LICENSE AND COLLABORATION AGREEMENT

Exhibit 10.5

Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.

LICENSE AND COLLABORATION AGREEMENT

     This License and Collaboration Agreement (the “ License Agreement ” or the “ Agreement ”) is entered into as of the 6 ^th day of September 2007 (the “ Effective Date ”) by and among Alnylam Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business at 300 Third Street, Cambridge, Massachusetts 02142 (“ Alnylam ”), Isis Pharmaceuticals, Inc., a Delaware corporation, with its principal place of business at 1896 Rutherford Road, Carlsbad, California 92008 (“ Isis ”, and each of Alnylam and Isis, a “ Licensor ” and together, the “ Licensors ”), and Regulus Therapeutics LLC, a Delaware limited liability company, with its principal place of business at 1896 Rutherford Road, Carlsbad, California 92008 (“ Regulus ”).

INTRODUCTION

1.

Isis and Alnylam each Controls certain intellectual property relating to miRNAs (each as defined below).

2.

Isis and Alnylam are creating a new entity, Regulus, to exploit miRNA Compounds.

3.

Regulus desires to obtain a license from Isis and Alnylam to such intellectual property for the purpose of developing and commercializing certain products, and Isis and Alnylam each desires to grant such a license to Regulus in accordance with the terms and conditions of this Agreement.

4.

On the Effective Date, the Parties are entering into a Services Agreement pursuant to which the Licensors will provide certain services to Regulus.

In consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Isis, Alnylam and Regulus each agrees as follows:

1. DEFINITIONS

     Capitalized terms used herein and not defined elsewhere herein have the meanings set forth in Exhibit 1 .

2. ASSIGNMENT; LICENSES

     2.1 Assignments to Regulus.

          (a) Isis hereby grants, sells, conveys, transfers, assigns, releases and delivers to Regulus all right, title and interest in and to the Patent Rights and contracts listed on Schedule 2.1(a) attached hereto, to have and hold the same unto itself, its successors and assigns forever, and Regulus hereby accepts such grant, sale, conveyance, etc.

          (b) Alnylam hereby grants, sells, conveys, transfers, assigns, releases and delivers to Regulus all right, title and interest in and to the Patent Rights and contracts listed on

Schedule 2.1(b) attached hereto, to have and hold the same unto itself, its successors and assigns forever, and Regulus hereby accepts such grant, sale, conveyance, etc.

          (c) Notwithstanding the foregoing, to the extent any contract for which assignment is provided for herein is not assignable pursuant to such contract without the written consent of another party or requires novation, if assigned, this Agreement will not constitute an assignment or an attempted assignment thereof if such assignment or attempted assignment would constitute a breach thereof. To the extent a contract is not assigned pursuant to this provision, the applicable Licensor will cooperate with the other Parties and will use its Commercially Reasonable Efforts to provide Regulus the economic and other benefits intended to be assigned to Regulus under the relevant contract.

     2.2 Licenses Granted to Regulus .

          (a) Grants . Subject to the terms and conditions of this Agreement (including but not limited to Section 2.4), each Licensor hereby grants to Regulus a worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5) license in the Field, under such Licensor’s Licensed IP,

	(i)		to Develop miRNA Compounds and miRNA Therapeutics,
	(ii)		to Manufacture miRNA Compounds and miRNA Therapeutics, and
	(iii)		to Commercialize miRNA Therapeutics.

Subject to Section 2.4, the rights granted under clauses (i), (ii) and (iii) will be (y) exclusive with respect to miRNA Compounds which are miRNA Antagonists and miRNA Therapeutics containing such miRNA Compounds, and (z) non-exclusive with respect to miRNA Compounds which are Approved Precursor Antagonists and miRNA Therapeutics containing such miRNA Compounds.

          (b) Request to License miRNA Mimics and Additional miRNA Precursor Antagonists . Regulus may request a worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5), non-exclusive license in the Field, under each Licensor’s Licensed IP, to Develop, Manufacture and Commercialize a specific miRNA Mimic or a specific miRNA Precursor Antagonist that is not then an Approved Precursor Antagonist, and miRNA Therapeutics containing such miRNA Mimic or miRNA Precursor Antagonist, by providing written notice to Licensors thereof on a miRNA Mimic-by-miRNA Mimic or miRNA Precursor Antagonist-by-miRNA Precursor Antagonist basis. Such license is subject to (i) review and affirmative approval by the Licensors, which approval may be withheld by a Licensor in such Party’s sole discretion, and (ii) compliance with relevant Third Party Rights ([**]). For the avoidance of doubt, Regulus will have no rights to such miRNA Mimic or miRNA Precursor Antagonist hereunder unless and until the affirmative approval of the relevant Licensor(s) and any required consents or approvals from Third Parties have been obtained and Regulus agrees to comply with all Third Party Rights, even to the extent inconsistent with the terms of this Agreement, following which such miRNA Mimic or miRNA Precursor Antagonist will be deemed to be an Approved Mimic or Approved Precursor Antagonist, respectively.

          (c) Retained Rights . The exclusive license granted to Regulus by Alnylam pursuant to Section 2.2(a) is subject to Alnylam’s retained right to use and exploit its Licensed IP solely to support its own internal Research in the Alnylam Field. The exclusive license granted to Regulus by Isis pursuant to Section 2.2(a) is subject to Isis’ retained right to use and exploit its Licensed IP solely to support its own internal Research in the Isis Field. All rights in and to each Licensor’s Licensed IP not expressly licensed pursuant to Sections 2.2(a) and (b), and any other Patent Rights or Know-How of such Licensor, are hereby retained by such Licensor.

     2.3 Licenses Granted to Licensors Under Regulus IP . Subject to the terms and conditions of this Agreement and to Third Party Rights:

          (a) Regulus hereby grants to Alnylam a worldwide, exclusive, royalty-free, perpetual and irrevocable license, with the right to grant sublicenses, under the Regulus IP solely to the extent necessary or useful to research, discover, develop, make, have made, use, sell, offer to sell and/or otherwise commercialize double-stranded oligonucleotides (other than Approved Mimics) and any product containing double-stranded oligonucleotides (other than Approved Mimics) (the “ Alnylam Field ”).

          (b) Regulus hereby grants to Isis a worldwide, exclusive, royalty-free, perpetual and irrevocable license, with the right to grant sublicenses, under the Regulus IP solely to the extent necessary or useful to research, discover, develop, make, have made, use, sell, offer to sell and/or otherwise commercialize single-stranded oligonucleotides (other than miRNA Antagonists, Approved Precursor Antagonists, or Approved Mimics) and any product containing single-stranded oligonucleotides (other than miRNA Antagonists, Approved Precursor Antagonists or Approved Mimics) (the “ Isis Field ”).

     2.4 Third Party Rights; Additional Rights .

          (a) Existing Out-License Agreements. The licenses granted under Section 2.2 and 2.3 are subject to and limited by the licenses granted, and other obligations owed, by each Licensor to a Third Party prior to the Effective Date under a Licensed Patent Right Controlled by such Licensor, pursuant to agreements described on (i) Part 1 of Schedule 2.4(a) in the case of Licensed Patent Rights Controlled by Isis, and (ii) Part 2 of Schedule 2.4(a) in the case of Licensed Patent Rights Controlled by Alnylam, and (iii) in an addendum transmittal instrument delivered by each Licensor within 30 days after the Effective Date. The schedules and instruments provided under this Section 2.4(a) will be collectively referred to as the “ Out-License Summary ”, and the agreements described therein will be collectively referred to as the “ Out-License Agreements ”).

          (b)  Existing In-Licenses from Third Parties .

               (i) Certain of the Licensed Patent Rights as of the Effective Date that are licensed to Regulus under Section 2.2 are in-licensed or were acquired by the applicable Licensor under agreements with Third Party licensors or sellers that may contain restrictions on the scope of the licenses or trigger payment or other material obligations or restrictions (such license or purchase agreements in effect as of the Effective Date being the “ In-License Agreements ”). The licenses and other rights (including sublicense and disclosure rights) granted to a Party pursuant to this Agreement are subject to, and are limited to the extent of the terms of

any (i) In-License Agreements between Isis and any Third Party licensor, as specifically described on Part 1 of Schedule 2.4(b) and (ii) any In-License Agreement between Alnylam and any Third Party, as specifically described on Part 2 of Schedule 2. 4(b) . The schedules provided under this Section 2.4(b) will be collectively referred to as “ In-License Summary .” Each Part of the In-License Summary summarizes all material restrictions on the scope of the licenses, and all material payment obligations owed, under the In-License Agreements (other than the Previous Agreements) which the applicable Licensor reasonably believes apply to the licenses granted to Regulus hereunder as of the Effective Date. Except as provided in Section 5.6(d), Regulus will assume all financial and other obligations to the relevant Third Party, and be subject to all restrictions, set forth on the In-License Summary and arising from the grant to Regulus of the licenses pursuant to Section 2.2(a) as of the Effective Date.

               (ii) In addition to the financial obligations and scope limitations set forth on the In-License Summary and the Out-License Summary, and to the extent access to such terms have been made available to such licensed Party in unredacted form ( provided , however , that such licensed Party has not failed to request such access in accordance with Section 2.4(e)), a Party receiving a license or sublicense under Licensed IP hereunder will comply, and will cause its Affiliates and Sublicensees to comply, with all other terms of the In-License Agreements and Out-License Agreements, including without limitation diligence requirements, applicable to the licenses granted to such Party hereunder.

          (c) Optional In-Licenses . Notwithstanding anything to the contrary herein, the licenses to Isis’ Licensed IP hereunder initially shall not include licenses to Patent Rights or Know-How licensed by Isis under the agreements listed and described on Part 1 of Schedule 2.4(c) and the licenses to Alnylam’s Licensed IP hereunder initially shall not include licenses to Patent Rights or Know-How licensed by Alnylam under the agreements listed and described on Part 2 of Schedule 2.4(c) (such agreements on Schedule 2.4(C) referred to as the “ Optional In-Licenses ”). Regulus is hereby granted the option of expanding its licenses under Section 2.2 to include Patent Rights and Know-How licensed to the relevant Licensor pursuant to [**] Optional In-Licenses, with respect to [**] miRNA Compounds and related miRNA Therapeutics, by notifying the Parties in writing of the relevant Optional In-License, and each miRNA Compound with respect thereto, for which such option is exercised. Upon such exercise and Regulus’ written agreement to assume all financial and other obligations and restrictions imposed by the desired Optional In-License (including, to the extent access to such terms have been made available to Regulus in unredacted form ( provided , however , that Regulus has not failed to request such access in accordance with Section 2.4(e)), all other terms of such Optional In-License applicable to the licenses granted to Regulus hereunder), the Patent Rights and Know-How licensed to the relevant Licensor pursuant to the specified Optional In-License shall be deemed included in such Licensor’s Licensed IP solely with respect to the relevant miRNA Compounds and related miRNA Therapeutics.

