AMENDED AND RESTATED COLLABORATION AND LICENSE AGREEMENT

Exhibit 10.2

AMENDED AND RESTATED COLLABORATION AND LICENSE AGREEMENT

This Amended and Restated Collaboration and License Agreement (the “ Agreement ”) between ISIS PHARMACEUTICALS, INC. of 1896 Rutherford Road, Carlsbad, CA 92008, USA (“ ISIS ”) and ANTISENSE THERAPEUTICS LTD., ACN 095 060 745 of Level 1, 10 Wallace Avenue, Toorak, Victoria 3142, AUSTRALIA (“ ATL ”) is entered into and made effective as of February 8, 2008 (the “ Amendment Date ”).

INTRODUCTION AND OVERVIEW

ISIS and ATL are parties to that certain Collaboration and License Agreement effective as of December 21, 2001 (the “ Effective Date ”), as amended (the “ Original Agreement ”), pursuant to which, among other things, the parties agreed to collaborate to enable ATL to develop and commercialize antisense drugs, including, without limitation, the Antisense Inhibitor known as ATL 1102 (formerly known as ISIS 107248), VLA4 Compounds and Other VLA4 Compounds.

ATL proposes to enter into a sublicense agreement with Teva Pharmaceutical Industries Ltd. (“ Teva ”) in the form provided to ISIS on the Amendment Date (the “ Teva Sublicense ”), pursuant to which ATL would grant to Teva an exclusive, worldwide sublicense to develop and commercialize ATL 1102, VLA4 Compounds and Other VLA4 Compounds, and VLA4 Products, subject to the terms and conditions set forth therein.

As a condition to Teva’s willingness to enter into the Teva Sublicense, Teva has requested that ATL and ISIS implement certain amendments to the Original Agreement.

In order to facilitate ATL’s entry into the Teva Sublicense, the parties wish to amend and restate the Original Agreement as set forth in this Agreement, effective as of the Amendment Date.

Therefore, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows.

AGREEMENT

ARTICLE 1

DEFINITIONS

                Capitalized terms used in this Agreement have the meanings set forth in Exhibit 1.

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ARTICLE 2

DRUG DEVELOPMENT PROGRAM

2.1           General.

Under the Drug Development Program, ATL will develop and commercialize antisense drugs arising out of the Collaborative Research Program conducted hereunder, as well as ATL1102 (a Collaboration Compound discovered by ISIS), VLA4 Compounds and Other VLA4 Compounds and VLA4 Products.  In general, ATL will be responsible for all development and commercialization activities for Collaboration Compounds.  ISIS has performed, and, pursuant to the Teva/ISIS Agreements, may continue to perform, certain activities in support of the development of ATL1102, VLA4 Compounds and Other VLA4 Compounds, but it is the intent of the parties that ATL will assume responsibility for all preclinical and IND-enabling activities with respect to other Collaboration Compounds, as more specifically provided in this Agreement.  ATL will be responsible for all costs of development and commercialization of Collaboration Compounds including, without limitation, the reimbursement of ISIS’ expenses as provided herein.

2.2           Development of VLA4 Compounds and Other VLA4 Compounds.

(a)            General .  ATL will use commercially reasonable efforts to develop at least one VLA4 Compound to maximize its commercial value.  ATL will conduct the development of VLA4 Compounds and  VLA4 Products in a good scientific manner and in compliance in all material respects with all requirements of applicable laws, rules and regulations to achieve the objective specified in the first sentence of this subsection (a) efficiently and expeditiously.  ATL will proceed diligently with the development of VLA4 Compounds  and VLA4 Products using commercially reasonable efforts to provide sufficient time, effort, equipment, facilities and skilled personnel.

(b)            VLA4 Compound Development Diligence .

(i)             During Term of Teva Sublicense .  The parties agree that, during the term of the Teva Sublicense: (A) no Development Milestones will be applicable to ATL 1102, VLA4 Compounds, Other VLA4 Compounds or VLA4 Products; (B) the only diligence obligations applicable to the development of ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products will be those set forth in Section 2.2(a) above; and (C) notwithstanding the definition of Active Program set forth in Exhibit 1 hereto, compliance with the diligence obligations set forth in Section 2.2(a) will satisfy the “Active Program” and “Active Development” criteria with respect to ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products.

(ii)            After Term of Teva Sublicense .  In the event of termination or expiration of the Teva Sublicense prior to Marketing Approval of a VLA4 Product in each of the Major Markets (and prior to the termination or expiration of this Agreement), then ATL and ISIS will, as promptly as practicable, mutually agree in writing upon

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Development Milestones for ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products that ATL will commit to reach, in which event the parties agree as follows with respect to such Development Milestones.  If a Development Milestone is not met, [***] extension on such Development Milestone, provided that ATL (x) gives the JDC members at least [***] prior written notice that it is unlikely to achieve the relevant milestone on the date specified above, and (y) demonstrates to the JDC that [***] agreed upon by the parties.  If the JDC cannot agree on this issue, the matter will be referred to the designated officers of ATL and ISIS for resolution, consistent with the provisions of Section 16.6(a).

2.3           Development of Collaboration Compounds Other Than VLA4 Compounds.

(a)            General .  The provisions of this Section 2.3 will apply solely to Collaboration Compounds other than ATL 1102, VLA4 Compounds or Other VLA4 Compounds.

(i)             As provided herein, during the term of this Agreement, ATL will advance additional Collaboration Compounds through the various stages of an Active Program hereunder, i.e., from the research phase through preclinical and IND-enabling studies to human clinical studies and commercialization.  To maintain any Collaboration Compound in Active Development status, ATL must meet the Development Milestones for each such Collaboration Compound.

(ii)            The terms under which ISIS and ATL will collaborate to develop such additional Collaboration Compounds will be in accordance with the terms set forth herein.  Within 60 days of ATL’s providing written notice to ISIS that ATL has initiated IND enabling studies on a Collaboration Compound, ATL will prepare a mutually-agreed-upon Development Plan for that Collaboration Compound, with ISIS’ assistance, consistent with the terms of this Agreement.

