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

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.8  “ Annual ” or “ Annually” shall mean Calendar Year.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.66  “ Generic Product ” shall mean a Third Party’s product(s) or Third Parties’ product(s) having the same or substantially the same active pharmaceutical ingredient as a Royalty-Bearing Product and for which in the US an ANDA has been filed naming the Royalty-Bearing Product as the reference listed drug or ex-US, an equivalent process where bioequivalence to the Royalty-Bearing Product has been asserted.

 

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1.67  “ GLP ” shall mean 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.

 

1.68  “ [***] ” shall mean a [***] study that is conducted in [***] that is conducted in compliance with GLP and is required to meet the requirements for filing an IND.

 

1.69  “ GSK ” shall have the meaning assigned to such term in the Recitals.

 

1.70  “ GSK Collaboration Know-How ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.71  “ GSK Collaboration Patents ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.72  “ GSK Collaboration Technology ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.73  “ GSK Diligence Failure Event ” shall have the meaning assigned to such term in Section 12.2.4.

 

1.74  “ GSK Enabling Studies Know-How ” shall mean any Know-How conceived or reduced to practice by or on behalf of GSK or its Affiliates during the course of conducting Enabling Studies.

 

1.75   “ GSK Enabling Studies Patents ” shall mean all Patent Rights which claim or cover GSK Enabling Studies Know-How.

 

1.76  “ GSK Know-How ” shall mean any Know-How to the extent pertaining specifically and primarily to a Collaboration Compound or Licensed Product that (a) is Controlled by GSK and/or its Affiliates on the Effective Date or during the Agreement Term; and (b) is [***] for Regulus (i) to conduct activities for which Regulus is responsible under the Initial Research Plan, Research Plan and/or Early Development Plan during the Collaboration Term; or (ii) to   Develop, Manufacture or Commercialize Refused Candidates, Refused Candidate Products and Returned Licensed Products.  GSK Know-How shall exclude Collaboration Know-How, but shall include GSK Enabling Studies Know-How.

 

1.77  “ GSK Patents ” shall mean all Patent Rights in the Territory Controlled by GSK and/or its Affiliates as of the Effective Date or during the Agreement Term, to the extent containing a claim which [***] to a Collaboration Compound and which is [***] for Regulus (a) to conduct activities for which Regulus is responsible under the Initial Research Plan, Research Plan and/or Early Development Plan during the Collaboration Term; or (b) to Develop,

 

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Manufacture or Commercialize Refused Candidates, Refused Candidate Products and Returned Licensed Products.  GSK Patents shall exclude Collaboration Patents, but shall include GSK Enabling Studies Patents.

 

1.78  “ GSK Patent Royalty ” shall have the meaning assigned to such term in Section 6.6.1.

 

1.79  “ GSK Technology ” shall mean any GSK Patents and GSK Know-How, excluding any Collaboration Technology owned by GSK either jointly or solely.

 

1.80  “ HSR ” shall have the meaning assigned to such term in Section 4.2.6.

 

1.81  “ IND ” shall mean any investigational new drug application filed with the FDA pursuant to Part 312 of Title 21 of the U.S. Code of Federal Regulations, including any amendments thereto. References herein to IND shall include, to the extent applicable, any comparable filing(s) outside the U.S. (such as a Clinical Trial Application in the European Union).

 

1.82  “ Indemnitee ” shall have the meaning assigned to such term in Section 11.3.

 

1.83  “ Indication ” shall mean any [***] (to the extent that Regulus or GSK, whichever is the licensing Party hereunder, Controls [***]) [***], or [***], or [***].

 

1.84  “ Initial Collaboration Target ” shall have the meaning assigned to such term in Section 3.2.1.

 

1.85  “ Initial Research Plan ” shall mean the preliminary research plan attached hereto as Exhibit A , which plan sets forth (a) the activities of the Parties commencing on the Effective Date until the Final Target Selection Date, including the Collaboration Target selection process, Screening Assays to be conducted, and contemplated time periods associated with such activities, and (b) a general description of the types of activities to be conducted by the Parties during the remainder of the Collaboration Term.  For purposes of clarity, upon final JSC approval of the Research Plan with respect to any Program, the terms of such Research Plan shall supersede the terms of the Initial Research Plan with respect to such Program.

 

1.86  “ Initiation ” shall mean, with respect to any human Clinical Studies set forth in Section 6.4, the first dosing of the first patient or subject in such study.

 

1.87  “ Isis ” shall have the meaning assigned to such term in the Recitals.

 

1.88  “ Joint Patent Subcommittee ” shall have the meaning assigned to such term in Section 2.2.2.

 

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1.89  “ Joint Program Subcommittee ” or “ JPS ” shall have the meaning assigned to such term in Section 2.2.1.

 

1.90  “ Joint Steering Committee ” or “ JSC ” shall have the meaning assigned to such term in Section 2.1.

 

1.91  “ Jointly-Owned Collaboration Know-How ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.92  “ Jointly-Owned Collaboration Patents ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.93  “ Jointly-Owned Collaboration Technology ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.94  “ JV Agreements ” shall have the meaning assigned to such term in the Recitals.

 

1.95  “ Know-How ” shall mean 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.

 

1.96   “ Leading Compound ” shall mean the furthest advanced Collaboration Compound under a given Program.

 

1.97  “ Licensed Product(s) ” shall mean any miRNA Therapeutic having one or more Collaboration Compounds as an active ingredient(s).  For purposes of clarity, Licensed Products include Combination Products.

 

1.98  “ Losses ” shall have the meaning assigned to such term in Section 11.1.

 

1.99  “ Major Country ” shall mean any of the following countries:  the [***]

 

1.100  “ Manufacture ” or “ Manufacturing ” shall mean 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.

 

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1.101  “ Manufacturing Patents ” shall have the meaning assigned to such term in Section 6.6.2.

 

1.102  “ Milestone Event ” shall have the meaning assigned to such term in Section 6.4.

 

1.103  “ miRNA ” shall mean a structurally defined functional RNA molecule usually between [***] and [***] 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 [***] for purposes of this Agreement; provided , however , that nothing contained herein shall require any Party hereto to [***].  The miRNAs exemplified in miRBase (http://microrna.sanger.ac.uk/) as of the Effective Date are specified in Schedule 1.103 , however, the Parties understand that the content of such database may change after the Effective Date.

 

1.104  “ miRNA Antagonist ” shall mean a single-stranded oligonucleotide (or a single stranded analog thereof) that [***] 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 [***].

 

1.105  “ miRNA Compound ” shall mean a compound consisting of a miRNA Antagonist.  For purposes of clarity, miRNA Compound [***].

 

1.106  “ miRNA Library ” shall mean a library of oligonucleotides [***] modulate the activity of miRNAs [***], from which library Regulus shall identify the miRNA Pool through the conduct of Screening Assays in accordance with the Initial Research Plan.   The library of oligonucleotides [***] however, the Parties understand that the content of such [***] may change after the Effective Date.

 

1.107  “ miRNA Mimic ” shall mean a double-stranded or single-stranded oligonucleotide or analog thereof with a substantially similar base composition as a particular miRNA and which [***] mimic the activity of such miRNA.

 

1.108  “ miRNA Pool ” shall mean a prioritized list of [***] miRNAs to be identified in accordance with the procedures set forth in the Initial Research Plan and from which list GSK shall select up to [***] Collaboration Targets in accordance with the terms hereof, which list shall exclude (a) any Collaboration Target once selected by GSK, including any Former Targets,

 

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Initial Collaboration Targets and Subsequent Collaboration Targets, and (b) any Blocked Targets.

 

1.109  “ miRNA Precursor ” shall mean 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.

 

1.110  “ miRNA Precursor Antagonist ” shall mean a single-stranded oligonucleotide (or a single stranded analog thereof) that [***] 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.

 

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

 

1.112  “ NDA ” shall mean a New Drug Application (as more fully defined in 21 C.F.R. 314.5 et seq . or its successor regulation) and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any equivalent agency or governmental authority outside the U.S. (including any supra-national agency such as the EMEA in the EU).

 

1.113  “ Net Sales ” shall mean, with respect to any Royalty-Bearing Product, the gross invoiced sales of such Royalty-Bearing Product sold by either (i) GSK, its Affiliates or Sublicensees or (ii), as the case requires, Regulus, its Affiliates or Sublicensees (in each case, the “ Selling Party ”), in finished product form, packaged and labelled for sale, under this Agreement in arm’s length sales to Third Parties, less the following deductions which are actually incurred, allowed, paid, accrued or specifically allocated to the Third Party customer by the Selling Party, to the extent actually taken by such Third Party customer, on such sales for:  (a) [***]trade, quantity, and cash discounts; (b) [***]credits, rebates and chargebacks (including those to [***]including [***], and allowances or credits to customers on account of [***] or on account of [***] affecting such Royalty-Bearing Product; (c) [***] charges relating to such Royalty-Bearing Product, including [***] thereto; (d) [***] directly linked to the sales of such Royalty-Bearing Product to the extent included in the gross amount invoiced; (e) the lesser or [***] of Net Sales or [***]; (f) [***]allowed or paid to [***] employed by the Selling Party; and (g) any other items actually deducted from gross invoiced sales amounts as reported by such Party in its financial statements in accordance with, in the case of GSK’s Net Sales, the International

 

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Financial Reporting Standards, applied on a consistent basis, and, in the case of Regulus’ Net Sales, the U.S. generally accepted accounting principles applied on a consistent basis.

 

Net Sales will not include any transfer or sale between or among a Party and any of its Affiliates or Parent Companies or direct Sublicensees.

 

Licensed Product provided to patients for [***] will not be included in Net Sales.

 

In the event a Royalty-Bearing Product is sold as part of a Combination Product (as defined below), the Net Sales from the Royalty-Bearing 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 [***] price (determined substantially in accordance with the above) of the Royalty-Bearing Product when sold separately in finished form and B is the [***] price (determined substantially in accordance with the above) [***] 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 [***] 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 [***] price in the above equation will be replaced by a good faith estimate of the [***] for which no such price exists.  As used above, the term “Combination Product” shall mean any pharmaceutical product which consists of a Royalty-Bearing Product and other therapeutically active pharmaceutical compound(s).

 

1.114  “ Non-breaching Party ” shall have the meaning assigned to such term in Section 12.2.1 or Section 12.2.2, as the case may be.

 

1.115  “ Option Compound ” shall mean (a) a Collaboration Compound which has qualified as a Development Candidate under a Program, with respect to which Program GSK has notified Regulus that it plans to exercise its [***] Option, (b) if GSK has not exercised its [***] Option for a Program, a Collaboration Compound for which Regulus has Completed a PoC Trial conducted with such Collaboration Compound under such Program, with respect to which Program GSK has notified Regulus that it plans to exercise its [***], and (c) all other Collaboration Compounds Developed under, or that is otherwise [***] to interfere with or inhibit (i.e. is directed to or directed against) the Collaboration Target that is the subject of, the same Program as the Collaboration Compound set forth in the foregoing clauses (a) or (b), including any Back-up Compounds and Derivatives of any of the foregoing.  For purposes of clarity, “Option Compounds” shall include all Collaboration Compounds Developed under a Program

 

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with respect to which GSK has exercised a Program Option or where pursuant to the termination of a Program, GSK acquired exclusive rights to the Collaboration Compounds of such Program in accordance with Article 12, regardless of whether or not any such Collaboration Compound has qualified as a Development Candidate or has satisfied the PoC Criteria.

 

1.116  “ Option Period ” shall mean any option exercise period applicable with respect to a Program Option hereunder.

 

1.117  “ Option Period Extension ” shall have the meaning assigned to such term in Section 4.2.6.

 

1.118  “ Parent Company ” shall have the meaning assigned to such term in the Recitals.

