STRATEGIC ALLIANCE AGREEMENT

EXHIBIT 10.4
FOIA CONFIDENTIAL TREATMENT REQUESTED

STRATEGIC ALLIANCE AGREEMENT

Between

Sirna Therapeutics, Inc.

&

Glaxo Group Limited and SmithKline Beecham
Corporation, d/b/a/Glaxosmithkline

Effective

March 31, 2006

Execution Version

Strategic Alliance Agreement

This Agreement is entered into on March 31, 2006 (the “Effective Date”) between

Smithkline Beecham Corporation, d/b/a GlaxoSmithKline , a Pennsylvania corporation having its principal place of business at One Franklin Plaza, 200 North 16 ^th Street, Philadelphia, PA 19102, United States , 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 (collectively, “GSK”); and

Sirna Therapeutics, Inc., a Delaware Corporation, having a place of business at 185 Berry Street, Suite 6504, San Francisco, CA 94107 (“Sirna”) (collectively, the “Parties”).

Whereas : Sirna has certain expertise and experience in the research, discovery, and development of certain pharmaceuticals known as siRNAs, which have potential as therapeutics for the treatment of diseases and conditions in humans;

Whereas : GSK has certain expertise in the discovery, research, development and commercialization of pharmaceuticals as therapeutic products for the treatment of diseases and conditions in humans;

Whereas : the Parties now desire to enter into a strategic collaboration and licensing arrangement to form an alliance for the research, development and commercialization of siRNA therapeutics in the Respiratory Field, as described herein;

Whereas : Under the alliance to be formed, Sirna will discover and research and perform pre-development studies on siRNA compounds pursuant to a research collaboration as described herein, and GSK will have exclusive worldwide rights to further develop and commercialize such compounds as products worldwide in the Respiratory Field; and

Whereas: Contemporaneously with the execution of this Agreement, the Parties have executed: a Stock Purchase Agreement (the “Stock Purchase Agreement”).

Now, Therefore, intending to be legally bound, the Parties hereby agree as follows.

1. Definitions

1.1 “Affiliate” means any entity that controls, is controlled by, or is under common control with a Party. An entity “controls” another if it owns more than fifty percent (50%) of the outstanding voting securities of a corporation or entity or has a comparable equity interest in any other type of entity, or has the power by contract or otherwise to direct the management and the policies of a corporation or entity.

1.2 “Allergan Agreement” means a Strategic Alliance Agreement entered into between Sirna and Allergan, Inc., in September 2005, including without limitation any amendments or addendums thereto, to exclusively pursue RNAi-based therapeutics in the Ocular Field.

Execution Version

1.3 “Alliance Manager” has the meaning set forth in Section 2.3(c).

1.4 “Backup Compound” means a [***] * that the JSC has selected as a backup candidate for Development.

1.5 “Candidate Selection” means [***]* activities on a particular [***]*. For the avoidance of doubt, the Candidate Selection milestone event hereunder will be deemed achieved if [***]* activities, such as [***]* studies, are initiated by GSK.

1.6 “Cocktail siRNA Compound” means a composition of matter comprising two or more siRNAs as active ingredients, which composition: (a) is specifically designed against one or more Collaboration Targets and (b) was known as of the Effective Date or is discovered pursuant to the Research Collaboration under this Agreement subsequent to the Effective Date, to be active against such Collaboration Targets in the Respiratory Field.

1.7 “Collaboration Compound” means a Compound, a Cocktail siRNA Compound and/or a Multi-Functional siRNA Compound.

1.8 “Collaboration Target” means a Target which is [***]* target within the Respiratory Field designated by GSK for collaboration under this Agreement in accordance with [***]* hereof and the applicable Program of Work as described in the applicable Schedule under the Research Plan. The Collaboration Targets include all Sirna Targets, all Public Domain Targets and all GSK Targets selected and designated by GSK for inclusion under the Research Plan.

1.9 “Combination Target Compound” means a Target Compound which is either a Cocktail siRNA Compound or a Multi-Functional siRNA Compound that targets (a) at least one [***]* and at least one [***]*, or (b) at least one [***]* and at least one [***]*.

1.10 “Compound” means a composition of matter comprising a single siRNA as an active ingredient, which composition (a) is or was specifically designed against one or more Collaboration Targets and (b) was known as of the Effective Date or is discovered pursuant to the Research Collaboration under this Agreement subsequent to the Effective Date, to be active against such Collaboration Targets in the Respiratory Field.

1.11 “Confidential Information” means all proprietary information disclosed by one Party to another and as further set forth in Section 5.6(e) and Article 10 hereof.

1.12 “Controlled” or “Controls” means, with respect to any material, data, information, know-how, patent or other intellectual property right, that a Party owns, co-owns, or has a license to such material, data, information, or intellectual property right and has the ability to grant a license, or a sublicense to such material, data, information, or intellectual property right to the other Party under this Agreement and its Affiliates and sublicensees for use or application in the Field without violating an agreement with, or infringing any rights of, a Third Party.

