*Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) 200.83 and 240.24b-2

DEVELOPMENT AND LICENSE AGREEMENT

between

MERCK & CO., INC.

and

ISIS PHARMACEUTICALS, INC.

DEVELOPMENT AND LICENSE AGREEMENT

THIS AGREEMENT is effective as the date of the last party to sign this Agreement (the "Effective Date") between MERCK & CO., INC., a corporation organized and existing under the laws of the State of New Jersey ("MERCK") and ISIS PHARMACEUTICALS, INC. a corporation organized and existing under the laws of the State of Delaware ("ISIS").

RECITALS:

WHEREAS, ISIS has rights in and to ISIS Know-How and ISIS Patent Rights (as the foregoing are hereinafter defined); and,

WHEREAS, MERCK and ISIS desire to enter into an agreement to develop Compound (as hereinafter defined) upon the terms and conditions set forth herein; and,

WHEREAS, MERCK desires to obtain licenses under the ISIS Patent Rights and ISIS Know-How, and the technical assistance of ISIS for the purpose of preparing and manufacturing Compound and Product, upon the terms and conditions set forth herein, and ISIS desires to grant such licenses and such assistance to MERCK.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:

1.1 "Affiliate" shall mean (i) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by MERCK or ISIS; or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds fifty percent (50%) (or the maximum ownership interest permitted by law) or more of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of MERCK or ISIS; or (iii) any corporation or business entity of which fifty percent (50%) or more of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a corporation or business entity described in (i) or (ii).

1.2 "Calendar Quarter" shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.

1.3 "Calendar Year" shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31.

1.4 "Clinical Development Program" shall mean the clinical development activities undertaken by MERCK as set forth in Article II herein

1.5    "Clinical Supply Agreement" shall mean the Clinical Supply Agreement
       entered into by the parties on the Effective Date in the form attached
       hereto as Schedule 1.

1.6    "Combination Product" shall mean a Product which includes one or more
       pharmaceutically active ingredients other than Compound in combination
       with Compound. All references to Product in this Agreement shall be
       deemed to include Combination Product.

1.7    "Compound" shall mean ISIS compounds ISIS 113715 and [ * ] that, as of
       the Effective Date and during the term of this Agreement, i) incorporate
       ISIS Core Technology and ii) target the genetic sequence of PTP-1B
       thereby reducing expression of PTP-1B protein in humans or animals.

1.8    "Compound Improvement" shall mean any and all enhancements, whether or
       not patentable, in the Compound. Compound Improvement shall include
       without limitation pharmaceutical formulations and dosage forms for
       administration discovered or invented solely or jointly by employees of
       MERCK, or acquired by MERCK, during the term of this Agreement. Compound
       Improvement shall not include pharmaceutical formulations or dosage forms
       for administration discovered or invented solely by employees of ISIS, or
       acquired by ISIS, during the term of this Agreement.

1.9    "Core Technology Improvement" shall mean any and all enhancements,
       whether or not patentable, in the ISIS Core Technology arising during the
       term of this Agreement.

1.10   "Field" shall mean the use of Compound and Product for any and all
       purposes.

1.11   "First Commercial Sale" shall mean, with respect to any Product, the
       first sale for end use or consumption of such Product in a country after
       all required approvals, including marketing and pricing approvals, have
       been granted by the governing Regulatory Authority of such country.

1.12   "FTE" shall mean the equivalent of a full-time scientist's work time over
       a twelve-month period (including normal vacations, sick days and
       holidays). The portion of an FTE year devoted by a scientist to the
       Preclinical Development Program, Technology Transfer, Clinical Supply
       Agreement, or any other activities under this Agreement which the parties
       may agree will be undertaken by ISIS on an FTE basis, shall be determined
       by dividing the number of days during any twelve-month period devoted by
       such employee to the Preclinical Development Program, Technology
       Transfer, Clinical Supply Agreement, or any other activities under this
       Agreement which the parties may agree will be undertaken by ISIS on an
       FTE basis, by the total number of working days during such twelve-month
       period (including normal vacations, sick days and holidays).

1.13   "Information" shall mean any and all information and data, including
       without limitation all scientific, preclinical, clinical, regulatory,
       manufacturing, marketing, financial and commercial information and data,
       whether communicated in writing or orally or by any other method, which
       is provided by one party to the other party in connection with this
       Agreement.

1.14   "ISIS Core Technology" shall mean technology owned or acquired by ISIS as
       of the Effective Date which claims, covers or relates to linkages and
       sugar units in an antisense oligonucleotide, wherein such linkages
       include phosphorothioate linkages and such sugar units include a
       combination of deoxy sugar units and 2'-O- (2-methoxy- ethyl)- (MOE-)
       modified sugar units with natural and methyl substituted heterocycle
       bases ("MOE Gapmer Technology"). ISIS Core Technology also includes
       technology owned or acquired by ISIS as of the Effective Date which
       claims, covers or relates to the cellular mechanisms of action by which
       MOE

       Gapmer Technology antisense oligonucleotides exert their effect. ISIS
       Core Technology does not include any target gene specific technology.

1.15   "ISIS Know-How" shall mean any and all information and materials
       including without limitation, Compound, Compound Improvements, ISIS
       Manufacturing Technology, ISIS Core Technology, Manufacturing Technology
       Improvements, Core Technology Improvements, processes, methods,
       protocols, formulas, preclinical, manufacturing and other data,
       discoveries, inventions, know-how and trade secrets, patentable or
       otherwise, which during the term of this Agreement (i) are in the
       possession or control of ISIS or an ISIS Affiliate, (ii) are not
       generally known and (iii) are necessary or useful to MERCK in the Field
       including without limitation the development, manufacture, marketing, use
       or sale of Compound or Product.

1.16   "ISIS Patent Rights" shall mean any and all patents and patent
       applications in the Territory (which for the purposes of this Agreement
       shall be deemed to include certificates of invention and applications for
       certificates of invention) which during the term of this Agreement are
       owned by ISIS or to which ISIS through license or otherwise acquires
       rights which (a) claim, cover or relate to Compound and/or Product
       including without limitation those patents and patent applications which
       (i) are Compound patents and patent applications listed on Schedule 1.16
       (a) (i); or (ii) are ISIS Core Technology patents and patent applications
       listed on Schedule 1.16 (a) (ii) (to the extent that such ISIS Core
       Technology patents and patent applications are necessary or useful to
       Merck in the Field) and patents and patent applications which claim,
       cover or relate to Core Technology Improvements (to the extent that such
       Core Technology Improvement patents and patent applications are necessary
       to Merck to practice effectively in the Field) ; or iii) are ISIS
       Manufacturing Technology patents and patent applications listed on
       Schedule 1.16 (a) (iii) (to the extent that such ISIS Manufacturing
       Technology patents and patent applications are necessary or useful to
       Merck in the Field) and patents and patent applications which claim,
       cover or relate to Manufacturing Technology Improvements, to the extent
       that such Manufacturing Technology Improvement patents and patent
       applications are necessary or useful to Merck in the Field; or (b) are
       divisions, continuations, continuations-in-part, reissues, renewals,
       extensions, supplementary protection certificates, and the like of any of
       the foregoing patents and patent applications and foreign equivalents
       thereof.

1.17   "ISIS Manufacturing Technology" shall mean any and all scientific
       and technical data and information including without limitation formulas,
       methods, techniques, protocols, and processes owned or acquired by ISIS
       or an ISIS Affiliate by license or otherwise as of the Effective Date
       which are necessary or useful to MERCK in the preparation, formulation,
       analysis, manufacturing or delivery of Compound and/or Product for the
       purpose of carrying out or implementing the manufacturing process defined
       generally as the process steps set forth in master batch records for the
       Compound ISIS 113715[ * ] including reasonable variants and extensions of
       process steps thereof.

1.18   "Major Market" shall mean any one of the following countries: United
       States, Japan, the United Kingdom, France, Germany, Italy or Spain.

1.19   "Manufacturing Technology Improvement" shall mean any and all
       enhancements, whether or not patentable, in the ISIS Manufacturing
       Technology arising during the term of this Agreement.

1.20   "Marketing Application" shall mean a New Drug Application (NDA),
       Worldwide Marketing Authorization (WMA), or Marketing Application
       Authorization (MAA) or similar application or submission for marketing
       authorization of a Product filed with a Regulatory Authority including
       without limitation the FDA.

1.21   "Net Sales" shall mean the gross invoice price of Product sold by MERCK,
       its Affiliates or sublicensees (which term does not include distributors)
       to the first independent third party after deducting, if not previously
       deducted, in the amount invoiced:

                                       3

        (a)  trade and quantity discounts other than early pay cash
             discounts;

        (b)  returns, rebate, chargebacks and other allowances;

        (c)  retroactive price reductions;

        (d)  sales commissions paid to third party distributors;

        (e)  a fixed amount equal to [ * ] of the amount invoiced to cover bad
             debt, sales or excise taxes, early payment cash discounts,
             transportation and insurance charges, custom duties, and other
             governmental charges;

        (f)  the standard inventory cost of devices or delivery systems used
             for dispensing or administering Product.

       With respect to sales of Combination Products, Net Sales shall be
       calculated on the basis of the invoice price of Product containing the
       same strength of Compound sold without other active ingredients. In the
       event that Product is sold only as a Combination Product, Net Sales shall
       be calculated on the basis of the invoice price of the Combination
       Product multiplied by a fraction, the numerator of which shall be the
       inventory cost of Compound in the Product and the denominator of which
       shall be the inventory cost of all of the active ingredients in the
       Combination Product. Inventory cost shall be determined in accordance
       with MERCK's regular accounting methods, consistently applied. The
       deductions set forth in paragraphs (a) through (f) above will be applied
       in calculating Net Sales for a Combination Product. In the event that
       Product is sold only as a Combination Product and either party reasonably
       believes that the calculation set forth in this Paragraph does not fairly
       reflect the value of the Product relative to the other active ingredients
       in the Combination Product, the parties shall negotiate, in good faith,
       other means of calculating Net Sales with respect to Combination
       Products.

1.22   "Phase I Clinical Trial" shall mean the first clinical trial in
       humans in any country including without limitation the first clinical
       trial in humans that is intended to evaluate the safety, tolerability,
       pharmacological and/or pharmocokinetic effect of a Compound in human
       subjects or that would otherwise satisfy the requirements of 21 CFR
       312.21(a) or its foreign equivalent.

1.23   "Phase II Clinical Trial" shall mean a human clinical trial in any
       country that is intended to evaluate the effectiveness of a Compound for
       a particular indication or indications in human subjects with the disease
       or indication under study or that would otherwise satisfy the
       requirements of 21 CFR 312.21(b) or its foreign equivalent. Specifically,
       a Phase II (a) Clinical Trial shall mean a clinical trial which is the
       first assessment of efficacy in the target population (and specifically
       does not include a clinical trial in which the sole endpoints relate to
       safety or drug interaction), and a Phase II (b) Clinical Trial shall mean
       a clinical trial which is a definitive dose-ranging study.