          (d) Additional Rights after Effective Date . If after the Effective Date, a Party (the “ Controlling Party ”) invents or acquires rights or title to an invention claimed by a Patent Right that would be included in the Licensed Patent Rights or Regulus Patent Rights (the “ Additional Rights ”), then, on the anniversary of the Effective Date following such invention or acquisition of such Additional Right, or as otherwise reasonably requested by a Party, the Controlling Party must notify each other Party (each, a “ Non-Controlling Party ”) of such acquisition or invention. If a Non-Controlling Party wishes to include such Additional Rights

under the licenses granted pursuant to Sections 2.2, 2.3 or 5.6 (as the case may be), such Non-Controlling Party will notify the Controlling Party of its desire to do so, the Controlling Party will provide the Non-Controlling Party a summary of all material restrictions on the scope of the licenses granted, and all material payment obligations owed, under any Third Party Agreement applicable to such Additional Rights and the Non-Controlling Party may, upon written notice to the Controlling Party, obtain a license under such Additional Rights and will assume all financial and other obligations to, and be subject to all restrictions imposed by, the Controlling Party’s licensors or collaborators, if any, arising from the grant to such Non-Controlling Party of such license (including, to the extent access to such terms have been made available to such Non-Controlling Party in unredacted form ( provided , however , that such Non-Controlling Party has not failed to request such access in accordance with Section 2.4(e)), all other terms of such Third Party Agreements applicable to the licenses granted to such Non-Controlling Party hereunder). Notwithstanding the foregoing, any Additional Rights that do not carry financial or other obligations or restrictions will be automatically included under the licenses granted pursuant to Section 2.2, 2.3 or 5.6. If the Controlling Party pays any upfront payments or similar acquisition costs to access Additional Rights, the Controlling Party and relevant Non-Controlling Party(ies) will negotiate in good faith regarding sharing such acquisition costs and payments. When acquiring or creating such Additional Rights pursuant to any agreement entered into after the Effective Date, each Party will endeavor in good faith to secure the right to sublicense such Additional Rights to the other Parties.

          (e) Applicable Agreements . Each Party agrees to provide, upon the request of a Party, access to each Third Party Agreement that is the subject of any provision of this Section 2.4; provided , however , that the Parties agree and acknowledge that (i) the Third Party Agreements so provided may, to the extent necessary to protect confidential information of the relevant Third Party or financial information of the relevant Party, be redacted, and (ii) if so redacted, the Party assuming any obligations or accepting any limitations under a Third Party Agreement pursuant to this Section 2.4, will only be liable to the extent access to such terms have been made available to such licensed Party in unredacted form.

     2.5 Sublicenses .

          (a) Subject to Third Party Rights, Regulus will have the right to grant to its Affiliates and Third Parties sublicenses under the licenses granted in Sections 2.2(a) and (b).

          (b) Subject to Third Party Rights, the Opt-In Party will have the right to grant to its Affiliates and Third Parties sublicenses under the rights granted to such Licensor in Section 5.6(a).

          (c) Each such sublicense will be subject and subordinate to, and consistent with, the terms and conditions of this Agreement, and will provide that any such Affiliate and Sublicensee will not further sublicense except on terms consistent with this Section 2.5. Regulus or the Opt-In Party, as applicable, will provide the other Parties with a copy of any sublicense granted pursuant to this Section 2.5 within 30 days after the execution thereof. Such copy may be redacted to exclude confidential scientific information and other information required by a Sublicensee to be kept confidential; provided that all relevant financial terms and information will be retained. Regulus or the Opt-In Party, as applicable, will remain responsible for the performance of its Affiliates and Sublicensees, and will ensure that all such

Affiliates and Sublicensees comply with the relevant provisions of this Agreement. In the event of a material default by any of its Affiliates or Sublicensees under a sublicense agreement, Regulus or the Opt-In Party, as applicable, will inform the other Parties and will take such action, after consultation with such other Parties, which, in Regulus’ or the Opt-in Party’s (as applicable) reasonable business judgment, will address such default.

3. TECHNOLOGY TRANSFER

     3.1 Technology Transfer to Regulus. At each meeting of the Collaboration Working Group the representatives will discuss new Know-How and Patent Rights of Isis and Alnylam that are included in such Licensor’s Licensed Patents and Licensed Know-How hereunder at the level of detail necessary to enable Regulus to effectively practice such Patent Rights and Know-How.

     3.2 Technology Transfer from Regulus; Identification and Improvements. At each Collaboration Working Group meeting Regulus will present a description of all Regulus IP developed by it or on its behalf, or over which Regulus otherwise acquired Control, since the last meeting. The description will be at a level of detail necessary to enable Isis, Alnylam or both, as appropriate, to effectively practice such Regulus IP in accordance with their respective licenses under Section 2.3.

4. DILIGENCE

     4.1 General Diligence . Except to the extent a Licensor receives a license from Regulus pursuant to this Agreement to Develop, Manufacture and Commercialize miRNA Therapeutics, Regulus will use Commercially Reasonable Efforts to Develop, and Commercialize miRNA Compounds and miRNA Therapeutics in the Field.

     4.2 Compliance with Laws . Each Party will, and will ensure that its Affiliates and Sublicensees will, comply with all relevant Laws in exercising their rights and fulfilling their obligations under this Agreement.

     4.3 Reporting . By January 31 ^st of each year, Regulus will prepare and furnish each Licensor with a written report summarizing Regulus’ activities conducted during the prior calendar year to Develop, Manufacture and Commercialize miRNA Therapeutics in the Field and identifying the results obtained or benchmarks achieved since the last report to the Licensors.

     4.4 Designation of Research Programs and Development Projects . Regulus’ officers will be responsible for reviewing the results of Research and Development activities under the Operating Plan and designating (subject to the approval of the Managing Board) from time to time Research Programs and Development Projects. A “ Research Program ” will begin upon the commencement of discovery or characterization activities focused on one or more specific miRNA(s) after preliminary validation of the biological function of such miRNA(s) has been identified (i.e., compound discovery, not target validation) and will include all activities with respect to the Development, Manufacturing and Commercialization of miRNA Compounds and miRNA Therapeutics directed to such miRNA(s). A Research Program will become a “ Development Project ” (and thereafter will no longer be a Research Program) when Regulus’ officers recommend, and the Managing Board agrees, that a sufficient portfolio of data exists to

support the initiation of a [**] on a miRNA Compound drug candidate targeting such miRNA(s). Regulus will maintain a written list of the then-current Research Programs and Development Projects (each, a “ Program/Project List ”).

5. RIGHT TO OPT-IN

     5.1 Notice of Development Project Status . Concurrently with the conversion of a Research Program into a Development Project, Regulus will notify each Licensor of such conversion and whether or not Regulus will continue to pursue the Development and Commercialization of such newly designated Development Project.

     5.2 Continued Development by Regulus of Development Projects . If Regulus notifies Licensors pursuant to Section 5.1 that Regulus will continue to pursue the Development and Commercialization of such Development Project, then, without limiting the generality of Section 4.1, Regulus will use Commercially Reasonable Efforts to Develop and Commercialize the relevant Development Compounds and Development Therapeutics in the Field. Regulus will also (a) pay to each Licensor a royalty of [**]% of Net Sales of such Development Therapeutics which are Royalty-Bearing Products, during the relevant Royalty Term ( provided , however , that, for the remainder of the relevant Royalty Term following the end of the relevant Exclusivity Period, the royalty rate will be [**]%) and (b) be responsible for all milestones, royalties and other payments payable to Third Parties in respect of the Development, Manufacture and Commercialization of such Development Therapeutics in the Field, by Regulus, its Affiliates and Sublicensees, including any amounts payable by either Licensor to Third Parties under the Third Party Rights. The Parties will use reasonable efforts to [**]. Regulus agrees that the royalty described in clause (a) of this Section 5.2 is payable to each Licensor, regardless of whether a particular Royalty-Bearing Product is covered by such Licensor’s Licensed IP. Each Party agrees and acknowledges that such royalty structure (i) is freely entered into by such Party, (ii) is a fair reflection of the value received by Regulus from the licenses granted by the Licensors, and (iii) is a reasonable allocation of the value received by Regulus from each Licensor, due to the difficulty of determining the extent to which Licensor’s Licensed IP covers or has enabled each Royalty-Bearing Product.

     5.3 Opt-In Election . If Regulus notifies Licensors pursuant to Section 5.1 that it will not continue to pursue the Development and Commercialization of such Development Project, each Licensor will have the right, exercisable by providing written notice to Regulus and the other Licensor within [**] days following receipt of such notice (“ Initial Opt-In Election Period ”), to elect to continue to pursue the Development and Commercialization of such Development Project (“ Opt-In Election ”).

          (a) Opt-In by One Licensor . If only one, but not both, of the Licensors (the “ Opt-In Party ”) makes an Opt-In Election with respect to such Development Project within the Initial Opt-In Election Period, the High Terms set forth in Section 5.4 and the terms of Section 5.6 will apply following the end of such Initial Opt-In Election Period and the Licensor who did not elect to opt-in will waive its right to opt-in with respect to such Development Project.

          (b) No Opt-In; Second Opt-In Election . If, within the Initial Opt-In Election Period, neither Licensor makes an Opt-In Election (or both Licensors fail to submit any response), then Regulus will use diligent efforts to negotiate and finalize, within [**] months

following the end of the Initial Opt-In Election Period, a term sheet with a Third Party pursuant to which such Third Party will Develop and Commercialize, either by itself or with or on behalf of Regulus, such Development Project in the Field.

	(i)		If, despite diligent efforts, Regulus is unable to finalize such term sheet with a Third Party with respect to the Development Project within such [**] month period, or Regulus is able to finalize such term sheet with a Third Party with respect to the Development Project within such [**] month period, but Regulus is unable to execute a definitive agreement substantially in conformance with such term sheet within [**] months after finalizing such term sheet, Regulus will notify Licensors thereof and each Licensor will again have the right, exercisable by providing written notice to Regulus and the other Licensor, within [**] days following Regulus’ notice (“ Second Opt-In Election Period ”), to elect to continue to pursue the Development and Commercialization of such Development Project on the Low Terms set forth in Section 5.5.
	(ii)		If only one, but not both, of the Licensors, makes an Opt-In Election within the Second Opt-In Election Period (the “ Opt-In Party ”), the Low Terms set forth in Section 5.5 and the terms of Section 5.6 will apply following the end of such Second Opt-In Election Period and the Licensor who did not make an Opt-In Election, within such Second Opt-In Election Period, will have waived its right to opt-in with respect to such Development Project.
	(iii)		If, within the Second Opt-In Election Period, neither Licensor makes an Opt-In Election (or both Licensors fail to submit any response), then Regulus will retain all rights to such Development Project.

          (c) Opt-In by Both Licensors . If, within the Initial Opt-In Election Period or Second Opt-In Election Period, both Licensors submit an Opt-In Election with respect to such Development Project, then the Parties will, to the extent mutually agreed, work together to amend the Operating Plan to support Regulus in Developing and Commercializing the Development Project, including, as applicable, creating a funding and early development plan, and the designation of roles and responsibilities of each Party in the execution of such Operating Plan.

     5.4 Opt-In on High Terms . In the event that an Opt-In Election is made by only one of the Licensors during the Initial Opt-In Election Period pursuant to Section 5.3(a), the following terms will apply (“ High Terms ”):

          (a) Upfront Payment . The Opt-In Party will pay to Regulus, within 15 days following the end of the Initial Opt-In Election Period, a one-time payment of [**] Dollars ($[**]).

          (b) Royalties . During the relevant Royalty Term, the Opt-In Party will pay to Regulus the following royalties on Net Sales (aggregated from all relevant countries) of each Royalty-Bearing Product in a calendar year:

		Royalty Rate		Royalty Rate
On the portion of Net Sales		on Net Sales During		on Net Sales After
during the calendar year:		Exclusivity Period		Exclusivity Period
Less than or equal to $[**]:		[**]%		[**]%
Greater than $[**]:		[**]%		[**]%

The Opt-In Party’s obligation to pay royalties under this Section 5.4(b) is imposed only once with respect to the same unit of Royalty-Bearing Product.