 

1.119  “ Parent Company Know-How ” shall mean, with respect to each Parent Company, all Know-How Controlled by such Parent Company on the Effective Date or during the term of the Regulus License Agreement (except as otherwise expressly provided therein) that relates to:

 

(a)               miRNA Compounds or miRNA Therapeutics in general,

 

(b)               specific miRNA Compounds or miRNA Therapeutics,

 

(c)               [***] of miRNA Compounds or miRNA Therapeutics,

 

(d)               [***] by which a miRNA Antagonist directly prevents the production of a specific miRNA, or

 

(e)               [***], by modulating one or more miRNAs;

 

provided , however , that in each case (i) for any such Know-How that include [***] (as defined in the Regulus License Agreement), the provisions of Section 2.4 of the Regulus License Agreement will govern whether, with respect to Know-How licensed under an Optional In-License (as defined in the Regulus License Agreement) or as an Additional Right (as defined in the Regulus License Agreement), such Know-How will be included as Parent Company Know-How and (ii) Parent Company Know-How does not include [***]).[***]

 

1.120  “ Parent Company Patents ” shall mean, with respect to each Parent Company,

 

(a)               all Patent Rights Controlled by such Parent Company on the Effective Date and listed on Exhibit B hereto, and

 

(b)               all Patent Rights Controlled by such Parent Company during the term of the Regulus License Agreement (except as otherwise expressly provided therein) that claim

 

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(i)            miRNA Compounds or miRNA Therapeutics in general,

 

(ii)           specific miRNA Compounds or miRNA Therapeutics,

 

(iii)          [***] of miRNA Compounds or miRNA Therapeutics,

 

(iv)          [***] by which a miRNA Antagonist directly prevents the production of the specific miRNA, or

 

(v)           [***], by modulating one or more miRNAs;

 

  provided , however , that in each case of (a) and (b), (x) for any such Patent Rights that include [***] (as defined in the Regulus License Agreement), the provisions of Section 2.4 of the Regulus License Agreement will govern whether, with respect to a Patent Right licensed under an Optional In-License (as defined in the Regulus License Agreement) or as an Additional Right (as defined in the Regulus License Agreement), such Patent Right will be included as a Parent Company Patents, and (y) Parent Company Patents do not include [***]).

 

1.121  “ Party ” or “ Parties ” shall have the meaning assigned to such term in the Recitals.

 

1.122  “ Patent Costs ” shall mean the reasonable fees and expenses paid to [***] and [***] and other reasonable [***]expenses paid to[***] incurred in connection with the Prosecution and Maintenance of Patent Rights.

 

1.123  “ Patent Rights ” shall mean (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 (c) any substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, continuations-in-part, re-examinations, renewals and foreign counterparts thereof.

 

1.124  “ Payee ” shall mean the Party to whom milestone payments or royalties are payable hereunder.

 

1.125  “ Payor ” shall mean the Commercializing Party and, with respect to milestone payments, GSK.

 

1.126  “ Pending Claim ” shall have the meaning assigned to such term in Section 6.6.2.

 

1.127  “ Permitted Licenses ” shall mean a license granted by a Parent Company to a Third Party to enable such Third Party to [***] but not to engage in any [***], where such Third Party is primarily engaged in [***] and is not engaged in any [***] activities with respect to any

 

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Collaboration Targets.  As used in this definition, the term “drug” includes, in addition to [***] and other [***].

 

1.128  “ Person ” shall mean 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.

 

1.129  “ Phase 1 Clinical Trial ” means a Clinical Study in any country, the principal purpose of which is a preliminary determination of safety in healthy individuals or patients that would satisfy the requirements of 21 CFR 312.21(a), or an equivalent clinical study required by a Regulatory Authority in a jurisdiction outside of the United States.

 

1.130  “ Phase 2 Clinical Trial ” means a Clinical Study conducted in any country that is intended to explore a variety of doses, dose response and duration of effect to generate initial evidence of clinical safety and activity in a target patient population, that would satisfy the requirements of 21 CFR 312.21(b), or an equivalent clinical study required by a Regulatory Authority in a jurisdiction outside of the United States.

 

1.131   “ Phase 3 Clinical Trial ” means a Clinical Study in any country performed after preliminary evidence of efficacy has been obtained, which if successful, would provide sufficient evidence of the safety and efficacy of a product to support a Regulatory Approval, and that would satisfy the requirements of 21 CFR 312.21(c), or an equivalent clinical study required by Regulatory Authority in a jurisdiction outside of the United States.

 

1.132  “ Phase 4 Clinical Trial ” means a Clinical Study in any country which is conducted after Regulatory Approval of a product has been obtained from an appropriate Regulatory Authority, consisting of trials conducted voluntarily for enhancing marketing or scientific knowledge of an approved indication and trials conducted due to request or requirement of a Regulatory Authority.

 

1.133  “ PoC ” shall mean the confirmation by the JSC or by GSK in accordance with the applicable PoC Criteria that a Collaboration Compound has met (i) the primary, and, if relevant, secondary endpoints regarding clinical efficacy and safety after Completion of the PoC Trial and (ii) any other PoC Criteria.

 

1.134  “ PoC Costs ” shall have the meaning assigned to such term in Section 1.136.

 

1.135  “ PoC Criteria ” shall mean the clinical and non-clinical criteria to be established by the Joint Program Subcommittee, subject to the agreement of the JSC and the final approval of GSK, to establish proof of concept for a given Development Candidate through the PoC Trial in a Program.  The PoC Criteria shall set forth: (a) the [***] and relevant [***] for the PoC Trial

 

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in such a manner that, following the PoC Trial, a determination can reasonably be made that such [***]; (b) where reasonable and appropriate, a [***]; (c) appropriate and validated [***] (d) [***] (i) which is appropriate [***] as to which there is no[***]which would prevent the compound from being developed into a [***] ( i.e ., there is no known impediment which would render [***] the [***]) and (ii) that show [***]safety and tolerability profile in view of relevant clinical and regulatory considerations; (e) a [***] which is in a [***] that is suitable for [***] ( i.e., there is no known impediment which would render [***]); (f) a [***] taking into account suitable [***] who could run such [***], any such contractors to be agreed by the JSC are understood and controlled [***] is reasonable for such indication; and (g) a [***] that is consistent with the applicable Target Product Profile.

 

1.136  “ PoC Financial Cap ” shall mean the limitation on the total [***] costs and expenditures, including [***], all of which are specifically attributable to the PoC Trial for each Program (such costs and expenditures, the “ PoC Costs ”), which shall not exceed [***], except as provided in Section 3.5.5.

 

1.137  “ [***] ” shall have the meaning assigned to such term in Section 4.1.1.

 

1.138  “ [***] Exercise Fee ” shall have the meaning assigned to such term in Section 6.4.

 

1.139  “ [***] Exercise Period ” shall have the meaning assigned to such term in Section 4.2.2.

 

1.140  “ PoC Report Date ” shall have the meaning assigned to such term in Section 4.2.2.

 

1.141  “ PoC Trial ” shall mean, with respect to a Program, the first human in-patient study designed to provide evidence of efficacy, safety and tolerability of a Collaboration Compound within such Program, which if conducted by Regulus, shall be consistent with the [***]agreed upon by the Parties and the PoC Financial Cap, subject to Section 3.5.5.  For purposes of clarity, the PoC Trial is intended only to demonstrate the [***] of a particular Development Candidate, and is not intended to be a [***], or intended to otherwise provide data [***].

 

1.142  “ PoC Trial Report ” shall have the meaning assigned to such term in Section 4.2.2.

 

1.143   “ Pre-Clinical Studies ” shall mean in vitro and in vivo studies of a Collaboration Compound, not in humans, including those studies conducted in whole animals and other test systems, designed to determine the toxicity, bioavailability, and pharmacokinetics of a Collaboration Compound and whether the Collaboration Compound has a desired effect.

 

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1.144  “ Preliminary PoC Plan ” shall have the meaning assigned to such term in Section 3.4.4.

 

1.145  “ Proceeding ” shall mean an action, suit or proceeding.

 

1.146  “ Program ” shall mean, with respect to a Collaboration Target, the Research Program and, if GSK has not exercised its [***] Option, the Early Development Program, taken together.  For purposes of clarity, except as stated to the contrary in this Agreement, all references to rights and obligations in connection with a Program which has been terminated  under the Agreement or with respect to which GSK has exercised a Program Option, shall refer to the  continuing or surviving rights and obligations of the Parties  as applicable in accordance with the relevant provisions of the Agreement with respect to Collaboration Compounds Developed under such Program, and any Derivatives of such Collaboration Compounds Developed thereafter by the Commercializing Party.

 

1.147  “ Program Data ” shall have the meaning assigned to such term in Section 3.7.1.

 

1.148  “ Program Option ” shall have the meaning assigned to such term in Section 4.1.1.

 

1.149  “ Program Option Exercise Fee ” shall mean either the [***] Option Exercise Fee or the [***] Exercise Fee.

 

1.150  “ Program-Specific Technology ” shall have the meaning assigned to such term in Section 6.8.

 

1.151  “ Program Term ” shall define the duration of each Program hereunder and shall be determined on a Program-by-Program basis.  For each Program, the Program Term shall consist of: (a) the Research Collaboration Term and (b), if GSK has not exercised its [***] Option for such Program, the Early Development Program Term; provided , however , that the Program Term shall terminate when GSK exercises a Program Option with respect to such Program, or GSK’s right to exercise the [***] with respect to such Program has expired without GSK’s exercise of such Program Option, or such Program is otherwise earlier terminated.

 

1.152  “ Prosecution and Maintenance ” or “ Prosecute and Maintain ” shall mean, with regard to a Patent Right, the preparing, filing, prosecuting and maintenance of such Patent Right, as well as handling re-examinations, reissues, and requests for patent term extensions with respect to such Patent Right, together with the conduct of interferences, the defense of oppositions and other similar proceedings with respect to the particular Patent.  For clarification, “Prosecution and Maintenance” or “Prosecute and Maintain” shall not include any other enforcement actions taken with respect to a Patent Right.

 

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1.153  “ Receiving Party ” shall have the meaning assigned to such term in Section 9.1.

 

1.154  “ Refused Candidate ” shall have the meaning assigned to such term in Section 4.2.7.

 

1.155  “ Refused Candidate Product ” shall have the meaning assigned to such term in Section 4.2.7.

 

1.156  “ Regulatory Approval ” shall mean any and all approvals (including price and reimbursement approvals, if required prior to sale in the applicable jurisdiction), licenses, registrations, or authorizations of any country, federal, supranational, state or local regulatory agency, department, bureau or other government entity that are necessary for the manufacture, use, storage, import, transport and/or sale of a particular Licensed Product in the applicable jurisdiction.

 

1.157  “ Regulatory Authority ” or “ Regulatory Authorities ” shall mean the FDA in the U.S., and any health regulatory authority(ies) in any country in the Territory that is a counterpart to the FDA and holds responsibility for granting Regulatory Approval for a Licensed Product in such country, and any successor(s) thereto.

 

1.158  “ Regulus ” shall have the meaning assigned to such term in the Recitals.

 

1.159  “ Regulus Collaboration Know-How ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.160  “ Regulus Collaboration Patents ” shall have the meaning assigned to such term in Section 8.1.2.

 

1.161  “ Regulus Collaboration Technology ” shall have the meaning assigned to such in Section 8.1.2.

 

1.162  “ Regulus Diligence Failure Event ” or “ Regulus Exclusivity Breach ” shall have the respective meanings set forth in Section 12.2.3.

 

1.163  “ Regulus Know-How ” shall mean:

 

(a)                all Parent Company Know-How Controlled by Regulus or any of its Affiliates as of the Effective Date or during the Agreement Term,

 

(b)                all Know-How, other than Parent Company Know-How, Controlled by Regulus or any of its Affiliates as of the Effective Date or during the Agreement Term (except as otherwise expressly provided herein) that relates to:

 

(i)             miRNA Compounds or miRNA Therapeutics in general,

 

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(ii)            specific miRNA Compounds or miRNA Therapeutics,

 

(iii)           [***] of miRNA Compounds or miRNA Therapeutics,

 

(iv)           [***] by which a miRNA Antagonist directly prevents the production of a specific miRNA,

 

(v)            [***], by modulating one or more miRNAs, and

 

(vi)           [***] relating to miRNA Compounds or miRNA Therapeutics (including but not limited to [***]);

 

  provided , however , that in each case of (a) and (b), (x) for any such Know-How other than Parent Company Know-How that includes [***] and which is not [***] as defined in Section [***] the provisions of Section 6.8.2 will govern whether such Know-How will be included as Regulus Know-How, and (y) Regulus Know-How shall exclude Collaboration Know-How.