1.24   "Phase III Clinical Trial" shall mean a pivotal human clinical trial
       in any country the results of which could be used to establish safety and
       efficacy of a Compound as a basis for a Marketing Application or that
       would otherwise satisfy the requirements of 21 CFR 312.21(c) or its
       foreign equivalent.

1.25   "Preclinical Development Program" shall mean the preclinical
       development activities undertaken by MERCK and/or by ISIS, at the
       direction of MERCK, as set forth in Article II herein and Schedule 2.2
       attached hereto as may be amended by the parties from time to time.

1.26   "Product" shall mean preparation(s) in final form for sale by
       prescription, over-the-counter or any other method for any and all uses
       in the Field which contain Compound including without limitation any
       Combination Product.

1.27   "Regulatory Authority" shall mean any applicable government
       regulatory authority involved in granting approvals for the marketing,
       and/or pricing of a Product in the Territory, including without
       limitation, in the United States, the Food and Drug Administration
       ("FDA"), and any successor government authority having substantially the
       same function, and foreign equivalents thereof.

1.28   "Technology Transfer" shall have the meaning set forth in Section
       7.2.1 herein.

1.29   "Territory" shall mean all of the countries in the world, and their
       territories and possessions.

1.30   "Valid Patent Claim" shall mean a claim of an issued and unexpired
       patent included within the ISIS Patent Rights listed on Schedule 1.16 (a)
       (i) hereto, which has not been revoked or held unenforceable or invalid
       by a decision of a court or other governmental agency of competent
       jurisdiction, unappealable or not appealed within the time allowed for
       appeal, and which has not been disclaimed, denied or admitted to be
       invalid or unenforceable through reissue or disclaimer or otherwise.

2.1      GENERAL. ISIS and MERCK shall undertake the Preclinical Development
         Program activities and MERCK shall undertake the Clinical Development
         activities upon the terms and conditions set forth in this Agreement.

2.2.1    CONDUCT OF PRECLINICAL DEVELOPMENT PROGRAM. a) The activities to
         be undertaken by ISIS and MERCK in the course of the Preclinical
         Development Program shall be at the direction of MERCK, and are set
         forth in Schedule 2.2. Promptly after the Effective Date, the parties
         will jointly develop a more detailed Schedule 2.2 relating to the
         activities, timeline, and budget agreed to in writing by the parties
         for the Preclinical Development Program, such amended Schedule 2.2 to
         be attached hereto and made a part of this Agreement. Schedule 2.2 may
         further be amended from time to time upon prior mutual written
         agreement of the parties. ISIS and MERCK shall conduct the Preclinical
         Development Program in a good scientific manner, and in compliance in
         all material respects with all requirements of applicable laws, rules
         and regulations to achieve the objectives efficiently and
         expeditiously. ISIS and MERCK shall proceed diligently with the work
         set out in Schedule 2.2 using good faith efforts to provide sufficient
         time, effort, equipment, facilities and skilled personnel to accomplish
         the objectives set forth in Schedule 2.2.

         (b) In no event shall ISIS be entitled to utilize the services of any
         third party to carry out its obligation under the Preclinical
         Development Program without the prior written approval of MERCK. ISIS
         and MERCK hereby acknowledge that MERCK has approved the use by ISIS of
         third parties listed in the attached Schedule 2.2.1 (b) for the purpose
         of carrying out certain ISIS' obligations under the Preclinical
         Development Program as indicated in Schedule 2.2.1 (b). Notwithstanding
         such approval by MERCK for the use of third parties as set forth
         herein, ISIS shall remain fully liable for the performance of ISIS'
         obligations under the Preclinical Development Program. Further, where
         ISIS is permitted hereunder to utilize third parties to carry out
         ISIS's obligations under the Preclinical Development Program, ISIS
         hereby warrants that the terms of any and all agreements with such
         third parties applicable to activities under the Preclinical
         Development Program, including without limitation terms relating to
         confidentiality, record keeping and inspection, inventions and
         licensing shall be consistent with the terms of this Agreement between
         ISIS and MERCK. ISIS shall, at MERCK's request, provide MERCK with a
         copy of any such third party agreements. MERCK shall be entitled (but
         shall not be obligated), at its discretion, to assume ISIS' rights and
         responsibilities under such third party agreements applicable to
         activities under the Preclinical Research Program.

                                       5

2.2.2    USE OF PRECLINICAL DEVELOPMENT PROGRAM FUNDING. ISIS shall apply the
         Preclinical Development Program funding it receives from MERCK under
         this Agreement solely to carry out its obligations under Schedule 2.2
         in accordance with the terms of this Agreement and the budget
         established by the parties.

2.2.3    PRECLINICAL DEVELOPMENT PROGRAM PROJECT LEADERS. Each party shall
         appoint one (1) project leader who shall be the primary contact between
         the parties with respect to the Preclinical Development Program and who
         shall each have appropriate technical credentials, experience and
         knowledge, and ongoing familiarity with the Preclinical Development
         Program ("Project Leader"). The Preclinical Development Program shall
         be conducted under the direction of the Project Leaders. The parties
         may seek the advice of additional representatives or consultants from
         time to time, by mutual consent of the parties. In the event that the
         Project Leaders cannot or do not, after good faith efforts, reach
         agreement on an issue, the resolution and/or course of conduct shall be
         determined by MERCK, in its sole discretion, provided that ISIS shall
         not be required, without its prior written consent, to carry out any
         additional work not included in Schedule 2.2, as may be amended by the
         parties.

2.2.4    MEETINGS. The Project Leaders shall meet at least once each month with
         the location for such meetings alternating between ISIS and MERCK
         facilities (or such other locations as is determined by the parties).
         Alternatively, the Project Leaders may meet by means of teleconference,
         videoconference or other similar communications equipment. The Project
         Leaders shall confer regarding the status of the Preclinical
         Development Program, review relevant data, consider and advise on any
         technical issues that arise, consider issues of priority, and review
         and advise on any budgetary and economic matters relating to the
         Preclinical Development Program.

2.2.5    PRECLINICAL DEVELOPMENT PROGRAM RESULTS AND INVENTIONS. ISIS
         shall promptly disclose to MERCK the development, making, conception or
         reduction to practice of all data, information, discoveries, and
         inventions, patentable or not, arising from the Preclinical Development
         Program. All such data, information, discoveries, and inventions
         including without limitations Compound Improvements, patentable or not,
         arising from the Preclinical Development Program shall be the sole and
         exclusive property of MERCK, subject to the provisions of Sections 3.4
         and 7.2.6 with regard to Core Technology Improvements and Manufacturing
         Technology Improvements, respectively. MERCK shall promptly disclose to
         ISIS, prior to filing the relevant patent application, all Core
         Technology Improvements and Manufacturing Technology Improvements
         arising from the Preclinical Development Program which shall be subject
         to the license granted to ISIS hereunder in accordance with the
         requirements of Sections 3.4 and 7.2.6, respectively, in the event that
         such Core Technology Improvements or Manufacturing Technology
         Improvements become patented Core Technology Improvements or patented
         Manufacturing Technology Improvements.

2.2.6    RECORDS. ISIS shall maintain records, in sufficient detail and in good
         scientific manner appropriate for patent and regulatory purposes, which
         shall (a) fully and properly reflect all work done and results achieved
         in the performance of the Preclinical Development Program, and (b)
         permit ISIS to provide the CMC Items listed and attached hereto as
         Schedule 2.2.6 as required by MERCK.

2.2.7    COPIES AND INSPECTION OF RECORDS. MERCK shall have the right,
         during normal business hours and upon reasonable notice, to inspect and
         copy all such records of ISIS referred to in Section 2.2.6 including
         without limitation the CMC Items listed on Schedule 2.2.6 and all
         preclinical information and data necessary or useful for MERCK for the
         purposes of filing with Regulatory Authorities hereunder. MERCK shall
         maintain such records and the information disclosed therein in
         confidence in accordance with Section 4.1. MERCK shall have the right
         to arrange for its employees and/or consultants involved in the
         activities contemplated hereunder to visit the offices and laboratories
         of ISIS and its third party contractors listed in Schedule 2.2.1 (b)
         during normal business hours and upon reasonable notice, and to discuss
         the Preclinical Development Program work and its results in detail with
         the technical personnel and consultants of ISIS.

2.2.8    QUARTERLY REPORTS. Within thirty (30) days following the end of
         each Calendar Quarter during the Preclinical Development Program, ISIS
         shall provide to MERCK, upon MERCK's request, a written progress report
         which shall describe the work performed to date on the Preclinical
         Development Program, evaluate the work performed in relation to the
         goals of the Preclinical Development Program and provide such other
         information required by the Preclinical Development Program or
         reasonably requested by

                                       6

         MERCK relating to the progress of the goals or performance of the
         Preclinical Development Program ("Quarterly Report"). Upon request,
         ISIS shall provide copies of the records described in Section 2.2.6
         above. Further, ISIS shall provide the CMC Items listed in Schedule
         2.2.6 in accordance with the timeline to be agreed to by the parties.

2.2.9    COMPLIANCE. ISIS hereby certifies that it has not and will not employ
         or otherwise use in any capacity any person debarred under Section 21
         USC 335(a) in performing any Preclinical Development Program
         activities.

2.3.1    CLINICAL DEVELOPMENT PROGRAM. MERCK may, at its sole discretion,
         undertake, and shall solely own the results of, the Clinical
         Development Program. MERCK shall have the sole responsibility to make
         any and all regulatory filings for Compound and Product in the
         Territory as MERCK, in its sole discretion, deems appropriate, and
         MERCK shall be the sole owner of all regulatory submissions and
         government approvals therefor. Similarly, MERCK shall have and conduct
         any and all communications and interactions with regulatory agencies
         with respect to the Compound and Product, including without limitation
         Regulatory Authorities, and other government authorities. ISIS shall
         cooperate with MERCK in all of these activities whenever and to the
         extent requested by MERCK, and shall supply MERCK with any and all
         information necessary or useful to MERCK in preparing and filing
         regulatory and other government submissions, and in obtaining
         regulatory and other governmental approvals.

2.3.2    DEVELOPMENT AND COMMERCIALIZATION. MERCK shall use reasonable
         efforts, consistent with the usual practice followed by MERCK in
         pursuing the commercialization and marketing of its other similar
         pharmaceutical products, at its own expense, to develop and
         commercialize a Product on a commercially reasonable basis in such
         countries in the Territory where in MERCK's opinion it is commercially
         viable to do so.