          (c) Milestone Payments . Subject to Section 5.6(f), the Opt-In Party will pay to Regulus the following payments upon the achievement of the events set forth below by a Royalty-Bearing Product for the relevant Development Project:

Milestone Event:		Payment
		[**]:
(i) Filing of IND for first Royalty-Bearing Product		$[**]
(ii) Upon Completion of the first Phase IIa Clinical Trial		$[**]
(iii) Initiation (i.e., dosing of first patient) of the first Phase III Clinical Trial		$[**]
(iv) Filing of NDA in U.S. for first Royalty-Bearing Product		$[**]
(v) Filing of NDA in the European Union for first Royalty-Bearing Product		$[**]
(vi) Regulatory Approval in U.S. for the first Royalty-Bearing Product		$[**]
(vii) Regulatory Approval in any Major Country in the European Union for the first Royalty-Bearing Product		$[**]

The Opt-In Party will notify the other Parties within 15 days following achievement or occurrence of a milestone event. Each milestone payment under this Section 5.4(c) will be payable only once with respect to the first Royalty-Bearing Product under the relevant Development Project to achieve the milestone event. If an event in clause (ii), (iii), (iv) or (v) occurs before an event in a preceding clause (i), (ii) or (iii), the milestone payment described in such clause (i), (ii) or (iii) will be paid when the milestone payment described in such clause (ii), (iii), (iv) or (v) is paid.

Milestone payments will continue to be due for milestone events occurring after any grant by the Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a) with respect to the relevant Development Project.

          (d) Sublicense Income . Subject to Section 5.6(f), the Opt-In Party will pay to Regulus a portion of the Sublicense Income received by the Opt-In Party or its Affiliates, in accordance with the following table:

Sublicense agreement initially entered into		Percentage of
during this timeframe:		Sublicense Income
Prior to Completion of first Phase IIa Clinical Trial		[**]%
After Completion of first Phase IIa Clinical Trial, but prior to completion of first Phase III Clinical Trial		[**]%
After Completion of first Phase III Clinical Trial		[**]%

     5.5 Opt-In on Low Terms . In the event that an Opt-In Election is made by only one, but not both, of the Licensors during the Second Opt-In Election Period pursuant to Section 5.3(b)(ii), the following terms will apply (“ Low Terms ”):

          (a) Upfront Payment . The Opt-In Party will pay to Regulus, within 15 days following the end of the Second Opt-In Election Period, a one-time payment of [**] Dollars ($[**]).

          (b) Royalties . During the relevant Royalty Term, the Opt-In Party will pay to Regulus the following royalties on Net Sales (aggregated from all relevant countries) of each Royalty-Bearing Product in a calendar year:

		Royalty Rate		Royalty Rate
On the portion of Net Sales		on Net Sales During		on Net Sales After
during the calendar year:		Exclusivity Period		Exclusivity Period
Less than or equal to $[**]:		[**]%		[**]%
Greater than $[**]:		[**]%		[**]%

The Opt-In Party’s obligation to pay royalties under this Section 5.5(b) is imposed only once with respect to the same unit of Royalty-Bearing Product.

          (c) Milestone Payments . Subject to Section 5.6(f), the Opt-In Party will pay to Regulus the following payments upon the achievement of the events set forth below by a Royalty-Bearing Product for the relevant Development Project:

		Payment for
		Royalty-Bearing
Milestone Event:		Product
		[**]:
(i) Filing of IND for first Royalty-Bearing Product		$[**]
(ii) Upon Completion of the first Phase IIa Clinical Trial		$[**]
(iii) Initiation (i.e., dosing of first patient) of the first Phase III Clinical Trial		$[**]
(iv) Filing of NDA in U.S. for first Royalty-Bearing Product		$[**]
(v) Regulatory Approval in U.S. for the first Royalty-Bearing Product		$[**]

The Opt-In Party will notify the other Parties within 15 days following achievement or occurrence of a milestone event. Each milestone payment under this Section 5.4(c) will be payable only once with respect to the first Royalty-Bearing Product under the relevant Development Project to achieve the milestone event. If an event in clause (ii), (iii), (iv) or (v) occurs before an event in a preceding clause (i), (ii) or (iii), the milestone payment described in such clause (i), (ii) or (iii) will be paid when the milestone payment described in such clause (ii), (iii), (iv) or (v) is paid.

Milestone payments will continue to be due for milestone events occurring after any grant by the Opt-In Party or its Affiliates to a Third Party of a sublicense of the Regulus IP or Licensed IP licensed to the Opt-In Party under Section 5.6(a) with respect to the relevant Development Project.

          (d) Sublicense Income . Subject to Section 5.6(f), the Opt-In Party will pay to Regulus a portion of the Sublicense Income received by the Opt-In Party or its Affiliates, in accordance with the following table:

Sublicense agreement initially entered into		Percentage of
during this timeframe:		Sublicense Income
Prior to Completion of first Phase IIa Clinical Trial		[**]%
After Completion of first Phase IIa Clinical Trial, but prior to completion of first Phase III Clinical Trial		[**]%
After Completion of first Phase III Clinical Trial		[**]%

     5.6 Other Terms Applicable to Opt-In Party .

          (a) License Grant .

	(i)		Regulus will, and hereby does, grant to the Opt-In Party, subject to and limited by the Third Party Rights, a worldwide, royalty-bearing, sublicenseable (in accordance with Section 2.5), (x) license under all Regulus IP, and (y) sublicense under all Licensed IP (within the scope of the license granted to Regulus under such Licensed IP pursuant to Sections 2.2(a) and 2.2(b)), solely for purposes of Developing, Manufacturing and Commercializing the relevant Development Project’s Development Compounds and Development Therapeutics in the Field on the terms set forth in this Section 5.6. Regulus shall comply with the provisions of Section 2.4 with respect to the disclosure of information with respect to the relevant Third Party Rights.
	(ii)		Subject to Third Party Rights, the rights granted under Section 5.6(a)(i) to the Opt-In Party will be exclusive, to the fullest extent possible, under Regulus IP and under Licensed IP. For the sake of clarity, this means that Regulus IP will be exclusively licensed by Regulus to the Opt-In Party with respect to the relevant Development Project, and Regulus’ rights under the Licensed IP will be exclusively sublicensed by Regulus to the Opt-In Party with respect to the relevant Development Project, but any non-exclusive licenses grant by the relevant Licensor to Regulus with respect to Licensed IP shall not be deemed to have been expanded to exclusive licenses to Regulus.

          (b) Diligence . The Opt-In Party will use Commercially Reasonable Efforts to Develop, Manufacture and Commercialize the relevant Development Compounds and Development Therapeutics, at such Opt-In Party’s own expense, in the Field, either by itself or with or through its Affiliates or Sublicensees.

          (c) Non-Compete . The non-Opt-In Party with respect to a Development Project will not, itself or through its Affiliates or with Third Parties, Develop, Manufacture or Commercialize Development Compounds or Development Therapeutics with respect to such Development Project during the period (i) [**] of a Royalty-Bearing Product with respect to such Development Project anywhere in the world as long as such Opt-In Party reasonably believes that a Development Therapeutic would be a Royalty-Bearing Product upon first commercial sale, and (ii) [**] of a Royalty-Bearing Product with respect to such Development Project anywhere in the world, until the expiration of [**] for such Development Project; provided , however that each Party will be entitled to grant Permitted Licenses.

          (d) Third Party and Inter-Licensor Payments . In addition to the royalties and milestones payable under Section 5.4 or 5.5 above, the Opt-In Party will be responsible for all milestones, royalties and other payments payable to Third Party Licensors and assumed under Section 2.4. The Parties will use reasonable efforts to [**]. In addition, the Opt-In Party will be

responsible for any other payments to the Third Parties in respect of the Development, Manufacture and Commercialization of such Development Compounds and Development Therapeutics in the Field. In addition, the Licensors agree that any amounts otherwise owed by one Licensor to another pursuant to a Previous Agreement is hereby waived with respect to such Development Project.

          (e) No Longer a Development Project . If one, but not both, Licensors make an Opt-In Election with respect to a Development Project, such Development Project will be permanently removed from the Program/Project List.

          (f) Credit for Prepaid Amounts . The Parties agree that, with respect to any Development Project, the relevant Opt-In Party should pay the greater of the cumulative Guaranteed Payments and the cumulative Sublicense Income Payments as of the end of each calendar quarter, and, because the timing of the Guaranteed Payments and the Sublicense Income Payments with respect to any given Development Project may not align, the Parties agree that the relevant Opt-In Party will not, with respect to any calendar quarter, be required to pay more than the amount necessary to bring the cumulative payments made by such Opt-In Party with respect to such Development Project up to the greater of the cumulative Guaranteed Payments and the cumulative Sublicense Income Payments with respect to such calendar quarter. Therefore, with respect to any calendar quarter, the relevant Opt-In Party shall pay the difference (if positive) between (i) the Cumulative Amount Owed as of the end of such calendar quarter, minus (ii) the Cumulative Amount Owed (if any) as of the end of the immediately prior calendar quarter. Several examples are provided in Schedule 5.6(f) .

	(A)		“ Cumulative Amount Owed ” means, with respect to a Development Project and a calendar quarter, the greater of (1) the cumulative Guaranteed Payments as of the end of such calendar quarter, and (2) the cumulative Sublicense Income Payments as of the end of such calendar quarter.
	(B)		“ Guaranteed Payments ” means, with respect to a Development Project and a calendar quarter, (1) if High Terms apply, the payments paid or payable pursuant to Sections 5.4(a) and 5.4(c) with respect to such calendar quarter, and (2) if Low Terms apply, the payments paid or payable pursuant to Section 5.5(a) and 5.5(c) with respect to such calendar quarter.

6. [Intentionally Deleted]

7. [Intentionally Deleted]

8. PAYMENT TERMS; REPORTS; RECORD-KEEPING AND AUDIT RIGHTS

     8.1 Reports and Payments . The Party paying any royalties, milestones or Sublicense Income Payments hereunder (the “ Paying Party ”) to another Party (each, a “ Payee Party ”) will deliver to such Payee Party(ies), within 15 days after the end of each calendar quarter, a report with a reasonably detailed written accounting of Net Sales of Royalty-Bearing Products that are subject to royalty payments due to the Payee Party(ies) for such calendar quarter, milestones payable and Sublicense Income received or accrued during such period. Such quarterly reports

will indicate gross sales on a country-by-country and Royalty-Bearing Product-by-Royalty-Bearing Product basis, the deductions from gross sales used in calculating Net Sales and the resulting calculation of the royalties due to the Payee Party(ies). Royalties or other payments accrued for the period covered by each such quarterly report will be due and payable 45 days after the end of each relevant calendar quarter. All amounts in this Agreement are expressed in U.S. Dollars and all payments due to the Payee Party(ies) hereunder will be paid in U.S. Dollars. If any conversion of foreign currency to U.S. Dollars is required in connection with any such payments, such conversion will be made by using the conversion rate existing in the United States (as reported in The Wall Street Journal ) on the last Business Day of the reporting period to which such payments relate, or such other publication as the Parties agree.

     8.2 Tax Withholding . The Paying Party will use all reasonable and legal efforts to reduce tax withholding with respect to payments to be made to the Payee Party(ies). Notwithstanding such efforts, if the Paying Party concludes that tax withholdings are required with respect to payments to the Payee Party(ies), the Paying Party will withhold the required amount and pay it to the appropriate governmental authority. In any such case, the Paying Party will promptly provide the Payee Party(ies) with original receipts or other evidence reasonably sufficient to allow the Payee Party(ies) to document such tax withholdings for purposes of claiming foreign tax credits and similar benefits.