 

1.164  “ Regulus License Agreement ” shall have the meaning assigned to such term in the Recitals.

 

1.165  “ Regulus LLC Agreement ” shall have the meaning assigned to such term in the Recitals.

 

1.166  “ Regulus Patents ” shall mean:

 

(a)                all Parent Company Patents Controlled by Regulus or any of its Affiliates as of the Effective Date or during the Agreement Term, including all Parent Company Patents licensed to Regulus or any of its Affiliates under the Regulus License Agreement and listed on Exhibit B ,

 

(b)                all Patent Rights, other than Parent Company Patents, owned by Regulus or any of its Affiliates as of the Effective Date and listed on Exhibit C or otherwise Controlled by Regulus or any of its Affiliates as of the Effective Date and listed on Exhibit D , and

 

(c)                all Patent Rights, other than Parent Company Patents, Controlled by Regulus or any of its Affiliates during the Agreement Term (except as otherwise expressly provided herein) that claim:

 

(i)             miRNA Compounds or miRNA Therapeutics in general,

 

(ii)            specific miRNA Compounds or miRNA Therapeutics,

 

(iii)           [***] of miRNA Compounds or miRNA Therapeutics,

 

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(iv)           [***] by which a miRNA Antagonist [***] of the specific miRNA,

 

(v)            [***], by modulating one or more miRNAs, or

 

(vi)           [***] relating to miRNA Compounds or miRNA Therapeutics (including but not limited to [***]);

 

1.167    provided , however , that in each case of (a) through (c), (x) for any such Patent Rights other than Parent Company Patents and which is not [***] as defined in Section [***] that include [***], the provisions of Section 6.8.2 will govern whether such Patent Right will be included as a Regulus Patent hereunder, and (y) Regulus Patents shall exclude Collaboration Patent Rights.  “ Regulus Technology ” shall mean the Regulus Patents and Regulus Know-How, excluding any Collaboration Technology owned by Regulus either solely or jointly (including by assignment from any permitted subcontractor of Regulus pursuant to Section 3.10).

 

1.168  “ Replaceable Target ” shall have the meaning assigned to such term in Section 3.2.1.

 

1.169  “ Reports ” shall have the meaning assigned to such term in Section 4.2.2.

 

1.170  “ Research Collaboration Term ” shall define the duration of each Research Program hereunder and shall be determined on a Research Program-by-Research Program basis as follows: the period ending upon the later of (a) [***] years following the Final Target Selection Date, or (b) the date on which the activities set forth under the Research Plan for a given Research Program are all completed; provided , however , that such period shall terminate when (i) GSK exercises the relevant [***] Option, (ii) the JSC ([***] as applicable) terminates such Program, (iii) the Collaboration Compound which is the subject of such Research Program is confirmed by the JSC as a Development Candidate, or (iv) the date on which such Program is terminated earlier in accordance with the applicable provisions of this Agreement.

 

1.171  “Research Plan ” shall mean a research plan (including any subsequent updates or amendments thereto) for each given Research Program that sets forth the outline of activities to be conducted by Regulus comprising such Research Program. Such Research Plan shall be based on the activities outlined in the Initial Research Plan.

 

1.172  “ Research Program ” shall mean, with respect to a Collaboration Target,  the Development activities performed or to be performed by Regulus in accordance with the Research Plan during the Research Collaboration Term directed to identifying a Development Candidate for such Collaboration Target, including research, identification, characterization, optimization and pre-clinical testing of Collaboration Compounds up until initiation of a [***]

 

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1.173  “ Returned Licensed Product ” shall have the meaning assigned to such term in Section 4.3.2.

 

1.174  “ Reverse Royalty ” shall have the meaning set forth in Section 6.7.

 

1.175  “ Royalty-Bearing Product ” shall mean (a) any Licensed Product Commercialized by or on behalf of GSK, its Affiliates or Sublicensees hereunder, upon the sale of which GSK would owe Regulus a royalty pursuant to Section 6.6; and (b) any Refused Candidate Product or Returned Licensed Product Commercialized by or on behalf of Regulus, its Affiliates or Sublicensees hereunder, upon the sale of which Regulus would owe a royalty to GSK pursuant to Section 6.7.  For purposes of clarity, Royalty-Bearing Product includes the relevant Combination Products.

 

1.176   [***].

 

1.177  “ Screening Assays ” shall mean the screening assays as defined in the Initial Research Plan.

 

1.178  “ SEC ” shall mean the U.S. Securities and Exchange Commission.

 

1.179  “ Selling Party ” shall have the meaning assigned to such term in Section 1.113.

 

1.180  “ Services Agreement ” shall have the meaning assigned to such term in the Recitals.

 

1.181  “ Side Agreement ” shall have the meaning assigned to such term in the Recitals.

 

1.182  “ Subcommittee ” shall have the meaning assigned to such term in Section 2.2.

 

1.183  “ Sublicensee ” shall mean a Third Party or Parent Company to whom a Party or its Affiliates or Sublicensees has granted a sublicense or license under any Collaboration Technology and/or Regulus Technology or GSK Technology, as the case may be, licensed to such Party in accordance with the terms of this Agreement.

 

1.184  “ Subsequent Collaboration Target ” shall have the meaning assigned to such term in Section 3.2.1.

 

1.185  “ Target ” shall mean a miRNA.

 

1.186  “ Target Product Profile ” or “ TPP ” shall mean, with respect to a given Development Candidate or class of compounds, and a given Indication, the targeted attributes for an aspirational drug product for the treatment and/or prophylaxis of such Indication. These attributes will be determined through an understanding of current and future unmet medical and market needs, and of the product performance necessary for Regulatory Approval and

 

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competitive differentiation at the time of anticipated launch.  By way of guideline only, a TPP typically contains information on at least the following parameters: [***].

 

1.187  “ Target Selection Period ” shall have the meaning assigned to such term in Section 3.2.1.

 

1.188  “ Terminated Program Option ” shall have the meaning assigned to such term in Section 4.1.1.

 

1.189  “ Territory ” shall mean all of the countries and territories of the world.

 

1.190  “ Third Party ” shall mean any Person other than Regulus or GSK or an Affiliate of Regulus or GSK or a Parent Company of Regulus.

 

1.191  “ Third Party License Pass-Through Costs ” shall mean, (a) with respect to Regulus, the licensing costs and payments that Regulus owes to Third Parties, but excluding any costs and payments of any kind owed by Regulus to [***], or (b) with respect to GSK, the licensing costs and payments that GSK owes to Third Parties, in each case as a result of the practice of intellectual property licensed from such Third Parties in the Development, Manufacture and/or Commercialization of Collaboration Compounds and/or Licensed Products hereunder, including, without limitation, [***] payments.  For clarity, any such costs and payments owed to Third Parties by a Party (x) shall only include the share of such costs and payments which is [***], and not by any of its Affiliates or by [***], as applicable (although, for clarity, if such costs and payments are paid by [***], as applicable, solely in order for such [***] to the relevant Third Party in those situations in which (i) GSK is a sublicensee of such Third Party, through its Affiliate, then such costs and payments shall be [***], or (ii) Regulus is a sublicensee of such Third Party through its Affiliate or Parent Company, then such costs and payments shall be [***], in each case subject to the following clause (y)), and (y) shall only include any such costs and payments to the [***].

 

1.192  “ Third Party and Parent-Originated Rights and Obligations ” shall mean the rights of, and any limitations, restrictions or obligations imposed by, (a) Parent Companies pursuant to the Regulus License Agreement and (b) Third Parties pursuant to (i) the contracts assigned to Regulus pursuant to Section 2.1 of the Regulus License Agreement, [***](as defined in the Regulus License Agreement)[***](as defined in the Regulus License Agreement)[***](as defined in the Regulus License Agreement)[***](each as defined in the Regulus License Agreement)[***].

 

1.193  “ Total License Pass-Through Costs ” shall mean the licensing costs and payments that [***] as a result of the practice of intellectual property licensed from any such

 

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[***] in the Development, Manufacture and/or Commercialization of Collaboration Compounds and/or Licensed Products hereunder, including, without limitation, all upfront fees, annual payments, milestone payments and royalty payments.  For clarity, any such costs and payments (a) shall only include the share of such costs and payments which is [***], and not by any [***] (although, for clarity, if such costs and payments are [***] solely in order for [***] to the relevant Third Party in those situations in which [***], of such Third Party, then such costs and payments shall be [***], subject to clause (b)), and (b) shall only include any such costs and payments to the [***].

 

1.194  “ United States ” or “ U.S. ” shall mean the fifty states of the United States of America and all of its territories and possessions and the District of Columbia.

 

1.195  “ Upfront Payment ” shall have the meaning assigned to such term in Section 6.1.

 

1.196  “ Valid Claim ” shall mean a claim (a) of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise; [***].

 

1.197  [***] shall have the meaning assigned to such term in Section 12.7.7(a).

 

ARTICLE 2

 

GOVERNANCE OF THE COLLABORATION

 

2.1  The Joint Steering Committee .

 

2.1.1        Generally .  Promptly, and in any event within [***] days, after the Effective Date, the Parties shall establish and convene a committee (the “ Joint Steering Committee ” or “ JSC ”) as more fully described in this Section 2.1.  The JSC shall have review and oversight responsibilities, including the responsibilities set forth in Section 2.1.6 below, for all Development activities performed by the Parties under the Initial Research Plan, the Research Plans and, if applicable, the Early Development Plans during the Collaboration Term.  After the exercise by GSK of a Program Option for a Program, the JSC shall remain in place solely to serve as a vehicle to facilitate the communication of information between the Parties with respect to any subsequent Development activities by GSK with respect to the Option Compounds and related Licensed Products Developed under such Program and, once Commercialization is underway with respect to such Program (as measured by the Regulatory Approval, in any country of the world, of a Licensed Product with respect to such Program), GSK will keep

 

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Regulus informed of activities through an annual progress report and the JSC shall no longer be required to meet with respect to such Program.  Each Party agrees to keep the JSC informed of the progress of the Development and/or Commercialization activities for which such Party is responsible hereunder with respect to each Program.

 

2.1.2        Regulus’ Right to Discontinue Participation .  Notwithstanding anything in this Agreement to the contrary, at any time following the end of the Program Term with respect to a Program hereunder, Regulus shall have the right, upon written notice to GSK, to discontinue its participation in the Joint Steering Committee or any Subcommittee thereof with respect to such Program, and such discontinuation by Regulus shall not constitute a breach of Regulus’ obligations hereunder.  For the avoidance of doubt, the exercise by Regulus of its right to discontinue its participation in the JSC pursuant to this Section 2.1.2 will not relieve Regulus of the obligation to perform any of its activities under any Program hereunder, and GSK shall have the right in such event to make decisions on matters where the JSC would have had such right and authority with respect to such Program, as necessary in order to continue such Programs.  For clarity, in the event that Regulus obtains rights to Refused Candidates, Refused Candidate Products or Returned Licensed Products hereunder, Regulus shall have the right in such event to make decisions on all matters related to the Development, Manufacture and/or Commercialization of such Refused Candidates, Refused Candidate Products or Returned Licensed Products.

 

2.1.3        Membership .  The JSC shall be comprised of [***] representatives (or such other number of representatives as the Parties may agree) from each of GSK and Regulus.  Each Party shall provide the other with a list of its initial members of the JSC on the Effective Date.  Each Party may replace any or all of its representatives on the JSC at any time upon written notice to the other Party in accordance with Section 13.6 of this Agreement.  Each representative of each Party shall be of the seniority and have expertise (either individually or collectively) in business and pharmaceutical drug discovery and development appropriate for service on the JSC in light of the functions, responsibilities and authority of the JSC and the status of Development of the Collaboration Compounds and related Licensed Products.  Any member of the JSC may designate a substitute to attend and perform the functions of that member at any meeting of the JSC.  Each member of the JSC, and any such substitute, shall be subject to the confidentiality obligations of Article 9.  Each Party may, in its reasonable discretion, invite non-member representatives of such Party to attend meetings of the JSC as a non-voting participant, subject to the confidentiality obligations of Article 9.  The Parties shall designate a chairperson (each, a “ Chairperson ”) to oversee the operation of the JSC, each such

 

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Chairperson to serve a twelve (12) month term. The right to name the Chairperson shall alternate between the Parties, with [***] designating the first such Chairperson.