Execution Version

1.13 “Cost of Goods” or “COGS” means the cost of resources required to manufacture Collaboration Compound in accordance with this Agreement and/or the terms and conditions of a separate manufacturing and supply agreement to be entered into by the Parties as contemplated by Section 8.2 hereof, calculated in accordance with Sirna’s accounting methods consistently applied, which methodology will be calculated in compliance with U.S. generally accepted accounting principles (GAAP). Cost would include materials, components, [***]* for the manufacture of bulk drug and Compounds. For the avoidance of doubt, Sirna should [***]*.

1.14 A patent “Covers” a composition or method if the patent has not expired and if the composition or method would infringe, but for this Agreement, at least one Valid Claim of the patent and a court or other authority of competent jurisdiction has not held the claim to be invalid or unenforceable. A patent application “Covers” a composition or method if the composition or method would infringe a claim of the application were a patent to issue thereon which recites the claim.

1.15 “Development Plan” means a plan [***] * for the development of a Lead Compound [***]*.

1.16 “Development” means the activities to be conducted [***]*, with the objective of developing and commercializing a [***]* Licensed Product for use and sale in the Respiratory Field [***]*.

1.17 “Drug” means a composition intended for use in the cure, mitigation, treatment, or prevention of disease.

1.18 “Drug Delivery Device” or “DDD” means a mechanical device or apparatus for delivering Target Compound or Licensed Product to a person, which Drug Delivery Device, in the absence of a Drug would have no therapeutic utility and is not ingested.

1.19 “Drug Formulation System” or “DFS” means a substrate, encapsulant or combination of excipients intended to deliver a Target Compound or Licensed Product to a Drug’s site of action in a person, which Drug Formulation System, in the absence of a Drug, would have no therapeutic utility.

1.20 “FDA” means the U.S. Food and Drug Administration, or any Regulatory Authority that is the successor thereto.

1.21 [***]*

1.22 “First Commercial Sale” means in any country, the first sale of a Licensed Product after required Marketing Approvals have been granted by the Regulatory Authority of that country.

1.23 “FTE” means one full time-equivalent research and/or development employee, with qualifications in the relevant field, defined as [***]* scientific hours of effort per year. The FTE

Execution Version

rate will be [***]* to be adjusted upward at a rate of [***]* per year every year on the anniversary of the Effective Date.

1.24 “GSK Drug Delivery Device ” or “ GSK DDD ” means a Drug Delivery System Controlled by GSK independent of Sirna.

1.25 “GSK Drug Formulation System” or “GSK DFS” means a Drug Formulation System Controlled by GSK independent of Sirna.

1.26 “GSK Know-How” means all scientific and technical information, [***]* the assays used to carry out research relating to any of the [***]*, so far as such information is solely developed and Controlled by GSK or its Affiliates and GSK is not prevented by a contractual obligation existing as of the Effective Date from licensing or disclosing such information to Sirna.

1.27 “GSK Patents” means any patent or patent application or allowed claim of a patent application existing as of the Effective Date or arising during and pursuant to the Research Collaboration, which is developed and Controlled by GSK or its Affiliates, that pertains specifically to any Collaboration Target or to any Collaboration Compound, Backup Compounds, or any Lead Compound or Licensed Product, or any GSK DDD or GSK DFS pertaining specifically to any of the foregoing, wherein the practice of subject matter recited in a claim therein is necessary or useful for GSK or Sirna to carry out its activities under this Agreement, and any continuations, continuations-in-part, reissues, reexaminations, or divisionals thereof, and any extensions of term or supplemental protection certificates directed thereto, and all foreign and P.C.T. equivalents and counterparts thereof.

1.28 “GSK Target” means a Target [***] * within the Respiratory Field, [***]* under this Agreement [***]*.

1.29 “GSK Target Compounds” means [***]* from among the [***]* against a given GSK Target [***]* under this Agreement for [***]* identification and progression under Program of Work. In the event that [***]* as set forth under Section [***]*) for inclusion within the GSK Target Compounds, from the relevant [***]* for such GSK Target. For the avoidance of doubt, GSK Target Compounds shall consist of a [***]* against a Collaboration Target at any given time.

1.30 “Investigational New Drug” or “IND” means the application filed with the FDA to obtain authorization from the FDA to administer an investigational drug or biological product to humans in clinical trials.

1.31 “Joint Know-How” means all scientific and technical information, [***]* the assays used to carry out research relating to any of the [***]*, which is developed jointly by the Parties during and pursuant to the Research Collaboration hereunder.

1.32 “Joint Patent” means any patent or patent application or allowed claim of a patent application arising during and pursuant to the Research Collaboration and which, as the result of joint inventorship between the Parties on the subject matter of at least one claim therein, is

Execution Version

Controlled jointly by GSK and Sirna, and any continuations, continuations-in-part, reissues, reexaminations, or divisionals thereof, and any extensions of term or supplemental protection certificates directed thereto, and all foreign and P.C.T. equivalents and counterparts thereof.