     8.3 Late Payments . Any payments that are not made on or before the due date will bear interest at the lesser of (a) 1.5% per month or (b) the maximum permissible rate under applicable law, for the period from the date on which such payment was due through the date on which payment is actually made.

     8.4 Financial Records . Unless otherwise required by the LLC Agreement, the Paying Party will maintain, and will require its Affiliates and Sublicensees to maintain, for 3 years after the relevant reporting period all financial records relating to the transactions and activities contemplated by this Agreement in sufficient detail to verify compliance with the terms of this Agreement.

     8.5 Audit Right . Once during each calendar year, each Payee Party may retain an independent certified public accountant reasonably acceptable to the Paying Party to audit the financial records described in Section 8.4, upon reasonable notice to the Paying Party, during regular business hours and under an obligation of confidentiality to the Paying Party. Such Payee Party will bear all of the costs of such audit, except as provided below. The results of such audit will be made available to all Parties; provided , that , such results will be deemed the Confidential Information of the Paying Party hereunder. If the audit demonstrates that the payments owed under this Agreement have been understated, the Paying Party will pay the balance to the Payee Party, together with interest in accordance with Section 8.3. Further, if the amount of the understatement is greater than 5% of the amount owed to such Payee Party with respect to the audited period, then the Paying Party will reimburse the Payee Party for the reasonable cost of the audit. If the audit demonstrates that the payments owed under this Agreement have been overstated, the Payee Party will refund to the Paying Party the amount of such overpayment. All payments owed by the Paying Party or Payee Party under this Section 8.5 will be made within 30 days after the results of the audit are delivered to the Parties unless the Paying Party is disputing in good faith the results of the audit in which case the payment will be made within 30 days after resolution of such dispute.

9. INTELLECTUAL PROPERTY

     9.1 Ownership .

          (a) As among the Parties, (i) all of Alnylam’s Licensed IP will be owned solely by Alnylam, (ii) all of Isis’ Licensed IP will be owned solely by Isis, and (iii) subject to the Buy-Out process, all Work Product, and the Intellectual Property therein, will be owned by Regulus, and each Licensor hereby assigns, and will cause its Affiliates to assign, to Regulus all Work Product and the Intellectual Property therein.

          (b) If Regulus enters into an agreement (other than the Services Agreement) with one of its Affiliates, a Licensor, an Affiliate of a Licensor or a Third Party pursuant to which Regulus IP could be developed, Regulus will use Commercially Reasonable Efforts to require such Person to assign to Regulus all right, title and interest to Regulus IP developed by such Person, or otherwise ensure that Regulus Controls all such Regulus IP.

     9.2 Prosecution and Maintenance of Patent Rights .

          (a)  Regulus IP . As among the Parties, Regulus will have the sole right to file, prosecute and maintain Patent Rights covering any Regulus IP, at Regulus’ own expense.

          (b)  Licensor IP .

	(i)		As among the Parties, each Licensor will have the initial right to file, prosecute and maintain such Licensor’s Licensed Patent Rights. Such activities will be at such Licensor’s expense.
	(ii)		Subject to any Third Party Rights, in the event that a Licensor declines to file, prosecute or maintain such Licensor’s Licensed Patent Rights, elects to allow any such Patent Rights to lapse, or elects to abandon any such Patent Rights before all appeals within the respective patent office have been exhausted, then:

	(A)		Such Licensor will provide Regulus with reasonable notice of its decision to decline to file, prosecute or maintain any such Patent Rights or its election to allow any such Patent Rights to lapse, or its election to abandon any such Patent Rights, so as to permit Regulus to decide whether to file, prosecute or maintain the same, and to take any necessary action.
	(B)		Regulus may assume control of the filing, prosecution and/or maintenance of such Patent Rights in the name of such Licensor, at Regulus’ expense.
	(C)		Such Licensor will, at Regulus’ expense and reasonable request, assist and cooperate in the filing, prosecution and maintenance of such Patent Rights.

	(D)		Regulus will provide such Licensor, sufficiently in advance for such Licensor to comment, with copies of all patent applications and other material submissions and correspondence with any patent counsel or patent authorities pertaining to such Patent Rights.
	(E)		Regulus will give due consideration to the comments of such Licensor, but will have the final say in determining whether or not to incorporate such comments.
	(F)		Regulus and such Licensor will promptly provide the other with copies of all material correspondence received from any patent counsel or patent authorities pertaining to such Patent Rights.

     9.3 Enforcement .

          (a) Competitive Infringement . Subject to any Third Party Rights, the terms of this Section 9.3(a) will apply with respect to any actual or suspected infringement of a Licensor’s Licensed Patent Rights or Regulus Patent Rights by a Third Party making, using or selling a therapeutic product that contains or consists of (y) a miRNA Compound as an active ingredient [**] or (z) if clause (y) does not apply, an oligonucleotide(s) that falls within the field of a Party’s exclusive license under Section 2.3 of this Agreement. In the case of (z) above, the Party with the exclusive license in the field where the infringing product most reasonably falls will be considered the relevant Commercializing Party for purposes of this Section 9.3(a).

	(i)		Each Party will promptly report in writing to the other Parties any such infringement of which it becomes aware, including, without limitation, receipt of any certification received under the United States Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. Law 98-471), as amended (the “ Hatch-Waxman Act ”), claiming that any of the Licensed Patent Rights or Regulus Patent Rights is invalid, unenforceable or that no infringement will arise from the manufacture, use or sale of such product (a “ Paragraph IV Certification ”).
	(ii)		The relevant Commercializing Party will have the initial right, at such Commercializing Party’s expense, to initiate a legal action against such Third Party with respect to such infringement of the Regulus Patent Rights and, if such Commercializing Party is a Licensor, such Commercializing Party’s Licensed Patent Rights. At the Commercializing Party’s reasonable request and expense, the relevant Licensor(s) (if Regulus is the Commercializing Party) or the other Licensor (if a Licensor is the Commercializing Party) will use Commercially Reasonable Efforts to initiate a legal action against such Third Party with respect to an infringement described in clause (y) of this Section 9.3(a) of such other Licensor(s)’ Licensed Patent Rights. Each other Party will join in any such

			action(s) as a party at the Commercializing Party’s request and at the Commercializing Party’s expense in the event that an adverse party asserts, the court rules or other Laws then applicable provide, or the Commercializing Party determines in good faith, that a court would lack jurisdiction based on such other Party’s absence as a party in such suit. Each other Party may also at any time join in the Commercializing Party’s action and may be represented by counsel of its choice, at such Party’s expense; but in any event control of such action will remain with the Commercializing Party. At the Commercializing Party’s or enforcing Licensor’s reasonable request and expense, the other Parties will provide reasonable assistance to the Commercializing Party or enforcing Licensor, as the case may be, in connection with any such action. Without the prior written consent of the relevant other Party(ies), the Commercializing Party or enforcing Licensor, as the case may be, will not enter into any settlement admitting the invalidity of, impacting the scope or interpretation of or otherwise impairing such other Party(ies)’ rights, as the case may be, in any such Patent Rights.
	(iii)		Any recoveries resulting from an action brought under Section 9.3(a)(ii) in connection with an infringement described in clause (y) of Section 9.3(a) (whether undertaken by the Commercializing Party or the enforcing Licensor) will be applied as follows:

	(A)		First, to reimburse each Party for all litigation costs in connection with such proceeding paid by such Party (on a pro rata basis, based on each Party’s respective litigation costs, to the extent the recovery was less than all such litigation costs); and
	(B)		The remainder of the recovery will be retained by the Commercializing Party and [**].

Any recoveries resulting from an action brought under Section 9.3(a)(ii) in connection with an infringement described in clause (z) of Section 9.3(a) will be retained by the Commercializing Party.

(iv)

If the Commercializing Party does not, within 6 months of written notice from another Party or otherwise becoming aware of such infringement (or within 30 days of the Commercializing Party’s receipt of a Paragraph IV Certification), commence and reasonably pursue a legal action to prevent such infringement with respect to the Regulus Patent Rights, Regulus will be entitled, at its expense, to commence the action in its name. Each Licensor will join in such action as a party at Regulus’ request and expense in the event that an adverse party asserts, the court rules or other Laws then

applicable provide, or Regulus determines in good faith, that a court would lack jurisdiction based on such Licensor’s absence as a party in such suit, but control of such action will remain with Regulus. Any recoveries resulting from such an action will be retained by Regulus.

          (b)  Non-Competitive Infringement .

	(i)		As among the Parties, except as provided in Sections 9.3(a), Regulus will have the sole right to protect Regulus Patent Rights from any actual or suspected infringement or misappropriation, at Regulus’ own expense. Any recoveries resulting from such an action will be retained by Regulus [**].
	(ii)		As among the Parties, except as provided in Section 9.3(a), each Licensor will have the sole right to protect such Licensor’s Licensed Patent Rights from any actual or suspected infringement or misappropriation. Such activities will be at such Licensor’s expense. Any recoveries resulting from such an action will be retained by such Licensor.

     9.4 Invalidity Claims . Subject to any Third Party Rights, if a Third Party at any time asserts a claim that a Licensor’s Licensed IP or the Regulus IP is invalid or otherwise unenforceable (an “ Invalidity Claim ”), whether as a defense in an infringement action brought by a Party pursuant to Section 9.3 or in an action brought against a Party under Section 9.5, the general concepts of Section 9.3 will apply to such Invalidity Claim (i.e., each Party has the right to defend its own intellectual property, except that the Commercializing Party will have the initial right, to the extent provided in Section 9.3(a), to defend such Invalidity Claim, and Regulus will have a step-in right, to the extent provided in Section 9.3(a), to defend such Invalidity Claim).

     9.5 Claimed Infringement .

          (a) Regulus will promptly notify the Licensors of the receipt of any claim that the Development or Manufacture of miRNA Compounds or miRNA Therapeutics or Commercialization of miRNA Therapeutics infringes the Patent Rights or misappropriates Know-How of any Third Party or the commencement of any action, suit or proceeding with respect thereto, enclosing a copy of the claim and all papers served.

          (b) If a Party becomes aware that the Development or Manufacture of miRNA Compounds or miRNA Therapeutics or the Commercialization of miRNA Therapeutics in the Field, by a Commercializing Party, its Affiliates or Sublicensees, infringes or misappropriates, or is likely to or is alleged to infringe or misappropriate, the Patent Rights or Know-How of any Third Party, such Party will promptly notify intellectual property counsel to the other Parties, and such Commercializing Party will have the sole right and responsibility to take any action it deems appropriate with respect thereto; provided , however , that , to the extent that any action would involve the enforcement of another Party’s Licensed IP or the Regulus IP (if the Commercializing Party is a Licensor), or the defense of an Invalidity Claim with respect to such

other Party’s Licensed IP or the Regulus IP, the general concepts of Section 9.3 will apply to the enforcement of such other Party’s Licensed IP or the Regulus IP or the defense of such Invalidity Claim (i.e., each Party has the right to enforce its own intellectual property, except that the relevant Commercializing Party will have the initial right, to the extent provided in Section 9.3(a), to enforce such Licensed IP or Regulus IP or defend such Invalidity Claim, and Regulus will have a step-in right, to the extent provided in Section 9.3(a), to enforce such Patent Right or defend such Invalidity Claim).