(b)            [***] Studies .  While it is the intent of the parties that ATL will assume responsibility for all [***] activities with respect to Collaboration Compounds other than ATL 1102, VLA4 Compounds or Other VLA4 Compounds, ISIS will be available to assist with [***] other than ATL 1102, VLA4 Compounds and Other VLA4 Compounds, if requested to do so by ATL.  Should ATL request ISIS’ assistance in this regard, the parties will agree on terms pertaining to ISIS’ participation, which terms will be included in the Development Plan referenced in (a).  With the possible exception of an [***] Collaboration Compound, ISIS will not be requested to participate in the [***].

2.4           Annual Reports.

ATL will provide ISIS with an annual written report describing all activities performed by the parties and the results achieved during the relevant year with respect to each Collaboration Compound in Active Development hereunder including, without limitation, ATL 1102, VLA4 Compounds and Other VLA4 Compounds.  Each such report will include details regarding the stage of development a Collaboration Compound has reached within an Active Program including, without limitation, what Development Milestones (if applicable) have been achieved.

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To the extent that it is feasible to do so, ATL will also include the projected goals and Development Milestones it anticipates achieving during the coming year with respect to such Collaboration Compound in each such report.  Notwithstanding the foregoing, ISIS acknowledges that ATL will not necessarily have access to all information regarding activities conducted by Teva and that this Section 2.4 only obligates ATL to report to ISIS with respect to information known to ATL.

2.5           Commercialization.

(a)            General .  ATL will use commercially reasonable efforts to bring Products into commercial use as quickly as is reasonably possible, in a manner designed to maximize the commercial potential of such Products worldwide.  ATL will use commercially reasonable efforts to Manufacture, market, promote, distribute, and sell the Product on a worldwide basis.  ATL will provide resources and expend funds in connection with such activities in a manner and to an extent comparable to the efforts of similar companies that manufacture, market, and sell pharmaceutical products of similar commercial potential at a similar stage of the product life cycle.

(b)            Product Plan .

(i)             ATL .  Except as set forth in subsection (ii) below, prior to the launch of any Product, ATL will prepare a global integrated Product plan outlining the key aspects of market launch and commercialization (the “ Integrated Product Plan ” or “ IPP ”).  Each IPP will be updated annually in accordance with ATL’s internal planning and budgeting process.  ATL will provide ISIS a copy of the final draft of each IPP (original and updates) for each Major Market.  Each IPP will also include appropriate milestones and the dates upon which such milestones must be met by ATL.

(ii)            Teva and Other Sublicensees .  If a Sublicensee of ATL (including Teva) bears primary responsibility for commercialization of any Product in one or more Major Markets, then ATL need not prepare an IPP covering such Product in such Major Market(s) and any other territory in which such Sublicensee has primary commercialization responsibility (collectively, the “ Sublicensee Market ”); provided, however, that:

(A)           the sublicense agreement between ATL and such Sublicensee will require that, prior to the launch of any Product, such Sublicensee will prepare a written plan outlining the key aspects of market launch and commercialization of such Product in the Sublicensee Market (a “ Sublicensee Product Plan ” or “ SPP ”), which will be updated at least annually;

(B)            ATL will provide ISIS with true and complete copies of each SPP and update thereto that ATL receives, whether in draft or final form, promptly following receipt thereof from the Sublicensee; and

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(C)            the sublicense agreement between ATL and such Sublicensee will expressly provide that (1) ATL is permitted to transmit copies of all SPPs and updates thereto to ISIS; (2) [***] (3) such Sublicensee will [***]

(c)            Commercialization by Sublicensees .  If a Sublicensee of ATL bears primary responsibility for commercialization of any Product in the applicable Sublicensee Market, the sublicense agreement will require that such Sublicensee will use commercially reasonable efforts to Manufacture, market, promote, distribute, and sell the Product in such Sublicensee Market and will require that the Sublicensee provide resources and expend funds in connection with such activities in a manner and to an extent comparable to the efforts of similar companies that manufacture, market, and sell pharmaceutical products of similar commercial potential at a similar stage of the product life cycle.  Consistent with Section 4.3 below, if ATL elects to meet any of its responsibilities and obligations under this Section via sublicense agreements, ATL will ensure that such agreements are subject to and will be consistent with the terms and conditions of this Agreement including, without limitation, the provisions of this Section.

(d)            Failure to Meet Diligence Obligations .  If ATL or a Sublicensee of ATL anticipates any difficulty in meeting its commercialization obligations under this Section including, without limitation, the milestones set forth in the IPP, ATL or its Sublicensee will provide ISIS with prompt notice thereof, in order that the parties may endeavor to work out an appropriate and acceptable resolution prior to pursuing other remedies hereunder.

(e)            Acknowledgment Regarding Teva Sublicense .  ISIS acknowledges and agrees that the Teva Sublicense, in the form provided to ISIS on the Amendment Date, satisfies the requirements of this Section 2.5 applicable to sublicense agreements between ATL and Sublicensees.

2.6           Effect of Change of Control and Competing Products

(a)            Change of Control of ATL : ISIS acknowledges and agrees that, notwithstanding anything else in this Agreement, if a Change of Control of ATL in which the Third Party acquiring control of ATL or its assets relating to VLA4 Products is a [***], then:

(i)             ATL will procure that Teva’s reports regarding any development plan, commercialization plan or SPP relating to VLA4 Products will be provided by Teva directly to ISIS; and

(ii)            for so long as Teva provides such reports, ATL will not be required to separately provide to ISIS annual reports and other information relating to the development and commercialization of VLA4 Products.

