Product Development And Commercialization Agreement

CONFIDENTIAL EXECUTION VERSION




CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R a7a7 200.80(b)4, AND 240.24b-2



PRODUCT DEVELOPMENT AND
COMMERCIALIZATION AGREEMENT



BETWEEN



GLAXO GROUP LIMITED



AND



REGULUS THERAPEUTICS LLC








This PRODUCT DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (this " Agreement ") is entered into and made effective as of the 17 th day of April, 2008 (the " Effective Date ") by and between Regulus Therapeutics LLC, a Delaware limited liability company having its principal place of business at 1896 Rutherford Road, Carlsbad, CA 92008 (" Regulus "), and Glaxo Group Limited, a company existing under the laws of England and Wales, having its registered office at Glaxo Wellcome House, Berkeley Avenue, Greenford, Middlesex, UB6 0NN, England (" GSK "). Regulus and GSK are each referred to herein by name or as a " Party " or, collectively, as " Parties ."



RECITALS



WHEREAS , Regulus is a limited liability company that was formed in 2007 by Isis Pharmaceuticals, Inc. (" Isis ") and Alnylam Pharmaceuticals, Inc. (" Alnylam " and together with Isis, Regulus92 " Parent Companies ") as a joint venture pursuant to a Limited Liability Company Agreement dated September 6, 2007 between Alnylam and Isis (the " Regulus LLC Agreement "), the License and Collaboration Agreement dated September 6, 2007 entered into between Alnylam, Isis and Regulus (the " Regulus License Agreement ") and the Services Agreement dated September 6, 2007 entered into between Alnylam, Isis and Regulus (the " Services Agreement " and together with the Regulus LLC Agreement and Regulus License Agreement, the " JV Agreements ");



WHEREAS , Regulus possesses proprietary technology and know-how related to the research, discovery, identification, synthesis and development of single-stranded oligonucleotide miRNA Antagonists (as defined below);



WHEREAS , GSK possesses expertise in the pharmaceutical research, development, manufacturing and commercialization of human pharmaceuticals, and GSK is interested in developing miRNA Antagonists as drug products;



WHEREAS , GSK desires to engage in a collaborative effort with Regulus, wherein (i) Regulus will conduct [***] different Programs (as defined below) each directed against a particular Target (as defined below) to be identified in accordance with the procedures described herein, in order to discover, research and develop miRNA Antagonists, through to certain agreed-upon stages, and (ii) GSK shall have exclusive options, exercisable at GSK92s sole discretion, at either the [***] (as defined below) or at [***] (as defined below), to further develop and commercialize Collaboration Compounds (as defined below) resulting from each of the [***] Programs on an exclusive basis for any and



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all uses in the Field (as defined below) and in the Territory (as defined below), all on the terms and conditions set forth herein;



WHEREAS , upon GSK92s exercise of any of its options to such Collaboration Compounds, Regulus desires to grant and will grant to GSK, and GSK desires to obtain and will obtain, an exclusive license in the Territory and in the Field under this Agreement to make, have made, use, sell, offer for sale, and import [***] Licensed Products (as defined herein) throughout the Territory, all on the terms and conditions set forth herein; and



WHEREAS , contemporaneously with the execution of this Agreement, the Parties have executed a separate Side Agreement with the Parent Companies (" Side Agreement ") regarding certain matters pertaining to the relationship between the JV Agreements and this Agreement, and on or about the Effective Date, Regulus shall deliver to GSK a Convertible Promissory Note pursuant to which GSK shall lend Regulus the amount specified therein (" Convertible Promissory Note ").



NOW, THEREFORE , in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be hereby bound, do hereby agree as follows:



ARTICLE 1



DEFINITIONS



As used in this Agreement, the following terms shall have the meanings set forth in this Article 1 unless context dictates otherwise. All references to " Dollars" mean U.S. Dollars. The use of the singular form of a defined term also includes the plural form and vice versa, except where expressly noted. The use of the word "including" shall mean "including without limitation". The use of the words "herein," "hereof" or "hereunder," and words of similar import, refer to this Agreement in its entirety and not to any particular provision hereof.



1.1 "Acceptance" means, with respect to an NDA filed for a Licensed Product, (a) in the United States, the receipt of written notice from the FDA in accordance with 21 CFR 314.101(a)(2) that such NDA is officially "filed", (b) in the European Union, receipt by GSK of written notice of acceptance by the EMEA of such NDA for filing under the centralized European procedure in accordance with any feedback received from European Regulatory Authorities; provided, that if the centralized filing procedure is not used, then Acceptance shall be determined upon the acceptance of such NDA by the applicable Regulatory Authority in a



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Major Country in the EU, and (c) in Japan, receipt by GSK of written notice of acceptance of filing of such NDA from the Japanese Ministry of Health, Labour and Welfare (" MHLW").



