ROBODESIGN INTERNATIONAL DEVELOPMENT AGREEMENT

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Exhibit 10.46

CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.R.F §§ 200.80(B)4 AND 240.24B-2

ROBODESIGN INTERNATIONAL

DEVELOPMENT AGREEMENT

        This Development Agreement (the "Agreement") is entered into this    day of November, 2003 (the "Effective Date"), by and between RoboDesign International, Inc., a Delaware corporation with its principal place of business located at 5920 Pasteur Court, Carlsbad, CA 92008 ("RoboDesign"), and Isis Pharmaceuticals, Inc., a Delaware corporation with its principal place of business located at 2292 Faraday Avenue, Carlsbad, CA 92008, ("Isis").

R E C I T A L S

        A.    WHEREAS, RoboDesign has developed and is the owner of the copyrights, Patents, trademarks and other intellectual property in certain software and hardware relating to automation motion and vision control, and certain user interfaces to facilitate user intervention with automated devices;

        B.    WHEREAS, Isis, through its Ibis Therapeutics™ program, is designing a biosensor, called Triangulation Identification Genetic Evaluation of biological Risks ("TIGER") as a tool to rapidly and specifically identify and/or detect infectious agents through their unique genomic sequences; and

        C.    WHEREAS, Isis desires to engage RoboDesign to develop certain instrumentation and related software to automate the TIGER detection processes.

        NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

A G R E E M E N T

1.     Definitions.

        1.1   " Affiliate " shall mean any person, joint venture, partnership, corporation, trust, unincorporated organization or other entity which, directly or indirectly, controls, is controlled by, or is under common control with another party.

        1.2    "End User" shall mean the ultimate user of a Tiger 2.0 Instrument in the Field.

        1.3    "Field" shall mean [***.]

        1.4   " Ibis Software " means the software developed by Isis (either alone or in collaboration with a third party) for use in the Prototype and/or the Tiger 2.0 Instrument. Ibis software does not include the Work Software.

        1.5   " Isis Technology " shall mean all Patents, copyrights, copyright applications, trade secrets, trade names, trademarks, formulas, know-how, drawings, sketches, configurations, models, prototypes, machines, designs, software, concepts, schematics, layouts, inventions, processes, and works of authorship owned or controlled by Isis, including without limitation, those related to the biochemical processes used in the TIGER technology and the Ibis Software.

        1.6    "Patent" shall mean (a) patent applications (including provisional applications and applications for certificates of invention); (b) any patents issuing from such patent applications (including certificates of invention); (c) all patents and patent applications based on, corresponding to, or claiming the priority date(s) of any of the foregoing; and (d) any substitutions, extensions (including supplemental protection certificates), registrations, confirmations, reissues, divisionals, continuations, continuations-in-part (but only to the extent claiming subject matter previously disclosed in the parent application), re-examinations, renewals and foreign counterparts thereof.

        1.7    "Prototype" shall mean the initial design and development of a pre-production prototype of the Tiger 2.0 Instrument, which shall include the Work Software and certain RoboDesign Software and may include the Ibis Software. After satisfactory completion of the acceptance tests specified in Sections 2.2, 2.3 and 2.4, the Prototype may be used as a Tiger 2.0 Instrument.

        1.8    "RoboDesign Blocking Technology" shall mean all Patents, copyrights, copyright applications, trade secrets, trade names, trademarks, formulas, know-how, drawings, sketches, configurations, models, prototypes, machines, designs, software, concepts, schematics, layouts, inventions, processes, and works of authorship owned or controlled by RoboDesign (except for the RoboDesign Software and the RoboDesign Architecture) that are necessary to make, use or sell a Tiger 2.0 Instrument.

        1.9    "RoboDesign Architecture" shall mean the techniques of using the RoboDesign Software to define a distributed network of individual machine controllers as a system to support a collective process and to schedule, synchronize, configure, control and monitor the individual machines in order to complete specific process jobs, which RoboDesign has developed, or may develop outside of its tasks under this Agreement, and which can be used, among other ways, to assist in the development of the Work Software and the operation of the Tiger 2.0 Instrument.

        1.10    "RoboDesign Software" shall mean software components including ActiveX controls, class and other library modules, device drivers, and other software objects, relating to automation, motion control, vision systems, image processing, machine control, machine simulation and diagnostics, machine remoting, synchronization and scheduling, machine data collection and visualization, data tracking, recipe and script generation and user interfaces to facilitate user intervention with automated devices, which RoboDesign has developed, or may develop outside of its tasks under this Agreement, and which can be used, among other ways, to assist in the development of the Work Software and the operation of the Tiger 2.0 Instrument. RoboDesign Software does not include the Work Software or the Ibis Software.