(b)            Change of Control of ISIS .  Notwithstanding anything contained herein to the contrary, in the event of a Change of Control of ISIS in which [***] then:

(i)             ISIS (or the successor entity) will not be allowed to [***] and

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(ii)            ATL will not be required to provide to ISIS (or the successor entity) with any [***], other than (A) reports and information required to be made available under Sections 5.6 and 5.8 of this Agreement and (B) summary annual reports regarding Teva’s development and commercialization activities with respect to VLA4 Products in sufficient detail to allow ISIS to ascertain ATL’s compliance with its diligence obligations under this Agreement.

(c)            Competing products:   ISIS acknowledges and agrees that if ATL Exploits a product that is [***], then:

(i)             ATL will procure that Teva’s reports regarding any development plan, commercialization plan or SPP relating to VLA4 Products will be provided by Teva directly to ISIS; and

(ii)            for so long as Teva provides such reports, ATL will not be required to separately provide to ISIS annual reports and other information relating to the development and commercialization of VLA4 Products.

ARTICLE 3

COLLABORATIVE RESEARCH PROGRAM

3.1           General; Collaboration Term.

(a)            ATL and ISIS will work together under the Collaborative Research Program described herein and as further detailed in the Collaborative Research Plan, as described in Section 3.2, to discover and develop antisense therapeutics.  The parties will collaborate to assess Research Targets that may be important in the prevention or treatment of a disease or condition, consistent with Sections 3.2 - 3.5.  If contracted by ATL, ISIS will discover and design antisense oligonucleotides to modulate the Research Targets as provided in Section 3.6 and will provide them to ATL.  Also, if contracted by ATL, ISIS will evaluate the antisense oligonucleotides in various functional assays.  ATL will perform in vitro and in vivo studies utilizing the antisense oligonucleotides provided by ISIS.  It is the intent of the parties that Collaboration Compounds will be identified during the Collaboration Term and that pursuant to Active Programs hereunder, such Collaboration Compounds will progress through research and preclinical development, meeting the relevant Development Milestones (see Exhibit 1, Section 1.2), and will each become the focus of a Development Plan hereunder, except as expressly set forth in Section 2.2(b) hereof.

(b)            The Collaboration Term will begin on the Effective Date and will continue until December 21, 2008, unless earlier terminated due to termination of the Agreement under Sections 12.2 or 12.3, or unless terminated or extended upon mutual agreement of the parties.

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3.2           Joint Research Committee.

(a)            The parties have established a Joint Research Committee of 4 people, consisting of 2 representatives nominated by each party, to facilitate the research collaboration called for herein.  Each party will designate a representative as a project leader to serve as the principal contact person for that party.  The parties may agree to add additional members to the JRC, as long as equal representation is maintained.  As ISIS’ participation will largely be to [***] will designate one of its representatives as chairman of the JRC. In the event of a tied vote, [***] will have the tie-breaking vote.

(b)            During the Collaboration Term, the JRC will be the primary vehicle for interaction between the parties with respect to the collaborative research conducted hereunder.  The JRC will be responsible for preparing an annual budget and plan for the collaborative research activities to be conducted during each year of the Collaborative Research Program (the “Collaborative Research Plan”) and for managing that program.  The JRC will be responsible for updating the Collaborative Research Plan as needed and will also be responsible for prioritizing work contracted to ISIS under Section 3.6.

(c)            The JRC will meet as needed during the Collaboration Term.  Meetings will be via teleconference or videoconference, or as the parties may otherwise agree.  The JRC will review the progress of the activities carried out under the Collaborative Research Program and will consider and decide on proposed modifications to the strategy and goals of that program.  The frequency, dates and times of all meetings will be mutually agreed upon by the parties.  At its first meeting the JRC will determine such procedures as it will reasonably require to conduct its business.

3.3           Research Targets: General.

As noted above, ATL and ISIS will collaborate to assess Research Targets that may be important in the prevention or treatment of a disease or condition.

3.4           Research Targets: Designation.

(a)            The collaborative research hereunder will be focused on specific gene targets thought to be attractive for the development of antisense drugs.  ATL will choose targets in accordance with the provisions of this Section 3.4 as the basis for its antisense drug discovery efforts.  ATL commits to use commercially reasonable efforts to conduct research and drug discovery activities with respect to each Research Target to maximize its commercial value.

(b)            Exhibit 3.4 hereto contains a list of the targets that are the object of Licenses to Research as of the Amendment Date (the “ Research Targets ”), as well as [***] Research Targets listed on Exhibit 3.4 that are [***] Targets are listed in Section B, and all other Research Targets are listed in Section A of Exhibit 3.4.  During the Collaboration Term, targets may be added to and removed from Exhibit 3.4 in accordance with the terms of this Section and Section 3.5.

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3.5           Research Targets: Selection, Removal, Replacement and Approval Process.

(a)            Exhibit 3.4 lists the Research Targets agreed upon by the parties as of the Amendment Date.  ATL warrants and represents that if it has not provided ISIS with the nucleic acid sequences for the corresponding human genes for any of the Research Targets listed in Exhibit 3.4 by the Amendment Date, it will do so promptly thereafter.  Consistent with the terms of this Agreement, ISIS will have no obligation to conduct any activities with respect to such Research Targets until the required materials, information and/or payments (if applicable) have been submitted to ISIS by ATL.  The addition of new Research Targets to the list in Exhibit 3.4 is at ISIS’ sole discretion.

(b)            If ATL wishes to designate a new Research Target, it will provide ISIS with written notice of the target it wishes to add to the list set forth in Exhibit 3.4.  Such written notice will include the gene name, the NCBI accession number or nucleic acid sequence, and one or more mammalian cell lines that express the Research Target.  ISIS will not, and is not required to, accept a proposed Research Target without such information.  In addition, ATL will inform ISIS of whether or not to the best of ATL’s knowledge the proposed target is in the public domain or is proprietary to a Third Party.

(i)             ATL will not propose a target for consideration as a possible Research Target if [***].

(ii)            If ATL proposes a target that is [***], but ATL is able to provide ISIS with [***] the proposed target, ATL will also provide ISIS with a copy of any [***]  ATL also warrants that any [***] required to be made to a Third Party in order to [***] activities in support of the Collaborative Research Program will be the sole responsibility of ATL. For the purpose of this Section, Third Party restrictions do not include [***].