1.33 “JSC” means the “Joint Steering Committee” as described in Section 2.3(a).

1.34 “Launch” means in the given country or territory, the point at which [***]*.

1.35 “Lead” means a Collaboration Compound [***]*, based on cell culture experiments, as being active against one or more Collaboration Targets under a Program pursuant to the Research Plan and [***]* for identification of the Lead Compound under the Program [***]* .

1.36 “Lead Compound” means a [***]*, with respect to a particular Collaboration Target [***]* for Development by the JSC. Lead Compound shall [***]*.

1.37 “Lead Compound Criteria” means that set of criteria set forth in [***] * as of the Effective Date, as attached hereto and hereby incorporated by reference, and as may be further specified by a Program of Work under the Research Plan, for the purpose of determining the achievement of a Lead Compound with respect to a particular Collaboration Target.

1.38 “Lead Criteria” means that set of criteria set forth in [***]* as of the Effective Date, as attached hereto and hereby incorporated by reference, and as may be further specified by a Program of Work under the Research Plan, for the purpose of determining the achievement of a Lead with respect to a particular Collaboration Target.

1.39 “Licensed Product” means a [***]* any product which incorporates a [***]*, being progressed for development and commercialization under this Agreement[***]*.

1.40 “Marketing Approval” means all approvals, licenses, registrations or authorizations of any federal, state or local regulatory agency, department, bureau or other governmental entity, necessary for the manufacturing, use, storage, import, transport and sale of a Licensed Product in a regulatory jurisdiction. “Marketing Approval” shall be deemed to occur upon first receipt of notice from a Regulatory Authority that a Licensed Product has been approved for commercial sale. [***]* .

1.41 “Multi-Functional siRNA Compound” means a composition of matter comprising a single double-stranded siRNA as active ingredient, wherein each strand of the siRNA targets a distinct sequence of a gene or genes (a single Multi-Functional siRNA may be designed to target two distinct genes or two regions of a single gene), which composition: (a) is specifically designed against one or more Collaboration Targets and (b) was known as of the Effective Date or is discovered pursuant to the Research Collaboration under this Agreement subsequent to the Effective Date, to be active against such Collaboration Targets in the Respiratory Field.

Execution Version

1.42 “Net Sales” means, with respect to a given period of time, gross sales in such period, less the following deductions from such gross amounts which are actually incurred, allowed or paid, and specifically relate to Licensed Products:

If a Licensed Product is sold in the form of a combination containing i) a Licensed Product and ii) a Drug, Net Sales for such a combination product will be calculated by multiplying actual Net Sales of the combination product by the fraction A/(A+B), where “A” is the average list price of such Licensed Product in the combination when sold separately and “B” is the total list price of such other biologically active component in the combination when sold separately. If the Licensed Product and the other biologically active component are not sold separately, the percentage of the total cost of the combination product attributed to cost of the Licensed Product will be multiplied times the average list price of the combination product to arrive at Net Sales, or alternative method which has been mutually agreed by both Parties.

[***]*

Execution Version

1.43 [***]*

1.44 “Ocular Field” means [***]* .

1.45 “Patent Costs” means the fees and expenses paid to outside legal counsel and other third parties, and investigation, filing, prosecution and maintenance expenses incurred by and on behalf of a Party in connection with the filing, prosecuting, enforcing and maintaining of a patent or application, as evidenced by supporting documentation.

1.46 “Phase IIa Clinical Trial” means a human clinical trial conducted in a targeted patient population for a particular indication and designed to indicate clinical efficacy and safety of a Drug, as well as to obtain an indication of the dosing regimen required, as more fully defined in 21 CFR 312.21(b).

1.47 “Program” or “Program of Work” means [***] *.

1.48 “Proof of Concept” or “PoC” means [***]* .

1.49 “Public Domain Target” means a Target [***]* .

1.50 “Public Domain Target Compounds” means [***]* from among the [***]* against a given Public Domain Target [***]* for Lead Compound identification and progression under a Program of Work. In the event that [***]* Public Domain Target Compounds as set forth under [***]* for inclusion within the Public Domain Target Compounds, from the [***]* resulting from the Program for such Public Domain Target. For the avoidance of doubt, Public Domain Target Compounds shall [***]* .

1.51 “Regulatory Authority” means an agency or regulatory body of any government in the Territory having the authority to regulate the sale, manufacture, marketing, testing and/or pricing of Drugs.

1.52 “Research Collaboration” means, the entire research effort as contemplated under this Agreement, under which Sirna and GSK will conduct their respective activities and carry out their respective obligations pursuant to the Research Plan, but excluding the Development of any Lead Compound (or Target Compound) into a Licensed Product by GSK or the development of any Lead Compound by Sirna under any scenario hereunder wherein Sirna acquires the right to progress the development of such Lead Compound.