1.2 "Affiliate" shall mean any Person, whether de jure or de facto , which directly or indirectly through one (1) or more intermediaries controls, is controlled by or is under common control with another Person. A Person shall be deemed to "control" another Person if it (a) owns, directly or indirectly, beneficially or legally, at least fifty percent (50%) of the outstanding voting securities or capital stock (or such lesser percentage which is the maximum allowed to be owned by a Person in a particular jurisdiction) of such other Person, or has other comparable ownership interest with respect to any Person other than a corporation; or (b) has the power, whether pursuant to contract, ownership of securities or otherwise, to direct the management and policies of the Person. Notwithstanding the above, neither of the Parent Companies of Regulus shall be deemed an Affiliate of Regulus for the purposes of this Agreement under any circumstances.



1.3 "Agreement" shall have the meaning assigned to such term in the Recitals.



1.4 "Agreement Term" shall have the meaning assigned to such term in Section 12.1.4.



1.5 "Alliance Manager" shall have the meaning assigned to such term in Section 2.3.



1.6 "Alnylam" shall have the meaning assigned to such term in the Recitals.



1.7 "ANDA" shall mean an Abbreviated New Drug Application and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any equivalent agency or governmental authority outside the U.S. (including any supra-national agency such as the EMEA in the EU).



1.8 "Annual" or "Annually" shall mean Calendar Year.



1.9 "Back-up Compound" shall mean, with respect to a given Leading Compound for a given Program, any other Collaboration Compound Developed under such Program that is designed to inhibit (i.e. directed to or directed against) the same Collaboration Target as the Leading Compound and [***] the Leading Compound.



1.10 "Bankruptcy Code" shall have the meaning assigned to such term in Section 12.6.2.



1.11 "Blocked Target" shall mean a miRNA from [***] that Regulus elects, by written notice to GSK, [***] and that GSK does not, in accordance with [***].



1.12 "Breaching Party" shall have the meaning assigned to such term in Section 12.2.1 or Section 12.2.2, as the case may be.



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1.13 "Business Day" shall mean any day other than a Saturday or Sunday on which banking institutions in both New York, New York and London, England are open for business.



1.14 "Calendar Quarter" shall mean a period of three (3) consecutive months ending on the last day of March, June, September, or December, respectively and will also include the period beginning on the Effective Date and ending on the last day of the calendar quarter in which the Effective Date falls.



1.15 "Calendar Year" shall mean a year of 365 days (or 366 days in a leap year) beginning on January 1 st (or, with respect to 2008, the Effective Date) and ending December 31 st , and so on year-by-year.



1.16 "Candidate Selection Criteria" shall mean the criteria for advancement of a Collaboration Compound [***], which provisional criteria are included in the Initial Research Plan with respect to Programs directed against the Initial Collaboration Targets (as such provisional criteria may be [***] in accordance with Section 2.1.6) and, with respect to Programs directed against the Subsequent Collaboration Targets, as confirmed by the JSC with respect to each such Program in accordance with Section 2.1.6. By way of guideline only, the Candidate Selection Criteria will typically include (a) data regarding the [***] of the Collaboration Compound and other [***] of the Collaboration Compound in [***] as well as a preliminary assessment of the [***], as well as evaluation of [***] models. An assessment of [***] should be typically included with preliminary [***], [***]; (b) the properties of the Collaboration Compound regarding [***]; (c) assessment of the [***]; and (d) a preliminary assessment of [***], (provided, however, that nothing herein shall require Regulus to resolve any such issues if they are identified).



1.17 "[***]" shall have the meaning assigned to such term in Section 4.1.1.



1.18 "[***]" shall have the meaning assigned to such term in Section 6.4.



1.19 "[***]" shall have the meaning assigned to such term in Section 4.2.1.



1.20 "[***]" shall have the meaning assigned to such term in Section 4.2.1.



1.21 "[***]" shall have the meaning assigned to such term in Section 4.2.1.