(iii)           If a target proposed by ATL is subject to an ISIS drug discovery and development program or a contractual obligation of ISIS to a Third Party with respect to that target, then the proposed target will not be approved as a Research Target hereunder.

(c)            Within [***] days after receipt of the ATL notice under subsection (b), ISIS will notify ATL, in writing, of its decision either to approve or to reject a proposed target.

(i)             If a proposed target is not approved as a Research Target, the notice provided by ISIS will advise ATL of the reason(s) the target was not approved, and ATL will be invited to submit a different proposed target for consideration.

(ii)            If a proposed target is approved as a Research Target, ISIS’ notice to ATL will indicate this and will also indicate whether or not the new Research Target is a [***] Target.  ISIS will add the Research Target to the list in Exhibit 3.4 (as well as the nucleic acid sequence of the gene) and will provide ATL with an amended copy of Exhibit 3.4.  If ISIS has [***], ISIS will add that information to Exhibit 3.4 and will provide ATL with a copy of the amended exhibit.

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(iii)           Upon receipt of written notice from ISIS that a proposed target has been approved as a Research Target and added to Exhibit 3.4, ATL will begin Active Development of such Research Target, consistent with the terms of this Agreement.

(d)            After the Effective Date, Research Targets may be removed from the list in Exhibit 3.4 as follows.

(i)             If ATL wishes to remove a Research Target from the approved list in Exhibit 3.4, it will provide ISIS with prompt written notice of its election to do so.  Upon ISIS’ receipt of such notice, it will remove the Research Target from the list.

(ii)            Upon receipt of notice at any time during the term of this Agreement that a Research Target is no longer in Active Development, ISIS will remove the target from the list set forth in Exhibit 3.4 and will provide ATL with prompt written notice of same.

(iii)           The License to Research or License to Exploit applicable to any Research Target removed pursuant to (i) or (ii) herein (each an “Abandoned Research Target”) will immediately terminate, consistent with the provisions of Sections 4.1 or 4.2, as applicable.  Notwithstanding the foregoing, an Abandoned Research Target may still bear royalty or other payment obligations, as described in Sections 5.1 – 5.3 herein.

(iv)           Once a target has been removed from the list of Research Targets, Exhibit 3.4 will be amended to delete such target and a copy of amended Exhibit 3.4 will be sent to ATL by ISIS.

(v)            Upon termination of a License to Research or a License to Exploit for any reason, a Research Target will be automatically removed from Exhibit 3.4 and will thereafter be considered an Abandoned Research Target.

(e)            At no time during the term of this Agreement or the Collaboration Term will there be any more than [***] designated Research Targets.  ATL may not substitute more than [***] Research Targets in any year during the Collaboration Term.

3.6           Discovery and Evaluation of Antisense Inhibitors.

(a)            Research Services .  During the Collaboration Term, ATL may request from time to time that ISIS perform Research Services with respect to one or more Research Targets.  If ISIS agrees to provide any requested Research Services to ATL, such Research Services will be described in a written work plan to be negotiated in good faith by the parties, which would include the compensation to be made by ATL for such Research Services.  ATL will be responsible for conducting further in in vitro and in vivo studies of Antisense Inhibitors provided by ISIS as a result of such Research Services.  The number, quantity and price of Antisense Inhibitors to be provided by ISIS to ATL for use in such studies will be set forth in the applicable work plan.  If ATL requests additional quantities of any such Antisense Inhibitor, the terms of supply will be mutually agreed upon by the parties

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in writing.  The ownership and use of all materials, including Antisense Inhibitors, and of all data and information generated as a result of services provided to ATL by ISIS pursuant to this Agreement is governed by the provisions of Article 6.  There will be no minimum or maximum amount of Research Services that ATL is obligated or entitled to request or ISIS is obligated or entitled to provide.

(b)            Project Coordinators .  ATL and ISIS will each select one employee to serve as the Project Coordinator for that party, with respect to services to be performed under Section 3.6(a).  The Project Coordinators will facilitate the selection, prioritization, removal and replacement of Research Targets.  The Project Coordinators will each have appropriate technical credentials, knowledge and ongoing familiarity with the foregoing activities.  The Project Coordinators will meet on an as-needed basis via teleconference or videoconference, at times mutually agreed upon by the parties.  Decisions of the Project Coordinators will be unanimous.  If the Project Coordinators cannot agree on an issue, the issue will be submitted to the JRC for resolution.

3.7           Other Collaborative Research Program-Related Activities.

(a)            During the Collaboration Term, ISIS will provide ATL with reasonable amounts of preclinical and research advice free of charge (phone consultation or visit at ISIS only) in support of any Active Program hereunder that involves a Collaboration Compound made using ISIS Standard Chemistry for which a License to Research exists.

(b)            If ATL requests additional amounts or types of consulting support or training not specified above in this Article 3 and if ISIS agrees to provide such support or training, the parties will negotiate appropriate terms including, without limitation, the scope, timing, duration and cost of such support or training, in good faith.

ARTICLE 4

LICENSE GRANTS AND OTHER RIGHTS

4.0           License Term.   As used herein, “License Term” means the term beginning on the Effective Date and ending on the date on which all obligations to pay royalties hereunder have expired.

4.1           Licenses to Research.   A License to Research is a license to perform research and development activities relating to a Research Target until the filing of an NDA or non-US equivalent on a Product that modulates such Research Target.

(a)            License Grant .

(i)             For each Research Target, ISIS will grant to ATL and its Affiliates when ATL takes a License to Research, an exclusive, worldwide license under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the Manufacturing Patent Rights, the Research Target Patent Rights and the Third Party Patent Rights solely to conduct research and clinical development for all human indications for Collaboration Compounds that modulate such Research Target.