1.53 “Research Plan” means, collectively [***]* . The foregoing described in [***]* shall collectively represent the activities to be conducted hereunder for the prosecution of Programs of Work directed against the Collaboration Targets.

1.54 “Research Team” has the meaning set forth in Section 2.3(b)(i).

Execution Version

1.55 “Research Team Leader” has the meaning set forth in Section 2.3(b)(i).

1.56 “Research Term” means [***]* commencing on the Effective Date, unless terminated earlier or extended by the mutual written agreement of the Parties in accordance with the provisions of this Agreement, during which GSK shall [***]* .

1.57 “Respiratory Field” means [***] *.

1.58 “RNAi” or “RNA interference” means, for the purposes of this Agreement, an endogenous biological process wherein siRNA introduced into a cell mediates the degradation of mRNA having sequence complementarity to the siRNA.

1.59 “RNAi Data” has the meaning set forth in Section 7.6.

1.60 “Scientifically and Commercially Reasonable and Diligent Efforts” means those efforts consistent with the exercise of prudent scientific and business judgment, as applied to other research, development and commercialization programs or products or potential products having similar scientific characteristics, similar technical profile and complexities, similar commercial potential and challenges, and with similar development complexities and challenges, within the relevant product lines of GSK and its Affiliates, or Sirna and its Affiliates, as the case may be, respectively, for the Party responsible for conducting such activities. For the avoidance of doubt, this standard shall be applied with respect to the products and programs being progressed by that same Party whose diligence is in question.

1.61 “siRNA” means a synthetic oligonucleotide, such as a short interfering RNA, that mediates RNA interference. siRNA is generally a double stranded oligonucleotide having sequence complementarity to the Target RNA and mediates cleavage of the Target RNA via RNAi. siRNA may be unmodified double stranded RNA or modified double stranded oligonucleotide with one or more chemical modification or double stranded oligonucleotides in which every nucleotide is chemically modified.

1.62 “Sirna Committed Target” shall have the meaning set forth in Section 3.1(e).

1.63 “Sirna Know-How” means all scientific and technical information [***]* the assays and formulations used to carry out research relating to any of the [***]*, so far as such information is solely developed and Controlled by Sirna or its Affiliate(s) and Sirna is not prevented by a contractual obligation existing as of the Effective Date from licensing or disclosing such information to GSK .

1.64 “Sirna Patents” means a) the patents and patent applications Controlled by Sirna or its Affiliate(s) as listed in [***]*, which includes without limitation patents and patent applications licensed from a Third Party; and b) any patent application Controlled by Sirna or its Affiliate(s) that claims priority to any of the foregoing patents and applications; and c) any patent Controlled by Sirna or its Affiliate(s) that issues from any of the applications described in clauses a) or b) above; and d) any patent or patent application arising under the Research Collaboration and

Execution Version

Controlled by Sirna or its Affiliate(s), that pertains to any Collaboration Target or to any Collaboration Compound, Lead, Backup Compounds, or any Lead Compound or Licensed Product or DFS and DDD, wherein the practice of subject matter recited in a claim therein is necessary or useful for GSK or Sirna to carry out its activities under this Agreement; and for any of subparts a) — d) above, any continuations, continuations-in-part, reissues, reexaminations, or divisionals thereof, and any extensions of term or supplemental protection certificates directed thereto, and all foreign and P.C.T. equivalents and counterparts thereof.

1.65 “Sirna Target” means a Target which is [***]* for which Sirna Controls a patent or a patent application or a foreign or P.C.T. equivalent or counterpart thereof, which includes a claim directed to siRNAs or use of siRNAs against such Target, regardless of whether such claim is existing as of the Effective Date, or thereafter during the Research Term; provided, that “Sirna Target” specifically excludes any Sirna Committed Target [***]* .

1.66 “Sirna Target Compounds” means [***]* under this Agreement for Lead Compound identification and progression under Program of Work. [***]*

1.67 “Stock Purchase Agreement” means that certain agreement entered into by and between the Parties on the same date as the Effective Date of this Agreement, and pertaining to the purchase by GSK of certain shares of the common stock of Sirna.

1.68 “Subsequent Year Collaboration Targets” means [***] *.

1.69 “Subsequent Year Sirna Targets” means [***]* .

1.70 “Target” means a protein or combination of proteins encoded by a single gene, the expression of which is (or may potentially be) disrupted by a siRNA, Multi-Functional siRNA Compound or Cocktail siRNA Compound.

1.71 “Target Compounds” means the GSK Target Compounds, the Sirna Target Compounds, the Combination Target Compounds, and/or the Public Domain Target Compounds.

1.72 [***]*

1.73 [***]*

1.74 “Term” shall mean the effective term of the Agreement, as defined in Section 6.1.

1.75 “Territory” means all of the countries and territories of the world.

1.76 “Third Party” means an entity or person other than GSK or one of its Affiliates or Sirna or one of its Affiliates.