1.22 "Candidate Selection Stage" shall mean, as applicable, that stage of progression of a Research Program, or a Collaboration Compound within a Research Program, which is defined by the demonstration by Regulus (as confirmed by the JSC) that a Collaboration Compound within such Research Program has met the Candidate Selection Criteria and is ready for advancement into a [***]. For purposes of clarity, notwithstanding the foregoing, the Candidate



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Selection Stage shall be deemed to have been achieved if, at any time during the Research Collaboration Term for a Research Program, GSK or the JSC requests that Regulus begin a [***] of a Collaboration Compound under such Research Program prior to Regulus92 demonstration (and the JSC92s confirmation) that a Collaboration Compound meets the Candidate Selection Criteria.



1.23 "cGMP" shall mean all applicable standards relating to manufacturing practices for fine chemicals, intermediates, bulk products or finished pharmaceutical products. For purposes of this Agreement, cGMPs shall mean the principles (a) detailed in the U.S. Current Good Manufacturing Practices, 21 CFR Parts 210, and The Rules Governing Medicinal Products in the European Community, Volume IV Good Manufacturing Practice for Medicinal Products, as each may be amended from time to time or (b) promulgated by any governmental body having jurisdiction over the manufacture of a Collaboration Compound, in the form of laws or regulations.



1.24 "Chairperson" shall have the meaning assigned to such term in Section 2.1.3.



1.25 "Claims" shall have the meaning assigned to such term in Section 11.1



1.26 "Clinical Studies" shall mean human studies designed to measure the safety, efficacy, tolerability and/or appropriate dosage of a Collaboration Compound or Licensed Product, as the context requires, including without limitation Phase 1 Clinical Trials, Phase 2 Clinical Trials (including any PoC Trial), Phase 3 Clinical Trials and any post-Regulatory Approval studies (such as Phase 4 Clinical Trials).



1.27 "Collaboration Compound" shall mean any miRNA Compound [***] to [***] a Collaboration Target, which compound was either identified or discovered by Regulus or any of its Affiliates or any of its Parent Companies prior to the Effective Date or is discovered or identified by or on behalf of Regulus or any of its Affiliates during the Research Collaboration Term, and [***] of such miRNA Compound which is identified or discovered by or on behalf of Regulus or GSK pursuant to the Agreement.



1.28 "Collaboration Know-How" shall mean any Know-How pertaining to a Collaboration Compound or Licensed Product that is discovered, developed, invented or created solely by a Party and/or its Affiliates (or on behalf of such Party and/or its Affiliates by such Party92s or its Affiliates92 agents or contractors in accordance with Section 3.10), or jointly by or on behalf of the Parties and/or a Party92s Affiliates (or on behalf of such Party and/or its Affiliates by such Party92s or its Affiliates92 agents or contractors in accordance with Section 3.10), in each case pursuant to activities conducted with respect to a Program during the relevant Program



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Term in accordance with the Initial Research Plan, the relevant Research Plan or, if applicable, the relevant Early Development Plan.



1.29 "Collaboration Patent" shall mean any Patent Rights that claim or cover Collaboration Know-How.



1.30 "Collaboration Target(s)" shall have the meaning assigned to such term in Section 3.2.1 below.



1.31 "Collaboration Technology" shall mean the Collaboration Know-How and the Collaboration Patents.



1.32 "Collaboration Term" shall mean the period from the Effective Date until the end of the [***] with respect to all Programs hereunder.



1.33 "Combination Product" shall have the meaning assigned to such term in the definition of "Net Sales" below.



1.34 "Commercialize" or "Commercialization" shall mean any and all activities directed to marketing, promoting, detailing, distributing, importing, having imported, exporting, having exported, selling or offering to sell a miRNA Therapeutic following receipt of Regulatory Approval for such miRNA Therapeutic.



1.35 "Commercializing Party" shall mean (a) GSK, with respect to any Collaboration Compounds other than Refused Candidates, and any Licensed Products other than Refused Candidate Products and Returned Licensed Products, in each case which are being Developed and Commercialized by or on behalf of GSK, its Affiliates or Sublicensees hereunder, and (b) Regulus, with respect to any Refused Candidates, Refused Candidate Products and/or Returned Licensed Products, in each case which are being Developed and Commercialized by or on behalf of Regulus, its Affiliates or Sublicensees hereunder.



1.36 "Competitive Infringement" shall have the meaning assigned to such term in Section 8.5.1.



1.37 "[***]" shall mean the [***] by Regulus of a [***] for such PoC Trial.



1.38 "Confidential Information" shall have the meaning assigned to such term in Section 9.1.



1.39 "Control," "Controls," "Controlled" or "Controlling" shall mean the possession of the right (whether by ownership, license or otherwise) to assign, or grant a license, sublicense or other right, as provided for herein without violating the terms of any agreement or other arrangement with any Third Party or with any Parent Company of Regulus.