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For Collaboration Compounds that modulate Dermatology Targets, the license is limited to topical dermatological indications only.  These rights will only be sublicensable as explicitly provided in Section 4.3.  The license grant described hereunder will commence automatically on grant of the License to Research and will terminate upon termination of the corresponding License to Research.

(ii)            For each Research Target, ISIS will grant to ATL and its Affiliates when ATL takes a License to Research, a nonexclusive, worldwide license under the Research Target Patent Rights, the ISIS C5-Propyne Patent Rights, and the ISIS Formulation Patent Rights solely to conduct research and clinical development for all therapeutic and cosmetic applications for Research Target Compounds that modulate such Research Target.  For Research Target Compounds that modulate Dermatology Targets, the license is limited to topical dermatological indications only.  These rights will only be sublicensable as explicitly provided in Section 4.3.  The license granted hereunder will commence automatically on grant of the License to Research and will not terminate upon termination of the corresponding License to Research.

(b)            As of the Amendment Date, ISIS grants to ATL a License to Research with respect to each Research Target listed in Exhibit 3.4.  ATL will receive additional Licenses to Research with respect to Research Targets when added to Exhibit 3.4.  Licenses to Research may only be obtained during the Collaboration Term.  No License to Research will be granted to ATL on any Research Target after the Collaboration Term ends.

(c)            [***].

(d)            ATL may terminate a License to Research with respect to a Research Target for any reason, at any time during the term of this Agreement, by providing ISIS with written notice that the Research Target is being removed from Exhibit 3.4.

(e)            With the exception of the License to Research applicable to ATL 1102, VLA4 Compounds and Other VLA4 Compounds, which is governed by the provisions of subsections (f) and (g) below, if a Research Target is no longer part of an Active Program, ISIS may terminate the License to Research applicable to that Research Target at any time during the term of this Agreement upon written notice to ATL.

(f)             Once ATL has elected and obtained [***] Licenses to Exploit pursuant to Section 4.2, all remaining Licenses to Research will immediately terminate, and all rights to the remaining Research Targets licensed to ATL will revert to ISIS; provided, however, that the licenses granted pursuant to Section 4.1(a)(ii) will remain in effect.

(g)            ISIS will provide ATL with a semiannual report summarizing the status of Research Target Patent Rights subject to a License to Research hereunder and will include updates to any Exhibits that are affected.

4.2           Licenses to Exploit.   A License to Exploit is a license to perform research, development and commercialization activities on, and otherwise Exploit, Products that modulate a Research Target.

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(a)            ISIS grants ATL the option to convert any active License to Research hereunder into a License to Exploit, as set out below.  Notwithstanding the foregoing, ATL may convert not more than [***] Licenses to Research into Licenses to Exploit, and each License to Exploit must be requested by ATL prior to the filing of an NDA (or non-US equivalent) for the relevant Research Target.  The option to convert Licenses to Research to Licenses to Exploit expires [***] years after the end of the Collaboration Term.

(b)            If ATL elects to convert a License to Research into a License to Exploit, ATL will provide ISIS with written notice effecting the exercise of the option, which will identify the particular Research Target to which the License to Research applies and will include written verification that all applicable milestones and obligations of ATL with respect to that Research Target have been timely met.  Upon ISIS’ receipt of such written notice, ISIS will have [***] days to object if it believes that ATL has not timely met all applicable milestones and obligations with respect to that Research Target.  At the end of such [***]-day period, the License to Exploit will be granted with respect to the relevant Research Target if ISIS has not objected.  [***].

(c)            License Grants and Assignments.

(i)             VLA4 Compounds and Other VLA4 Compounds.

(A)           Subject to the terms and conditions of this Agreement, effective as of the Amendment Date, ISIS hereby grants to ATL an exclusive, worldwide license under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the Manufacturing Patent Rights, the Research Target Patent Rights (other than the VLA4 Compound Patent Rights, which are covered by Section 4.2(c)(i)(C) below) and the Third Party Patent Rights solely to  Exploit ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products for all human indications.  These rights will only be sublicensable as explicitly provided in Section 4.3.  This license will terminate only in accordance with Section 12.2 hereof.

(B)            Subject to the terms and conditions of this Agreement, effective as of the Amendment Date, ISIS hereby grants to ATL a nonexclusive worldwide license under the ISIS [***] and the ISIS Formulation Patent Rights  to Exploit ATL1102, Other VLA4 Compounds and VLA4 Products for all human indications.  These rights will only be sublicensable as explicitly provided in Section 4.3.  This license will terminate only in accordance with Section 12.2 hereof.

(C)            Subject to the terms and conditions of this Agreement (including, without limitation, Section 4.8(c) hereof), effective as of the Amendment Date, ISIS hereby assigns to ATL all of ISIS’ right, title and interest in and to the VLA4 Compound Patent Rights.  ISIS agrees to execute all assignment and other documents, testify and take all other actions reasonably necessary or appropriate to transfer, effect, confirm, perfect, record, preserve, protect and enforce ATL’s right, title and interest in the  VLA4

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Compound Patent Rights throughout the world, at the reasonable request and expense (to the extent of any out-of-pocket costs incurred by ISIS) of ATL.  ATL covenants not to sell, transfer or assign any of the  VLA4 Compound Patent Rights to any Affiliate or Third Party, except in connection with a permitted assignment by ATL of this Agreement and ATL’s rights and obligations hereunder to an Affiliate or Third Party in accordance with Section 16.2.

(D)           Isis hereby covenants that for so long as the licenses granted in Sections 4.2(c)(i)(A) and 4.2(c)(i)(B) above remain in effect, Isis will not [***] with respect to [***] however, if a VLA4 Product has not [***] (or such later date as is mutually agreed by the parties), then [***] will terminate as of such date.

(ii)            Other Research Targets and Collaboration Compounds .