2.3.3    EXCUSED PERFORMANCE. In addition to the provisions of Section
         10.1 hereof, the obligations of MERCK with respect to any Product under
         Section 2.3.2 are expressly conditioned upon the continuing absence of
         any adverse condition or event relating to the safety or efficacy of
         the Product, and the obligation of MERCK to develop or market any such
         Product shall be delayed or suspended so long as in MERCK's opinion any
         such condition or event exists. All judgments as to safety and efficacy
         shall be made by MERCK in its sole discretion.

2.3.4    CLINICAL DEVELOPMENT PROGRAM RESULTS AND INVENTIONS. All data,
         information, inventions and discoveries including without limitation
         Compound Improvements, patentable or not, resulting from the Clinical
         Development Program shall be the sole and exclusive property of MERCK,
         subject to the provisions of Sections 3.4 and 7.2.6 with regard to Core
         Technology Improvements and Manufacturing Technology Improvements,
         respectively.

2.4      REPORTING REQUIREMENTS. ISIS and MERCK hereby agree to comply with the
         reporting requirements set forth in Schedule 2.4 attached hereto, as
         may be amended in writing by the parties from time to time. In the
         event of changes to regulatory reporting requirements worldwide, each
         party agrees to comply with revised notification requirements as
         reasonably requested in writing by the other party. Notwithstanding the
         foregoing, MERCK shall have the sole right to report to the Regulatory
         Authorities any such information relating to the Compound or Product.

ARTICLE III
LICENSE; DISCLOSURE OF INFORMATION

3.1 LICENSE GRANT.

(a) ISIS hereby grants to MERCK an exclusive (exclusive even as to ISIS), sublicensable, royalty-bearing license in the Territory to practice under the ISIS Patent Rights and to utilize the ISIS Know-How to develop, make, have made, use, sell, offer to sell and import Compound and Product in the Field and to otherwise carry out the activities contemplated by this Agreement.

(b) Notwithstanding the foregoing, in the case of ISIS Patent Rights or ISIS Know-How consisting of Core Technology Improvements, MERCK shall be granted an exclusive license to such ISIS Patent Rights and ISIS Know-How in the Field to the extent that such Core Technology Improvements are necessary for MERCK to practice effectively in the Field, and, in the case of such Core Technology Improvements acquired by ISIS from third party(ies) during the term of this Agreement, where such third party rights are sublicensable and MERCK has agreed with ISIS to comply with all obligations relating to such sublicense by ISIS. Further, in the case of ISIS Patent Rights or ISIS Know-How consisting of Manufacturing Technology Improvements acquired by ISIS from third party(ies) during the term of this Agreement, MERCK's shall be granted an exclusive license to such ISIS Patent Rights and ISIS Know-How in the Field where such third party rights are sublicensable and MERCK has agreed with ISIS to comply with all obligations relating to such sublicense by ISIS.

(c) ISIS shall retain the right to practice under the ISIS Patent Rights and to utilize the ISIS Know-How licensed to MERCK hereunder solely as necessary to carry out ISIS' obligations under this Agreement.

(d) For clarification purposes, the parties hereby acknowledge that MERCK shall have no liability or responsibility for, and ISIS shall be fully liable and responsible for, any payments of any kind whatsoever payable by ISIS to its third party licensors of intellectual property licensed to MERCK by ISIS hereunder.

(e) In addition to the representations and warranties set forth in this Agreement, ISIS hereby agrees, with regard to the ISIS Patent Rights licensed from third parties as set forth in Patent Schedule 1.16(a)(ii), to the following terms and conditions:

(i) ISIS warrants that it will take all actions reasonably necessary to maintain the relevant third party licenses in good standing as to the ISIS Patent Rights sublicensed to MERCK under this Agreement; and

(ii) ISIS shall make all reasonable efforts to notify MERCK as soon as practicable of any notice given or received by ISIS to terminate such third party license(s), and, in the event that such third party license(s) should be terminated for any reason, make all reasonable efforts to obtain for MERCK the right to directly license with the relevant ISIS' third party licensor(s) for the rights sublicensed to MERCK hereunder as of the Effective Date; and,

(iii) In the event that MERCK, due to termination of the relevant license between ISIS and its third party licensor, enter into a direct license with such third party licensor, MERCK shall be entitled to deduct any payments payable by MERCK to such third party licensor from payments due to ISIS under this Agreement.

3.2 NON-EXCLUSIVE LICENSE GRANT. In the event the development, making, having made, use, sale or import by MERCK, its Affiliates and/or sublicensees of Compound (or Product, due to its incorporation of Compound) would infringe during the term of this Agreement a claim of issued letters patent which ISIS owns or has the rights to license and which patents are not covered by the grant in Section 3.1, ISIS hereby grants to MERCK, to the extent ISIS is legally able to do so, a non-exclusive, royalty-free, sublicensable license in the Territory under such issued letters patent solely for MERCK to develop, make, have made, use, sell, offer for sale or import Compound and Product in the Field in the Territory.

3.3 DISCLOSURE OF INFORMATION. During the term of this Agreement, ISIS shall promptly disclose to MERCK in English and in writing on an ongoing basis all ISIS Know-How and other useful information not previously disclosed.

3.4 CORE TECHNOLOGY IMPROVEMENTS. The entire right, title, and interest in and to all Core Technology Improvements, patentable or not, developed or invented solely by employees of ISIS during the term of this Agreement shall be the sole and exclusive property of ISIS, subject to the licenses granted to MERCK under this Agreement. The entire right, title, and interest in and to all Core Technology Improvements, patentable or not, developed or invented solely by employees of MERCK during the term of this Agreement shall be the sole and exclusive property of MERCK, and MERCK hereby grants to ISIS a

worldwide, non-exclusive, sublicensable, royalty-free license to any such patented sole MERCK Core Technology Improvements solely for use outside of the Field. The entire right, title, and interest in and to all Core Technology Improvements, patentable or not, developed or invented jointly by employees of ISIS and MERCK during the term of this Agreement shall be the joint property of ISIS and MERCK, subject to the licenses granted to MERCK under this Agreement. The parties shall promptly disclose to each other the development, making, conception or reduction to practice of all Core Technology Improvements.

3.5 COMPOUND IMPROVEMENTS. The entire right, title, and interest in and to all Compound Improvements, patentable or not, developed or invented solely or jointly by employees of ISIS and/or MERCK during the term of this Agreement shall be the sole and exclusive property of MERCK. ISIS shall promptly disclose to MERCK the development, making, conception or reduction to practice of all Compound Improvements.

3.6 TARGET EXCLUSIVITY. ISIS hereby agrees that, until such time as the approval of the first marketing application for a Compound in a Major Market pursuant to this Agreement, ISIS will work exclusively (even as to ISIS itself) with MERCK with regard to any and all activities for the research, discovery, development and/or commercialization of antisense compounds and products that target the genetic sequence of PTP-1B.

ARTICLE IV

CONFIDENTIALITY AND PUBLICATION

4.1 NONDISCLOSURE OBLIGATION. All Information disclosed by one party to the other party hereunder shall be maintained in confidence by the receiving party and shall not be disclosed to a non-party or used for any purpose except as set forth herein without the prior written consent of the disclosing party, except to the extent that such Information:

(a) is known by recipient at the time of its receipt, and not through a prior disclosure by the disclosing party, as documented by business records;

(b) is properly in the public domain;

(c) is subsequently disclosed to a receiving party by a third party who may lawfully do so and is not under an obligation of confidentiality to the disclosing party;

(d) is developed by the receiving party independently of Information received from the other party;

(e) is disclosed to governmental or other regulatory agencies by either party in order to obtain patents or by MERCK to gain approval to conduct clinical trials or to market Product, but such disclosure may be only to the extent reasonably necessary to obtain patents or authorizations;

(f) is deemed necessary by MERCK to be disclosed to MERCK sublicensees, agents, consultants, Affiliates and/or other third parties for the development, manufacturing and/or marketing of the Product (or for such parties to determine their interest in performing such activities) in accordance with this Agreement on the condition that such third parties agree to be bound by the confidentiality obligations contained this Agreement, PROVIDED the term of confidentiality for such third parties shall be no less than seven (7) years; or

(g) is required to be disclosed by law or court order, provided that notice is promptly delivered to the other party in order to provide an opportunity to challenge or limit the disclosure obligations.

4.2 PUBLICATION. MERCK shall be entitled to publish on the subject matter of this Agreement, PROVIDED THAT, MERCK shall deliver to ISIS a copy of any proposed publication or an outline of any oral disclosure involving ISIS Manufacturing Technology or ISIS Core Technology at least sixty
(60) days prior to submission for publication or presentation, and ISIS shall have the right to request a reasonable delay in such publication or presentation in order to protect patentable information. If ISIS requests a delay, MERCK shall delay submission or presentation for a period of up to thirty (30) days after such planned submission date to enable patent applications to be filed by ISIS in accordance with Article VIII below.

Upon expiration of such thirty-day (30)period, MERCK shall be free to proceed with the publication or presentation. Further, MERCK hereby agrees to provide ISIS, for informational purposes only, with a copy of any proposed MERCK publication involving the Compound once such proposal has been submitted for publication. ISIS shall be permitted to publish on matters relating to the Compound or Product during the term of this Agreement including without limitation any ISIS Know-How only upon the prior written approval of MERCK, which may be given at MERCK's sole discretion. Notwithstanding the foregoing, MERCK acknowledges that, prior to the Effective Date, ISIS and its third party research collaborator(s) have generated data relating to the Compound that ISIS is contractually required to permit such third party research collaborator(s) to publish or present during the term of this Agreement. ISIS agrees to provide MERCK, in advance of the proposed publication or presentation, with copies of any such proposed publication or presentation intended for publication or presentation during the term of this Agreement, and ISIS warrants to MERCK that ISIS shall not grant such third party collaborators any rights to publish or present such data beyond the rights ISIS is contractually required to grant such third parties as of the Effective Date, and in no case shall ISIS grant such third parties any rights to publish or present data which could negatively impact Compound or Product.

4.3 PUBLICITY. No disclosure of the existence of, or the terms of, this Agreement may be made by either party, and no party shall use the name, trademark, trade name or logo of the other party or its employees in any publicity, news release or disclosure relating to this Agreement, or its subject matter, without the prior express written permission of the other party, except as may be required by law.