1.77 “Third Party License Agreements” means those certain license agreements existing as of the Effective Date to which Sirna is a party as listed in Exhibit D, as appended hereto.

Execution Version

1.78 “Third Party Licensee” means a third party, not an Affiliate, to which a Party licenses its rights to sell Licensed Products.

1.79 “Valid Claim” means a claim within [***]* that has not expired, lapsed, or been cancelled or abandoned, and that has not been donated to the public, disclaimed, or held unenforceable, invalid, or cancelled by a court or administrative agency of competent jurisdiction in an order or decision from which no appeal has been or was timely taken, including without limitation, through opposition, re-examination, reissue or disclaimer.

1.80 “Year One Collaboration Targets” means [***]* .

1.81 “Year One Public Domain Targets” means [***]* .

1.82 “Year One Sirna Targets” means [***] *.

2.1 In General

During the Research Term, the Parties will conduct their respective research activities and obligations, as described in the Research Plan, in furtherance of the Research Collaboration hereunder. The parties will establish a Joint Steering Committee (JSC), as described below, which will determine the content of and approve and amend as necessary the Schedules for Programs for each Collaboration Target. The Research Collaboration will seek to generate Lead Compounds [***]* during the Research Term. In the event one or more Programs are initiated but not completed before the end of the Research Term, subject to Section 3.5 herein, Sirna shall continue all of such initiated Programs until it has completed all of its obligations under such Programs of Work as were approved by the JSC [***]* and the Research Term shall be extended until the date of completion by Sirna of the last of such initiated Programs.

The primary objective of the Research Collaboration is to generate siRNAs for topical delivery to the respiratory tract as Lead Compounds hereunder for use in the Respiratory Field. The [***]* objective of the Research Collaboration will be to generate Lead Compounds against Collaboration Targets which are validated respiratory Targets selected and designated by GSK, with the aim of progressing rapidly to preclinical and clinical development using either a Compound, Cocktail siRNA Compound or Multi-Functional siRNA Compound.

2.2 Responsibilities of the Parties

Execution Version

Execution Version

2.3 Management of the Collaboration .

Execution Version

Execution Version

Execution Version

any Program attached to this Agreement as described in a Schedule to Exhibit A, but does not have the power to amend this Agreement or to amend Exhibit A, or to amend Exhibit B-1 or Exhibit B-2 (other than as Exhibit B-1 and/or Exhibit B-2 may be further defined by a Program).

1) drafting a Program of Work for each Collaboration Target,

2) formulating and executing the specific details of the research in accordance with the deadlines and deliverables in the Research Plan,

3) drafting updates or modifications to the Research Plan at least annually,

4) providing for exchange of data and results and materials relating to the Program of Work, and

5) facilitating a smooth transition at designation of a Lead Compound for the Development phase.

Execution Version

     (a) Each Collaboration Target will be a Sirna Target, Public Domain Target or a GSK Target [***]* for use under the Research Collaboration. GSK shall [***]* by providing written notice on a Target Selection Form (a sample form is attached hereto as Exhibit E), of the identity of each Collaboration Target to the JSC.

          (i) During the first year of the Research Collaboration, GSK shall [***]* .

          (ii) In each of the [***] *.

     (b) Prior to the Effective Date, and at any time thereafter during the Research Term, GSK shall [***]* .

     (c) Sirna will provide to GSK at GSK’s written request and at each meeting of the JSC, on an ongoing basis during the Research
Term [***]* .

     (d) In the event GSK requests that Sirna identify a Multi-Functional siRNA Compound, Combination Target Compound or a Cocktail siRNA Compound, then the Parties shall discuss [***]* by way of example but not a limitation, a Multi-Functional siRNA Compound or a Cocktail siRNA Compound targeting both [***]* and [***]* will constitute a compound against two (2) Collaboration Targets.

     (e) For the purposes of this Agreement, “Sirna Committed Target(s)” shall mean those Targets that, at the relevant time indicated under this Agreement, meet any one of the following criteria:

          [***]*

[***]*

     (a) On a Program by Program basis, GSK shall have an [***]*, exercisable at GSK’s sole discretion, to obtain an exclusive, fully sublicenseable license in the Territory to [***]* the Target Compounds resulting from each Program in the [***]* the Covenant of Exclusivity as described in Section 3.8(b) to apply [***]* the relevant Target Compounds to also include [***]* arising under a given Program for any Collaboration Target. With respect to any Collaboration Target that is a Sirna Committed Target, the rights obtained by GSK [***]* shall be determined in accordance with [***]* . [***]* GSK as described below [***]*, except that the requirements [***]* shall not apply to any GSK Targets, and the [***]* shall be deemed to be [***]* GSK for all GSK Targets [***]*.

