               7.     CONFIDENTIALITY. Confidential Information under the 
terms of this Agreement is all information relating to the Patent Rights  
sold, assigned or licensed to Isis under Section 2.1 and the Technology 
Transfer to Isis by Gilead under Section 4.1.  Gilead agrees to treat the 
Confidential Information as confidential and to protect and maintain the 
confidentiality thereof.  Gilead will use at least the same standard of care 
as it uses to protect its own Confidential Information to ensure that its 
employees, agents, and consultants do not disclose or make any unauthorized 
use of such Confidential Information.  Gilead will promptly notify Isis upon 
discovery of any unauthorized use or disclosure of the Confidential 
Information. Confidential Information will not include any information which 
is generally available to the public, is otherwise part of the public domain 
other than through any act or omission of Gilead in breach of this Agreement, 
or which is required to be disclosed by law or contract entered into 


                                       5.



prior to this Agreement (provided that Isis shall have notice thereof in 
advance so that it can act to protect its interests should it decide to do 
so).

               8.     CONSIDERATION.  Isis shall pay Gilead the following 
noncontingent, non-refundable cash payments as consideration for the 
assignments provided for in this Agreement: $2,000,000 on the Effective Date, 
$1,000,000 on the first anniversary of the Effective Date, $1,000,000 on the 
second anniversary of the Effective Date, and $2,000,000 on the third 
anniversary of the Effective Date, for total payments of $6,000,000.  In the 
event that Isis defaults on any of these payments, after thirty (30) days 
notice and an opportunity to cure, then ownership of all Patent Rights will 
automatically revert to Gilead and Isis will take all actions reasonably 
requested by Gilead for such purposes, including, without limitation, signing 
and delivering any applicable assignments and other documents.  Isis shall be 
entitled to no damages exceeding the consideration set forth in this Section 
8 for any uncured claim against Gilead respecting Gilead's performance or 
representations hereunder.

               9.     NOTICES.  Notices under this Agreement shall be 
sufficient only if personally delivered, delivered by a major commercial 
rapid delivery courier service, facsimile or mailed by certified or 
registered mail, return receipt requested, to a party at its addresses set 
forth as follows:

               If to Isis:    Isis Pharmaceuticals, Inc.
                              2292 Faraday Avenue
                              Carlsbad, CA 92008
                              Attn:  Executive Vice President, CFO
                              Facsimile:  (760) 431-9448
               
               If to Gilead:  Gilead Sciences, Inc.
                              333 Lakeside Drive
                              Foster City, CA 94404
                              Attn:  Vice President, Intellectual Property
                              Facsimile:  (650) 577-6622
               
               If to Glaxo:   Glaxo Wellcome, Inc.
                              Five Moore Drive
                              Research Triangle Park, NC 27709
                              Attn:  Company Secretary
                              Facsimile:  (919) 483-0265
               
               10.    MISCELLANEOUS.     If any provision of this Agreement 
shall be adjudged by any court of competent jurisdiction to be unenforceable 
or invalid, that provision shall be limited or eliminated to the minimum 
extent necessary to continue to effect the intent of the parties, and this 
Agreement shall otherwise remain in full force and effect and enforceable.  
Any waivers or amendments shall be effective only if made in writing and 
signed by a representative of the respective parties authorized to bind the 
parties.  This Agreement shall be governed by the laws of the State of 
Delaware, excluding conflicts-of-law principles.  This Agreement is the 
complete and exclusive statement of the mutual understanding of the parties 
and supersedes and cancels all previous written and oral agreements and 
communications relating to the subject matter of this 


                                       6.



Agreement, excluding the Confidential Disclosure Agreement between the 
parties dated July 29, 1998.


                                       7.



         IN WITNESS WHEREOF, the parties have executed this Agreement as of the 
day and year first indicated above.

ISIS PHARMACEUTICALS, INC.                 GILEAD SCIENCES, INC.

By:  /s/  B. Lynne Parshall                By:  /s/  Mark L. Perry
    ------------------------------            ------------------------------

Printed:  B. Lynne Parshall                Printed:  Mark L. Perry
        --------------------------                 --------------------------

Title: Executive Vice President, CFO       Title: Sr. Vice President, Chief 
                                           Financial Officer and General Counsel
Address: 2292 Faraday Avenue
         Carlsbad, CA 92008                Address: 333 Lakeside Drive
                                                    Foster City, CA 94404


                                       8.



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12/16/98                            EXHIBIT A



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                                   EXHIBIT B


December 16, 1998

VIA FACSIMILE AND COURIER

Hugh Mackie, Ph.D.
Glen Research Corporation
22825 Davis Drive
Sterling, VA 20164

RE: ASSIGNMENT OF LICENSE AGREEMENT

Dear Hugh:

As we discussed today by phone, Gilead has negotiated a Patent Rights 
Purchase Agreement with Isis Pharmaceuticals, Inc. ('Isis'), a 
biopharmaceutical company based in Carlsbad, California, pursuant to which 
Gilead will assign all of its antisense patent rights to Isis. As part of 
this Agreement, Gilead will be assigning to Isis the License Agreement 
between Gilead and Glen Research Corporation dated January 1, 1994, as 
amended November 19, 1996 (the 'License Agreement'). The purpose of this 
letter is to obtain the formal consent of Glen Research Corporation to the 
proposed assignment of the License Agreement to Isis, as required by Section 
16 of the License Agreement. Please indicate your consent to the assignment 
by executing and dating this letter in the space indicated below and 
returning it to my attention via facsimile at (650) 577-5488. When you 
receive the original copy of the letter please execute and date it (using the 
same date) and return it to me by courier.

We would be happy to discuss the proposed assignment in more detail with you, 
or put you in touch with appropriate people at Isis. Please give me a call at 
(650) 573-4772, or John Milligan at (650) 573-4756, if you have any 
questions. Thank you for your prompt response to this matter.

Very truly yours,

/s/ Jeffrey W. Bird
Jeffrey W. Bird, M.D., Ph.D.
Senior Vice President, Business Operations

ACCEPTED AND AGREED TO:
Glen Research Corporation

By /s/ Hugh Mackie

Name: Hugh Mackie
Title: President
Date: December 17, 1998