ARTICLE V

PAYMENTS; ROYALTIES AND REPORTS

5.1 PROGRAM FUNDING. a) In consideration for ISIS' performance of certain preclinical development activities in connection with the Compound as of [ * ] such reimbursement to take place within thirty (30) days of the Effective Date and upon receipt of invoice from ISIS. In consideration for ISIS' performance of certain preclinical development activities in connection with the Compound [ * ] for the performance of such activities, such reimbursement to take place within thirty (30) days of receipt of invoice from ISIS. [ * ]

b) In consideration for ISIS' performance of its obligations under the Preclinical Development Program, upon the terms and conditions contained herein, MERCK shall pay ISIS for such performance in accordance with the requirements of Schedule 2.2. The FTE rate for Preclinical Development Program work performed directly by ISIS shall be [ * ] per FTE for any of the following activities undertaken directly by ISIS pursuant to the Preclinical Development Program: drug substance manufacturing; analytical chemistry; process chemistry; formulation; raw material ordering and handling; quality control; or manufacturing technology transfer. The FTE rate for Preclinical Development Program work performed directly by ISIS shall be [ * ] per FTE for any of the following activities undertaken pursuant to the Preclinical Development Program: toxicology; pharmocokinetics/metabolism; regulatory; clinical development and data management. MERCK shall reimburse ISIS for payments to third parties who have been approved by MERCK to conduct the Preclinical Development Program activities hereunder. ISIS shall invoice MERCK [ * ] for the amounts payable in accordance with Schedule 2.2. Payments under this Section. 5.1 (b) shall be due thirty (30) days after receipt of each invoice by MERCK. With each [ * ] invoice after the first [ * ] invoice provided to MERCK under this Paragraph, ISIS will provide MERCK with copies of third party invoices supporting the invoice amounts charged to MERCK in the prior [ * ] invoice to MERCK, and ISIS will make any adjustments for overpayment or underpayment therein. If one party is owing the other party as result of such reconciliation process, the owing party will issue a payment to the other party within thirty (30) days. Total payments under this Section shall not exceed [ * ] without the prior written approval of MERCK for performance of activities under Schedule 2.2.

c) In connection with the Technology Transfer efforts by ISIS hereunder, ISIS shall utilize [ * ] In consideration for ISIS' performance of its obligations under the Technology Transfer, upon the terms and conditions contained herein, MERCK shall pay ISIS for such performance in accordance with the

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requirements of Article VII herein and Schedule 7. 2. ISIS shall invoice MERCK, [ * ] for all activities performed in accordance with Article VII and the Schedule 7.2. Such invoice shall itemize the activities as set forth in Schedule 7.2. Merck will pay each invoice within thirty (30) days after receipt of invoice and all relevant documentation.

d) In consideration of ISIS' performance of CMC activities in connection with the Compound as set forth in Schedule 2.2.6, and other Compound-specific activities including without limitation specifications development for in-process and release testing of Compound and formulated Compound (including standards, stability programs, and formulation development) and other activities requested by MERCK in support of registration efforts and in response to regulatory questions and regulatory inspections, where the foregoing activities are required under this Agreement but fall outside ISIS' activities pursuant to the Preclinical Development Program, Technology Transfer and [ * ] MERCK shall compensate ISIS for such performance at the FTE rate of [ * ] for any of the following activities undertaken directly by ISIS:
analytical chemistry; process chemistry; formulation; drug substance manufacturing, raw material ordering and handling; or manufacturing technology transfer; and, at the FTE rate of [ * ] for the following activities performed directly by ISIS under this Paragraph (d): toxicology; pharmocokinetics/metabolism; regulatory; clinical development and data management.

Further, where ISIS undertakes other activities such as analytical methods development for raw materials, API, drug product testing and release, and process development in connection with other phosphorothioate 2' deoxyoligonucelotides and MOE Gapmer Technology drugs which support the activities of ISIS with regard to Compound as required pursuant to this Agreement, MERCK will compensate ISIS [ * ] The FTE rate shall be [ * ] for any of the following activities undertaken directly by ISIS pursuant to this
Section 5.1 (d): analytical chemistry; process chemistry; formulation; drug substance manufacturing, raw material ordering and handling; or manufacturing technology transfer. The FTE rate shall be [ * ] per FTE for any of the following activities undertaken by ISIS pursuant to this Section 5.1 (d); toxicology; pharmocokinetics/metabolism; regulatory; clinical development and data management.]

5.2 CONSIDERATION FOR RESEARCH FUNDING. [ * ]

5.3 MILESTONE PAYMENTS.

a) Subject to the terms and conditions of, and during the term of, this Agreement, MERCK shall pay to ISIS [ * ] each, each such milestone payable only once, upon satisfactory performance of the Preclinical Development Program activities in accordance with the requirements of Schedule 2.2 as Schedule 2.2 may be amended by mutual agreement of the parties. The Preclinical Development milestones set forth in this
Section 5.3 (a) shall become payable [* ] Notwithstanding the foregoing, in the event that MERCK provides ISIS with a notice of Agreement termination in accordance with the terms of Article 9 herein prior to any such anniversary date, any milestone payment for a milestone achieved during [ * ] and MERCK shall have no obligation to make any such milestone payment to ISIS.

b) Subject to the terms and conditions of, and during the term of, this Agreement, MERCK shall pay to ISIS the following Development milestone payments with respect to each Compound in development for diabetes, each milestone payment to be made no more than once with respect to such Compound:

(i) [ * ]

(ii) [ * ]

(iii) [ * ]

(iv) [ * ]

(v) [ * ]

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c) Subject to the terms and conditions of, and during the term of, this Agreement, MERCK shall pay to ISIS the following Development milestone payments with respect to each Compound for obesity, each milestone payment to be made no more than once with respect to each such Compound:

(i) [ * ]

(ii) [ * ]

(iii) [ * ]

MERCK shall notify ISIS in writing within thirty (30) days upon the achievement of each Development milestone set forth in Sections 5.3 (b) and (c), such notice to be accompanied by payment of the appropriate milestone payment. The milestone payment shall be payable only upon the initial achievement of such milestone and no amounts shall be due hereunder for subsequent or repeated achievement of such milestone. Should the development of a Compound for an indication be discontinued, any Development milestone payment(s) previously paid hereunder for a Compound for such indication shall not be payable by MERCK for any other Compound developed by MERCK hereunder for the same indication. In the event that MERCK achieves any Developmental Milestone set forth in Sections 5.3 (b) or (c) without having achieved prior Developmental Milestone(s) set forth in the relevant Section for the same indication, Merck shall be obligated to pay all such prior Developmental Milestones not previously paid, upon achievement of such subsequent Developmental Milestone for the same indication.

5.4.1    ROYALTIES PAYABLE BY MERCK. Subject to the terms and conditions
         of, and during the term of, this Agreement, MERCK shall pay to ISIS
         royalties in an amount equal to:

         (a)   [ * ] of the aggregate annual worldwide Net Sales of each
               Product by MERCK, its Affiliates or sublicensees where such
               aggregate annual worldwide Net Sales are less than [ * ] as set
               forth below, provided the sale of the Product would, but for the
               license hereunder, infringe a Valid Patent Claim in the country
               of sale, or

         (b)   [ * ] of the aggregate annual worldwide Net Sales of each
               Product by MERCK, its Affiliates or sublicensees where such
               aggregate annual worldwide Net Sales are equal to or greater than
               [ * ] as set forth below, provided the sale of the Product would,
               but for the license hereunder, infringe a Valid Patent Claim in
               the country of sale, or

         (c)   For Net Sales of Products by MERCK, its Affiliates or
               sublicensees other than those covered by Subsection 5.4.1. (a) or
               5.4.1 (b), the royalty rate shall be [ * ] but in no event shall
               such royalty pursuant to this Subsection 5.4.1 (c) [ * ]

         Royalties on each Product at the rate set forth above shall be
         effective as of the date of First Commercial Sale of Product in a
         country and shall continue until either (i) the expiration of the last
         applicable patent on such Product in such country in the case of sales
         under Subsection 5.4.1(a) and (b), [ * ] in the case of sales of
         Product under Subsection 5.4.1(c) above. Notwithstanding the foregoing,
         under Subsection (ii) of this Paragraph, [ * ] However, in no event
         shall such pass through royalties be payable by Merck after such ISIS'
         royalty obligations to such third party licensor(s) have terminated.
         Royalty payments pursuant to Subsection 5.4.1 are subject to the
         following conditions:

         (x)   that only one royalty shall be due with respect to the same
               unit of Product;

         (y)   that no royalties shall be due upon the sale or other transfer
               among MERCK, its Affiliates or sublicensees, but in such cases
               the royalty shall be due and calculated upon MERCK's or its
               Affiliate's or its sublicensee's Net Sales to the first
               independent third party; and (z) no royalties shall accrue on the
               disposition of Product in reasonable quantities by MERCK,
               Affiliates or its sublicenses as samples (promotion or otherwise)
               or as donations (for example, to non-profit institutions or
               government agencies for a non-commercial purpose).

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In the event that MERCK sells Product for end use or consumption prior to receiving all required approvals from the governing Regulatory Authority of the country of sale, including without limitation for compassionate use purposes, the first such sale for end use or consumption of such Product in such country shall be deemed a First Commercial Sale hereunder for the purpose of establishing the effective date for the initiation of payment of royalties in such country as set forth above, however, [ * ]set forth in Section (ii) above shall commence upon the date of First Commercial Sale after all required approvals have been granted, as set forth in Section 1.11 of this Agreement.

[ * ]

5.4.2    ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is understood
         by the parties that MERCK may sell Product to an independent third
         party (such as a retailer or wholesaler) and may subsequently perform
         services relating to Product and other products under a managed
         pharmaceutical benefits contract or other similar contract. In such
         cases, it is agreed by the parties that Net Sales shall be based on the
         invoice price to such independent retailer or wholesaler, as set forth
         in Section 1.21, notwithstanding that MERCK or its Affiliates may
         receive compensation arising from the performance of such services.

5.4.3    CHANGE IN SALES PRACTICES. The parties acknowledge that during the term
         of this Agreement, MERCK's sales practices for the marketing and
         distribution of Product may change to the extent to which the
         calculation of the payment for royalties on Net Sales may become
         impractical or even impossible. In such event the parties agree to meet
         and discuss in good faith new ways of compensating ISIS to the extent
         currently contemplated under Section 5.4.1.

5.4.4    ROYALTIES FOR BULK FORMULATED COMPOUND. In those cases where MERCK
         sells bulk formulated Compound, rather than Product in packaged form,
         to an independent third party, the royalty obligations of this Article
         V shall be applicable to the bulk formulated Compound.

5.4.5    COMPULSORY LICENSES. If a compulsory license is granted to a third
         party with respect to Product in any country in the Territory with a
         royalty rate lower than the royalty rate provided by Section 5.4.1.,
         then the royalty rate to be paid by MERCK on Net Sales in that country
         under Section 5.4.1 shall be reduced to the rate paid by the compulsory
         licensee.