        1.11    "Tiger 2.0 Instrument" shall mean the instrument for the automated detection of infectious agents by use of Isis' TIGER technology, as more fully described in the Specifications attached as Exhibit B , or any successor instrument thereto that employs [***.]

        1.12    "Unauthorized Code" means (i) any software routine designed to disable a computer program automatically or under the positive control of a person other than a licensee of the program and (ii) any software routines or hardware components designed to permit unauthorized access to disable, erase, or otherwise harm software, hardware, or data. Unauthorized Code does not include software routines in a computer program, if any, designed to permit RoboDesign to obtain access to the RoboDesign Software or the Work Software to perform its obligations under this Agreement (e.g., remote access via modem).

        1.13    "Work" shall mean all work product, services and information, and all intellectual property rights therein, created or developed by RoboDesign under this Agreement, including without limitation, (i) the Prototype, (ii) Patents, copyrights, copyright applications, trade secrets, trade names, trademarks, moral rights, know-how, drawings, sketches, configurations, models, prototypes, machines, designs, computer files containing designs, concepts, schematics, layouts, inventions, processes, ideas, improvements and works of authorship; (iii) the Work Software, including its source code and design documents, (but not the RoboDesign Software) and related enhancements, upgrades, bug fixes and any derivative works thereof; (iv) operator, user and technical manuals relating to such software; and (v) training materials, guides, specifications, listings and any other information concerning the Prototype. " Work " shall not include (a) the RoboDesign Architecture and the RoboDesign Software, and (b) the Isis Technology (even if such Isis Technology is integrated with any other Work).

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        1.14    "Work Software " shall mean the software developed by RoboDesign hereunder for use in connection with the Tiger 2.0 Instrument. Work Software does not include the RoboDesign Software or the Ibis Software.

        1.15     Other Definitions.     The following other terms are defined as follows:

"Effective Date" shall have the meaning set forth in the Preamble.

"End User License shall have the meaning set forth in Section 4.3.

"Escrow Agreement" shall have the meaning set forth in Section 4.6(a)

"Factory Acceptance Test" shall have the meaning set forth in Section 2.2.

"Release Event" shall have the meaning set forth in Section 4.6(b)

"Site Acceptance Test" shall have the meaning set forth in Section 2.3.

"Specifications" shall have the meaning set forth in Section 2.1.

"Source Code" shall have the meaning set forth in Section 4.6(a).

2.     Product Development.

        2.1     Design & Development of Prototype.     RoboDesign shall use commercially reasonable efforts to design and develop the Prototype, including the Work Software, according to design specifications provided to RoboDesign by Isis and attached as Exhibit B (the "Specifications") within [***] months of the Effective Date.

        2.2     Factory Acceptance Test.     Upon completion of the Prototype, RoboDesign shall conduct the testing set forth on Exhibit C (the "Factory Acceptance Test"), it being acknowledged that the Factory Acceptance Test shall evaluate [***]. If the Prototype fails to satisfy the Factory Acceptance Test requirements, RoboDesign shall, as soon as practicable, modify the Prototype, at [***] to Isis, and again perform the Factory Acceptance Test as needed until the Prototype successfully meets the Factory Acceptance Test requirements. When the Prototype has successfully satisfied the Factory Acceptance Test, RoboDesign shall give Isis written notice thereof and Isis shall take possession of the Prototype as set forth in Section 2.6 below.

        2.3     Site Acceptance Test.     Promptly upon taking possession of the Prototype, Isis shall conduct the testing set forth on Exhibit D (the "Site Acceptance Test"), it being acknowledged that the Site Acceptance Test shall evaluate [***]. If the Prototype fails to satisfy the Site Acceptance Test requirements, RoboDesign shall, as soon as practicable, modify the Prototype, at [***] to Isis, and Isis shall again perform the Site Acceptance Test as needed until the Prototype successfully meets the Site Acceptance Test Requirements. When the Prototype has successfully satisfied the Site Acceptance Test, Isis shall give RoboDesign written notice thereof.