     (b) [***]* GSK for any Collaboration Target to the extent that such rights and license are available for Sirna to grant to GSK at the time GSK seeks to exercise such option, by providing written notice to Sirna of its intent [***]*; provided, however, that GSK must provide such notice by the later of [***]* from the date that GSK first designated such Target as a Collaboration Target to the JSC, or [***]* from the date that Sirna first provides [***]* for progression against the relevant Collaboration Target. [***]* any Collaboration Target, GSK shall have the right to

Execution Version

pursue Development of the relevant Lead Compound (or other relevant Target Compounds) against such Collaboration Target into a Licensed Product [***]* the Respiratory Field.

For the avoidance of doubt, upon designating each of the [***]* in accordance with this paragraph, GSK will be deemed to have [***]* with respect to each of such [***]*, and no [***]*; provided however , with respect to [***]*, in the event that [***]* the Respiratory Field with respect to such [***]* Target Compound, then GSK shall have the obligation to [***]* applicable with respect to such Target in order to develop and progress such [***]* Target Compounds [***]* the Respiratory Field against any such [***]*.

          (i) For Target Compounds against [***]*, and subsequent to completion of [***]* activities for a Lead Compound in the Respiratory Field, GSK shall have the right to progress a [***]* such Target Compound against the same Collaboration Target(s) [***] * . At GSK’s request, Sirna agrees to grant GSK a limited nonexclusive, non-sublicensable, non-transferable research license solely to carry out [***]* such Collaboration Targets, certain formulation activities involving [***]* provided such formulation activities [***]* are carried out: (a) solely for the purpose of evaluating [***]* the feasibility of using such Target Compounds [***]*; and (b) after the completion of all activities associated with candidate selection of a Lead Compound milestone for each such Target Compound.

          (ii) On a Program-by-Program basis, with respect to any [***]* for a Lead Compound or other Target Compound [***]* against each of the [***]* the Lead Compounds to GSK against such Target(s) [***]* with respect to such Targets and Target Compounds, including exclusivity on such Targets and Target Compounds [***]*.

     (c) In the event that GSK notifies Sirna in writing of its desire to designate as Collaboration Targets [***]* for Sirna Targets which were Sirna Targets as of the Effective Date [***]* to include such Sirna Targets as Collaboration Targets [***]* (to the extent Sirna has such rights to grant to GSK), but in no event will the [***]* additional Sirna Target exceed [***]*. For clarity, it is understood by the Parties that the limit [***]* described in the previous sentence applies to the total consideration payable by GSK for [***]* the right to designate such [***]* Sirna Target [***]*. GSK may designate such [***]* Sirna Targets [***]* with respect to such [***]* Sirna Targets only during each of the [***]* of the Research Term provided the total number of Collaboration Targets in each such year shall not exceed [***]* Targets.

3.3. Prosecution of Collaboration Targets.

For each Collaboration Target, Sirna will be responsible to use Scientifically and Commercially Reasonable and Diligent Efforts with respect to the goal of identifying [***]* directed to the Collaboration Target, by using its Scientifically and Commercially Reasonable and Diligent Efforts to:

     a) generate [***]* Collaboration Compounds (including Multi-Functional siRNA Compounds and Cocktail siRNA Compounds as may be provided for in the applicable Program of Work) and/or Combination Target Compounds directed against the Collaboration Targets based

Execution Version

on cell culture screening in accordance with the Research Plan. Sirna will promptly notify the JSC upon the generation of Leads against a Collaboration Target(s). Sirna will perform all in vitro research as described in the Research Plan relating to the identification and evaluation of Leads, and will provide to GSK data, results, Target Compounds and assays sufficient to reproduce such research internally. All of the above efforts and activities shall be in accordance with a Program of Work for such Collaboration Target(s) to be established by the JSC, including specific criteria for potency, selectivity, efficacy in reducing expression of the selected Collaboration Target(s), etc .; and

     b) carry out the in vivo experiments attributed to Sirna as set forth under the Research Plan under this Agreement, and to optimize, in relevant animal model systems, the relevant Target Compounds with the goal of generating [***]*. Sirna will perform relevant in vivo research attributed to Sirna as described in the Research Plan relating to the identification and evaluation of the relevant Target Compounds, [***] * . All of the above efforts and activities shall be in accordance with a Program of Work for such Collaboration Target(s) to be established by the JSC, including specific criteria for biological activity, pharmacokinetics, lung tissue residency, etc .; and

     c) design, manufacture, and supply to GSK the relevant Lead Compound [***]*, in the quantities and having the characteristics specified by the Research Plan and Programs of Work and by [***]*; and

     d) design, manufacture, and supply to GSK the relevant Target Compound, in the quantities and having the characteristics and for the purposes specified by the Research Plan and Programs of Work; and

     e) prepare a Program of Work encompassing all of the goals detailed above for approval by the JSC for each Collaboration Target, detailing the activities to be conducted by each Party in order to generate Lead Compounds, which can subsequently be recommended to GSK for progression by GSK for Development [***]* .