 

2.1.4        Meetings .  During the Collaboration Term (subject to Section 2.1.2), the JSC shall meet in person or otherwise once each Calendar Quarter, and less or more frequently as the Parties mutually deem appropriate, on such dates, and at such places and times, as provided herein or as the Parties shall agree.  Upon the conclusion of the Collaboration Term (subject to Section 2.1.2), the JSC shall meet, in person or otherwise, once every two (2) Calendar Quarters or more or less frequently as mutually agreed between the Parties, to provide Regulus an update regarding GSK’s efforts after exercise of its Program Option(s) and otherwise to perform the responsibilities assigned to it under this Agreement while a Collaboration Compound is in Development; provided , however , that the Parties agree to periodically discuss in good faith the frequency and scope of such ongoing meetings and such JSC meetings will not occur once all Programs are in Commercialization (as measured by the Regulatory Approval, in any country of the world, of a Licensed Product with respect to each such Program).  Meetings of the JSC that are held in person shall alternate between the offices of the Parties, or such other place as the Parties may agree.  The members of the JSC also may convene or be polled or consulted from time to time by means of telecommunications, video conferences, electronic mail or correspondence, as deemed necessary or appropriate.

 

2.1.5        Minutes .  During the Collaboration Term (subject to Section 2.1.2), the Chairperson shall designate to the Alliance Manager of the other Party, responsibility for preparing and circulating minutes within [***] days after such meeting setting forth, a brief summary of the discussions at the meeting and a list of any actions, decisions or determinations approved by the JSC and a list of any issues to be resolved by the Executive Officers pursuant to Section 2.1.7.  Such minutes shall be effective only after written approval of such minutes by both Parties.  With the sole exception of specific items of the meeting minutes to which the members cannot agree and which are escalated to the Executive Officers as provided in Section 2.1.7 below, definitive minutes of all JSC meetings shall be finalized no later than [***] days after the meeting to which the minutes pertain. If at any time during the preparation and finalization of the JSC minutes, the Parties do not agree on any issue with respect to the minutes, such issue shall be resolved by the escalation process as provided in Section 2.1.7.  The decision resulting from the escalation process shall be recorded by the designated Alliance Manager in amended finalized minutes for said meeting.  Notwithstanding any of the foregoing, in no event shall such minutes be deemed to amend, or be incorporated into, the terms of this Agreement.

 

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2.1.6        Specific Responsibilities of the JSC . Without limiting any of the foregoing, subject to Sections 2.1.7 and 2.2.2, the JSC shall perform the following functions for any given Program, some or all of which may be addressed directly at any given meeting of the JSC:

 

(a)                Review [***] each Research Plan and any amendments thereto as it relates to either an Initial Collaboration Target or a Subsequent Collaboration Target;

 

(b)                Confirm that the Discovery Milestone has been achieved for a Program, [***];

 

(c)                review, update [***] (upon unanimous agreement of the Parties) the Candidate Selection Criteria within [***] days of recommendation by the JPS, including any amendments thereto proposed by either Party (through the JPS, JSC or otherwise);

 

(d)                amend ([***] of the Parties) the Candidate Selection Criteria from time to time;

 

(e)                confirm ([***] of the Parties) whether a Collaboration Compound meets the Candidate Selection Criteria;

 

(f)                 review, update [***] (upon unanimous agreement of the Parties) the (i) design and content of the PoC Criteria, (ii) Target Product Profile upon which such PoC Criteria was based, and (iii) design, content and endpoints of the PoC Trial, in each case within [***] days of recommendation by the JPS, including any amendments to the PoC Criteria design and content, Target Profit Profile or PoC Trial design, content and endpoints which may be proposed by either Party (through the JPS, JSC or otherwise), each of (i), (ii) and (iii) shall be subject to GSK final decision-making authority as described in Section 2.1.7(b);

 

(g)                review the overall progress of Regulus’ efforts to discover, identify, optimize and otherwise Develop Collaboration Compounds under each Program, including review and [***] of any proposal for termination of a Program;

 

(h)                review [***] the Development of any Collaboration Compound for the treatment of any potential additional Indications;

 

(i)                 review, update [***] (upon unanimous agreement of the Parties) the Initial Research Plan, the Research Plans and, if applicable, the Early Development Plans, including any technical changes or amendments thereto which may be proposed by either Party (through the JPS, JSC or otherwise) to reflect [***], with the aim of achieving the [***] Criteria and [***] Criteria;

 

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(j)                 discuss and attempt to resolve (by unanimous agreement of the Parties) any deadlock issues submitted to it by any Subcommittee, including the resolution of any disputes regarding [***]; and

 

(k)                such other responsibilities as may be assigned to the JSC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time;

 

provided , however , that in no event shall the JSC have any authority to (x) resolve any disputes involving the breach or alleged breach of this Agreement, (y) amend any budget or allocation of costs between the Parties, or require either Party to expend additional resources, whether internal or external, except as stated under this Agreement pursuant to the exercise of discretionary authority expressly granted to the JSC or (z) otherwise amend or modify this Agreement or the Parties’ respective rights and obligations hereunder.

 

2.1.7        Decision-Making Authority and Escalation Process .

 

(a)                Generally, except as otherwise expressly provided herein, all decisions of the JSC shall be made by consensus, with each Party having collectively [***] in all decisions.

 

(b)                Prior to the exercise by GSK of its Program Option for a given Program, unless such Program is earlier terminated, if the JSC cannot agree on a matter within its purview, the matter will be escalated to the Parties’ Executive Officers, who shall have a period of [***] days (unless extended by mutual agreement of the Executive Officers) to resolve such dispute by cooperating in good faith.  Except as otherwise stated below in this Section 2.1.7, if the Parties still cannot agree on a matter after such escalation to the Executive Officers, the Parties will submit such matter to binding arbitration in accordance with Section 13.1; provided , however , that , in lieu of binding arbitration, (i) if the dispute relates primarily to [***], the dispute will instead be resolved by [***] in accordance with [***] and (ii) for each Program, GSK will have final decision-making authority with respect to any disputes between the Parties concerning (A) the [***], (B) the [***], and/or (C) the [***], and none of such disputes listed in [***] above will be subject to arbitration under Section 13.1 or any other form of review, provided , that , in the case of any dispute regarding (ii) above GSK asserts such final decision-making right in good faith, based upon [***] or upon some other rational basis in light of [***], and subject to Section 3.5.5 with respect to the [***].

 

(c)                After the exercise by GSK of its Program Option for a given Program, GSK will have sole decision-making authority on all decisions relating to the Development and Commercialization of any Option Compounds and related Licensed Products

 

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under such Program.  If Regulus disagrees with any such decisions taken by GSK, such disagreement will not be escalated to the Executive Officers nor shall any such disagreement be submitted to arbitration under Section 13.1 or any other form of review; provided , however , that GSK will comply with its diligence obligations (as described below in Article 4) and other relevant obligations as expressly stated hereunder (including payment obligations) and any dispute with respect to whether there has been a material breach by GSK of such obligation may be escalated to the Executive Officers and, if the Executive Officers are unable to resolve such dispute within thirty (30) days thereof, to binding arbitration under Section 13.1.

 

(d)                Regulus shall not have the right to progress any [***] without the express prior unanimous approval of the JSC, and shall not have the right to research or pursue any [***] for any Collaboration Compound (other than [***] applicable to such Collaboration Compound) without the express prior unanimous approval of the JSC, except with respect to Refused Candidates, Refused Candidate Products and Returned Licensed Products.

 

(e)                Notwithstanding anything in this Agreement to the contrary, if the JSC is unable to unanimously agree on any matter before it (including the resolution of any dispute arising at any Subcommittee level), such matter shall be subject to escalation to the Executive Officers and resolution as described in this Section 2.1.7, except in the case of matters which pertain to Prosecution and Maintenance which shall be resolved in accordance with Article 8.

 

2.2  Subcommittee(s) .  From time to time, the JSC may establish subcommittees to oversee particular projects or activities, as it deems necessary or advisable (each, a “ Subcommittee ”).  Each Subcommittee shall consist of such number of members as the JSC determines is appropriate from time to time.  Such members shall be individuals with expertise and responsibilities in the areas relevant to the function and purpose of the proposed Subcommittee.  Generally, except as otherwise expressly provided herein (including Section 2.2.2), all decisions of any Subcommittee shall be made by consensus, with each Party having collectively one (1) vote in all decisions.

 

2.2.1        Joint Program Subcommittee .

 

(a)                Promptly after the establishment of the JSC pursuant to Section 2.1, the JSC shall establish the Joint Program Subcommittee (the “ JPS ”).  The JPS shall be comprised of [***] representatives (or such other number of representatives as the Parties may agree) from each of GSK and Regulus and shall meet once every Calendar Quarter or more or less frequently as the Parties mutually agree (subject to Section 2.1.2).  The JPS will report to the JSC and will be responsible for the recommendation to the JSC with respect to each Program of

 

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(i) the Candidate Selection Criteria for such Program, which shall be recommended to the JSC no more than [***] days following the selection of the relevant Collaboration Target, (ii) the design and content of all PoC Criteria and Target Product Profiles for such Program as set forth below, which shall be recommended to the JSC no more than [***] days following the nomination of a Development Candidate, and (iii) the design, content and endpoints of all PoC Trials, which shall be recommended to the JSC no more than [***] days following the nomination of a Development Candidate.  In the event of a dispute within the JPS on any matter, such matter shall be submitted to the JSC for resolution in accordance with the provisions of Section 2.1.7(b).

 

(b)                For each Program, a Target Product Profile shall be prepared by GSK, in consultation with Regulus and through the JPS, for adoption by the Joint Steering Committee; provided , that each TPP shall (i) be consistent with and no broader than the Indication and Collaboration Targets for its corresponding Program, and (ii) set as the objective for the Program competitiveness in the applicable market, but not necessarily superiority in all aspects relevant to pharmaceutical commercialization.  Upon nomination of a Development Candidate, each such aspirational TPP shall be updated, amended or modified to specifically address the particular qualities and features of such Development Candidate.  In the event of a disagreement at the JSC level, GSK shall have the final decision-making authority on the content of the Target Product Profile or any amended TPP as set forth in Section 2.1.7(b).  It is understood and agreed that the Target Product Profile is aspirational in nature, and that any given Development Candidate may not meet all targeted features and requirements of a given TPP, and that certain features of the TPP may only apply to later stages of Development of a given Development Candidate (such as development of a sustained release formulation, etc.).

 

2.2.2        Joint Patent Subcommittee .  Promptly after the establishment of the JSC pursuant to Section 2.1, the JSC shall establish a Joint Patent Subcommittee (the “ Joint Patent Subcommittee ”).  The Joint Patent Subcommittee shall be comprised of an equal number of representatives from each of GSK and Regulus.  The Joint Patent Subcommittee will report to the JSC and will be responsible for the coordination of the Parties’ efforts in accordance with the provisions set forth in Article 8 of this Agreement (subject to Section 2.1.2).  In the event of a dispute within the Joint Patent Subcommittee, such matter shall be submitted to the JSC for resolution; provided , however , that the provisions of Article 8 shall determine which Party shall have control and the final decision-making authority with respect to matters related to Prosecution and Maintenance, enforcement of Patent Rights, the determination of inventorship, and patent listing obligations.

 

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2.3  Alliance Managers .  Promptly after the Effective Date, each Party shall appoint an individual (other than an existing member of the JSC) to act as the project leader for such Party (each, an “ Alliance Manager ”).  Each Alliance Manager shall thereafter be permitted to attend meetings of the JSC and any other Subcommittee as a nonvoting observer, subject to the confidentiality provisions of Article 9.  The Alliance Managers shall be the primary point of contact for the Parties regarding the activities of the Parties contemplated by this Agreement during the Agreement Term and shall facilitate all such activities hereunder, including, but not limited to, communications between the Parties following any decisions made by the JSC, and the exchange of information between the Parties as described in Section 3.9.2.  The Alliance Managers shall also be responsible for assisting the JSC and the Joint Program Subcommittee in performing their respective responsibilities.  The name and contact information for such Alliance Manager, as well as any replacement(s) chosen by Regulus or GSK, in each such Party’s sole discretion, from time to time, shall be promptly provided to the other Party in accordance with Section 13.6 of this Agreement.