(A)           For each Research Target (other than CD49d) for which a License to Exploit is granted ISIS will grant to ATL an exclusive, worldwide license under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the Manufacturing Patent Rights, the Research Target Patent Rights and the Third Party Patent Rights solely to develop, make, have made, use, sell, have sold, offer for sale and import Collaboration Compound Products that modulate such Research Target for all therapeutic and cosmetic applications.  For Collaboration Compound Products that modulate [***], the license is limited to [***] only.  These rights will only be sublicensable as explicitly provided in Section 4.3.  This license will commence automatically on grant of the corresponding License to Exploit and will terminate upon termination of the corresponding License to Exploit.

(B)            For each Research Target (other than CD49d) for which a License to Exploit is granted ISIS will grant to ATL a nonexclusive worldwide license under the [***] and the [***] solely to develop, make, have made, use, sell, have sold, offer for sale and import Research Target Compound Products for all therapeutic and cosmetic applications.  For Research Target Compound Products that modulate [***], the license is limited to [***] only.  These rights will only be sublicensable as explicitly provided in Section 4.3.  This license will commence automatically on grant of the corresponding License to Exploit and will not terminate upon termination of the corresponding License to Exploit.

(d)            No substitutions may be made on Licenses to Exploit.  Once a License to Exploit has been taken with respect to a Research Target, a different Research Target may not be substituted thereunder.

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(e)            Subject to the terms and conditions of the Teva Sublicense, ATL may terminate a License to Exploit with respect to a Research Target, for any reason, at any time during the term of this Agreement, by providing ISIS with written notice.

(f)             The party bearing primary responsibility for the prosecution, maintenance and defense of any Research Target Patent Rights pursuant to Article 8 herein will provide the other party hereto with a semiannual report summarizing the status of Research Target Patent Rights subject to a License to Exploit hereunder for which such party is responsible and will include updates to any Exhibits listing rights in any Patents licensed hereunder that are affected, if appropriate.

4.3           Sublicenses Under ISIS Patent Rights and Third Party Patent Rights.

(a)            Any sublicense granted by ATL and its Affiliates under this Agreement is subject to and will be consistent with the terms and conditions of this Agreement and with the terms of the agreements pursuant to which ISIS obtained its rights in Third Party Patent Rights.  The grant of any such sublicense hereunder will not relieve ATL or its Affiliates of its obligations under this Agreement.  ATL will promptly provide ISIS with copies of all sublicenses granted by ATL or its Affiliates (including, without limitation, the Teva Sublicense), as well as Sublicensee contact information.

(b)            Subject to the terms and conditions of this Agreement and during the License Term, ATL and its Affiliates will have the right to grant sublicenses (each an “ ATL Sublicense ”) under the licenses from ISIS set forth in Sections 4.1 and 4.2 to Third Parties as follows.

(i)             Teva Sublicense .

(A)           ATL may enter into the Teva Sublicense, in the form provided to ISIS on the Amendment Date.

(1)            ATL hereby covenants that, except with ISIS’ prior written consent, ATL will not amend the Teva Sublicense in any manner that would (a) conflict with this Agreement, (b) expand the scope of the sublicense granted to Teva under ATL’s rights hereunder to include any compound or product other than ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products; (c) diminish any rights of ATL thereunder that would result in any direct or indirect diminution of ISIS’ rights under this Agreement, or (d) diminish any rights expressly conferred upon ISIS under the Teva Sublicense.  ATL will obtain the written covenant of Teva not to amend the Teva Sublicense in any of the foregoing ways.

(2)            Each party to this Agreement hereby covenants that, except with Teva’s prior written consent, such party will not amend this Agreement in any manner that would (a) diminish any rights of ATL hereunder that would result in any direct or indirect diminution of Teva’s rights under the Teva Sublicense, (b) diminish any rights expressly conferred upon Teva under this

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Agreement, or (c) directly or indirectly impose any additional financial or other obligations upon Teva beyond those specified in the Teva Sublicense.

(B)            ATL and its Affiliates acknowledge and agree that: (1) the sublicense granted to Teva under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the Manufacturing Patent Rights, and the Third Party Patent Rights may be practiced solely for  Exploiting the ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products for all human indications; and (2) any further sublicense granted by Teva (or any of its sublicensees) to another Third Party under any of the foregoing Patent Rights will be subject to the restriction set forth in the preceding clause (1).  ATL will obtain the foregoing written acknowledgment and agreement from each Sublicensee (including Teva).

(C)            In the event of a material default by Teva under the Teva Sublicense, ATL will promptly inform ISIS in writing and take commercially reasonable efforts to cause Teva to cure the default.  Alternatively, ATL will have the right to cure such default on Teva’s behalf.  If ATL elects to cure such default on Teva’s behalf, ATL will promptly provide to ISIS a written plan outlining the steps ATL will undertake in order to cure such default, including ATL’s good faith estimate of the period of time for ATL to do so.  If Teva does not timely cure such material default and ATL does not elect to cure such default on Teva’s behalf (or elects to cure such default but does not timely comply with the written cure plan described above), ATL will terminate the Teva Sublicense.

(D)           In the event of a material default by ATL under this Agreement that relates to CD49d, ATL 1102 or any VLA4 Compounds, Other VLA4 Compounds or  VLA4 Product (including, without limitation, any fundamental breach of this Agreement by ATL with respect to which ISIS provides written notice to ATL under Section 12.2), ISIS will promptly inform Teva in writing (in accordance with the notice provisions of the Teva/ISIS Agreements), and the parties agree that Teva will have the right to cure such default on ATL’s behalf.

(E)            If Teva wishes to have ISIS generate any Other VLA4 Compound, ISIS will be not obligated to generate any such Other VLA4 Compound unless and until Teva and ISIS mutually agree in writing upon a research plan specifically describing the activities to be undertaken by ISIS, including the amounts to be reimbursed by Teva to ISIS for performing such activities.  In addition, to the extent that ATL has the right to develop and commercialize any Other VLA4 Compound, ATL may request that ISIS generate such Other VLA4 Compound in accordance with Section 3.6 hereof.