5.4.6    THIRD PARTY LICENSES. In the event that one or more patent
         licenses from other third parties are required by MERCK, its Affiliates
         and sublicensees to practice the ISIS Patent Rights or to utilize the
         ISIS Know-How in order to develop, make, have made, use, import, offer
         to sell or sell Compound (or Product, due to the incorporation of
         Compound) (hereinafter "Third Party Patent Licenses"). [ * ] In the
         event that MERCK acquires patent license(s) from third parties pursuant
         to this Subsection 5.4.6, and such license(s) are both sublicensable,
         and useful outside the Field, MERCK hereby grants ISIS a non-exclusive,
         royalty-free sublicense under such patent license(s) solely for use
         outside the Field, such sublicense to be subject to the obligations of
         such third party license(s) to MERCK. ]

5.5      REPORTS; PAYMENT OF ROYALTY. During the term of the Agreement following
         the First Commercial Sale of a Product, MERCK shall furnish to ISIS a [

* ] written report for the [ * ] showing the Net Sales of all Products subject to royalty payments sold by MERCK, its Affiliates and its sublicensees in the Territory during the reporting period and the royalties payable under this Agreement. MERCK shall provide ISIS, for ISIS' convenience, [ * ] Reports of actual information as required in this Subsection 5.5 above shall be due on the [ * ] following the close of each [ * ] Royalties shown to have accrued by each such [ * ] royalty report shall be due and payable on the date such royalty report is due [ * ] following the close of each [ * ] MERCK shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined.

5.6 AUDITS.

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(a) Upon the written request of ISIS and not more than once in each Calendar Year, MERCK shall permit an independent certified public accounting firm of nationally recognized standing selected by ISIS and reasonably acceptable to MERCK, at ISIS's expense, to have access during normal business hours to such of the records of MERCK as may be necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty-four (24) months prior to the date of such request. Such records shall consist of the Net Sales figure for each Product, and the Coefficient for each Product, as reported on a quarterly basis within MERCK's internal worldwide accounting system. The accounting firm shall disclose to ISIS only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to ISIS.

(b) If such accounting firm correctly concludes that additional royalties were owed during such period, MERCK shall pay the additional royalties within thirty (30) days of the date ISIS delivers to MERCK such accounting firm's written report so correctly concluding. The fees charged by such accounting firm shall be paid by ISIS [ * ]

(c) MERCK shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to MERCK, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by ISIS's independent accountant to the same extent required of MERCK under this Agreement.

(d) Upon the expiration of [ * ] months following the end of any year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon ISIS, and MERCK and its sublicensees shall be released from any liability or accountability with respect to royalties for such year.

(e) ISIS shall treat all financial information subject to review under this Section 5.6 or under any sublicense agreement as MERCK Information in accordance with the confidentiality and non-use provisions of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with MERCK and its sublicensees obligating such accounting firms to retain all such financial information in confidence pursuant to such confidentiality and non-use provisions.

5.7 PAYMENT EXCHANGE RATE. All payments to be made by MERCK to ISIS under this Agreement shall be made in United States dollars and may be paid by check made to the order of ISIS or bank wire transfer in immediately available funds to such bank account in the United States designated in writing by ISIS from time to time. In the case of sales invoiced in a foreign currency, exchange conversion of such sales into United States dollars shall be made on a monthly basis and shall be made at the rate of exchange utilized by MERCK in its worldwide accounting system prevailing on the third to the last business day preceding the month in which sales are recorded by MERCK.

5.8 INCOME TAX WITHHOLDING. If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article V, MERCK shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Article V. MERCK shall submit appropriate proof of payment of the withholding taxes to ISIS within a reasonable period of time.

ARTICLE VI

REPRESENTATIONS, WARRANTIES AND INDEMNITY

6.1 REPRESENTATION AND WARRANTY. ISIS represents and warrants to MERCK that, as of the date of this Agreement:

(a) to the best of ISIS' knowledge, the ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology and ISIS Know-How are subsisting and are not invalid or unenforceable, in whole or in part;

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(b) it has the full right, power and authority to enter into this Agreement, to perform the Preclinical Development Program and Technology Transfer, and to grant the licenses granted under Article III hereof;

(c) it has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology or ISIS Know-How in a manner that would interfere with ISIS' ability to grant the licenses granted to MERCK under this Agreement;

(d) it is the sole and exclusive owner of the Compound and the patent applications claiming Compound set forth in Schedule 1.16
(a) (i) herein, and has the rights in and to the ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology and ISIS Know-How necessary and sufficient to grant to MERCK the rights licensed to MERCK under this Agreement all of which are free and clear of any liens, charges and encumbrances, and no other person, corporate or other private entity, or governmental entity or subdivision thereof, has or shall have any claim of ownership with respect to the ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology and ISIS Know-How licensed to MERCK under this Agreement that would interfere with the licenses granted to MERCK under this Agreement, whatsoever;

(e) to the best of ISIS' knowledge, the licensed ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology and ISIS Know-How and the development, manufacture, use, sale and import of Compound and Product do not interfere with or infringe any intellectual property rights owned or possessed by any third party;

(f) there are no claims, judgments or settlements against or owed by ISIS or pending or threatened claims or litigation relating to the ISIS Patent Rights, ISIS Core Technology, ISIS Manufacturing Technology or ISIS Know-How; and

(g) ISIS has disclosed to MERCK all reasonably relevant information regarding ISIS Patent Rights, ISIS Manufacturing Technology, ISIS Core Technology and ISIS Know-How licensed under this Agreement, including all patent opinions obtained by ISIS related thereto.

6.2 INDEMNITY. a) ISIS shall indemnify, defend and hold MERCK and its Affiliates, and their respective directors, officers, employees and agents harmless against any and all losses, costs, liabilities and expenses (including reasonable attorneys' fees), actions, suits, claims, demands and prosecution that may be brought or instituted to the extent based upon or arising out of i) the negligence or willful misconduct of ISIS under this Agreement, or ii) the material breach by ISIS of any warranty, representation or obligation of ISIS under this Agreement.

b) MERCK shall indemnify, defend and hold ISIS and its Affiliates, and their respective directors, officers, employees and agents harmless against any and all losses, costs, liabilities and expenses (including reasonable attorneys' fees), actions, suits, claims, demands and prosecution that may be brought or instituted to the extent based upon or arising out of i) the negligence or willful misconduct of MERCK under this Agreement, ii) the material breach by MERCK of any warranty, representation or obligation of MERCK under this Agreement, or iii) the use, manufacture or sale by MERCK of Compound or Product.

ARTICLE VII

CLINICAL SUPPLY AND TECHNOLOGY TRANSFER

7.1 CLINICAL SUPPLY. ISIS hereby agrees to supply MERCK with its worldwide requirements for API, Intermediate Compound, Placebo and Clinical Product (as the foregoing terms are defined in the Clinical Supply Agreement) in accordance with the terms of the Clinical Supply Agreement. In the event that ISIS does not have sufficient manufacturing capacity to meet MERCK's requirements in accordance with the terms of the Clinical Supply Agreement, ISIS may use a third party toll manufacturer to manufacture all or part of MERCK's requirements, upon the prior written approval of MERCK. MERCK shall supply its own requirements for Compound and Products for development and commercialization on a worldwide

         basis upon completion of the Technology Transfer in accordance with the
         terms of this Agreement. Concurrently with the execution of this
         Agreement, the parties shall execute the Clinical Supply Agreement
         attached hereto as Schedule 1.5.

7.2.1    TECHNOLOGY TRANSFER. Commencing with the Effective Date and for a
         time period thereafter to be determined by the Committee (the
         "Technology Transfer Term") and in accordance with the terms and
         conditions set forth in this Agreement, ISIS promptly shall (a)
         disclose to and transfer to MERCK all of the ISIS Know-How and ISIS
         Technology including the items listed in Schedule 7.2 and those items
         more fully detailed in the Technology Transfer Work Plan to be agreed
         to by the parties within thirty (30) days after the Effective Date and
         (b) provide to MERCK the training and support described in Schedule 7.2
         and the Technology Transfer Work Plan and elsewhere in this Agreement
         to enable MERCK to efficiently and economically optimize use of the
         ISIS Know-How, ISIS Technology and ISIS Patent Rights, in the
         formulation, development, registration, manufacture, marketing and sale
         of Compound and Product in the Field (the "Technology Transfer"). ISIS
         shall perform the Technology Transfer in accordance with the Procedures
         established by the Committee in accordance with Section 7.2.3. The
         parties shall cooperate so that the Technology Transfer may be
         completed as expeditiously as possible.

7.2.2    TECHNOLOGY TRANSFER COMMITTEE. The Technology Transfer shall be
         coordinated and implemented under the supervision of a joint committee
         (the "Committee") comprised of an agreed number of employees appointed
         by the parties having appropriate technical credentials, experience and
         knowledge and co-chaired by an employee of each party. The advice of
         additional employees or consultants of either party may by mutual
         consent of the parties be obtained. Decisions of the Committee shall be
         made by unanimous decision of the two-co-chairs; provided however, in
         the event that the co-chairs do not, after good faith efforts, reach
         agreement on an issue, the resolution and/or course of conduct in issue
         shall be determined in good faith by the Executive Vice President,
         Science and Technology, and President of MERCK Research Laboratories,
         and the Executive Vice President of ISIS; provided, however, in the
         event that they do not, after good faith efforts, reach agreement on an
         issue, the issue shall be submitted to arbitration pursuant to Section
         10.6. Throughout the entire Technology Transfer Term, the Committee
         shall meet at least once each month in person or by teleconference,
         videoconference or by other mutually acceptable means. The Committee
         shall establish the Procedures, confer regarding the status of the
         Technology Transfer and compliance with the Procedures, review relevant
         data and results achieved, consider and advise on any technical issues
         that arise, consider issues of priority, and review and advise on any
         matters relating to the Technology Transfer referred to the Committee.

7.2.3    PROCEDURES FOR TECHNOLOGY TRANSFER. Promptly after the Effective
         Date, the Committee shall commence to monitor compliance with the
         procedures set forth in Schedule 7.2 and the Technology Transfer Work
         Plan which shall detail the procedures for the prompt and efficient
         Technology Transfer, and shall describe the events necessary to
         accomplish the Technology Transfer and detail the training and support
         to be provided by ISIS during the Technology Transfer (the
         "Procedures"). The Procedures shall be designed to ensure, and shall be
         refined by the Committee as necessary to ensure, MERCK's optimal use of
         the ISIS Know-How, ISIS Technology and ISIS Patent Rights in
         developing, manufacturing and commercializing Compound and Product, all
         in accordance with the terms of this Agreement.

7.2.4    TRAINING AND SUPPORT. The training and support to be provided by
         ISIS to MERCK throughout the Technology Transfer Term shall include
         without limitation training and support in a mutually acceptable MERCK
         facility in all of the methods necessary to practice the ISIS Know-How,
         ISIS Technology and ISIS Patent Rights in the development,
         manufacturing and commercialization of Compound and Product, and this
         shall include without limitation (a) demonstration and training during
         the installation, operational and performance qualifications of the
         technology, (b) technical support for the operational startup of
         manufacturing equipment, and (c) demonstration of the manufacturing
         processes. In addition, a reasonable number of employees of MERCK and
         its Affiliates shall be entitled to visit ISIS facilities including
         without limitation pilot and commercial scale facilities and testing
         laboratories to observe relevant processes in operation. Moreover, ISIS
         shall provide technical consultation on an as-needed basis following
         NDA approval of Product for a time period to be established by the
         Committee. ISIS also shall be available, if requested, for consultation
         during any regulatory inspection or to assist in responding to
         regulatory questions that may occur during Product registration
         activities.