 

2.4  Certain Matters Subject to Expert Panel .  If, at any time during the relevant Program Term, the JSC is unable to agree whether to [***], the Parties shall submit such matter to a panel of three (3) experts who are experienced in the field of biopharmaceuticals (an “ Expert Panel ”).  All members of the Expert Panel must be mutually agreed by the Parties in good faith and as promptly as possible and must be free of any conflicts of interest with respect to either or both Parties.  The Expert Panel shall promptly hold a hearing to review the matter, at which they will consider briefs submitted by each Party at least [***] days before the hearing, as well as reasonable presentations that each Party may present.  The Parties may elect to use separate Expert Panels for different Programs in order to align the expertise of the members of the Expert Panels with the subject matter of the respective Programs.  The Expert Panel will only [***] if the Expert Panel unanimously agrees that [***] is [***]. The Expert Panel shall not be permitted to take into account [***].  The determination of the relevant Expert Panel as to such dispute shall be binding on both Parties.  The Parties shall share equally in the costs of the Expert Panel, and each Party shall bear its own costs associated with preparing for and presenting to the Expert Panel.  The Parties may also elect by mutual agreement to use an Expert Panel (or other panels of key opinion leaders) for guidance on other issues that may arise during the Collaboration Term.

 

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ARTICLE 3

 

THE CONDUCT OF THE COLLABORATION; REGULUS DILIGENCE

 

3.1  Overview .  Subject to and in accordance with the terms of this Agreement, Regulus will be responsible for conducting [***] Programs, each to be directed at a different Collaboration Target to be selected as set forth in Section 3.2 below, with the goal of researching, identifying and otherwise Developing [***] Collaboration Compounds under each Program through to [***], subject to earlier termination of such Program or the exercise of the [***] Option as described in this Agreement.

 

3.2  Selection of Targets .

 

3.2.1        Initial Collaboration Targets; Subsequent Collaboration Targets .  As of the Effective Date, GSK has selected [***] Targets to be the subject of Programs to be progressed by Regulus under Section 3.3 (each such Target, an “ Initial Collaboration Target ”), which [***] Initial Collaboration Targets are listed on Exhibit E hereto.  GSK shall have the right to identify an additional [***] Targets (each, a “ Subsequent Collaboration Target ”, and together with the Initial Collaboration Targets, the “ Collaboration Targets ”) from the miRNA Pool within [***] months of identification of such miRNA Pool from within the miRNA Library in accordance with the Initial Research Plan (such [***] period, the “ Target Selection Period ” and the end of such [***] period being the “ Final Target Selection Date ”); provided , further , that GSK may, at any time during the Target Selection Period, replace up to [***] previously-identified Collaboration Targets which have not reached [***] (each, a “ Replaceable Target ”) with a different Target from the miRNA Pool, in which case, such different Target shall become a Collaboration Target and such previously-identified Collaboration Target (as such, a “ Former Target ”) shall no longer be a Collaboration Target.  For purposes of clarity, notwithstanding anything in this Agreement to the contrary, in no event shall GSK have the ability to replace more than [***] previously-identified Collaboration Targets under this Agreement, nor shall there be more than a total of [***] Collaboration Targets as of the Final Target Selection Date. Any Target which is not a Collaboration Target as of the Final Target Selection Date shall thereafter be a Former Target.

 

3.2.2        Selection to be Completed by Final Target Selection Date .  After the selection of the Subsequent Collaboration Targets by GSK from the miRNA Pool, to be completed by the Final Target Selection Date, Regulus will progress Programs against such Subsequent Collaboration Targets in accordance with the Research Plan for each Program as set forth in Section 3.3.  If any Subsequent Collaboration Target is not selected within the Target

 

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Selection Period, GSK’s rights and Regulus’ obligations under the Agreement with respect to such Subsequent Collaboration Target and related Program shall terminate.

 

3.2.3        Blocked Targets .  Additionally, if during the Target Selection Period, Regulus intends to work outside of the Research Program, along with or for the benefit of an Affiliate, Parent Company or a Third Party, to identify, research, optimize, otherwise Develop or Commercialize any [***] prior to the selection by GSK of all [***] final Collaboration Targets, then Regulus shall first offer in writing to GSK the right to select such miRNA as one of the remaining Collaboration Targets hereunder, including as a replacement for any Replaceable Target, in each case solely to the extent that GSK has the right to do so under Section 3.2.1 above (including the [***] limitation set forth therein), such right to expire [***] days after GSK’s receipt of such written offer.  If GSK does not select such miRNA as a Collaboration Target hereunder, such miRNA shall thereafter be excluded from the miRNA Pool and deemed a Blocked Target; provided , however , that no more than [***] of the number of miRNAs in the miRNA Pool may be deemed to be a Blocked Target under the Agreement.

 

3.2.4        Expansion of Agreement .  The Parties hereby agree that, on or about the date that is [***] years after the Effective Date as may be mutually agreed by the Parties, the Parties shall meet to discuss and consider in good faith the possible expansion of the Agreement to include additional Targets, on [***], but without any obligation on either Party to enter into any such expanded Agreement.

 

3.3  Commencement of the Programs; Research Program; Research Plan .

 

3.3.1        Commencement of Program .  Commencing on the Effective Date, Regulus will progress Programs directed against the Initial Collaboration Targets in accordance with the Research Plan for each such Program.  The Programs directed against the Subsequent Collaboration Targets shall each commence as soon as practicable after the selection of such Subsequent Collaboration Targets and the final JSC approval of the Research Plan with respect to such Program.

 

3.3.2        Research Program .  Subject to the oversight of the JSC and except as may be mutually agreed by the Parties, Regulus shall be solely responsible for conducting all Development activities set forth in the Research Plan with respect to Collaboration Compounds under each Research Program, and for all costs and expenses associated therewith, during the relevant Research Collaboration Term.

 

3.3.3        Research Plan .  Each Research Program will be carried out by Regulus pursuant to a Research Plan, which will outline (subject to JSC [***] and/or amendment as set

 

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forth in Section 2.1.6), for each Collaboration Target, as appropriate:  discovery, research and optimization activities in connection with the identification and progression of Collaboration Compound to Candidate Selection Stage; and estimated timelines for completion of the studies and activities to be undertaken by Regulus thereunder.  The Research Plan shall be updated by Regulus as needed, but at least once Annually and submitted to the JSC for its review and comment and may be further amended, at any time and from time to time, by Regulus, to reflect material events or changes under the then-current Research Plan.  It is expected that the level of detail required for activities with respect to each Collaboration Target will vary depending on the state of progression of Regulus’ efforts with regard to such Collaboration Target.

 

3.4  Development Candidate Selection; Preliminary PoC Plan .

 

3.4.1        Selection of Development Candidate .  During the relevant Research Collaboration Term, using the Candidate Selection Criteria and Target Product Profile as a guide, Regulus shall use Diligent Efforts to conduct studies under each Research Program that it determines appropriate to Develop a Development Candidate, and to select [***] Collaboration Compound that it determines has met the Candidate Selection Criteria.  Upon such determination, Regulus shall seek confirmation by the JSC that such Collaboration Compound meets the Candidate Selection Criteria.  The JSC shall review all relevant information and study results concerning each such proposed Development Candidate, and, if the JSC unanimously confirms such selection, then (x) such Collaboration Compound shall be designated a Development Candidate, (y) the Parties shall agree upon an Early Development Plan for such Development Candidate, and (z) following JSC approval of such Early Development Plan, the Early Development Program for such Development Candidate shall commence in accordance with Section 3.5.  If the JSC does not confirm that such Collaboration Compound meets the Candidate Selection Criteria, then the procedures set forth in Section 3.4.3 shall apply.

 

3.4.2        Identification of Back-Up Compounds .  Upon JSC confirmation of a Development Candidate, Regulus may also identify Collaboration Compounds as preliminary Back-up Compounds to such Development Candidate.  With respect to any Back-up Compound for such Program, if such Back-up Compound has not yet reached the [***] Stage as of the expiration of the [***] Option Exercise Period with respect to such Program, Regulus shall have the right, but not the obligation, to conduct Development activities to advance such Back-up Compound to the [***] Stage [***].

 

3.4.3        If No [***] is Selected .  For clarity, if no Collaboration Compound under a Program meets the [***] Criteria, or the JSC does not confirm Regulus’ nomination of a Collaboration Compound as a [***] after completion of the activities outlined in the applicable

 

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Research Plan or otherwise decides to terminate the Program by the end of the Research Collaboration Term, the Program shall be deemed terminated by the JSC, Regulus shall not be required to conduct any activities under any Early Development Program with respect to such Collaboration Target, and the Collaboration Compounds directed against such Collaboration Target shall be deemed Refused Candidates and revert to Regulus, subject to Section 4.2.7; provided , however , that GSK shall have the right to exercise its Terminated Program Option for any Program in accordance with Section 4.2.3.

 

3.4.4        Preliminary PoC Plan .  At the time of, and as part of the process of selection of the Development Candidate as provided in Section 3.4.1, the Parties, through the JSC and/or JPS, shall discuss and agree upon the appropriate preliminary development strategy and a preliminary plan for establishing PoC for such Development Candidate, including the possible trial design and protocol for the PoC Trial, and estimated associated costs and timelines, it being understood that such trial design and timelines are merely provisional and preliminary, and are subject to modification (the “ Preliminary PoC Plan ”).  Regulus shall have the right, but not the obligation, to reasonably rely on such Preliminary PoC Plan in undertaking any Phase 1 Clinical Trials of such Development Candidate under any Early Development Program for such Development Candidate.  Notwithstanding the foregoing, and Regulus’ discretion in the overall conduct of the Research Program and Early Development Programs, the final PoC Criteria and the final PoC Trial for such Development Candidate shall be subject to the further design of the JPS and the review and unanimous approval of the JSC as set forth in Section 2.1.6, and any disputes related thereto shall be resolved in accordance with Section 2.1.7.

 

3.5  Early Development Program; Early Development Plan .

 

3.5.1        Early Development Program .  Unless GSK exercises its [***] Option for a given Research Program within the [***] Option Exercise Period, Regulus shall proceed with conducting Development activities directed toward progressing the Development Candidate for such Research Program through Completion of the PoC Trial, including the conduct of a Phase 1 Clinical Trial and such PoC Trial, in accordance with the Early Development Plan (“ Early Development Program ”).  In such case, subject to the oversight of the JSC and except as may be mutually agreed by the Parties, Regulus shall be solely responsible for conducting all Development activities set forth in the Early Development Plan with respect to Collaboration Compounds under each Early Development Program, and for all costs and expenses associated therewith, during the Early Development Program Term.  GSK, through the JSC, shall have the right to provide consultation and advice with respect to such activities, which shall be considered in good faith by Regulus.

 

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3.5.2        Early Development Plan .  Each Early Development Program will be carried out by Regulus pursuant to an Early Development Plan, subject to JSC approval and/or amendment as set forth in Section 2.1.6.  The Early Development Plan shall be updated by Regulus as needed, but at least once Annually and submitted to the JSC for its review and comment and may be further amended, at any time and from time to time, by Regulus, to reflect material events or changes under the current Early Development Plan, subject to JSC approval and GSK final decision-making authority on the PoC Criteria and the PoC Trial design.  It is expected that the level of detail required for activities with respect to each Development Candidate will vary depending on the state of progression of Regulus’ efforts with regard to such Development Candidate.

 

3.5.3        Substitution of Development Candidate with Back-Up Compound .  If, at any time during the Early Development Program prior to initiation of the [***], the Parties mutually agree through the JSC to substitute for the Development Candidate any Back-up Compound for further Development, including without limitation mutual agreement in good faith with respect to the [***] and GSK’s ability to [***], then Regulus shall undertake such substitution and Development of the Back-up Compound upon such mutually-agreed terms.