     9.6 Additional Right . Notwithstanding any provision of Section 9, Isis will actively participate in the planning and conduct of any enforcement of Regulus IP or Isis IP and will take the lead of such enforcement to the extent that the scope or validity of any Licensed Patent Right Controlled by Isis [**].

10. CONFIDENTIAL INFORMATION

     10.1 Permitted Disclosures . Each Party may make Permitted Disclosures of another Party’s Confidential Information.

     10.2 Scientific Publications . No Party will publish, present or otherwise disclose to the public the results of any Research Program or Development Project (“ Research Results ”), except as specifically approved by the Collaboration Working Group or as provided in this Section 10.2 below or in Section 10.3. The Collaboration Working Group will agree upon the form and timing of any publication or presentation or other disclosure (such as an abstract, manuscript or presentation) to the public of the Research Results subject to the Collaboration Working Group’s approval. For clarification, this Section 10.2 and Section 10.3 will not apply with respect to the use and disclosure of another Party’s Confidential Information as specifically provided for in the LLC Agreement or Section 10.1 of this Agreement or for disclosure of any Party’s own information to comply with Law.

     10.3 Disclosures Regarding Royalty-Bearing Products . In addition, each Commercializing Party may, without the Collaboration Working Group’s approval, make disclosures pertaining solely to its Royalty-Bearing Products; provided , however , that, (i) Regulus will immediately notify (and provide as much advance notice as possible to) the other Parties of any event materially related to its Royalty-Bearing Products (including any regulatory approval) so that the Parties may analyze the need to or desirability of publicly disclosing or reporting such event and (ii) any press release or other similar public communication by any Party related to efficacy or safety data and/or results of a Royalty-Bearing Product will be submitted to the other Parties for review at least [**] Business Days (to the extent permitted by Law) in advance of such proposed public disclosure, the other Parties shall have the right to expeditiously review and recommend changes to such communication and the Party whose communication has been reviewed shall in good faith consider any changes that are timely recommended by the reviewing Parties. Notwithstanding the foregoing, in each case such right of review and recommendation shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of information that (A) is substantially similar to a previously reviewed disclosure and (B) in the context of the subsequent disclosure, does not carry a substantially different qualitative message than that carried by the previously reviewed disclosure.

11. INDEMNIFICATION

     11.1 Indemnification by Regulus . Regulus agrees to defend each Licensor, the Affiliates of each Licensor, and their respective agents, directors, officers and employees (the “ Licensor Indemnitees ”), at Regulus’ cost and expense, and will indemnify and hold harmless the Licensor Indemnitees from and against any and all losses, costs, damages, fees or expenses (“ Losses ”) relating to or in connection with a Third Party claim arising out of (a) any actual or alleged death, personal bodily injury or damage to real or tangible personal property claimed to result, directly or indirectly, from the manufacture, storage, possession, use or consumption of, treatment with or sale, any miRNA Compound or miRNA Therapeutic (other than as set forth in Section 11.2(a) or in the LLC Agreement), regardless of the form in which any such claim is made or whether actual negligence is found, (b) any actual or alleged infringement or unauthorized use or misappropriation of any Patent Right or other intellectual property right of a Third Party with respect to the activities of Regulus, its Affiliates or Sublicensees under this Agreement or the Services Agreement, (c) breach by Regulus of its representations, warranties or covenants made under this Agreement or the Services Agreement, or (d) any negligent act or omission or willful misconduct of Regulus, its Affiliates or Sublicensees or any of their employees, contractors or agents, in performing its obligations or exercising its rights under this Agreement or the Services Agreement; provided , however , that, with respect to each Licensor and its related Licensor Indemnitees, the foregoing indemnity will not apply to the extent that any such Losses (i) are attributable to the gross negligence or willful misconduct of such Licensor or its related Licensor Indemnitees, or (ii) are otherwise subject to an obligation by such Licensor to indemnify the Superset Indemnitees under Section 11.2(a)-(d).

     11.2 Indemnification by Licensor(s) . Each Licensor agrees to defend Regulus and its Affiliates, and their respective agents, directors, officers and employees (the “ Regulus Indemnitees ”) and the other Licensor, and its related Licensor Indemnitees (the Regulus Indemnitees, such other Licensor and its related Licensor Indemnitees, collectively, the “ Superset Indemnitees ”), at such Licensor’s cost and expense, and will indemnify and hold harmless the Superset Indemnitees from and against any and all Losses, relating to or in connection with a Third Party claim arising out of (a) any actual or alleged death, personal bodily injury or damage to real or tangible personal property claimed to result, directly or indirectly, from the manufacture, storage, possession, use or consumption of, treatment with or sale, any miRNA Compound or miRNA Therapeutic Developed, Manufactured and/or Commercialized by such Licensor, its Affiliates or Sublicensees pursuant to Section 5, regardless of the form in which any such claim is made or whether actual negligence is found, (b) any actual or alleged infringement or unauthorized use or misappropriation of any Patent Right or other intellectual property right of a Third Party with respect to the activities of such Licensor, its Affiliates or Sublicensees under this Agreement or the Services Agreement, (c) any breach by such Licensor of its representations, warranties or covenants under this Agreement or the Services Agreement given to the other Party seeking indemnification hereunder, or (d) any negligent act or omission or willful misconduct of such Licensor or its Affiliates, or any of their employees, contractors or agents, in performing its obligations or exercising its rights under this Agreement or the Services Agreement; provided , however , that with respect to Regulus or the indemnified Licensor, and the relevant Superset Indemnitees, the foregoing indemnity will not apply to the extent that any such Losses (i) are attributable to the gross negligence or willful misconduct of such Party or its Superset Indemnitees, or (ii) are otherwise subject to an obligation by such Party to indemnify the Licensor Indemnitees under Section 11.1(a)-(d).

     11.3 Notification of Claims; Conditions to Indemnification Obligations . A Party entitled to indemnification under this Section 11 will (a) promptly notify the indemnifying Party as soon as it becomes aware of a claim or action for which indemnification may be sought pursuant hereto, (b) cooperate with the indemnifying Party in the defense of such claim or suit, and (c) permit the indemnifying Party to control the defense of such claim or suit, including without limitation the right to select defense counsel; provided that if the Party entitled to indemnification fails to promptly notify the indemnifying Party pursuant to the foregoing clause (a), the indemnifying Party will only be relieved of its indemnification obligation to the extent prejudiced by such failure. In no event, however, may the indemnifying Party compromise or settle any claim or suit in a manner which admits fault or negligence on the part of the indemnified Party, or which imposes obligations on the indemnified Party, other than financial obligations that are covered by the indemnifying Party’s indemnification obligation, without the prior written consent of the indemnified Party. The indemnifying Party will have no liability under this Section 11 with respect to claims or suits settled or compromised without its prior written consent and the indemnified Party may not, without the prior written consent of the indemnifying Party, compromise or settle any claim or suit in a manner which admits fault or negligence on the part of the indemnifying Party, or which imposes obligations on the indemnified Party.

     11.4 Allocation . In the event a claim is based partially on an indemnified claim under this Agreement or the LLC Agreement and partially on a non-indemnified claim or based partially on a claim indemnified by one Party under this Agreement or the LLC Agreement and partially on a claim indemnified by another Party(ies) under this Agreement or the LLC Agreement, any payments in connection with such claims are to be apportioned between the Parties in accordance with the degree of cause attributable to each Party.

12. INSURANCE

     12.1 Without limiting a Party’s undertaking to defend, indemnify, and hold the other Parties harmless as set forth in Section 11, to the extent available on commercially reasonable terms each Party will obtain and maintain a commercial general liability policy, including coverage for commercial general liability claims and coverage for products liability claims, taking into account the stage of development of the miRNA Compound or miRNA Therapeutic to which such Party has rights under this Agreement, in amounts reasonably sufficient to protect against liability under Section 11. The foregoing coverage will continue during the term of this Agreement and for a period of 3 years thereafter. The Parties have the right to ascertain from time to time that such coverage exists, such right to be exercised in a reasonable manner.

13. WARRANTIES

     13.1 Mutual Warranties . Each Party warrants that as of the Effective Date: (a) it is a corporation (with respect to each Licensor) or a limited liability company (with respect to Regulus) duly organized and in good standing under the laws of the jurisdiction of its incorporation or organization, and it has full power and authority and the legal right to own and operate its property and assets and to carry on its business as it is now being conducted and as it is contemplated to be conducted under this Agreement and the Services Agreement; (b) it has the full right, power and authority to enter into this Agreement and the Services Agreement and to grant the rights and licenses granted by it under this Agreement and the Services Agreement; (c)

there are no existing or, to its knowledge, threatened actions, suits or claims pending with respect to the subject matter hereof or its right to enter into and perform its obligations under this Agreement and the Services Agreement; (d) it has taken all necessary action on its part to authorize the execution and delivery of this Agreement and the Services Agreement and the performance of its obligations under this Agreement and the Services Agreement; (e) this Agreement and the Services Agreement have been duly executed and delivered on behalf of it, and each constitutes a legal, valid, binding obligation, enforceable against it in accordance with the terms hereof, subject to the general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors’ rights generally; (f) all necessary consents, approvals and authorizations of all regulatory and governmental authorities and other persons required to be obtained by it in connection with the execution and delivery of this Agreement and the Services Agreement and the performance of its obligations under this Agreement and the Services Agreement have been obtained; and (g) the execution and delivery of this Agreement and the Services Agreement and the performance of its obligations under this Agreement and the Services Agreement do not conflict with, or constitute a default under, any of its existing contractual obligations.

     13.2 Additional Licensor Warranties .

          (a) Each Licensor warrants to Regulus that, as of the Effective Date, except as set forth on Schedule 2.4(A) or in accordance with Section 2.4: (i) such Licensor has the right to grant to Regulus the rights granted to Regulus under such Licensor’s Licensed IP hereunder; and (ii) no written claim has been made against such Licensor alleging that such Licensor’s Licensed Patent Rights are invalid or unenforceable.

          (b) Each Licensor further warrants to each other Party that such Licensor has prepared, or will prepare, as applicable, its respective In-License Summary, Out-License Summary and descriptions of Optional In-Licenses, in good faith and having used reasonable and diligent efforts to disclose, in summary form, all material issues relating to the scope of the license granted to Regulus and all material pass-through payment obligations. The Parties agree and acknowledge that a Licensor shall be deemed to be in breach of the warranty in this Section 13.2(b) if such Licensor knowingly omitted from, or knowingly misrepresented in, its In-License Summary, Out-License Summary or Optional In-License description any material issues relating to the scope of the license granted to Regulus or any material pass-through payment obligations. For the sake of clarity, the Parties agree and acknowledge, by way of example and not limitation, that a Licensor shall not be deemed to be in breach of the warranty in this Section 13.2(b) if its In-License Summary, Out-License Summary or Optional In-License description is incorrect or misleading in light of facts, issues or technology changes which occur or become known after the date such In-License Summary, Out-License Summary or Optional In-License description is provided to the other Licensor.

          (c) Each Licensor further warrants to each other Party that such Licensor has set forth on Schedule 2.2(A) , in good faith and having used reasonable and diligent efforts to identify, all Patent Rights Controlled by such Licensor on the Effective Date that (1) are reasonably necessary or useful to the research, development and commercialization of miRNA Compounds or miRNA Therapeutics as contemplated by the current Operating Plan and (2) claim (a) miRNA Compounds or miRNA Therapeutics in general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or

miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly prevents the production of the specific miRNA, or (e) methods of treating an Indication by modulating one or more miRNAs; except , in each case for manufacturing technology (including but not limited to analytical methods). In the event a Licensor is in breach of this warranty, the Parties will work in good faith to amend Schedule 2.2(A) such that the Patent Right that is the subject of the breach is including as a Licensed Patent Right under this Agreement.