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7.2.5    RECORDS. ISIS shall maintain records, in sufficient detail and in
         good scientific manner appropriate for patent, regulatory and
         manufacturing purposes, which shall fully and properly reflect all of
         the work done and the progress achieved in the performance of the
         Technology Transfer (the "Records"). The Records at all times shall be
         available to the Committee and Merck shall have the right, during
         normal business hours and upon reasonable notice, to inspect and copy
         all such Records. MERCK also shall have the right to arrange for its
         employees and/or consultants to visit ISIS at its offices and
         laboratories and other facilities during normal business hours on
         reasonable notice concerning or in furtherance of the Technology
         Transfer and/or to discuss the progress of the Technology Transfer and
         its results in detail with the technical personnel and consultants of
         ISIS.

7.2.6    MANUFACTURING TECHNOLOGY IMPROVEMENTS. The entire right, title,
         and interest in and to all Manufacturing Technology Improvements,
         patentable or not, developed or invented solely by employees of ISIS
         during the term of this Agreement shall be the sole and exclusive
         property of ISIS, subject to the licenses granted to MERCK under this
         Agreement. The entire right, title, and interest in and to all
         Manufacturing Technology Improvements, patentable or not, developed or
         invented solely by employees of MERCK during the term of this Agreement
         shall be the sole and exclusive property of MERCK, and MERCK hereby
         grants to ISIS a worldwide, non-exclusive, sublicensable, royalty-free
         license to any such patented sole MERCK Manufacturing Technology
         Improvements solely for use outside of the Field. The entire right,
         title, and interest in and to all Manufacturing Technology
         Improvements, patentable or not, developed or invented jointly by
         employees of ISIS and MERCK during the term of this Agreement shall be
         the joint property of ISIS and MERCK, subject to the licenses granted
         to MERCK under this Agreement. The parties shall promptly disclose to
         each other the development, making, conception or reduction to practice
         of all Manufacturing Technology Improvements.

ARTICLE VIII

PATENT PROVISIONS

8.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS. ISIS and MERCK hereby agree that, during the term of this Agreement, the ISIS Patent Rights which claim, cover or relate to the Compound in the Territory shall, at MERCK's expense, be filed, prosecuted and maintained by independent patent legal counsel chosen by MERCK and reasonably acceptable to ISIS. Such independent counsel shall keep ISIS and MERCK advised of the status of the actual and prospective patent filings and upon the request of the party(ies), shall provide advance copies of any papers related to the filing, prosecution and maintenance. The parties shall consult as to patent filings by such independent counsel which shall be subject to the prior mutual agreement of the parties. ISIS agrees to file, prosecute and maintain in the Territory the ISIS Patent Rights which claim, cover or relate to Core Technology, Core Technology Improvements, Manufacturing Technology or Manufacturing Technology Improvements owned in whole or in part by ISIS and licensed to MERCK under this Agreement. ISIS shall keep MERCK advised of the status of the actual and prospective patent filings on a semi-annual basis and upon the request of MERCK, provide copies of any papers related to the filing, prosecution and maintenance of such patent filings. MERCK shall have the exclusive right during the term of this Agreement to file, prosecute and maintain, in the Territory, patent applications that claim, cover or relate to Compound Improvements. With respect to all filings hereunder, the filing party shall be responsible for payment for all costs and expenses related to such filings.

8.2 ISIS PATENT RIGHTS PATENT SCHEDULES. ISIS hereby agrees to provide MERCK with updated patent schedules in a timeframe agreed to by the parties.

8.3 INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. Either party shall, within ten (10) days of learning of such event, inform the other party of any request for, or filing or declaration of, any interference, opposition, or reexamination relating to ISIS Patent Rights in the Field. MERCK and ISIS shall thereafter consult and cooperate fully to determine a course of action with respect to any such proceeding subject to the following:

(a) Any interference, opposition, reissue, or reexamination proceeding relating to ISIS Patent Rights which claim, cover or relate to Compound in the Territory shall be conducted at MERCK's expense by independent patent legal counsel chosen by MERCK and reasonably acceptable to

ISIS. MERCK and ISIS will cooperate fully and will provide each other and the independent patent legal counsel with any information or assistance that any party may reasonably request. Outside patent legal counsel shall keep MERCK and ISIS informed of developments in any such action or proceeding. Decisions on whether to initiate such a proceeding and the course of action in such proceeding, including settlement negotiations and terms, shall be made by mutual agreement of ISIS and MERCK.

(b) Any interference, opposition, reissue, or reexamination proceeding relating to ISIS Patent Rights which claim, cover or relate to the Core Technology, Core Technology Improvements, Manufacturing Technology or Manufacturing Technology Improvements in the Territory, shall be conducted by ISIS at ISIS' expense. To the extent that such interference, opposition, reissue, or reexamination proceeding materially impacts MERCK's rights within the Field, MERCK and ISIS will cooperate fully and will provide each other with any information or assistance that either may reasonably request. ISIS shall keep MERCK informed of developments in any such action or proceeding, including, to the extent permissible, the status of any settlement negotiations and the terms of any offer related thereto, except that ISIS must obtain MERCK's consent to any settlement terms which affect MERCK's freedom to operate in the Field under the licenses granted to MERCK under this Agreement.

8.4 ENFORCEMENT AND DEFENSE.

(a) ISIS shall give MERCK notice of (i) any infringement of ISIS Patent Rights in the Field, or (ii) any misappropriation or misuse of ISIS Know-How in the Field, that may come to ISIS's attention. MERCK and ISIS shall thereafter consult and cooperate fully to determine a course of action, including without limitation the commencement of legal action by either or both MERCK and ISIS, to terminate any infringement of ISIS Patent Rights or any misappropriation or misuse of ISIS Know-How in the Field. However, ISIS, upon notice to MERCK, shall have the first right to initiate and prosecute such legal action at its own expense and in the name of ISIS and MERCK, or to control the defense of any declaratory judgment action relating to ISIS Patent Rights or ISIS Know-How in the Field. ISIS shall promptly inform MERCK if it elects not to exercise such first right and MERCK shall thereafter have the right to either initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of MERCK and, if necessary, ISIS.

(b) In the event that ISIS elects not to initiate and prosecute an action as provided in paragraph (a), and MERCK elects to do so, the costs of any agreed-upon course of action to terminate infringement of ISIS Patent Rights or misappropriation or misuse of ISIS Know-How, including the costs of any legal action commenced or the defense of any declaratory judgment, shall be shared equally by ISIS and MERCK, except that the cost of any such action related solely to the Compound shall be borne by MERCK.

(c) For any action to terminate any infringement of ISIS Patent Rights or any misappropriation or misuse of ISIS Know-How, in the event that MERCK is unable to initiate or prosecute such action solely in its own name, ISIS will join such action voluntarily and will execute and cause its Affiliates to execute all documents necessary for MERCK to initiate litigation to prosecute and maintain such action. In connection with any action, MERCK and ISIS will cooperate fully and will provide each other with any information or assistance that either may reasonably request. Each party shall keep the other informed of developments in any action or proceeding, including, to the extent permissible by law, the status of any settlement negotiations and the terms of any offer related thereto.

(d) Any recovery obtained by either or both MERCK and ISIS in connection with or as a result of any action contemplated by this section, whether by settlement or otherwise, shall be shared in order as follows:

(i) the party which initiated and prosecuted the action shall recoup all of its costs and expenses incurred in connection with the action;

(ii) the other party shall then, to the extent possible, recover its costs and expenses incurred in connection with the action; and

(iii)the amount of any recovery remaining shall then be allocated between the parties on a PRO RATA basis under which ISIS shall receive a proportion based on the royalties it lost and MERCK shall receive a proportion based on its lost profits.

(e) ISIS shall inform MERCK of any certification regarding any ISIS Patent Rights it has received pursuant to either 21 U.S.C. Sections 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under Canada's Patented medicines (Notice of Compliance) Regulations Article 5 and shall provide MERCK with a copy of such certification within five
(5) days of receipt. ISIS's and MERCK's rights with respect to the initiation and prosecution of any legal action as a result of such certification or any recovery obtained as a result of such legal action shall be as defined in paragraphs (a)-(d) hereof; provided, however, that ISIS shall exercise its first right to initiate and prosecute any action and shall inform MERCK of such decision within ten (10) days of receipt of the certification, after which time MERCK shall have the right to initiate and prosecute such action.

8.5 CERTIFICATION UNDER DRUG PRICE COMPETITION AND PATENT RESTORATION ACT. ISIS and MERCK each shall immediately give notice to the other of any certification of which they become aware filed under the United States "Drug Price Competition and Patent Term Restoration Act of 1984" claiming that ISIS Patent Rights covering Compound or Product are invalid or that infringement will not arise from the manufacture, use or sale of Compound(s) or Product(s) by a third party. If ISIS or MERCK (depending on which party is defending the ISIS Patent Rights) decides not to bring infringement proceedings against the entity making such a certification, such party shall give notice to the other party of its decision not to bring suit within twenty-one (21) days after receipt of notice of such certification. The party receiving such notice may then, but is not required to, bring suit against the party that filed the certification. Any suit by MERCK or ISIS shall either be in the name of MERCK or in the name of ISIS, or jointly by MERCK and ISIS. For this purpose, the party not bringing suit shall execute such legal papers necessary for the prosecution of such suit as may be reasonably requested by the party bringing suit.

8.6 ABANDONMENT. ISIS shall promptly give notice to MERCK of the grant, lapse, revocation, surrender, invalidation or abandonment of any ISIS Patent Rights licensed to MERCK for which ISIS is responsible for the filing, prosecution and maintenance.

8.7 PATENT TERM RESTORATION. The parties hereto shall cooperate with each other in obtaining patent term restoration or supplemental protection certificates or their equivalents in any country in the Territory where applicable to ISIS Patent Rights. In the event that elections with respect to obtaining such patent term restoration are to be made, MERCK shall have the right to make the election and ISIS agrees to abide by such election.

ARTICLE IX

TERM AND TERMINATION

9.1 TERM AND EXPIRATION. This Agreement shall be effective as of the Effective Date and unless terminated earlier pursuant to Sections 9.2 or 9.3 below, the term of this Agreement shall continue in effect until expiration of all royalty obligations hereunder. Upon expiration of this Agreement due to expiration of all royalty obligations hereunder, MERCK's licenses pursuant to Section 3.1 and 3.2 shall become fully paid-up, perpetual licenses.