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1.40 "Convertible Promissory Note" shall have the meaning assigned to such term in the Recitals.



1.41 "CREATE Act" shall have the meaning assigned to such term in Section 8.8.



1.42 "[***]" shall mean, with respect to any Collaboration Compound, a compound that is [***] from such Collaboration Compound or that is an [***] based thereupon, and that has, or is intended at the time of its synthesis to have, [***] the properties of the Collaboration Compound from which it was [***] and that is designed to [***] the same Collaboration Target as such Collaboration Compound.



1.43 "Develop" or "Development" shall mean, with respect to a miRNA Compound or miRNA Therapeutic, any and all discovery, characterization, preclinical or clinical activity with respect to such miRNA Compound or miRNA Therapeutic, including human clinical trials conducted after Regulatory Approval of such miRNA Therapeutic to seek Regulatory Approval for additional Indications for such miRNA Therapeutic.



1.44 "Development Candidate" shall mean a Collaboration Compound that has been confirmed by the JSC to have satisfied the [***]. For purposes of clarity, (a) a Collaboration Compound shall be deemed a Development Candidate if, at any time during the Research Collaboration Term for a Research Program, GSK or the JSC by mutual agreement requests that Regulus begin [***] of such Collaboration Compound under such Research Program prior to confirmation by the JSC that such Collaboration Compound has met the [***] and (b) if Regulus has [***] a Collaboration Compound as a Development Candidate on or before [***] with respect to such Research Program, in which case, upon such expiration, Regulus shall provide a [***] with respect to the Leading Compound under such Research Program.



1.45 "Diligent Efforts" shall mean, with respect to the efforts to be expended by a Party with respect to any objective or obligation under this Agreement, such commercially reasonable, diligent and good faith efforts as such Party would normally use to accomplish a similar objective or perform a similar obligation under similar circumstances, acting reasonably promptly and in a sustained manner, and taking into account scientific, medical and commercially relevant factors such as (as applicable) stage of development, product life, patent position, strategic value, [***] market potential, medical, safety and regulatory issues, in accordance with the following:



1.45.1 For Regulus : Regulus shall apply its commercially reasonable Diligent Efforts in the conduct of all activities and obligations for which Regulus is responsible under this Agreement, in accordance with (a) the Initial Research Plan, (b) each Research Plan for each



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Research Program, and (c) if GSK has not exercised its [***] with respect to a Program, the Early Development Plan for the relevant Early Development Program, in each case as established hereunder. Such efforts will be consistent at all times with the efforts and resources normally used by Regulus or, where one of its Parent Companies has already conducted or is actively conducting activities similar to those described in the Initial Research Plan, the relevant Research Plan or the relevant Early Development Plan, as applicable, but Regulus has not previously conducted such activities, the efforts and resources normally used by Regulus92 Parent Company, in the exercise of Regulus92 or its Parent Company92s (as applicable) reasonable business discretion relating to the research and development progression of a compound in its own pipeline at a [***] as compared to the Collaboration Compound or Licensed Product in question.



1.45.2 For GSK : GSK shall apply commercially reasonable Diligent Efforts in the conduct of all activities and obligations for which GSK is responsible under this Agreement, including with respect to the further Development and Commercialization of a Leading Compound Developed under each Program for which GSK has exercised its Program Option hereunder. Such efforts will be consistent at all times with the manner and degree in which GSK in its reasonable business discretion would apply efforts and resources for a compound in its own pipeline, at a [***] as compared to the Collaboration Compound or Licensed Product in question.



1.45.3 A Party that is required to use Diligent Efforts with respect to an obligation shall, consistent with the standard described above: (a) promptly assign responsibility for such obligation to specific employee(s) or permitted contractors who are held accountable for progress and monitor such progress on an on-going basis, (b) establish and consistently seek to achieve specific, meaningful and measurable objectives for carrying out such obligation, and (c) consistently make and implement decisions and allocate reasonably sufficient personnel and financial resources designed to advance progress with respect to such objective.



1.46 "Disclosing Party" shall have the meaning assigned to such term in Section 9.1.



1.47 "Discovery Milestone" shall mean, on a Program-by-Program basis, the milestone event that is achieved hereunder upon the later of (i) demonstration of [***] confirmed by the JSC (subject to the dispute resolution provisions in Section 2.1.7, if necessary) or (ii) [***] for a given Program.