     13.3 Disclaimer . EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS SECTION 13, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF PATENT CLAIMS, WHETHER ISSUED OR PENDING.

14. LIMITATION OF LIABILITY

     14.1 UNLESS RESULTING FROM A PARTY’S WILLFUL MISCONDUCT OR FROM A PARTY’S WILLFUL BREACH OF SECTION 10, NO PARTY HERETO WILL BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSS OF PROFITS, LOSS OF DATA, LOSS OF REVENUE, OR LOSS OF USE DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER BASED UPON WARRANTY, CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. NOTHING IN THIS SECTION 14 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER THIS AGREEMENT.

15. TERMINATION

     15.1 Term . This Agreement will become effective as of the Effective Date, and will remain in effect until the earlier of (a) the termination of this Agreement in accordance with Section 15.2, (b) the cessation of all Development of potential Royalty-Bearing Products prior to the first commercial sale of a Royalty-Bearing Product anywhere in the world, or (c) following the first commercial sale of a Royalty-Bearing Product anywhere in the world, the expiration of the Royalty Terms for Royalty-Bearing Products on a country-by-country and a Royalty-Bearing Product-by-Royalty-Bearing Product basis.

     15.2 Termination for Breach .

          (a) If Regulus breaches any material provision of this Agreement (including any representation or warranty), and fails to remedy such breach within sixty (60) days after written notice from the Licensors, acting jointly, then the Licensors, acting jointly, shall have the right, but not the obligation, to initiate the Buy-Out. In such event, the Licensors will determine which Licensor will be considered the “Initiating Member” (as defined in the LLC Agreement) for purposes of the Buy-Out.

          (b) If an Opt-In Party breaches any material provision of this Agreement with respect to the relevant Development Project, and fails to remedy such breach within 60 days after written notice from Regulus, then Regulus will have the right, but not the obligation, to terminate such Opt-In Party’s rights and licenses with respect to such Development Project and the breaching Opt-In Party will promptly return to the aggrieved Party(ies) all related tangible Know-How and Confidential Information of such aggrieved Party(ies).

          (c) Except as provided in Section 15.2(b), if a Licensor breaches any material provision of this Agreement (including any representation or warranty), and fails to remedy such breach within sixty (60) days after written notice from any other Party, then (i) if such other Party is a Licensor, such Licensor may initiate the Buy-Out, (ii) if such other Party is Regulus, Regulus may not terminate this Agreement, and (iii) whether such other Party is Regulus or a Licensor, such other Party has the right to seek other legal or equitable remedies with respect to such breach.

          (d) Notwithstanding Section 15.2(b) or 15.2(c)(i), if a non-breaching Party gives the allegedly-breaching Party a notice pursuant to this Section 15.2 of a material breach by such alleged-breaching Party, and, as of the end of the cure period specified above, two or more Parties are engaged in an arbitration pursuant to Section 16.7 in which such allegedly-breaching Party is in good faith disputing the occurrence of the alleged material breach or the sufficiency of the cure with respect thereto, then the non-breaching Parties may not (i) initiate the Buy-Out in the case of Section 15.2(c)(i) or (ii) terminate the applicable license in the case of Section 15.2(b), as a result of such breach unless and until the arbitrator issues an award that such breach occurred (if that issue was in dispute) and/or that the cure was insufficient (if that issue was in dispute), following which the breaching Party shall have 60 days to cure such breach (or unless and until such allegedly-breaching Party is no longer disputing such issues in good faith, if earlier).

     15.3 Effects of Termination .

          (a) Any of Regulus’ direct Sublicensees may, by providing written notice to the Licensors within the 60 day period immediately following termination of this Agreement with respect to Regulus, in whole or in part, obtain from each Licensor a direct license from such Licensor, on the same terms as the sublicense granted by Regulus to such Sublicensee with respect to such Licensor’s Licensed IP, except to the extent that any such terms are inconsistent with the rights granted by such Licensor to Regulus under this Agreement, in which case any terms in this Agreement which are more protective of such Licensor’s rights will instead apply. If a Sublicensee provides such notice, the Licensors will negotiate in good faith with such Sublicensee a written agreement to reflect such terms; provided , that, (i) such Sublicensee is, at the time of termination of this Agreement, in compliance with its sublicense agreement with Regulus, and (ii) such Sublicensee cures any payment default of Regulus hereunder, with respect to any royalties or Sublicense Income Payments due to the Licensors with respect to the sublicense granted by Regulus to such Sublicensee hereunder.

     15.4 Survival . Upon termination of this Agreement, the following sections of this Agreement will survive: Sections 2.1, 2.3, 8, 9.1(a), 9.3, 10, 11, 12, 14, 15.2, 15.3, 15.4 and 16, and, to the extent related to Section 9.3, Sections 9.4, 9.5 and 9.6. In addition, if this Agreement is terminated pursuant to a Buy-Out, then, with respect to each Development Project for which

an Opt-In Party has obtained a license under Section 5.6 before the initiation of the Buy-Out, the following sections of this Agreement will survive with respect to such Development Project: Sections 5.4 or 5.5 (as applicable), and Section 5.6, unless and until terminated pursuant to Section 15.2(b), subject to Section 15.2(d) (with Regulus’ role in such termination sections being played by the other Member following the dissolution of Regulus). Upon any expiration of this Agreement with respect to a Royalty-Bearing Product under Section 15.1(c), the license granted under any Know-How that is part of the Licensed IP and/or Regulus IP to a Party with respect to such Royalty-Bearing Product will become a fully paid-up and perpetual license to Manufacture, import, use, sell or otherwise Commercialize such Royalty-Bearing Product.

16. MISCELLANEOUS

     16.1 Assignment . Neither this Agreement nor any of the rights or obligations hereunder may be assigned by a Party without the prior written consent of the other Parties, except (a) Regulus shall assign both this Agreement and the Services Agreement to a Person that acquires, by merger, sale of assets or otherwise, all or substantially all of the business of Regulus to which the subject matter of this Agreement relates, (b) each Licensor shall assign both this Agreement and the Services Agreement along with the Transfer (as defined in the LLC Agreement) of such Licensor’s Membership Interest (as defined in the LLC Agreement), and (c) each Party may assign or transfer its rights to receive royalties, milestones and Sublicense Income Payments under this Agreement (but no liabilities) to a Third Party in connection with [**]. Notwithstanding the foregoing, each Party will have the right to assign this Agreement, in whole or in part, to an Affiliate of such Party without the prior written consent of the other Parties; provided that such assignee assumes in writing all obligations of the assigning Party hereunder. Any assignment not in accordance with the foregoing will be void. This Agreement will be binding upon, and will inure to the benefit of, all permitted successors and assigns. Each Party agrees that, notwithstanding any provisions of this Agreement to the contrary, (y) in the event that this Agreement is assigned by a Party in connection with the sale or transfer of all or substantially all of the business of such Party to which the subject matter of this Agreement relates, such assignment will not provide the non-assigning Parties with rights or access to the Know-How or Patent Rights of the acquirer of such assigning Party, and (z) in the event of a Change of Control of a Party, the other Parties shall not acquire rights or access to the Know-How or Patent Rights of the acquirer of such acquired Party.

     16.2 Force Majeure . No Party will be held liable or responsible to any other Party nor be deemed to have defaulted under or breached this Agreement for failure or reasonable delay in fulfilling or performing any term of this Agreement (except any obligation to pay upfront payments, milestones, royalties or Sublicense Income Payments) when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, which may include, without limitation, embargoes, acts of war (whether war be declared or not), insurrections, riots, civil commotions, acts of terrorism, strikes, lockouts or other labor disturbances, or acts of God. The affected Party will notify the other Parties of such force majeure circumstances as soon as reasonably practical and will make every reasonable effort to mitigate the effects of such force majeure circumstances.

     16.3 Section 365(n) of the Bankruptcy Code . All rights and licenses granted under or pursuant to any section of this Agreement are and will otherwise be deemed to be for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the

“ Bankruptcy Code ”), licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. The Parties will retain and may fully exercise all of their respective rights and elections under the Bankruptcy Code. The Parties agree that each Party, as licensee of such rights under this Agreement, will retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any other provisions of Applicable Law outside the United States that provide similar protection for ‘intellectual property.’ The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under the U.S. Bankruptcy Code or analogous provisions of applicable Law outside the United States, the Party that is not subject to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) such intellectual property and all embodiments of such intellectual property, which, if not already in the non subject Party’s possession, will be promptly delivered to it upon the non subject Party’s written request thereof. Any agreements supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy Code.

     16.4 Notices . Any notice required or provided for by the terms of this Agreement or the Services Agreement shall be delivered in accordance with Section 13.9 of the LLC Agreement.

     16.5 Relationship of the Parties . It is expressly agreed that the Parties will be independent contractors hereunder and that the relationship among the Parties under this Agreement will not constitute a partnership, joint venture or agency. No Party will have the authority under this Agreement to make any statements, representations or commitments of any kind, or to take any action, which will be binding on any other Party, without the prior consent of such other Party. This Agreement will be understood to be a joint research agreement to discover miRNA Compounds and associated uses and to develop Royalty-Bearing Products in accordance with 35 U.S.C. § 103(c)(3).

     16.6 Governing Law . This Agreement will be governed and interpreted in accordance with the substantive laws of the State of Delaware, excluding its conflicts of law rules; provided that matters of intellectual property law concerning the existence, validity, ownership, infringement or enforcement of intellectual property will be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.

     16.7 Dispute Resolution . Except (a) for matters of intellectual property law concerning the existence, validity, ownership, infringement or enforcement of intellectual property, which matters will not be subject to the terms of this Section 16.7, and (b) as other dispute resolution procedures are expressly provided herein, in the event of any dispute, controversy or claim arising out of or relating to this Agreement, the Parties will try to settle such dispute, controversy or claim amicably between themselves, including referring such dispute, controversy or claim to the Executive Officers of the Parties. If the Parties are unable to so settle such dispute, controversy or claim within a period of 60 days from the date of such referral, then upon notice by any Party to the other Parties, any such dispute, controversy or claim arising out of or relating to any provision of this Agreement, or the interpretation, enforceability, performance, breach, termination or validity hereof, will be finally resolved under the Commercial Arbitration Rules of the American Arbitration Association by a single arbitrator appointed in accordance with such rules. The Parties will be entitled to the same discovery as permitted under the U.S. Federal Rules of Civil Procedure; provided that the arbitrator will be entitled in its discretion to grant a

request from a Party for expanded or more limited discovery. The place of arbitration will be New York, New York. The language of the arbitration will be English. At any time, a Party may seek or obtain preliminary, interim or conservatory measures from the arbitrators or from a court.

     16.8 Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affect the substantive rights of the Parties. The Parties will in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, maintains the balance of the rights and obligations of the Parties under this Agreement.

     16.9 Entire Agreement . This Agreement (including all schedules and exhibits hereto), the LLC Agreement and the Services Agreement constitute the entire agreement among the Parties with respect to the subject matter herein and supersedes all previous agreements (other than those listed in Schedule A (the “ Previous Agreements ”)), whether written or oral, with respect to such subject matter. Unless otherwise expressly indicated, references herein to sections, subsections, paragraphs and the like are to such items within this Agreement. The Parties acknowledge that this Agreement is being executed and delivered simultaneously with the execution and delivery by the Parties and/or their Affiliates of the LLC Agreement and the Services Agreement. For purposes of clarity, nothing in this Agreement (other than Section 5.6(d)) will be deemed to modify or amend any provision of any of the Previous Agreements.