9.2 TERMINATION BY MERCK. a) Notwithstanding anything contained herein to the contrary, MERCK shall have the right to terminate this Agreement at any time in its sole discretion a) during the Preclinical Development Program by giving thirty (30) days advanced written notice to ISIS, and
b) thereafter by giving ninety (90) days advance written notice to ISIS. b) In the event of such termination by MERCK, the rights and obligations hereunder, including any payment obligations not due and owing as of the termination date, shall terminate, subject to the provisions of Section 9.4 herein, provided that MERCK shall be obligated to pay all non-cancelable commitments to undertake Preclinical Development Program studies in accordance with Schedule 2.2 and the terms of this Agreement, and all other non-cancelable Agreement commitments undertaken by ISIS in accordance with the terms of this Agreement, where such non-cancelable commitments exist as of the date of notice of termination is provided by MERCK. c) In the

event that MERCK terminates this Agreement pursuant to this Section 9.2 after the commencement of Clinical Development studies by MERCK for reasons other than safety, and ISIS notifies MERCK within ninety (90) days after such termination that ISIS wishes to commercialize the Compound, the parties hereof agree to enter into negotiations for a commercially reasonable arrangement to permit ISIS to undertake development and commercialization of the Compound utilizing summaries of Clinical Development Program data developed by MERCK under this Agreement. [ * ]

9.3.1    TERMINATION FOR CAUSE. This Agreement may be terminated by notice by
         either party at any time during the term of this Agreement:

         (a)   if the other party is in breach of its material obligations
               hereunder by causes and reasons within its control and has not
               cured such breach within ninety (90) days after notice requesting
               cure of the breach; providing, however, that in the event of a
               good faith dispute with respect to the existence of a material
               breach, the ninety (90) day cure period shall be stayed until
               such time as the dispute is resolved pursuant to Subsection 10.6
               hereof; and

         (b)   upon the filing or institution of bankruptcy, reorganization,
               liquidation or receivership proceedings, or upon an assignment of
               a substantial portion of the assets for the benefit of creditors
               by the other party; PROVIDED, HOWEVER, in the case of any
               involuntary bankruptcy proceeding such right to terminate shall
               only become effective if the party consents to the involuntary
               bankruptcy or such proceeding is not dismissed within ninety (90)
               days after the filing thereof.

9.3.2    EFFECT OF TERMINATION FOR CAUSE ON LICENSE.

         (a)   In the event MERCK terminates this Agreement under Section
               9.3.1(a), MERCK's licenses pursuant to Sections 3.1 and 3.2 shall
               become perpetual licenses. It is understood that in the event
               MERCK contends it suffers damages as a result of the breach,
               MERCK may place a portion of the payments to be made by MERCK
               pursuant to Article 5 that would reasonably cover MERCK's alleged
               damages into an interest-bearing escrow account pending
               resolution of any dispute between the parties relating to the
               material breach or termination of the agreement, including a
               dispute over damages, pursuant to paragraph 10.6. In the event
               that ISIS terminates this Agreement under Section 9.3.1(a),
               MERCK's licenses pursuant to Sections 3.1 and 3.2 shall terminate
               as of such termination date.

         (b)   In the event this Agreement is terminated by MERCK under
               Section 9.3.1(b) or due to the rejection of this Agreement by or
               on behalf of ISIS under Section 365 of the United States
               Bankruptcy Code (the "Code"), all licenses and rights to licenses
               granted under or pursuant to this Agreement by ISIS to MERCK are,
               and shall otherwise be deemed to be, for purposes of Section
               365(n) of the Code, licenses of rights to "intellectual property"
               as defined under Section 101(35A) of the Code. The parties agree
               that MERCK, as a licensee of such rights under this Agreement,
               shall retain and may fully exercise all of its rights and
               elections under the Code, and that upon commencement of a
               bankruptcy proceeding by or against ISIS under the Code, MERCK
               shall be entitled to a complete duplicate of or complete access
               to (as MERCK deems appropriate), any such intellectual property
               and all embodiments of such intellectual property. Such
               intellectual property and all embodiments thereof shall be
               promptly delivered to MERCK (i) upon any such commencement of a
               bankruptcy proceeding upon written request therefore by MERCK,
               unless ISIS elects to continue to perform all of its obligations
               under this Agreement or (ii) if not delivered under (i) above,
               upon the rejection of this Agreement by or on behalf of ISIS upon
               written request therefore by MERCK. Where MERCK does retain and
               is able to fully exercise all licenses and rights to licenses
               granted under this Agreement, MERCK's payment obligations to ISIS
               for milestones and royalties in accordance with Section 5.3
               and/or Section 5.4 of this Agreement in connection with such
               exercise by MERCK of MERCK's licenses hereunder shall continue in
               effect.

*Confidential Treatment Requested 20

The foregoing is without prejudice to any rights MERCK may have arising under the Code or other applicable law.

9.4 EFFECT OF EXPIRATION OR TERMINATION. (a) Expiration or termination of the Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination, Sections 2.2.5, 2.2.6, 2.2.7, 2.3.4, 3.1 (d), 3.4, 3.5, 7.2.5, 7.2.6, 9.1, 9.2, 9.3.2, 9.4, 10.4, 10.5 and 10.6 shall survive expiration or termination of the Agreement, the provisions of Article IV shall survive the termination or expiration of the Agreement and shall continue in effect for ten (10) years thereafter, and the provisions of 2.4 and Schedule 2.4 shall continue in effect in accordance with the application timetable set forth therein. Any expiration or early termination of this Agreement shall be without prejudice to the rights of either party against the other accrued or accruing under this Agreement prior to termination, including the obligation to pay royalties for Product or Compound sold prior to such termination.

(b) Upon any termination of this Agreement by MERCK pursuant to Subsection 9.2, or by ISIS pursuant to Subsection 9.3.1, MERCK shall be entitled, during the twelve (12) months following the termination date, to finish any work-in-progress and to sell any inventory of Compound and Product which remains on hand.

10.1     FORCE MAJEURE. Neither party shall be held liable or responsible to the
         other party nor be deemed to have defaulted under or breached the
         Agreement for failure or delay in fulfilling or performing any term of
         the Agreement when such failure or delay is caused by or results from
         causes beyond the reasonable control of the affected party including
         without limitation embargoes, war, acts of war (whether war be declared
         or not), insurrections, riots, civil commotions, strikes, lockouts or
         other labor disturbances, or acts of God. The affected party shall
         notify the other party of such force majeure circumstances as soon as
         reasonably practical and shall make every reasonable effort to mitigate
         the effects of such force majeure circumstances.

10.2     ASSIGNMENT. This Agreement shall inure to the benefit and be binding
         upon each party, its successors and assigns. The Agreement may not be
         assigned or otherwise transferred, nor, except as expressly provided
         hereunder, may any right or obligations hereunder be assigned or
         transferred by either party without the prior written consent of the
         other party; PROVIDED, HOWEVER, that MERCK may, without such consent,
         assign the Agreement and its rights and obligations hereunder to an
         Affiliate or in connection with the transfer or sale of all or
         substantially all of its assets related to the Product or the business,
         or in the event of its merger or consolidation or change in control or
         similar transaction, and PROVIDED, HOWEVER, that ISIS may, without such
         consent, assign the Agreement and its rights and obligations hereunder
         in connection with the transfer or sale of all or substantially all of
         its assets, or in the event of its merger or consolidation or change in
         control or similar transaction. Any permitted assignee shall assume all
         obligations of its assignor under the Agreement. Any attempted
         assignment not in accordance with this Section 10.2 shall be void.

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

10.4     NOTICES. All notices which are required or permitted hereunder shall be
         in writing and sufficient if delivered personally, sent by facsimile
         (and promptly confirmed by personal delivery, registered or

                                       21

         certified mail or overnight courier), sent by nationally-recognized
         overnight courier or sent by registered or certified mail, postage
         prepaid, return receipt requested, addressed as follows:

              if to ISIS, to:           ISIS Pharmaceuticals, Inc.
                                        Carlsbad Research Center
                                        2292 Faraday Avenue
                                        Carlsbad, CA  92008
                                        Attention:  Executive Vice President
                                        Fax No.:  (760) 931-9639

              with a copy to:           Attention:  General Counsel
                                        Fax No.: (760) 603-3820



              if to MERCK, to:          Merck & Co., Inc.
                                        One Merck Drive
                                        P.O. Box 100
                                        Whitehouse Station, NJ 08889-0100
                                        Attention:  Vice President,
                                        Corporate Development and Licensing

              with a copy to:           Attention: Office of the Secretary

         or to such other address as the party to whom notice is to be given may
         have furnished to the other party in writing in accordance herewith.
         Any such notice shall be deemed to have been given when delivered if
         personally delivered or sent by telecopier on a business day, on the
         business day after dispatch if sent by nationally-recognized overnight
         courier and on the third business day following the date of mailing if
         sent by mail.

10.5     APPLICABLE LAW. The Agreement shall be governed by and construed
         in accordance with the laws of the State of New Jersey without
         reference to any rules of conflict of laws or renvoi.

10.6     DISPUTE RESOLUTION. The parties shall negotiate in good faith and use
         reasonable efforts to settle any dispute, controversy or claim arising
         from or related to this Agreement or the breach thereof. If the parties
         do not fully settle, and a party wishes to pursue the matter, each such
         dispute, controversy or claim that is not an "Excluded Claim" shall be
         finally resolved by binding arbitration in accordance with the
         Commercial Arbitration Rules and Supplementary Procedures for Large
         Complex Disputes of the American Arbitration Association ("AAA"), and
         judgment on the arbitration award may be entered in any court having
         jurisdiction thereof. The arbitration shall be conducted by a panel of
         three persons experienced in the pharmaceutical business: within 30
         days after initiation of arbitration, each party shall select one
         person to act as arbitrator and the two party-selected arbitrators
         shall select a third arbitrator within 30 days of their appointment. If
         the arbitrators selected by the parties are unable or fail to agree
         upon the third arbitrator, the third arbitrator shall be appointed by
         the AAA. The place of arbitration shall be Denver, Colorado. Either
         party may apply to the arbitrators for interim injunctive relief until
         the arbitration award is rendered or the controversy is otherwise
         resolved. Either party also may, without waiving any remedy under this
         Agreement, seek from any court having jurisdiction any injunctive or
         provisional relief necessary to protect the rights or property of that
         party pending the arbitration award. The arbitrators shall have no
         authority to award punitive or any other type of damages not measured
         by a party's compensatory damages. Each party shall bear its own costs
         and expenses and attorneys' fees and an equal share of the arbitrators'
         and any administrative fees of arbitration. Except to the extent
         necessary to confirm an award or as may be required by law, neither a
         party nor an arbitrator may disclose the existence, content, or results
         of an arbitration without the prior written consent of both parties. In
         no event

                                       22

         shall an arbitration be initiated after the date when commencement of a
         legal or equitable proceeding based on the dispute, controversy or
         claim would be barred by the applicable New York statute of
         limitations. As used in this Section, the term "Excluded Claim" shall
         mean a dispute, controversy or claim that concerns (a) the validity or
         infringement of a patent, trademark or copyright; or (b) any antitrust,
         anti-monopoly or competition law or regulation, whether or not
         statutory.