 

3.5.4        Completion of PoC Trial .  Following the conduct of the PoC Trial by Regulus for any Development Candidate, Regulus shall promptly notify GSK in writing thereof and provide to the JSC and GSK the PoC Trial Report which will initiate the [***] Exercise Period.  Regulus shall endeavor in good faith to provide GSK with a reasonably accurate estimate of the time that the PoC Trial Report will be available at least [***] months in advance.  In the event that such estimate of delivery date is found to be more than [***] months past the estimated date, GSK shall have a [***] extension for the time allowed hereunder to exercise the PoC Option.

 

3.5.5        Conduct of PoC Trial within PoC Financial Cap .  In the event that (a) GSK, in accordance with Section 2.1.7, exercises its final decision-making authority with respect to the PoC Criteria or the design, content and end points of any PoC Trial, and the JSC agrees   (such agreement not to be unreasonably withheld) that the [***] of such PoC Trial would [***] or (b) the [***] of such PoC Trial actually [***] except to the extent due to [***], then, in each case, (i) Regulus shall use its Diligent Efforts to conduct such PoC Trial and [***], the amount of such [***] to be agreed prior to the initiation of the PoC Trial (to the extent possible), and in such event any [***] on account of such PoC Trial [***] shall be [***] of GSK arising under the relevant Program hereunder, or (ii) if Regulus does not have [***] to conduct such PoC Trial which has been [***], then GSK shall either, such choice to be made at GSK’s sole discretion,

 

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(A) agree to [***] such agreement not subject to [***] in making such decision, the PoC Trial, and then [***] as would have been required of Regulus hereunder, and Regulus shall be required to [***] attributable to the PoC Trial which would have been equivalent to [***] for conducting the PoC Trial if a good-faith estimate of such [***] based on the PoC Trial design, content and end points, plus, the first [***] in PoC Costs of such PoC Trial, and [***] on account of such PoC Trial above [***] shall be [***] of GSK arising under the relevant Program hereunder or (B) revise the PoC Criteria or the design, content and end points of any PoC Trial to [***].

 

3.6  Regulus Diligence . The common objective of the Parties is to identify and Develop [***] Collaboration Compound for each Program for Development and Commercialization as Licensed Products containing such Collaboration Compound(s) in the Field in the Territory under the terms of this Agreement.  Regulus shall use its Diligent Efforts to conduct the identification, screening, characterization, optimization and other discovery and research activities in accordance with the Initial Research Plan during the Target Selection Period, and to carry out and conduct each Research Program and Development in accordance with the Research Plan, and, if GSK has not exercised its [***] Option for such Program, each Early Development Program in accordance with the relevant Early Development Plan during the Program Term.  To that end, Regulus shall dedicate to the conduct of the initial discovery and research activities under the Initial Research Plan, and the Development activities under each Program, appropriate resources and allocate personnel with an appropriate level of education, experience and training in order to achieve the objectives of this Agreement efficiently and expeditiously, which resources and personnel shall be consistent with the applicable requirements of the Initial Research Plan, the Research Plan and any Early Development Plan and shall be consistent always with the standard under this Agreement applicable to Regulus for its Diligent Efforts.  For purposes of clarity, Regulus shall be deemed to have met its diligence obligation hereunder with respect to each Program (a) upon achievement of the [***] Stage if GSK exercises the relevant Program Option at the [***] Stage or (b) if GSK does not exercise the relevant Program Option before [***], upon Completion of the PoC Trial and completion of all other activities set forth in the Early Development Program; provided , however , that the Parties acknowledge that such clauses (a) and (b) may not be the only proof that Regulus has met its diligence obligations.

 

3.7  Specific Regulus Responsibilities.  During the  Program Term with respect to each Program, and consistent with and subject to the applicable Research Plan and Early Development Plan (as each such plan may be updated or amended from time to time hereunder), Regulus shall be responsible for the following activities.

 

3.7.1        General .  Regulus shall use its Diligent Efforts to:

 

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(a)               conduct Development activities to identify, research, optimize, and otherwise Develop Collaboration Compounds under such Program, including, without limitation, screening for new Collaboration Compounds against the relevant Collaboration Target as necessary and conducting medicinal chemistry with respect to a potential Development Candidate under the Program with the aim of achieving Candidate Selection Criteria and PoC Criteria;

 

(b)               if GSK has not exercised the Candidate Selection Option, conduct Pre-Clinical Studies and Clinical Studies through and including the Completion of the PoC Trial for a Development Candidate and conduct formulation development of such Development Candidate for each Program;

 

(c)               provide to the JSC reasonable progress updates at each Calendar Quarter meeting of the JSC on the status of each Program, summaries of data associated with Regulus’ Development activities (“ Program Data ”), and the likelihood of and general timetable for completion of such Development activities and advancement of Collaboration Compounds to the next phase of Development, as applicable;

 

(d)               consider in good faith all reasonable suggestions received from GSK regarding the Initial Research Plan and any Research Plan, Research Program, Early Development Plan and/or Early Development Program; and

 

(e)               perform such other obligations with respect to each Research Program and each Early Development Program as the JSC may assign to Regulus from time to time under the Initial Research Plan and any Research Plan, Research Program, Early Development Plan and/or Early Development Program.

 

3.7.2        Data Integrity .

 

(a)               Regulus acknowledges the importance to GSK of ensuring that the activities under the Initial Research Plan, Research Programs and any Early Development Programs are undertaken in accordance with the following good data management practices (“ Good Data Management Practices ”):

 

(i)             Data are being generated using sound scientific techniques and processes;

 

(ii)            Data are being accurately recorded in accordance with good scientific practices by persons conducting research hereunder;

 

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(iii)           Data are being analyzed appropriately without bias in accordance with good scientific practices;

 

(iv)           Data and results are being stored securely and can be easily retrieved, and

 

(v)            where, pursuant to then-existing policies and procedures, Regulus’ senior management documents in writing its key decisions, it will follow its internal procedures and policy, so as to demonstrate and/or reconstruct key decisions made by such senior management during the conduct of the research and development activities under this Agreement.

 

(b)               Regulus agrees that it shall carry out the Research Programs, Initial Research Plan, and the Early Development Programs and collect and record any data generated therefrom in a manner consistent with the above requirements as set forth in (a) above, and shall, upon reasonable request by GSK, permit review of relevant notebooks and records as needed as a result of GSK responsibilities under Article 8 in relation to Prosecution and Maintenance.

 

3.7.3        Regulatory Matters.   During the Collaboration Term, with respect to any Program for which the Program Options have not yet been exercised or expired and which Program has not otherwise been terminated, and the Collaboration Compounds therein, Regulus shall use its Diligent Efforts to:

 

(a)               own and maintain all regulatory filings filed by or on behalf of Regulus for Collaboration Compounds Developed pursuant to this Agreement, including all INDs filed by Regulus.  Upon exercise by GSK of its Program Option with respect to a Program, Regulus shall transfer to GSK ownership of such regulatory filings for all Option Compounds Developed under such Program, as further described in Section 5.3;

 

(b)               report all adverse drug reaction experiences related to Collaboration Compounds in connection with the activities of Regulus under this Agreement to the appropriate Regulatory Authorities in the countries in the Territory in which such Collaboration Compounds are being Developed, in accordance with the applicable laws and regulations of the relevant countries and Regulatory Authorities, and to provide GSK notice of such event and provide copies of all reports to GSK as promptly as practicable, which GSK shall use solely for purposes of facilitating GSK’s decision-making with respect to its exercise of any relevant Program Option hereunder, and for no other purpose unless and until GSK exercises such Program Option.  Through the JSC, GSK shall have the right, upon reasonable request, to review from time to time Regulus’ pharmacovigilance policies and procedures.  GSK and

 

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Regulus agree to cooperate and use good faith efforts to ensure that Regulus’ adverse event database is organized in a format that is reasonably compatible with GSK’s adverse event databases.  The Parties will consider in good faith from time to time whether a safety data exchange agreement is required.

 

3.7.4        Manufacturing Obligations .  Regulus shall [***] use its Diligent Efforts to manufacture pre-clinical supplies and clinical supplies of Collaboration Compounds, including all bulk drug substance, for all Pre-Clinical Studies and Clinical Studies, including process development and scale-up, conducted by Regulus under such Program during the Program Term for such Program.   At GSK’s request, Regulus shall also supply to GSK reasonable (as determined by the Joint Steering Committee) quantities of bulk drug substance for Collaboration Compounds as reasonably required by GSK for certain supplemental Enabling Studies which GSK may from time to time undertake pursuant to Section 3.8, unless Regulus is unable to do so due to [***], provided, that the determination of whether [***] shall not take into account [***].  Regulus shall carry out its manufacturing obligations consistent with Regulus’ reasonable internal practices, industry standards, cGMP requirements, and all applicable laws and regulations.  For purposes of clarity, upon GSK’s exercise of its Program Option for a Program, GSK will thereafter be responsible for manufacturing, [***] all pre-clinical, clinical and commercial supplies of the Option Compounds and related Licensed Products under such Program, as set forth in Section 4.4.2.  The Parties shall discuss in good faith at the JSC the manufacturing process as then being used or planned to be used by Regulus for Collaboration Compounds under each Program well in advance of the Program reaching the Candidate Selection Stage, in order that, wherever practical, (a) the Parties can plan together to minimize [***], and (b) the Parties can [***] for Commercialization by GSK in the event that GSK exercises its Program Option.

 

3.8  GSK Enabling Studies . GSK shall have the right at all times during the Research Collaboration Term and during any relevant Early Development Program Term, to conduct, at its sole cost and expense, certain reasonable supplemental enabling activities such as additional formulation development, additional pre-clinical animal studies and/or compound scale-up (“ Enabling Studies ”) which GSK reasonably deems as useful for supplementing pre-clinical and/or clinical activities conducted by Regulus pursuant to the Research Program and the Early Development Program and relating to one or more of the Collaboration Compounds.  At GSK’s request, Regulus shall offer GSK reasonable cooperation in relation to such Enabling Studies, including, subject to availability and Section 3.7.4, the transfer of reasonable quantities of Collaboration Compounds, if necessary.  It is understood and agreed by the Parties that any such supplemental Enabling Studies are to be conducted by GSK in its reasonable discretion and not

 

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as part of any Program, Pre-Clinical Study, PoC Trial or other Clinical Study conducted by Regulus and that Regulus shall not be permitted or required to delay the progress of any Research Program or Early Development Program to await the results of any such supplemental Enabling Studies or to transfer any responsibility to GSK for the conduct of any activities under the Research Plan or Early Development Plan and that GSK shall not be permitted (without Regulus’ consent) to transfer any responsibility to Regulus for the conduct of any Enabling Studies.

 

3.9  Cooperation; Exchange of Information .

 

3.9.1        Cooperation . The Parties agree to cooperate in good faith during the Collaboration Term in identifying and implementing opportunities to reduce the costs incurred in the conduct of the Programs, including costs of equipment, consumables such as laboratory supplies, and Third Party services such as toxicology, clinical studies, drug substance and drug product process development, or manufacturing services, provided , that such cooperation does not delay or hamper Regulus in the performance of its activities thereunder and in no event shall Regulus be obligated to incur additional costs or expenses as a result of such new opportunities.  These attempts may include exploration of [***].

 

3.9.2        Exchange of Information .  During the Research Collaboration Term and the Early Development Term, Regulus shall provide to the JSC reasonable progress updates at each Calendar Quarter meeting of the JSC on the status of the Research Program for each Collaboration Target and of the Early Development Programs, summaries of data associated with Regulus’ research and development efforts and the likelihood of and timetable for completion of the respective Programs or Development activities and advancement of Collaboration Compounds to the next phase of research or Development, as applicable.  Any such written summaries shall be provided to JSC members at least [***] Business Days in advance of the upcoming JSC meeting.  Regulus will use Diligent Efforts to share any data or information, as well as any correspondence received from or submitted to any Regulatory Authority, directly relating to Collaboration Compounds that is generated in the course of Regulus’ activities hereunder, with the JSC, on an ongoing basis, regardless of whether such data or information would have a positive, neutral or negative impact on the potential commercial, scientific or strategic value of such Collaboration Compounds, in order to facilitate GSK’s decision-making in connection with the exercise of an applicable Program Option and to monitor Regulus’ obligations during the applicable Program Term.  The provision of all such data or information shall be performed in a timely matter to accommodate all regulatory deadlines and ensure compliance with the timelines set forth in any agreed plan.