        2.4     Biochemical Acceptance Test.     Promptly upon taking possession of the Prototype, Isis shall conduct the testing set forth on Exhibit E (the "Biochemical Acceptance Test"). If the Prototype fails to satisfy the Biochemical Acceptance Test requirements, RoboDesign shall, as soon as practicable, modify the Prototype (i) at [***] to Isis if the failure to satisfy the Biochemical Acceptance Test is due to the Prototype's failure to meet the Specifications (as updated by mutually agreed change requests under Section 2.7 through the time of such failure) or (ii) at [***] to the extent such modification requires new change requests under Section 2.7 to correct the failure to satisfy the Biochemical Acceptance Test, and Isis shall again perform the Biochemical Acceptance Test as needed until the Prototype successfully meets the Biochemical Acceptance Test Requirements. When the Prototype has successfully satisfied the Biochemical Acceptance Test, Isis shall give RoboDesign written notice thereof.

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        2.5     Development Fee Payments.     Isis agrees to pay to RoboDesign all development fees as set forth on Exhibit F (the "Development Fees") within [***] days of the applicable due date specified on Exhibit F by wire transfer to a bank account designated by RoboDesign or by check payable to RoboDesign. In the event any payment of the Development Fees are not made when due such unpaid Development Fees shall bear interest at the rate of [***]% per month, or the maximum rate as permissible by law, whichever is less. All Development Fees shall be non-refundable.

        2.6     Delivery.     Following satisfactory completion of Factory Acceptance Testing, RoboDesign shall deliver the Prototype to Isis at RoboDesign's facilities in Carlsbad, California. Title and risk of loss shall pass to Isis when Isis takes possession of the Prototype at RoboDesign's facilities. In addition to the Prototype, RoboDesign will deliver to Isis the Work.

        2.7     Change Requests.     In the event Isis requests modifications to the design specifications for the Prototype which are beyond the scope of the original design specifications, RoboDesign agrees to cooperate with Isis to accommodate reasonable changes to such design specifications; provided, however , that if any such changes or alternative or additional design specifications require RoboDesign to invest additional resources (including personnel resources) beyond what is contemplated by the then-current design specifications, or will result in additional costs to RoboDesign, then RoboDesign will provide a quote for such changes and if Isis agrees, RoboDesign will undertake the changes and Isis shall pay per the quote in accordance with the terms defined in Exhibit F. If any Isis change request will impact a delivery schedule previously agreed upon by the parties, RoboDesign shall notify Isis and the parties shall make reasonable and appropriate adjustments to such delivery schedule.

3.     Ownership of Technology.

        Subject to the rights set forth in Section 4 below:

        3.1     Work for Hire.     RoboDesign hereby agrees that all Work has been specially ordered and commissioned by Isis and shall be "works made for hire" for copyright purposes. Isis shall exclusively own all Work, including, without limitation, all Patent, trade secret and copyright rights therein.

        3.2     Assignment.     RoboDesign hereby assigns to Isis, its successors and assigns, all rights, title and interest in and to the Work including, without limitation, the following:

        (a)   any U.S. copyrights that RoboDesign may possess or acquire in the Work and all copyrights and equivalent rights in the Work throughout the world, including all renewals and extensions of such rights that may be secured under the laws now or hereafter in force and effect in the United States of America or in any other country or countries;

        (b)   all rights in and to any inventions, ideas, designs, concepts, techniques, discoveries, or improvements, whether or not patentable, embodied in the Work or developed in the course of RoboDesign's creation of the Work, including, but not limited to, all trade secrets, utility and design Patent rights and equivalent rights in and to such inventions and designs throughout the world, regardless of whether or not legal protection for the Work is sought;

        (c)   any documents, drawings, magnetically or optically encoded media, or other materials created by RoboDesign under this Agreement; and

        (d)   the right to sue for infringements, which may occur before the date of this Agreement, and to collect and retain damages from any such infringements.

        3.3     Further Assistance.     At Isis' expense, RoboDesign shall take all actions and execute and deliver all documents as Isis may reasonably request to effectuate the acknowledgement of ownership herein and vesting of complete and exclusive ownership of the Work in Isis. RoboDesign will provide reasonable assistance to Isis and its attorneys and agents in securing any of the patent or other proprietary rights provided for in this Section 3.3, including to effectuate the acknowledgement of

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ownership contained herein and the vesting of complete and exclusive ownership of the Work in Isis, and to secure, maintain and defend for Isis' own benefit all rights therein, including the right to submit any Patent, copyright or trademark application or registration.

        3.4     Isis Technology.     RoboDesign shall have no right, title or interest in or to the Isis Technology.

4.     Licenses.

        4.1     Grant-Back of License in the Work by Isis.     Isis hereby grants to RoboDesign an irrevocable, perpetual, worldwide, royalty-free, non-exclusive, transferable and assignable license, with the right to sublicense, solely to use, modify, copy, incorporate, create derivative works from, manufacture and have manufactured products incorporating the Work for applications outside the Field.