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(F)            ATL acknowledges and agrees that this Agreement does not grant to ATL any license or right under ISIS Patent Rights to develop, make, have made, use, sell, have sold, offer for sale or import any [***].  ATL further acknowledges and agrees that if Teva wishes to have ISIS generate any [***], ISIS will be not obligated to generate any such [***] Compound unless and until: (i) Teva and ISIS mutually agree in writing upon a research plan specifically describing the activities to be undertaken by ISIS, including the amounts to be reimbursed by Teva to ISIS for performing such activities; (ii) TEVA and ISIS mutually agree in writing upon license terms [***] with respect to products utilizing the [***]; and (iii) only if and to the extent such [***](s) is(are) within the scope of the license(s) granted by ISIS to ATL hereunder, ATL and ISIS mutually agree in writing upon the [***] would be payable by ISIS to ATL with respect to products developed utilizing such [***].

(ii)            Other ATL Sublicenses .

(A)           In addition to ATL’s right to grant the Teva Sublicense, ATL and its Affiliates may grant an ATL Sublicense to a Third Party collaborator under the Research Target Patent Rights solely for the purpose of enabling such Third Party to collaborate with ATL on bona fide research, development and commercialization work on a Research Target Compound and, after such collaborative work, to make, have made, use, offer for sale and sell a Product containing such Research Target Compound.

(B)            ATL and its Affiliates may grant an ATL Sublicense to a Third Party collaborator under the ISIS Core Technology Patent Rights, the ISIS Formulation Patent Rights, the Manufacturing Patent Rights, the Research Target Patent Rights and the Third Party Patent Rights solely for the purpose of making, developing or using a Collaboration Compound or making, having made, using, developing, offering for sale or selling a Collaboration Compound Product.

(C)            In the event of a material default by any Sublicensee under an ATL Sublicense, ATL will inform ISIS and take commercially reasonable efforts to cause the Sublicensee to cure the default or will terminate the ATL Sublicense.  ATL will specifically state that ISIS is a third party beneficiary in any ATL Sublicense(s) hereunder.

4.4           Maximum Number of Licenses.

Not more than [***] Licenses to Research or Licenses to Exploit (including such licenses with respect to CD49d) may be in existence at any time during the term of this Agreement.  Each such license is to a discrete Research Target.

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4.5           Right of First Refusal.

(a)            During the term of this Agreement, if ATL is approached by a Third Party regarding, or elects to offer to a Third Party, the opportunity to collaborate on the development of a compound that modulates a Research Target other than IGF-1R, ATL will provide written notice of same to ISIS. Such notice will include information identical to that presented by ATL to a Third Party including, at a minimum, (i) information possessed and disclosable by ATL that supports the development of such a compound and is reasonably necessary for ISIS to assess the commercial potential of such compound; and (ii) a proposal that ATL would be prepared to accept.  Within [***] days of receipt of such notice, ISIS will provide written notice to ATL indicating whether it is interested in negotiating with ATL to obtain the rights to develop and commercialize such compound with ATL.

(b)            If ISIS fails to respond to ATL’s notification within [***] days or indicates that it is not interested in developing and commercializing such compound with ATL, ATL will thereafter be free to enter into discussions with one or more Third Parties regarding the development and commercialization of such compound.

(c)            If ISIS timely indicates its interest in obtaining such rights to develop and commercialize such compound with ATL, the parties will negotiate in good faith the terms of a separate development and commercialization agreement, which terms will be commercially reasonable, including without limitation license fees, milestone payments, and royalties, during the period up to [***] days following receipt of ISIS’ notice.  If the parties are unable to execute such an agreement within such time period, despite good faith negotiations by each party, ATL will thereafter be free to develop and commercialize such compound with one or more Third Parties, provided that the terms offered to such Third Party include financial terms that are no more favorable than those offered to ISIS.

(d)            Notwithstanding the foregoing, this Section 4.5 will not apply to the Teva Sublicense.

4.6           Rights Retained by ISIS.

ISIS will retain the right to practice under all patent rights licensed to ATL hereunder as necessary to carry out ISIS’ obligations under this Agreement and the Teva/ISIS Agreements, and for any purpose other than  Exploiting the Collaboration Compound Products, except as provided otherwise herein.  ATL will not practice any of the patent rights licensed to ATL hereunder other than as expressly licensed in this Article 4.

4.7           Access to Additional Technology.

(a)            If, after the Effective Date and during the Collaboration Term, ISIS comes to own, or acquires a license with the right to grant sublicenses thereunder, any new or additional ISIS Core Technology Patent Rights or Manufacturing Patent Rights, and ATL desires access to such rights, ISIS agrees to negotiate in good faith with ATL regarding such access, provided that any licenses or sublicenses from ISIS to ATL under such Patents pursuant to Sections 4.1 and 4.2 are conditioned on ATL’s agreement (i) to pay, on a flow-through basis, any royalties, milestones or other financial obligations owed to ISIS’

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licensor arising from a license or sublicense grant to ATL and the practice under such license or sublicense by ATL, its Affiliates or Sublicensees; and (ii) to abide by all terms of the agreement under which a Third Party license is granted to ISIS.

(b)            If, after the Effective Date and during the Collaboration Term, a change in the manufacturing process as a result of a change in the master batch records for ATL 1102 requires access of ATL to Manufacturing Patent Rights that were not practiced in the manufacture of the ATL 1102 API prior to such change, and if ISIS has obtained ownership or control of such Manufacturing Patent Rights by way of a license from or via collaboration with a Third Party, then any license or sublicense granted to ATL under such Manufacturing Patent Rights is conditioned on the prior agreement to be negotiated in good faith by the parties regarding (i) the assumption by ATL of all financial obligations owed to such Third Party arising from the grant of a license or sublicense to ATL and the practice under such license or sublicense by ATL, its Affiliates or Sublicensees; (ii) the payment to ISIS of an equitable portion of acquisition costs incurred by ISIS; and (iii) an agreement by ATL to abide by all terms of the agreement under which such Manufacturing Patent Rights were acquired, if applicable.