3.4 [***]*

     (a) In the event Sirna considers that a given Target Compound [***]* has met [***]* the Lead Compound Criteria and should be deemed a Lead Compound [***]* Sirna will notify GSK in writing in the event Sirna considers that a Target Compound has met [***]* the Lead Compound Criteria and should be deemed a Lead Compound or a Backup Compounds, and GSK will promptly notify the JSC of any GSK Know-How or Joint Know-How generated by GSK from the evaluation of such Target Compounds against the relevant Collaboration Target.

     (b) If the [***]* that a Target Compound [***]* has met [***]* the Lead Compound Criteria, such Target Compound will be deemed to be a Lead Compound [***]* .

     (c) If the JSC [***]*, such Target Compound shall be deemed [***]* a Lead Compound for the purposes of this Agreement. If the JSC [***]* the relevant Target Compound as a Lead

Execution Version

Compound in a case where [***]* the Lead Compound Criteria were met, then the Parties shall [***]* .

     (d) If the [***]* that a Target Compound [***]* against a given Collaboration Target [***]* the Lead Compound Criteria, the applicable Program against such Collaboration Target(s) shall [***]* follow one of the following scenarios:

          (i) The JSC may unanimously agree to direct the Research Team to prepare a [***]* Program of Work for the relevant Collaboration Target(s) to combine the efforts and expertise of both Parties [***]*. Any such [***]* Program of Work shall be submitted for review and approval by the JSC, and if approved, shall be conducted by Sirna or GSK on terms to be mutually agreed upon by the Parties.

          (A) [***] * Program of Work [***]* unanimously agreed by the JSC, GSK may decide, by notice to Sirna given within thirty (30) days of the JSC’s decision, to progress the relevant Target Compounds into Development in the Respiratory Field [***]* optimization of formulations of the Target Compounds. [***]* GSK shall be obligated to pay all the applicable milestones and royalties according to Sections 5.3 and 5.4 hereof, including without limitation payment of Lead Compound Criteria milestone.

          (B) [***]* Program of Work [***]* unanimously agreed by the JSC and GSK decides, by notice to Sirna given within [***]* of the JSC’s decision, to progress the relevant Target Compounds into Development in the Respiratory Field [***]* and significant [***]* efforts of the relevant Target Compounds are required and are carried out by GSK [***]* when the Candidate Selection milestone event is achieved, and such payment [***]* full to the amount due as set forth in [***]*. The Candidate Selection milestone event payment, [***]*, as the case may be, based on the selection of a Compound, or Multifunctional siRNA Compound or Combination Target Compound or Cocktail siRNA Compound, respectively. GSK will also continue to have the obligation to pay all the applicable subsequent milestones if achieved and the applicable royalties for such Target Compounds as set forth in Sections 5.3 and 5.4 hereof.

          [***]* to the research, development or commercialization of any Target Compounds or Licensed Products for that Collaboration Target and, unless GSK decides to progress the relevant Target Compounds further on its own [***]* and all rights that were expressly granted hereunder from Sirna to GSK with respect specifically to such discontinued Collaboration Target(s) and associated Target Compounds shall revert to Sirna without any further obligations to GSK.

     (e) In the event the JSC recommends any Lead Compound for Development by GSK for any Collaboration Target, [***]* initiate or progress the Development hereunder for any Lead Compound or other Target Compound. For the avoidance of doubt, the decision by GSK [***]* the Development of any particular Lead Compound or other Target Compound shall [***]* be deemed or construed in any circumstance under this Agreement [***]* decision by GSK is made in good faith [***]*.

3.5 Sirna’s Development Opportunity

Execution Version

     (a) In the event that, [***]* GSK decides [***]* GSK shall promptly notify Sirna in writing of such decision, and Sirna shall [***]* request in writing a sublicense from GSK under GSK’s exclusive license to such compounds and such Collaboration Target to further develop and/or commercialize such compound. [***]*, the exclusive, worldwide, sublicenseable license rights to the Lead Compound, other Target Compounds or Backup Compounds and the relevant Collaboration Target(s), or, in the alternative, to permit Sirna to progress the Lead Compound, other Target Compounds or Backup Compounds to commercialization as a Licensed Product [***]* . Such [***]* at any time until [***]* is attained by Sirna for the [***]* relevant Lead Compound, other Target Compounds or Backup Compounds as set forth in [***]*.