1.48 "Early Development Plan" shall mean an overall Development plan (including all subsequent amendments or updates thereto) for the Development of a Development Candidate through to Completion of the PoC Trial.



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1.49 "Early Development Program" shall have the meaning set forth in Section 3.5.1.



1.50 "Early Development Program Term" shall define the duration of each Early Development Program hereunder and shall be determined on an Early Development Program-by-Early Development Program basis as follows: the period commencing upon the earlier of (a) the expiration of the [***] Exercise Period without GSK92s exercise of the [***] for such Program, or (b) GSK92s notice to Regulus of its decision not to exercise such [***], and ending upon [***]; provided , however , that such period shall terminate when GSK exercises the relevant [***] unless such Program is terminated earlier.



1.51 "Effective Date" shall have the meaning assigned to such term in the Recitals.



1.52 "EMEA" shall mean the European Medicines Evaluation Agency, and any successor entity thereto.



1.53 "Enabling Studies" shall have the meaning assigned to such term in Section 3.8.



1.54 "European Union" or "EU" shall include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden, United Kingdom, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia, and any such other country or territory that may officially become part of the European Union after the Effective Date.



1.55 "Executive Officers" shall mean the Chief Executive Officer of Regulus (or a senior executive officer designated by such Person) and either the Chief Executive Officer or the Chairman of R&D at GSK (or another senior executive officer designated by such Persons).



1.56 "Existing In-License Agreements" shall have the meaning assigned to such term in Section 10.3.3.



1.57 "Expert Panel" shall have the meaning assigned to such term in Section 2.4.



1.58 "FDA" shall mean the U.S. Food and Drug Administration, and any successor entity thereto.



1.59 "Field" shall mean (a) the [***] of any or all Indications and (b) also, to the extent that Regulus or GSK, whichever is the licensing Party hereunder, Controls [***] any or all Indications, to the extent such [***] are [***] to Commercialize a Licensed Product or where the absence of Control by the Commercializing Party, of [***] could reasonably be considered to materially adversely affect the sales of the Licensed Product.



1.60 "Final Target Selection Date" shall have the meaning assigned to such term in Section 3.2.1.



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1.61 "First Commercial Sale" means, with respect to a Royalty-Bearing Product in a country in the Territory, the first sale, transfer or disposition for value to an end user of such Royalty-Bearing Product in such country; provided, that, the following shall not constitute a First Commercial Sale: (a) any sale to an Affiliate, Parent Company or Sublicensee unless the Affiliate, Parent Company or Sublicensee is the last entity in the distribution chain of the Royalty-Bearing Product, (b) any use of such Royalty-Bearing Product in Clinical Studies, pre-clinical studies or other research or development activities, or disposal or transfer of Products for a bona fide charitable purpose, (c) compassionate use, (d) so called "treatment IND sales" and "named patient sales," and (e) use under the ATU system in France and/or the International Pharmi system in Europe.



1.62 "Former Target" shall have the meaning assigned to such term in Section 3.2.1.



1.63 "FTC" shall have the meaning assigned to such term in Section 4.2.6.



1.64 "Fully Absorbed Costs of Goods" shall mean, with respect to the Manufacture of units or components of Collaboration Compounds or Licensed Products (including bulk drug substance), the fully-absorbed actual cost of supplying the Collaboration Compounds or Licensed Products to Regulus, GSK or a designee of either such Party as calculated under US GAAP or IFRS, as applicable, and consistent with such Party92s or, with respect to Regulus, the applicable Parent Company92s, methodology for other products. Specifically this shall include:



(a) if Manufactured by Regulus (or its Parent Company) or GSK, the Fully Absorbed Manufacturing Cost ("FAMC") as described in Schedule 1.64, including without limitation incremental and/or reasonably allocable overhead costs incurred including: [***] provided, however, that with respect to Manufacture by Regulus or one of its Parent Companies and if [***], the Parties shall agree in good faith to the costs with respect to the Manufacture of Collaboration Compounds or Licensed Products, based, at least in part, on such definition; or



(b) if Manufactured by a Third Party contract manufacturer, the actual costs of procuring such Collaboration Compounds or Licensed Products from such Third Party contract manufacturer, including any [***] payable to such Third Party contract manufacturer.



1.65 "Fundamental IP" shall have the meaning assigned to such term in Section 6.8.1.



1.66 "Generic Product" shall mean a Third Party92s product(s) or Third Parties92 product(s) having the same or substantially the same active pharmaceutical ingredient as a Royalty-Bearing Product and for which in the US a ...