 

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3.9.3        Publication of Clinical Trials Results.   Each of GSK and Regulus shall have the right to publish summaries of results from any human clinical trials conducted by such Party under this Agreement, without requiring the consent of the other Party; provided however that GSK shall have no right, without the consent of Regulus, to so publish data generated by Regulus prior to GSK’s exercise of its Program Option with respect to the relevant Collaboration Compounds, and, after the exercise of its Program Option, GSK shall have the right to so publish any such existing and future data generated by Regulus or GSK with respect to the relevant Collaboration Compound(s) without obtaining the consent of Regulus except with respect to any Refused Candidates, Refused Candidate Products or Returned Licensed Products.  In addition, after the exercise of its Program Option by GSK, Regulus shall not have the right to publish any of such data, without the prior consent of GSK, for any data pertaining to the relevant Collaboration Compounds, except (a) with respect to any Refused Candidates, Refused Candidate Products or Returned Licensed Products and (b) as described in Section 9.2(ii).  The Parties shall discuss and reasonably cooperate in order to facilitate the process to be employed in order to ensure the publication of any such summaries of human clinical trials data and results as required on the clinical trial registry of each respective Party, and shall provide the other Party via submission to the Joint Patent Subcommittee established under Section 2.2.2, at least [***] days prior notice to review the clinical trials results to be published for the purposes of preparing any necessary Patent Right filings.

 

3.10  Subcontracting .  Each Party shall have the right to engage Third Party subcontractors and, in the case of Regulus, its Parent Companies, to perform certain of its obligations under this Agreement; provided that Regulus shall not have the right to subcontract, in whole or in part, the discovery, research or optimization of miRNA Antagonists against Collaboration Targets except to its Parent Companies pursuant to the Services Agreement.  Any subcontractor to be engaged by a Party to perform a Party’s obligations set forth in the Agreement shall meet the qualifications typically required by such Party for the performance of work similar in scope and complexity to the subcontracted activity.  Notwithstanding the preceding, any Party engaging a subcontractor hereunder (including, without limitation, for the performance of clinical trials) shall remain responsible and obligated for such activities and shall in all cases retain or obtain exclusive [***], at the sole cost and expense of the Party engaging such subcontractor, and any such costs and expenses [***], unless the JSC agrees, in advance as documented in the relevant meeting minutes, to engage such subcontractor and to assume the proposed financial obligations that would result under any agreement with such subcontractor, in which case the allocation of such costs and expenses between the Parties shall be governed by [***].  To the extent that such exclusive [***] cannot be obtained by Regulus with respect to

 

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[***] of Regulus, prior to entering into any such arrangement with any such subcontractor, Regulus shall bring such matter to GSK in writing in a timely fashion in order to seek the prior written consent from GSK to enter into such an arrangement, such consent not to be unreasonably withheld.  For clarity, this Section 3.10 shall not apply to restrict or otherwise limit the rights of GSK to use a subcontractor after the exercise of its Program Option or the acquisition of exclusive rights to the Collaboration Compounds of a Program pursuant to the express provisions of Article 12 for the relevant Program beyond the restrictions and limitations expressly stated in Section 5.2.2.

 

ARTICLE 4

 

GSK’S PROGRAM OPTION RIGHTS; EXERCISE OF PROGRAM OPTIONS;
GSK DILIGENCE

 

4.1  Program Options .

 

4.1.1        Program Options .  For each Program, Regulus hereby grants to GSK the exclusive right, exercisable in accordance with this Article 4, to assume the Development, Manufacture and Commercialization of Collaboration Compounds Developed under such Program and to obtain the licenses described in Section 5.2 under the terms and conditions set forth in this Agreement (each, a “ Program Option ”), which right is exercisable, at GSK’s sole discretion in accordance with the procedures set forth below, (a) at the [***] Stage (“ [***] Option ”), (b) if GSK does not exercise its Candidate Selection Option for a Program, upon Completion of the PoC Trial (the “ [***] Option ”) which may include GSK’s immediate termination of the Leading Compound in accordance with Section 4.2.4, (c) upon termination of such Program by the JSC [***], or otherwise for a termination of such Program pursuant to Section 3.4.3 on or before the Completion of the PoC Trial (the “ Terminated Program Option ”), or (d) as provided in Section 4.2.5.   For the sake of clarity, the Program Option may be exercised once per Program, and, upon such exercise, all Collaboration Compounds under such Program are licensed to GSK under the terms and conditions set forth in this Agreement. GSK may exercise a Program Option as permitted herein by providing written notice thereof to Regulus.

 

4.1.2        Upon Exercise of Program Option .  Upon exercise of a Program Option for a Program and payment of the Program Option Exercise Fee as set forth in Article 6 (as applicable), GSK shall receive the license grant described in Section 5.2 for all Collaboration Compounds which were Developed pursuant to such Program and GSK shall be responsible for

 

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the milestone and royalty payments described in Article 6 with respect to such Collaboration Compounds and related Licensed Products and for diligence obligations with respect thereto as set forth in Section 4.4.

 

4.1.3        During the relevant Program Term, Regulus will not grant to any Third Party or to any of its Parent Companies rights to any Regulus Technology which are inconsistent with or which would interfere with the grant of the licenses resulting from the exercise of the Program Options to GSK hereunder.  For the avoidance of doubt, the Parties understand and agree that GSK’s Program Option rights, as described herein, shall be exclusive options over the Collaboration Compounds that are the subject of a given Research Program and/or Early Development Program, and unless and until such time (if any) as GSK declines to exercise or permits to lapse all of its pending or outstanding Program Option rights with respect to any such Research Program or Early Development Programs or the relevant Program is otherwise terminated, Regulus shall not have the right to offer or negotiate with any Third Party or any of its Parent Companies with respect to the grant to such Third Party or Parent Company of any right or license or other encumbrance of any kind in or to any of such Collaboration Compounds.

 

4.2  Exercise of Program Options .

 

4.2.1        [***] Option .

 

(a)               On a Program-by-Program basis, Regulus will notify GSK, through the JSC, when it has Developed a Collaboration Compound that meets the [***] Criteria for nomination as a Development Candidate, and shall provide to GSK, through the JSC, within [***] days of such occurrence (to be reasonably extended if impractical depending on the nature of the Pre-Clinical Studies and the data generated thereunder), a complete data package containing all material analysis, results and preclinical data or any related material correspondence or information received from or sent to any Regulatory Authority relating to the Collaboration Compounds at issue (the “ Candidate Selection Report ”), in each case as would be reasonably expected to be material to assist and enable GSK to make its decision on whether to elect to exercise its [***] Option with respect to the Program under which such Development Candidate is Developed.  In addition, GSK shall have the right to review, to the extent practical and reasonable, the original records and documentation containing such material data, results and information. The JSC shall confirm whether the [***] Criteria have been met.

 

(b)               GSK may exercise its [***] Option with respect to a Program by delivering to Regulus a written notice of exercise not later than [***] days (unless extended by the mutual written agreement of the Parties or as permitted herein pending HSR clearance by the FTC as set forth in Section 4.2.6) after the date of receipt by GSK from Regulus of the

 

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completed [***] Report (such [***]-day period, as it may be extended, the “ [***] Option Exercise Period ”), with respect to the Collaboration Compound at issue (such date of receipt by GSK, the “ [***] Report Date ”), specifying the Program for which the Program Option is being exercised.  After providing to Regulus such written notice of its election to exercise the [***] Option, GSK shall, within [***] days of receipt of an invoice therefore from Regulus, pay the [***] Option Exercise Fee.  Notwithstanding the foregoing, in GSK’s sole discretion, it shall have the right to exercise a Program Option prior to the [***] Report Date but during the [***] Option Exercise Period by providing Regulus written notice thereof, in which case the Table 1 Rates will still apply to the milestone payments and royalties owed by GSK to Regulus hereunder.

 

(c)               Notwithstanding any of the foregoing, if, at any time during the Research Collaboration Term for a Research Program, the JSC (by mutual agreement) or GSK requests that Regulus begin a [***] of a Collaboration Compound under such Research Program prior to Regulus’ notification to GSK of a Collaboration Compound that meets the [***] Criteria, the [***] Criteria shall be deemed to have been met and, upon such request, the [***] Option Exercise Period shall begin.

 

4.2.2        PoC Option.

 

(a)               If GSK does not exercise the [***] Option within the [***] Option Exercise Period, then, on a Program-by-Program basis, Regulus will continue to use Diligent Efforts to progress the Program through to the [***].  On a Program-by-Program basis, Regulus will notify GSK when it has completed a PoC Trial with respect to a Development Candidate, and shall provide to GSK, within [***] days of such occurrence (to be reasonably extended if impractical depending on the nature of the Clinical Studies, Pre-Clinical Studies and the other data generated thereunder), a reasonably complete data package containing all material analysis, results and clinical data or any related material correspondence or information received from or sent to any Regulatory Authority relating to the Development Candidate at issue (which data package need not include any information or data generated in the course of GSK’s conduct of the PoC Trial, or portion thereof, under Section 3.5.5) (the “ [***] Report ”, and referred to collectively with the [***] Report as the “ Reports ”), in each case as would be reasonably expected to be material to assist and enable GSK to make its decision on whether to elect to exercise its [***] with respect to the Program under which such Development Candidate is Developed. In addition, GSK shall have the right to review, to the extent practical and reasonable, the original records and documentation containing such material data, results and information.

 

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(b)                GSK may exercise its [***] with respect to a Program by delivering to Regulus a written notice of exercise, not later than [***] days (unless extended by the mutual written agreement of the Parties or as permitted herein pending HSR clearance by the FTC as set forth in Section 4.2.6) after the date of receipt by GSK from Regulus of the PoC Trial Report (such [***]-day period, as it may be extended, the “ [***] Exercise Period ”), with respect to the applicable Development Candidate at issue (such date of receipt by GSK, the “ [***] Date ”), specifying the Program for which the Program Option is being exercised, subject to the tolling of such payment obligation pursuant to Section 4.2.6.  After providing to Regulus such written notice of its election to exercise the [***], GSK shall, within [***] days of receipt of an invoice therefore from Regulus, pay the [***] Exercise Fee as described in Section 6.4.  Notwithstanding the foregoing, in GSK’s sole discretion, it shall have the right to exercise a Program Option prior to the [***] Date by providing Regulus written notice thereof.

 

4.2.3        Terminated Program Option . Subject to GSK’s obligation to pay milestones and royalties pursuant to Section 6.4, subject to Section 6.5.3, Section 6.6.1(d) and Section 6.6.2, GSK shall have the right to exercise its Terminated Program Option for a Program by providing Regulus written notice within an exercise period of [***] days (extendable to [***] days at GSK’s request if made within such initial [***] day period) after the provision of a data package to GSK by Regulus (comparable to the [***] Report) for a terminated Program in accordance with GSK’s Terminated Program Options as described under Section 4.1.1 (the “ Terminated Program Option Report ”); provided , that GSK’s obligation to pay Regulus milestones and royalties shall vary, as set forth in Section 6.4, subject to Section 6.5.3, Section 6.6.1(d) and Section 6.6.2, depending on the stage of Development at which the termination occurred.

 

4.2.4        Program Option Upon Completion of the [***] where the Leading Compound is immediately terminated. If GSK exercises its Program Option in accordance with Section 4.2.2 after Completion of the [***] for a Leading Compound under a Program but immediately terminates the Leading Compound in order to progress a Back-up Compound under the same Program (provided that GSK provides written notice to Regulus of such decision along with or within [***] Business Days of notice of GSK’s exercise of its Program Option), then GSK shall pay Regulus the royalties and milestones in accordance with the applicable [***] provided, however, that, if GSK later undertakes the Development or Commercialization of such terminated Leading Compound, then GSK shall thereafter pay Regulus the applicable royalties and milestones in accordance with the [***] with respect to all Licensed Products under the relevant Program, except that, with respect to any Milestone Event which had already been achieved by a Back-up Compound under such Program for which GSK had already paid Regulus

 

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the relevant milestone payment in accordance with the [***], then, as such terminated Leading Compound (or another Option Compound) achieves such Milestone Event, GSK shall pay to Regulus the difference between the [***] and the [***] with respect to such Milestone Event.