     16.10 Amendment and Waiver . This Agreement may not be amended, nor any rights hereunder waived, except in a writing signed by the properly authorized representatives of each Party.

     16.11 No Implied Waivers . The waiver by a Party of a breach or default of any provision of this Agreement by any other Party will not be construed as a waiver of any succeeding breach of the same or any other provision, nor will any delay or omission on the part of a Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power or privilege by such Party.

     16.12 Export Compliance . The Parties acknowledge that the exportation from the United States of materials, products and related technical data (and the re-export from elsewhere of United States origin items) may be subject to compliance with United States export Laws, including, without limitation, the United States Bureau of Export Administration’s Export Administration Regulations, the Federal Food, Drug and Cosmetic Act and regulations of the FDA issued thereunder, and the United States Department of State’s International Traffic and Arms Regulations which restrict export, re-export, and release of materials, products and their related technical data, and the direct products of such technical data. The Parties agree to comply with all exports Laws and to commit no act that, directly or indirectly, would violate any United States Law, or any other international treaty or agreement, relating to the export, re-export, or release of any materials, products or their related technical data to which the United States adheres or with which the United States complies.

     16.13 Counterparts . This Agreement may be executed in any number of counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument.

[Remainder of Page Intentionally Left Blank]

     IN WITNESS WHEREOF, the Parties hereby execute this License Agreement as of the date first written above.

Exhibit 1

Defined Terms

     1.1 “ Additional Rights ” will have the meaning set forth in Section 2.4(d).

     1.2 “ Affiliate ” of an entity means any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with such first entity. For purposes of this definition only, “control” (and, with correlative meanings, the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct the management or policies of an entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance. For purposes of this Agreement (a) Regulus will not be deemed to be an Affiliate of any Licensor and (b) a Licensor and its Affiliates will not be considered an Affiliate of Regulus.

     1.3 “Agreement” will have the meaning set forth in the Preamble.

     1.4 “Alnylam” will have the meaning set forth in the Preamble.

     1.5 “Alnylam Field” will have the meaning set forth in Section 2.3(a).

     1.6 “Approved Mimic” will have the meaning set forth in Section 1.61.

     1.7 “ Approved Precursor Antagonist ” will have the meaning set forth in Section 1.61.

     1.8 “ Bankruptcy Code ” will have the meaning set forth in Section 16.3.

     1.9 “ Business Day ” means a day on which the banks in New York, New York are open for business.

     1.10 “ Buy-Out ” will have the meaning set forth in the LLC Agreement.

     1.11 “ Change of Control ” means, with respect to a Licensor, the earlier of (x) the public announcement of or (y) the closing of: (a) a merger, reorganization or consolidation involving such Licensor in which its shareholders immediately prior to such transaction would hold less than 50% of the securities or other ownership or voting interests representing the equity of the surviving entity immediately after such merger, reorganization or consolidation, or (b) a sale to a Third Party of all or substantially all of such Licensor’s assets or business relating to this Agreement.

     1.12 “ Collaboration Working Group ” means a group having equal representation from Isis, Alnylam and Regulus which will meet on a regular basis to share information about Know-How and Patent Rights relevant to the joint venture and to conduct the business necessary under this Agreement. Each Party will designate two Collaboration Working Group members within 30 days of the Effective Date. At its first meeting, which will be within 60 days of Effective Date, the Collaboration Working Group will create and adopt a Charter that will include meeting frequency and other relevant items.

     1.13 “ Combination Product ” will have the meaning set forth in Section 1.67.

     1.14 “ Commercialization ” or “ Commercialize ” means 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.

     1.15 “ Commercializing Party ” means the Party Manufacturing, Developing or Commercializing a miRNA Therapeutic under this Agreement pursuant to licenses granted under Sections 2.2 or 5.6.

     1.16 “ Commercially Reasonable Efforts ” means, reasonable, diligent, good faith efforts to accomplish an objective as such Party would normally use to accomplish a similar objective, under similar circumstances exercising reasonable business judgment. With respect to the Development, Manufacturing or Commercialization of a miRNA Therapeutic, such efforts will be substantially equivalent to the efforts used by such Party with respect to other products at similar stages in their development or product life and of similar market potential, taking into account the profile of the miRNA Therapeutic, the competitive landscape and other relevant factors commonly considered in similar circumstances. For all Parties the level of effort will be at least that of a typical medium sized biopharmaceutical company.

     1.17 “ Completion ” means, with respect to any clinical trial, the locking of the database pertaining to such clinical trial.

     1.18 “ Confidential Information ” will have the meaning set forth in the LLC Agreement.

     1.19 “ Control ” or “ Controlled ” means 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; provided , however , that neither Licensor will be deemed to Control Regulus IP and no Party other than the relevant Licensor shall be deemed to Control such Licensor’s Licensed IP.

     1.20 “ Controlling Party ” will have the meaning set forth in Section 2.4(d).

     1.21 “ Cover ”, “ Covered ” or “ Covering ” means, (a) with respect to a patent, that, in the absence of a license granted to a Person under a Valid Claim included in such patent, the practice by such Person of an invention claimed in such patent would infringe such Valid Claim, or (b) with respect to a patent application, that, in the absence of a license granted to a Person under a Valid Claim included in such patent application, the practice by such Person of an invention claimed in such patent application would infringe such Valid Claim if it were to issue as a patent.

     1.22 “ Develop ” or “ Development ” means, with respect to a miRNA Compound or miRNA Therapeutic, any 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.

     1.23 “ Development Compound ” means, with respect to a Development Project, any miRNA Compound directed to the miRNA(s) which is the focus of such Development Project.

     1.24 “ Development Project ” will have the meaning set forth in Section 4.4.

     1.25 “ Development Therapeutic ” means, with respect to a Development Project, any miRNA Therapeutic containing an miRNA Compound(s) directed to the miRNA(s) which is the focus of such Development Project.

     1.26 “ Disclosing Party ” will have the meaning set forth in the LLC Agreement.

     1.27 “ Effective Date ” will have the meaning set forth in the Preamble.

     1.28 “ Exclusivity Period ” means, with respect to a Royalty-Bearing Product in a country, that period of time beginning with the first commercial sale of such Royalty-Bearing Product in such country and ending on the later to expire of (a) the time during which the applicable Regulatory Authority in such country is not permitted to grant Regulatory Approval for a generic equivalent of such Royalty-Bearing Product and (b):

	•		with respect to a Royalty-Bearing Product being Commercialized by Regulus, the last Valid Claim of the Patent Rights licensed to Regulus pursuant to this Agreement or the Regulus Patent Rights Covering (i) the Manufacture of such Royalty-Bearing Product in such country or (ii) the use, sale or other Commercialization of such Royalty-Bearing Product in such country; or
	•		with respect to a Royalty-Bearing Product being Commercialized by a Licensor, the last Valid Claim of the Patent Rights licensed to such Licensor pursuant to this Agreement Covering (i) the Manufacture of such Royalty-Bearing Product in such country or (ii) the use, sale or other Commercialization of such Royalty-Bearing Product in such country.

     1.29 “ Executive Officer ” means, with respect to a Party, the Chief Executive Officer of such Party (or the officer or employee of such Party then serving in a substantially equivalent capacity) or his/her designee of substantially equivalent rank.

     1.30 “ FDA ” means the United States Food and Drug Administration or any successor agency thereto.

     1.31 “ Field ” means treatment and/or prophylaxis of any or all Indications.

     1.32 “ GAAP ” means United States Generally Accepted Accounting Principles, consistently applied.

     1.33 “ GLP ” means the then-current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, and comparable foreign regulatory standards.

     1.34 “[**]” means a [**].

     1.35 “Hatch-Waxman Act” will have the meaning set forth in Section 9.3(a)(i)(A).

     1.36 “High Terms” will have the meaning set forth in Section 5.4.

     1.37 “In-License Agreement” will have the meaning set forth in Section 2.4(b).

     1.38 “In-License Summary” will have the meaning set forth in Section 2.4(b).

     1.39 “ IND ” means an Investigational New Drug Application or similar foreign application or submission for approval to conduct human clinical investigations.

     1.40 “ Indication ” means any disease or condition, or sign or symptom of a disease or condition, or symptom associated with a disease or syndrome.

     1.41 “Initial Opt-In Election Period” will have the meaning set forth in Section 5.3.

     1.42 “Intellectual Property” will have the meaning set forth in the LLC Agreement.

     1.43 “Invalidity Claim” will have the meaning set forth in Section 9.4.

     1.44 “Isis” will have the meaning set forth in the Preamble.

     1.45 “Isis Field” will have the meaning set forth in Section 2.3(b).

     1.46 “ Know-How ” means any information, inventions, trade secrets or technology (excluding Patent Rights), whether or not proprietary or patentable and whether stored or transmitted in oral, documentary, electronic or other form. Know-How includes ideas, concepts, formulas, methods, procedures, designs, compositions, plans, documents, data, discoveries, developments, techniques, protocols, specifications, works of authorship, biological materials, and any information relating to research and development plans, experiments, results, compounds, therapeutic leads, candidates and products, clinical and preclinical data, clinical trial results, and Manufacturing information and plans.

     1.47 “ Law ” means any law, statute, rule, regulation, ordinance or other pronouncement having the effect of law of any federal, national, multinational, state, provincial, county, city or other political subdivision, domestic or foreign.

     1.48 “ License Agreement ” will have the meaning set forth in the Preamble.

     1.49 “ Licensed I P” means, with respect to a Licensor, such Licensor’s Licensed Know-How and Licensed Patent Rights.

     1.50 “ Licensed Know-How ” means, with respect to a Licensor, all Know-How Controlled by such Licensor on the Effective Date or during the term of this Agreement (except as otherwise expressly provided herein) that relates to (a) miRNA Compounds or miRNA Therapeutics in general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly prevents the production of a specific miRNA, or (e)

methods of treating an Indication by modulating one or more miRNAs; provided , however , that in each case, (i) for any such Know-How that include financial or other obligations to a Third Party, the provisions of Section 2.4 will govern whether such Know-How will be included as Licensed Know-How and (ii) Licensed Know How does not include manufacturing technology (including but not limited to analytical methods).

     1.51 “ Licensed Patent Rights ” means, with respect to a Licensor, (A) all Patent Rights Controlled by such Licensor on the Effective Date and listed on Schedule 2.2(A) , and (B) all Patent Rights Controlled by such Licensor during the term of this Agreement (except as otherwise expressly provided herein) that claim (a) miRNA Compounds or miRNA Therapeutics in general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or delivery of miRNA Compounds or miRNA Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly prevents the production of the specific miRNA, or (e) methods of treating an Indication by modulating one or more miRNAs; provided , however , that in each case, (i) for any such Patent Rights that include financial or other obligations to a Third Party, the provisions of Section 2.4 will govern whether such Patent Right will be included as a Licensed Patent Right and (ii) Licensed Patent Rights do not include manufacturing technology (including but not limited to analytical methods).

     1.52 “ Licensor ” will have the meaning set forth in the Preamble.

     1.53 “ Licensor Indemnitees ” will have the meaning set forth in Section 11.1.

     1.54 “ LLC Agreement ” means the Limited Liability Company Agreement of Regulus among the Parties, dated as of the Effective Date, as the same may be amended from time to time after the Effective Date.

     1.55 “ Losses ” will have the meaning set forth in Section 11.1.