     (b) In the event that Sirna wishes to acquire a sublicense [***] * GSK shall grant, at GSK’s sole discretion, such a license [***]* taking into account the other provisions of this Agreement and any other ongoing Programs or Development activities with respect to other Collaboration Targets, but not to be unreasonably refused, to permit Sirna to further progress [***]* as a sublicensee of GSK hereunder. It shall be at GSK’s sole discretion [***]* exclusive rights to commercialize [***]* at completion of [***]*, or will permit Sirna to [***]*. In the event that GSK [***]* the Lead Compound, other Target Compounds or Backup Compounds at [***]*, then GSK shall [***]* to Sirna the [***]*. In the event GSK declines or fails to [***]* such compounds, within [***]* of receiving such notification from Sirna, then GSK’s [***]* Lead Compound, other Target Compounds and/or Backup Compounds shall [***]* and Sirna shall [***]* any such agreement [***]* to GSK as set forth in [***]*. Sirna shall however have the right to enter in to discussions [***]* with [***]* regarding partnership of the Lead Compound, other Target Compounds or Backup Compounds at any time after Sirna has [***]* from GSK. On at least a [***]* basis, or at GSK’s request, but in no case more frequently than once [***]*, Sirna agrees to provide [***]* activities against such Lead Compounds, other Target Compounds and/or Backup Compounds. Such [***]* shall include, at a minimum, a summary of [***]* conducted by or on behalf of Sirna, to the extent permitted by applicable law.

     (c) In the event that, after [***]* GSK decides [***]* of any Lead Compound, other Target Compound or Backup Compounds hereunder, either on its own or through an Affiliate or a Third Party sublicensee, then in such case, GSK shall [***]* and Sirna shall [***]* have a period of [***]* to request the right to obtain [***]* GSK’s exclusive license to such compounds and such Collaboration Target to [***]* develop and/or commercialize such compounds [***]* . GSK shall [***]* taking into account the other provisions of this Agreement and any other ongoing Programs or Development activities with respect to other Collaboration Targets [***]* . [***]* shall not have the right to [***]* such Lead Compounds, other Target Compounds or Backup Compounds hereunder.

Research and Development Funding

3.6 (a) Other than as expressly set forth elsewhere in this Agreement, [***]* all of its activities relating to the conduct and performance of the Research Collaboration activities [***]*. Other than as expressly set forth elsewhere in this Agreement, [***]* all of its activities relating to the

Execution Version

[***]* in the applicable Field. In the event that Sirna carries out tasks requested by GSK [***]* in the Program of Work, as exemplified in subsection (b) below, GSK shall [***]* .

            (b) Upon the approval of the JSC (following receipt by the JSC of FTE estimates), Sirna will use its Scientifically and Commercially Reasonable and Diligent Efforts to (i) conduct activities as necessary to identify one or more [***]* against a Collaboration Target that was formerly the subject of a single Program hereunder using [***]* (ii) develop process and analytical development methods for Lead Compounds or other Target Compounds to support IND filing and GMP synthesis, stability studies, and API, and (iii) Sirna will be responsible for release testing and final release of active pharmaceutical ingredient and drug product, if applicable, for which, in each of (i) — (iii), GSK will pay to Sirna research funding on an FTE basis, as specified in Section 1.23 (plus reimbursements for all materials and reagents costs), to compensate Sirna for such work.

            (c) Sirna will not be obligated to carry out activities and identify Target Compounds during any year of the Research Term against more than the maximum number of Collaboration Targets that may be selected with respect to such year nor will Sirna be obligated to carry out any activities outside the Respiratory Field. [***]* GSK desires Sirna to evaluate [***]* Collaboration Targets [***] * or to perform any other activities not specifically set forth in this Agreement or the Research Plan as in effect at the relevant time, then Sirna at its sole discretion may choose to carry out such additional activities on an FTE basis as specified in Section 1.23 (plus reimbursements for materials and reagents costs). Any such activities and the extent of such funding will be based on mutual agreement of the Parties.

Covenant of Exclusivity

3.7 During the Research Term, neither Party will work independently or with any Third Party with respect to the discovery, research, development or commercialization of any siRNA-based compounds in the Respiratory Field.

3.8 (a) Target Exclusivity . For so long as there is any Target Compound or any Licensed Product in [***]* GSK or Sirna or any of their respective Affiliates, sublicensees or permitted assigns at any time during the Term of this Agreement against any Collaboration Target, [***]* either independently or with any Third Party, or [***]* any right or license to [***]* with respect to the discovery, research, development or commercialization of any [***]* Collaboration Target for any [***]* or for any [***]* with respect to any Collaboration Target for which the [***]* subject to the limitations set forth in [***]*.

     (b)  Compound Exclusivity . For so long as there is any Target Compound or any Licensed Product in [***]* GSK or any of its Affiliates, sublicensees or permitted assigns at any time during the Term of this Agreement against any Collaboration Target, [***]* either independently or with any Third Party, or [***]* any right or license to [***]* with respect to, the discovery, research, development or commercialization of any of the [***]* Collaboration Target for any indication in [***]*. In the event that for any given [***]* successfully achieves Lead Compound Criteria milestone [***]* Leads that will be selected by GSK for [***]* Target Compounds, [***]*

Execution Version

Program for such Collaboration Target for the purposes of this Section 3.8(b), and for the purposes of the licenses granted to GSK under Section 4 for Target Compounds, and as otherwise relevant under this Agreement. In the case where the [***]* with respect to such Collaboration Target, the covenant in this paragraph shall apply, in addition to the Target Comp