 

4.2.5        Early Program Option Exercise.   For purposes of clarity, upon exercise of any Program Option by GSK hereunder, GSK shall pay Regulus the Program Option Exercise Fee applicable to the exercise of such Program Option (as applicable), in addition to any other milestones and royalties which may be due in the future as a result of the Development and/or Commercialization of the Option Compounds and related Licensed Products by GSK and/or its Affiliates and Sublicensees.  Notwithstanding any of the foregoing, regardless of whether or not the Development activities or stages necessary to trigger a particular Program Option for a Program have been completed or achieved ( e.g. , regardless of whether a Collaboration Compound Developed under a Program has qualified as a Development Candidate or has satisfied the [***] Criteria, or [***] has occurred for such Collaboration Compound), GSK shall have the right, at any time prior to the completion of such Development activities which might otherwise trigger a particular Program Option (but in no event after the end of the Option Period that would otherwise apply with respect to such Program Option), to exercise its Program Option early for such Program by paying Regulus (or its successors or assigns) the Program Option Exercise Fee in accordance with the provisions of Section 6.5.5 depending upon the time at which GSK exercises its Program Option and the remaining milestone and royalty obligations shall be payable in accordance with Section 6.5.5, Section 6.6.1(f) and Section 6.6.2, depending on the time that GSK exercises its Program Option.

 

4.2.6        HSR; Option Period Extension .  In the event that GSK reasonably determines in good faith that the exercise of any Program Option by GSK under this Agreement requires a filing with the Federal Trade Commission and the Department of Justice, as applicable, (collectively, the “ FTC ”) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. §18a) (“ HSR ”), or any successor thereto or under any similar premerger notification provision in the EU or other jurisdiction, GSK shall make such filing [***], and the Option Period applicable to such Program Option shall be extended automatically for [***] from the expiration of the original Option Period (the “ Option Period Extension ”) in the event that: (a) the HSR initial waiting period is still pending upon expiration of the original Option Period; or (b) a “Second Request” that GSK intends to respond to is received from the FTC in connection with such filing and final clearance has not been granted upon expiration of the Option Period; provided, that if the HSR initial waiting period ends during the original Option Period, such Option Period shall be extended for no more than an additional [***] following the end of such HSR initial waiting period.  During such Option Period Extension, all rights and

 

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obligations of the respective Parties related to the exercise of such Program Option or to make any otherwise required Program Option Exercise Fee payment shall be tolled.  In the event that HSR clearance has still not been granted upon expiration of the Option Period Extension, Regulus and GSK shall promptly meet to discuss in good faith whether an additional extension of the Option Period is reasonable, with the presumption being that the Option Period shall be extended for no more than an additional [***] period, unless there is no [***], in which case no such extension shall be granted.

 

4.2.7        Refused Candidates.  If GSK does not exercise its Program Option for a Program when triggered within the applicable Option Period, as may be extended by Section 4.2.6 or by the mutual written agreement of the Parties, and GSK has not exercised its Program Option early pursuant to Section 4.2.5, and does not exercise any of its Terminated Program Options under Section 4.2.3, then such Program Option shall expire with respect to such Program and except if the expired Program Option is a [***] Option (in which event Section 4.2.2(a) shall apply), and then, except if GSK acquires exclusive license rights to the relevant Collaboration Compounds under the applicable termination provisions of Article 12, any Collaboration Compounds resulting from such Program shall be referred to as “ Refused Candidates ” and any Licensed Products having any such Refused Candidate(s) as an active pharmaceutical ingredient(s) as “ Refused Candidate Products ” and GSK shall no longer have any rights with respect to such Refused Candidates and Refused Candidate Products.  Regulus will thereafter have all rights as set forth in Section 12.1.5(c), itself or with a Third Party or through a Sublicensee and without regard to Article 7 (except to the extent set forth in Section 12.1.5(c)), to Develop, Manufacture and Commercialize the Refused Candidates and any Refused Candidate Products at Regulus’ sole expense, and Regulus shall no longer have any obligations with respect to such Refused Candidates and any Refused Candidate Products other than the Reverse Royalty payment obligation to GSK as set forth in Section 6.7 and Section 12.1.5(c).  In addition, Regulus will take responsibility for all licensing costs and payments incurred by GSK after the date that such Collaboration Compounds became Refused Candidates or Refused Candidate Products and that are owed by GSK to Third Parties (excluding any costs that were already due as payable by GSK as of the date that such Collaboration Compounds became Refused Candidates or Refused Candidate Products) as a result of the practice of intellectual property licensed from any such Third Parties in the Development, Manufacture and/or Commercialization of Refused Candidates and Refused Candidate Products hereunder, including, without limitation, all upfront fees, annual payments, milestone payments and royalty payments to the extent allocable to such Refused Candidates and Refused Candidate Products. For clarity, any such costs and payments shall only include the share of such costs and payments

 

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attributable to such Refused Candidates and Refused Candidate Products and not to any other compounds licensed by GSK.  For purposes of clarity, upon reversion of such rights to Regulus with respect to any Refused Candidates or Refused Candidate Products hereunder, such Refused Candidates shall no longer be deemed Option Compounds and/or Collaboration Compounds and such Refused Candidate Products shall no longer be deemed Licensed Products, in each case to which GSK has any rights under this Agreement, except that, upon the exercise by GSK of any Terminated Program Option under Section 4.2.3 or early exercise of a Program Option under Section 4.2.5, this Section 4.2.7 shall not apply.

 

4.2.8        Right to Exercise Program Options for Development Candidates after Expiration of the Research Collaboration Term . For clarity, it is understood and agreed by the Parties that, with respect to each Collaboration Target, GSK’s rights to exercise its Program Option with respect to any Collaboration Compounds that are at the [***] Stage or later but have not yet completed or entered an Early Development Program at the time of expiration of the Research Collaboration Term, shall remain exercisable in accordance with this Article 4 until termination of the last to expire Option Period with respect to such Program, unless such Program is earlier terminated as provided hereunder.

 

4.3  Activities Post-Option Exercise by GSK.

 

4.3.1        Commencement of Activities . As soon as practicable after the exercise by GSK of a Program Option for a Program and receipt from Regulus of the information and materials set forth in Sections 5.3.1 and 5.3.2, GSK shall promptly commence and pursue a program of ongoing Development and Commercialization for the Option Compounds under such Program, in accordance with GSK’s diligence obligations set forth below.  GSK shall be solely responsible for all Development and Commercialization activities, and for all [***] associated therewith, with respect to the Development, Manufacture and Commercialization of Option Compounds and related Licensed Products of a Program, following exercise of its Program Option for such Program.

 

4.3.2        Returned Licensed Products . In the event that GSK exercises its Program Option for a Program and thereafter determines in good faith, for any reason, to cease the Development and Commercialization of all Option Compounds and related Licensed Products, on a Collaboration Target-by-Collaboration Target basis, or GSK’s rights to such Option Compounds and related Licensed Products terminates for any reason other than as a result of the termination of this Agreement by GSK for Regulus’ uncured material breach under Section 12.2 or for Regulus’ insolvency under Section 12.6, or a termination by the JSC [***] for scientific or safety concerns pursuant to Section 12.5, then each Option Compound and related Licensed

 

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Product resulting from such Program shall thereafter be referred to as a “ Returned Licensed Product ”, and GSK shall no longer have any rights with respect to such Returned Licensed Product, except for the right to receive Reverse Royalties under Section 6.7 (except to the extent otherwise expressly set forth in Article 12).  Regulus will thereafter have all rights as set forth in Section 12.7.1, 12.7.2 or 12.7.4, as applicable, itself or with a Third Party or through a Sublicensee and without regard to Article 7, to Develop, Manufacture and Commercialize the Returned Licensed Products at Regulus’ sole expense, and Regulus shall have no obligations with respect to such Returned Licensed Products other than the Reverse Royalty payment obligation to GSK as set forth in Section 6.7 (except to the extent otherwise expressly set forth in Article 12). In addition, Regulus will take responsibility for all licensing costs and payments incurred by GSK after the date that such Collaboration Compounds became Returned Licensed Products and that are owed by GSK to Third Parties (excluding any costs that were already due as payable by GSK as of the date that such Collaboration Compounds became Returned Licensed Products) as a result of the practice of intellectual property licensed from any such Third Party in the Development, Manufacture and/or Commercialization of Returned Licensed Products hereunder, including, without limitation, all upfront fees, annual payments, milestone payments and royalty payments to the extent allocable to such Returned Licensed Product.  For clarity, any such costs and payments shall only include the share of such costs and payments which is attributable directly to such Returned Licensed Products and not to any other compounds licensed by GSK.  For purposes of clarity, upon reversion of such rights to Regulus with respect to any Returned Licensed Products hereunder, such Returned Licensed Products shall no longer be deemed Option Compounds and/or Licensed Product to which GSK has any rights under this Agreement.  For purposes of clarity, upon the exercise by GSK of any Terminated Program Option under Section 4.2.3, or the termination of a Program otherwise under Section 3.4.3 or the early exercise of a Program Option under Section 4.2.5, this Section 4.3.2 shall not apply.

 

4.4  GSK Diligence; Responsibilities .

 

4.4.1        GSK Diligence .  GSK shall exercise its Diligent Efforts in Developing and Commercializing at least one Licensed Product in the Field [***] for each Program for which GSK exercises the Program Option.  For purposes of clarity, (a) GSK shall not be required to Develop and Commercialize, with respect to a Program, more than one Option Compound  resulting from a Program, provided , that GSK exerts its Diligent Efforts to Develop and Commercialize at least one Option Compound resulting from such Program, and (b) following GSK’s exercise of its Program Option for a Program, GSK may, in its sole discretion, substitute the Leading Compound with another Option Compound Developed in the same Program or Develop and Commercialize other Option Compounds resulting from such Program, provided ,

 

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that GSK exerts Diligent Efforts to Develop and Commercialize such Back-up Compound or other Option Compound as the new Leading Compound in a manner that is consistent always with the standard under this Agreement applicable to GSK for its Diligent Efforts.  Notwithstanding the above or any provision or interpretation of this Agreement to the contrary, GSK shall have no obligation to exercise its Diligent Efforts with respect to any Program for which GSK has exercised a Terminated Program Option or which has otherwise been terminated and to which GSK acquires exclusive rights to Develop and Commercialize the Collaboration Compounds resulting from such Program under Article 12.

 

4.4.2        Specific GSK Responsibilities .  Without limiting any of the foregoing, following the exercise of a Program Option for a Program hereunder, GSK shall use its Diligent Efforts to:

 

(a)               conduct all Pre-Clinical Studies and Clinical Studies on the Option Compounds, as deemed necessary or desirable by GSK, in accordance with this Section 4.4.2;

 

(b)               conduct additional formulation Development of the Option Compounds as and if deemed necessary or appropriate by GSK;

 

(c)               provide to the JSC reasonable progress updates at each regular meeting of the JSC on the status of GSK’s Development efforts with respect to the Option Compounds and related Licensed Products;

 

(d)               prepare and file all regulatory filings for the Option Compounds or related Licensed Products, including all NDAs;

 

(e)               Manufacture or have Manufactured (including process development and scale up) all bulk drug substance or drug product material with respect to the Option Compounds and related Licensed Products for ongoing Development and Commercialization requirements, consistent with GSK’s reasonable internal practices, industry standards and all applicable laws and regulations;

 

(f)                own and maintain all NDAs, Regulatory Approvals and other regulatory filings and approvals, and all brands and trademarks for any resulting Licensed Products in the Field in the Territory;

 

(g)               maintain a safety database with respect to all Option Compounds and related Licensed Products Developed and Commercialized by GSK, and report all adverse drug reaction experiences related to such Option Compounds and Lice