4.8           Effect of Termination of Licenses to Research and Licenses to Exploit.

(a)            Return of ISIS-Provided Information .  Upon termination of any License to Research or License to Exploit applicable to a Collaboration Compound or Collaboration Compound Product (including, without limitation, ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products), ATL will promptly return to ISIS, at no cost to ISIS, all information and materials provided to ATL by ISIS relating to such Collaboration Compound or Collaboration Compound Product.

(b)            Return of API .  Upon termination of any License to Research or License to Exploit applicable to a Collaboration Compound or Collaboration Compound Product (including, without limitation, ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products), ATL will promptly, subject [***] to ISIS all quantities of such Collaboration Compound API provided by ISIS that have not been used.

(c)            Assignment Back to ISIS of VLA4 Compound Patent Rights .  Upon termination of the License to Exploit ATL 1102, VLA4 Compounds, Other VLA4 Compounds and VLA4 Products, ATL will promptly assign to ISIS all of ATL’s right, title and interest in and to the VLA4 Compound Patent Rights.  In connection therewith, ATL agrees to promptly execute all assignment and other documents, testify and take all other actions reasonably necessary or appropriate to transfer, effect, confirm, perfect, record, preserve, protect and enforce ISIS’ right, title and interest in the VLA4 Compound Patent Rights throughout the world, at the reasonable request and expense (to the extent of any out-of-pocket costs incurred by ATL) of ISIS.

(d)            Transition Plan for Research Targets Other Than CD49d .  If a License to Research or License to Exploit, other than any such license with respect to ATL 1102, VLA4 Compounds and Other VLA4 Compounds and VLA4 Products, is terminated for any reason, promptly upon any such termination, the parties will prepare a transition plan to

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ensure the seamless transition of any clinical studies and distribution and sales activities relating to any Antisense Inhibitor, Collaboration Compound, and/or Collaboration Compound Product from ATL to ISIS.  In addition, ATL will provide ISIS with any and all data relating to such Antisense Inhibitor, Collaboration Compound, Product using ISIS Standard Chemistry and/or to any ISIS Patent Rights relating to any Research Target that are in ATL’s possession or control.

(e)            Independently-Generated Information .  Upon termination of any License to Research or License to Exploit applicable to a Collaboration Compound or Collaboration Compound Product (including, without limitation, ATL1102, VLA4 Compound, Other VLA4 Compounds and VLA4 Products), ATL will promptly assign and transfer to ISIS all information and materials (including, without limitation, preclinical and clinical data, regulatory submissions and Patents) relating to such Collaboration Compound or Collaboration Compound Product that were independently generated by ATL or any of its Affiliates, contractors and Sublicensees (collectively, “ Independently-Generated Information ”), excluding any such information independently generated by a Sublicensee (including Teva) that ATL is prohibited from providing to ISIS.  ATL will obtain the written agreement of each Sublicensee (including Teva) to comply with the provisions of this Section 4.8(e).  With respect to Independently-Generated Information provided to ISIS in the event of termination of a License to Research or License to Exploit, ISIS will compensate ATL as follows:

(1)            If such termination occurs before the [***] of the Collaboration Compound or Collaboration Compound Product to which such Independently-Generated Information relates, ISIS or its Sublicensees will pay to ATL [***] using such Independently-Generated Information, for [***].

(2)            If such termination occurs after the [***] of the Collaboration Compound or Collaboration Compound Product to which such Independently-Generated Information relates, ISIS or its Sublicensees will pay to ATL a [***] using such Independently-Generated Information, for [***].

(3)            Any reasonable out-of-pocket costs payable by ATL to Third Parties (excluding any Sublicensee or any further sublicensee of a Sublicensee) associated with the physical transfer of Independently-Generated Information to ISIS pursuant to this Section 4.8(e) ( e.g. , copying, shipping) will be borne by ISIS.

ARTICLE 5

ROYALTIES AND PAYMENTS

5.1           Minimum Royalties Payable to ISIS by ATL on Sales of Products by ATL or its Affiliates.

Subject to the terms and conditions of, and during the term of, this Agreement, ATL will pay to ISIS royalties on sales of Products by ATL or its Affiliates, according to the terms set forth below.

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(a)            The minimum royalty payable to ISIS by ATL for sales of any VLA4 Product by ATL or its Affiliates is [***] of Net Sales for as long as there are issued and unexpired claims within the patent rights applicable to such VLA4 Product (including, without limitation, the VLA4 Compound Patent Rights) and [***] of Net Sales thereafter for the life of such VLA4 Product.

(b)            There is [***]for sales of any Product that contains a compound that modulates IGF-1R[***].

(c)            Except as otherwise provided above, the minimum royalty payable to ISIS for sales of any Product by ATL or its Affiliates comprising a compound that modulates a Research Target or Abandoned Research Target for which ISIS has not established efficacy in an animal model and has not conducted preclinical toxicology studies is [***] of Net Sales.  Such minimum royalty is due and payable for the life of the Product.

(d)            Except as otherwise provided above, the minimum royalty payable to ISIS by ATL for sales of any Product by ATL or its Affiliates for which ISIS has established efficacy in an animal model or has conducted preclinical toxicity studies will be negotiated in good faith by the parties on a case-by-case basis, but will not be less than [***] of Net Sales.

(e)            For Products under (a) or (c), in addition to any minimum royalties due under (a) or (c), the royalty payable to ISIS by ATL for sales of any Product by ATL or its Affiliates, the manufacture, use, sale, or importation of which would, but for the licenses granted hereunder, infringe an issued and unexpired claim under the ISIS Formulation Patent Rights is [***]

(f)             The minimum royalties payable as described in Sections 5.1 (a)-(e) are in addition to any royalties payable to ISIS for Third Party Patent Rights as set forth in Section 5.3 below.

5.2           Sublicense Income Payable to ISIS by ATL or its Affiliates on Products sold by Sublicensee(s).

Subject to the terms and conditions of, and during the