        4.2     Grant of License in the Isis Technology by Isis.     During the term of this Agreement, Isis hereby grants to RoboDesign a, nonexclusive, nonassignable, nontransferable royalty-free license to use, modify, copy, incorporate, create derivative works from the Isis Technology solely for the purpose of performing RoboDesign's obligations under this Agreement.

        4.3     Software License by RoboDesign.     RoboDesign hereby grants to Isis (i) a non-exclusive, limited license to deliver one (1) copy of the RoboDesign Software (in binary executable form) together with a Tiger 2.0 Instrument to an End User, (ii) a limited right to grant a sublicense to each End User to use one (1) copy of the RoboDesign Software in conjunction with each Tiger 2.0 Instrument only, provided that such sublicense is granted pursuant to an end user license agreement (the "End User License Agreement") with terms no less protective of RoboDesign's rights than those set forth on Exhibit G hereto. The license rights granted under clauses (i) and (ii) of this Section 4.3 are sublicensable, transferrable and/or assignable only to (x) the United States government, (y) a partner of Isis that has agreed to make or commercialize a Tiger 2.0 Instrument, or (z) as permitted under Section 10.9.

        4.4     Unblocking License by RoboDesign.     RoboDesign hereby grants to Isis a non-exclusive, license to practice the RoboDesign Blocking Technology and the RoboDesign Architecture solely to the extent necessary to make, use or sell a Tiger 2.0 Instrument in the Field. This license is sublicensable to End Users and the United States government, and is assignable to a partner of Isis that has agreed to make or commercialize a Tiger 2.0 Instrument or as permitted under Section 10.9.

        4.5     Government Rights.     The licenses granted under this Section 4.1and 4.2 are subject to the rights of the United States Government as set forth in 35 U.S.C. § 200 et seq . If there is any conflict between such rights and the rights granted herein, such government rights will prevail.

        4.6     Source Code Escrow.     

        (a)    Escrow Agreement. If requested by Isis in writing, within 30 days of such request RoboDesign will deliver one (1) copy of the RoboDesign Software incorporated in the Tiger 2.0 Instrument in source code form (the "Source Code") along with documentation as to the applicable use of the RoboDesign Architecture, to an escrow agent to be mutually determined by the parties (the "Escrow Agent"), and at such time, RoboDesign, Isis and the Escrow Agent shall enter into the Escrow Agreement (the "Escrow Agreement"), which shall, among other things, reflect the terms set forth in this Section 4.6. All fees and expenses charged by the Escrow Agent will be borne by Isis.

        (b)    Release Events for Source Code . The Source Code and related documentation shall be released from escrow and delivered to Isis upon the occurrence of one or more of the following events (each, a "Release Event"): (I) if RoboDesign becomes insolvent or admits insolvency or admits a general inability to pay its debts as they become due; (II) if RoboDesign files a petition

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for protection under the Bankruptcy Code of the United States, or an involuntary petition in bankruptcy is filed against RoboDesign and is not dismissed within sixty (60) days thereafter; (III) if RoboDesign or its successor with respect to this Agreement ceases operations as a going concern or (IV) RoboDesign refuses to or is unable to honor the warranty set forth in Section 5.1 or provide post warranty service under Section 5.2.

        (c)    Effect of Release Event . Upon the occurrence of a Release Event and the delivery of the Source Code and related documentation to Isis, Isis shall have right only to use the Source Code and related documentation to maintain and upgrade the software in the Tiger 2.0 Instrument (including those being used by End Users) in accordance with the scope of the License set forth in Section 4.3 and shall have no right to use the RoboDesign Software, the Source Code or related documentation to design, develop, use or market any other products. All right, title and interest in and to the Source Code and all related documentation, and all copyrights, Patents, trademarks, service marks or other intellectual property or proprietary rights related thereto are and shall remain solely with RoboDesign, both prior to and after the occurrence of the Release Event. Isis acknowledges that no other right, title or interest in or to the Source Code or related documentation is granted under this Agreement, and that no such assertion shall be made by Isis either prior to or after the occurrence of the Release Event. Isis shall treat the Source Code and the related documentation as Proprietary Information pursuant to Article 7 below.

5.     Warranties, Indemnity, Limitations of Liability, Insurance

        5.1     Limited Warranty, Warranty Service.     

        (a)   RoboDesign expressly warrants to Isis that the Prototype shall conform with the Specifications and be free from defects in materials and workmanship for a period of [***] months following the date the Prototype satisfac