     1.56 “ Low Terms ” will have the meaning set forth in Section 5.5.

     1.57 “ Major Country ” means France, Germany, Italy, Spain and the United Kingdom.

     1.58 “ Manufacture ” or “ Manufacturing ” means any activity involved in or relating to the manufacturing, quality control testing (including in-process, release and stability testing), releasing or packaging, for pre-clinical, clinical or commercial purposes, of a miRNA Compound or a miRNA Therapeutic.

     1.59 “ miRNA ” means a structurally defined functional RNA molecule usually between 21 and 25 nucleotides in length, which is derived from genetically-encoded non-coding RNA which is predicted to be processed into a hairpin RNA structure that is a substrate for the double-stranded RNA-specific ribonuclease Drosha and subsequently is predicted to serve as a substrate for the enzyme Dicer, a member of the RNase III enzyme family; including, without limitation, those miRNAs exemplified in miRBase (http://microrna.sanger.ac.uk/). To the extent that [**] for purposes of this Agreement; provided , however , that nothing contained herein shall require any Party hereto to [**].

     1.60 “ miRNA Antagonist ” means a single-stranded oligonucleotide (or a single stranded analog thereof) that is designed to interfere with or inhibit a particular miRNA. For purposes of clarity, the definition of “miRNA Antagonist” is not intended to include oligonucleotides that function predominantly through the RNAi mechanism of action or the RNase H mechanism of action.

     1.61 “ miRNA Compound ” means a compound consisting of (a) a miRNA Antagonist, (b) to the extent listed in Schedule 1.61 or otherwise agreed upon by Regulus and the relevant Licensor(s) pursuant to Section 2.2(b), a miRNA Precursor Antagonist (an “ Approved Precursor Antagonist ”), or (c) to the extent agreed upon by Regulus and the relevant Licensor(s) pursuant to Section 2.2(b), a miRNA Mimic (an “ Approved Mimic ”).

     1.62 “ miRNA Mimic ” means a double-stranded or single-stranded oligonucleotide or analog thereof with a substantially similar base composition as a particular miRNA and which is designed to mimic the activity of such miRNA.

     1.63 “ miRNA Precursor ” means a transcript that originates from a genomic DNA and that contains, but not necessarily exclusively, a non-coding, structured RNA comprising one or more mature miRNA sequences, including, without limitation, (a) polycistronic transcripts comprising more than one miRNA sequence, (b) miRNA clusters comprising more than one miRNA sequence, (c) pri-miRNAs, and/or (d) pre-miRNAs.

     1.64 “ miRNA Precursor Antagonist ” means a single-stranded oligonucleotide (or a single stranded analog thereof) that is designed to bind to a miRNA Precursor to prevent the production of one or more miRNAs. For purposes of clarity, the definition of “miRNA Precursor Antagonist” is not intended to include oligonucleotides that function predominantly through the RNAi mechanism of action or the RNase H mechanism of action.

     1.65 “ miRNA Therapeutic ” means a therapeutic product having one or more miRNA Compounds as an active ingredient(s).

     1.66 “ NDA ” means a New Drug Application or similar application or submission for approval to market and sell a new pharmaceutical product filed with or submitted to a Regulatory Authority.

     1.67 “ Net Sales ” means, with respect to a Royalty-Bearing Product, the gross invoice price of all units of such Royalty-Bearing Products sold by the relevant Commercializing Party, its Affiliates and/or their direct Sublicensees to any Third Party, less the following items: (a) trade discounts, credits or allowances, (b) credits or allowances additionally granted upon returns, rejections or recalls, (c) freight, shipping and insurance charges, (d) taxes, duties or other governmental tariffs (other than income taxes), (e) government-mandated rebates, and (f) a reasonable reserve for bad debts. “Net Sales” under the following circumstances will mean the fair market value of such Royalty-Bearing Product: (i) Royalty-Bearing Products which are used by such Commercializing Party, its Affiliates or direct Sublicensees for any commercial purpose without charge or provision of invoice, (ii) Royalty-Bearing Products which are sold or disposed of in whole or in part for non cash consideration, or (iii) Royalty-Bearing Products which are provided to a Third Party by such Commercializing Party, its Affiliates or direct Sublicensees

without charge or provision of invoice and used by such Third Party except in the cases of Royalty-Bearing Products used to conduct clinical trials, reasonable amounts of Royalty-Bearing Products used as marketing samples and Royalty-Bearing Product provided without charge for compassionate or similar uses.

Net Sales will not include any transfer between or among a Party and any of its Affiliates or direct Sublicensees for resale.

In the event a Royalty-Bearing Product is sold as part of a Combination Product (as defined below), the Net Sales from the Combination Product, for the purposes of determining royalty payments, will be determined by multiplying the Net Sales (as determined without reference to this paragraph) of the Combination Product, by the fraction, A/A+B, where A is the average sale price of the Royalty-Bearing Product when sold separately in finished form and B is the average sale price of the other therapeutically active pharmaceutical compound(s) included in the Combination Product when sold separately in finished form, each during the applicable royalty period or, if sales of all compounds did not occur in such period, then in the most recent royalty reporting period in which sales of all occurred. In the event that such average sale price cannot be determined for both the Royalty-Bearing Product and all other therapeutically active pharmaceutical compounds included in the Combination Product, Net Sales for the purposes of determining royalty payments will be calculated as above, but the average sales price in the above equation will be replaced by a good faith estimate of the fair market value of the compound(s) for which no such price exists. As used above, the term “ Combination Product ” means any pharmaceutical product which consists of a Royalty-Bearing Product and other therapeutically active pharmaceutical compound(s).

     1.68 “Non-Controlling Party” will have the meaning set forth in Section 2.4(d).

     1.69 “[**]” means [**].

     1.70 “[**]” means the [**].

     1.71 “Operating Plan” has the meaning ascribed to it in the LLC Agreement.

     1.72 “Opt-In Election” will have the meaning set forth in Section 5.3.

     1.73 “Opt-In Party” will have the meaning set forth in Section 5.3(a) and 5.3(c).

     1.74 “ Opt-In Product ” means any miRNA Therapeutic that is Developed, Manufactured or Commercialized pursuant to a Development Project for which one and only one Licensor has exercised an Opt-In Election and which the relevant Opt-In Party subsequently licensed.

     1.75 “Optional In-License” will have the meaning set forth in Section 2.4(c).

     1.76 “Out-License Agreement” will have the meaning set forth in Section 2.4(a).

     1.77 “Out-License Summary” will have the meaning set forth in Section 2.4(a).

     1.78 “ Paragraph IV Certification ” will have the meaning set forth in Section 9.3(a)(i)(A).

     1.79 “ Party ” means Alnylam, Isis and/or Regulus; “ Parties ” means Alnylam, Isis and Regulus, or any combination thereof.

     1.80 “ Patent Rights ” means (a) patent applications (including provisional applications and for certificates of invention); (b) any patents issuing from such patent applications (including certificates of invention); (c) all patents and patent applications based on, corresponding to, or claiming the priority date(s) of any of the foregoing; and (d) any substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, continuations-in-part, re-examinations, renewals and foreign counterparts thereof.

     1.81 “Payee Party” will have the meaning set forth in Section 8.1.

     1.82 “Paying Party” will have the meaning set forth in Section 8.1.

     1.83 “Permitted Disclosures”. The following are Permitted Disclosures:

          (a) To the extent that a Recipient has been granted the right to sublicense under the terms of this Agreement, such Party will have the right to provide a Disclosing Party’s Confidential Information to the employees, consultants and advisors of such Recipient’s Affiliate and Third Party sublicensees and potential sublicensees who have a need to know the Confidential Information for purposes of exercising such sublicense and are bound by an obligation to maintain in confidence the Confidential Information of the Disclosing Party; provided , that such Persons are bound to maintain the confidentiality of such information to the same extent as if they were parties hereto.

          (b) Each Recipient will have the right to provide a Disclosing Party’s Confidential Information:

	(i)		to governmental or other regulatory agencies in order to seek or obtain patents, to seek or obtain approval to conduct clinical trials, or to gain Regulatory Approval, as contemplated by this Agreement; provided that such disclosure may be made only to the extent reasonably necessary to seek or obtain such patents or approvals; and
	(ii)		as necessary, if embodied in products, to develop and commercialize such products as contemplated by this Agreement.

     1.84 “ Permitted License ” means a license granted by a Licensor to a Third Party to enable such Third Party to broadly manufacture or formulate oligonucleotides, where such Third Party is primarily engaged in [**] and is not engaged in [**]; provided , however , that any such license will not grant rights to research, manufacture or formulate miRNA Compounds or miRNA Therapeutics for which the other Licensor has obtained or later obtains a license pursuant to Section 5 or pursuant to the Buy-Out process in the LLC Agreement.

     1.85 “ Person ” means any corporation, limited or general partnership, limited liability company, joint venture, trust, unincorporated association, governmental body, authority, bureau or agency, any other entity or body, or an individual.

     1.86 “ Phase IIa Clinical Trial ” means, with respect to a Royalty-Bearing Product, any human clinical trial conducted in patients with a particular Indication for the purpose of studying the pharmacokinetic or pharmacodynamic properties and preliminary assessment of safety and efficacy of such Royalty-Bearing Product over a measured dose response, as described in 21 C.F.R. §312.21(b) or its foreign counterpart.

     1.87 “ Phase III Clinical Trial ” means, with respect to a Royalty-Bearing Product, a controlled pivotal clinical study of such Royalty-Bearing Product that is prospectively designed to demonstrate statistically whether such Royalty-Bearing Product is safe and effective to treat a particular Indication in a manner sufficient to obtain Regulatory Approval to market such Royalty-Bearing Product, as described in 21 CFR 312.21(c) or its foreign counterpart.

     1.88 “Previous Agreements” will have the meaning set forth in Section 16.9.

     1.89 “Program/Project List” will have the meaning set forth in Section 4.4.

     1.90 “Recipient” will have the meaning set forth in the LLC Agreement.

     1.91 “ Regulatory Approval ” means the act of a Regulatory Authority necessary for the marketing and sale (including, if required for marketing and sales, pricing) of such product in a country or regulatory jurisdiction, including, without limitation, the approval of an NDA by the FDA.

     1.92 “ Regulatory Authority ” means any applicable government regulatory authority involved in granting approvals for the marketing and/or pricing of a product in a country or regulatory jurisdiction including, without limitation, the FDA.

     1.93 “Regulus” will have the meaning set forth in the Preamble.

     1.94 “Regulus Indemnitees” will have the meaning set forth in Section 11.2.

     1.95 “Regulus IP” means all Regulus Know-How and Regulus Patent Rights.

     1.96 “ Regulus Know-How ” means all Know-How conceived and/or developed by or on behalf of Regulus (including by employees of a Licensor or its Affiliates in performance of the Services Agreement), or over which Regulus otherwise acquires Control, including but not limited to any Know-How assigned to Regulus by a Licensor under Section 9.1, but specifically excluding Licensed IP.

     1.97 “ Regulus Patent Rights ” means any Patent Right claiming an invention conceived and/or developed by or on behalf of Regulus (including by employees of a Licensor or its Affiliates in performance of the Services Agreement), or over which Regulus otherwise acquires Control, including but not limited to any Patent Right assigned to Regulus by a Licensor under Sections 2.1 or 9.1, but specifically excluding Licensed IP.

     1.98 “ Research ” means pre-clinical research including gene function, gene expression and target validation research, which may include small pilot toxicology studies but excludes the pharmacokinetic and toxicology studies required to meet the regulations for filing an IND, clinical