10.7     ENTIRE AGREEMENT. This Agreement and the Clinical Supply Agreement
         contain the entire understanding of the parties with respect to the
         license, development and commercialization of Compound and Product. All
         express or implied agreements and understandings, either oral or
         written, heretofore made by the parties on the same subject matter are
         expressly superseded by this Agreement. The Agreement may be amended,
         or any term hereof modified, only by a written instrument duly executed
         by both parties hereto.

10.8     HEADINGS. The captions to the several Articles and Sections hereof are
         not a part of the Agreement, but are merely a convenience to assist in
         locating and reading the several Articles and Sections hereof.

10.9     INDEPENDENT CONTRACTORS. It is expressly agreed that ISIS and MERCK
         shall be independent contractors and that the relationship between the
         two parties shall not constitute a partnership, joint venture or
         agency. Neither ISIS nor MERCK shall have the authority to make any
         statements, representations or commitments of any kind, or to take any
         action, which shall be binding on the other, without the prior consent
         of the other party.

10.10    WAIVER. The waiver by either party hereto of any right hereunder, or
         the failure to perform, or a breach by the other party shall not be
         deemed a waiver of any other right hereunder or of any other breach or
         failure by said other party whether of a similar nature or otherwise.

10.11    COUNTERPARTS. The Agreement may be executed in two or more
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

10.12    WAIVER OF RULE OF CONSTRUCTION. Each party has had the opportunity to
         consult with counsel in connection with the review, drafting and
         negotiation of this Agreement. Accordingly, the rule of construction
         that any ambiguity in this Agreement shall be construed against the
         drafting party shall not apply.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date(s) set forth below.

Merck & Co., Inc. Isis Pharmaceuticals, Inc.

BY:______________________ BY:____________________________

TITLE: __________________ TITLE: ________________________

DATE: ___________________ DATE: _________________________

SCHEDULE 1.5

[ * ]

*Confidential Treatment Requested 24

ISIS PATENT RIGHTS

SCHEDULE 1.16 (a)(i)

[ * ]

and 1.16 (a)(ii)

[ * ]

and 1.16 (a)(iii)

[ * ]

*Confidential Treatment Requested 25

SCHEDULE 2.2

[ * ]

*Confidential Treatment Requested 26

SCHEDULE 2.2.1 (b)

[ * ]

*Confidential Treatment Requested 27

SCHEDULE 2.2.6

[ * ]

*Confidential Treatment Requested 28

SCHEDULE 2.4

[ * ]

*Confidential Treatment Requested 29

SCHEDULE 7.2

[ * ]

*Confidential Treatment Requested 30

*Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) 200.83 and 240b-2

COLLABORATION AND LICENSE AGREEMENT

BY AND BETWEEN

ISIS PHARMACEUTICALS, INC.

AND

HYBRIDON, INC.

TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

ARTICLE I  DEFINITIONS.........................................................1

   SECTION 1.1  "AFFILIATE"....................................................1

   SECTION 1.2  "AMINO PATENT RIGHTS"..........................................2

   SECTION 1.3  "ANTISENSE PRODUCTS"...........................................2

   SECTION 1.4   "ANTISENSE TECHNOLOGY"........................................2

   SECTION 1.5  "CONFIDENTIAL INFORMATION".....................................2

   SECTION 1.6  "DOCKET 104"...................................................2

   SECTION 1.7  "DOCKET 105"...................................................3

   SECTION 1.8  "DRUG POTENTIATION PATENT RIGHTS"..............................3

   SECTION 1.9  "EXHIBIT K PATENTS"............................................3

   SECTION 1.10  "FACILITATOR PATENT RIGHTS"...................................3

   SECTION 1.11  "FINDERON PATENT RIGHTS"......................................3

   SECTION 1.12  "HYBRIDON ANTISENSE DRUG".....................................4

   SECTION 1.13  "HYBRIDON ANTISENSE PATENT RIGHTS"............................4

   SECTION 1.14  "HYBRIDON EXCLUDED PATENT RIGHTS".............................5

   SECTION 1.15  "HYBRIDON INTELLECTUAL PROPERTY"..............................5

   SECTION 1.16  "IMMUNE STIMULATION PATENT RIGHTS"............................5

   SECTION 1.17  "ISIS INTELLECTUAL PROPERTY RIGHTS"...........................5

   SECTION 1.18  [*]

   SECTION 1.19  "MOTIFS"......................................................6

   SECTION 1.20  "NAKED SUBLICENSE"............................................6

   SECTION 1.21  "NON-PARENT AFFILIATE"........................................6

   SECTION 1.22  "OPTIMIZATION"................................................6

   SECTION 1.23  "PARTY".......................................................6

   SECTION 1.24  "RIBOZYMES"...................................................6

   SECTION 1.25  "RIBOZYME TECHNOLOGY".........................................6

   SECTION 1.26  "RNASEH DEPENDENT MECHANISMS OF ACTION".......................7

   SECTION 1.27  "SUBLICENSE INCOME"...........................................7

*Confidential Treatment Requested    - i -

   SECTION 1.28  "SUBLICENSEE".................................................7

   SECTION 1.29  "SUBSIDIARY"..................................................7

   SECTION 1.30  "THIRD PARTY LICENSE AGREEMENTS"..............................8

   SECTION 1.31  "TULLIS NET SALES"............................................8

   SECTION 1.32  "TULLIS PATENTS"..............................................8

   SECTION 1.33  "TULLIS PRODUCT"..............................................8

   SECTION 1.34  "UMASS PATENT RIGHTS".........................................8

   SECTION 1.35  "VALID CLAIM".................................................8


ARTICLE II  GRANT OF RIGHTS BY HYBRIDON........................................9

   SECTION 2.1  LICENSE GRANT..................................................9

   SECTION 2.2  SUBLICENSING RIGHT............................................11

   SECTION 2.3  NO IMPLIED LICENSES; RETAINED RIGHTS..........................13

   SECTION 2.4  COMMERCIALIZATION EFFORTS.....................................13

   SECTION 2.5  LICENSE AGREEMENTS TO WHICH HYBRIDON IS A PARTY...............13

   SECTION 2.6  METHYLGENE LICENSE AGREEMENT..................................14

   SECTION 2.7  ORIGENIX LICENSE AGREEMENT....................................14

   SECTION 2.8  AFFILIATES....................................................14


ARTICLE III  GRANT OF RIGHTS BY ISIS..........................................14

   SECTION 3.1  LICENSE GRANT.................................................14

   SECTION 3.2  SUBLICENSING RIGHT............................................14

   SECTION 3.3  TULLIS PATENTS................................................15

   SECTION 3.4  SCOPE OF LICENSE..............................................16

   SECTION 3.5  NO IMPLIED LICENSES...........................................17

   SECTION 3.6  LIMITATION ON LICENSE GRANT WITH RESPECT TO TARGET
                     VALIDATION AND GENE FUNCTIONALIZATION ACTIVITIES.........17

   SECTION 3.7  NOTICE OF HYBRIDON ANTISENSE DRUGS............................17

   SECTION 3.8  AFFILIATES....................................................18

                                     - ii -

ARTICLE IV PAYMENT OBLIGATIONS................................................18

   SECTION 4.1  CONSIDERATION FOR LICENSES OF HYBRIDON INTELLECTUAL
                      PROPERTY AND ISIS INTELLECTUAL PROPERTY.................18

   SECTION 4.2  CONSIDERATION FOR SUBLICENSE OF TULLIS PATENTS................18

   SECTION 4.3  ISIS SUBLICENSE INCOME........................................19

   SECTION 4.4  RECORDS; AUDITS...............................................19

   SECTION 4.5  PAYMENT CURRENCY..............................................19

   SECTION 4.6  LATE PAYMENTS; COLLECTIONS....................................19


ARTICLE V  COLLABORATION......................................................20


ARTICLE VI INTELLECTUAL PROPERTY PROTECTION...................................20

   SECTION 6.1  PATENT PROSECUTION AND COOPERATION............................20

   SECTION 6.2  ENFORCEMENT OF HYBRIDON ANTISENSE PATENT RIGHTS...............24


ARTICLE VII  CONFIDENTIALITY..................................................27

   SECTION 7.1  CONFIDENTIAL INFORMATION......................................27


ARTICLE VIII  DISPUTE RESOLUTION..............................................28


ARTICLE IX TERM AND TERMINATION...............................................29

   SECTION 9.1  TERM..........................................................29

   SECTION 9.2  TERMINATION OF LICENSES AND SUBLICENSES FOR BREACH............30

   SECTION 9.3  TERMINATION OF SUBLICENSE OF TULLIS PATENTS...................31

   SECTION 9.4  SURVIVAL......................................................31

   SECTION 9.5  SUBLICENSE SURVIVAL...........................................31

   SECTION 9.6  FAILURE TO MAKE MASTER AGREEMENT DELIVERIES...................32


ARTICLE X MISCELLANEOUS PROVISIONS............................................32

   SECTION 10.1  INDEMNIFICATION..............................................32

   SECTION 10.2  GOVERNING LAW................................................33

   SECTION 10.3  ASSIGNMENT...................................................33

   SECTION 10.4  ENTIRE AGREEMENT; AMENDMENTS.................................33

   SECTION 10.5  NOTICES......................................................33

   SECTION 10.6  FORCE MAJEURE................................................35

   SECTION 10.7  DISCLOSURE OF PROVISIONS OF AGREEMENT........................35

                                     - iii -

   SECTION 10.8  INDEPENDENT CONTRACTORS......................................36

   SECTION 10.9  NO STRICT CONSTRUCTION.......................................36

   SECTION 10.10  HEADINGS....................................................36

   SECTION 10.11  NO IMPLIED WAIVERS; RIGHTS CUMULATIVE.......................36

   SECTION 10.12  SEVERABILITY................................................37

   SECTION 10.13  EXECUTION IN COUNTERPARTS...................................37

   SECTION 10.14  NO CONSEQUENTIAL DAMAGES....................................37

   SECTION 10.15  PATENT VALIDITY.............................................37

EXHIBITS:
---------

Exhibit A through Exhibit G    - Omitted
Exhibit H-1   -    Third Party License Agreements
Exhibit H-2   -    Other License Agreements
Exhibit I     -    Tullis Patents
Exhibit J     -    UMass Agreement
Exhibit K     -    Excluded Hybridon Intellectual Property
Exhibit L     -    UMass Patent Rights
Exhibit M     -    Drug Potentiation Patent Rights
Exhibit N     -    Tullis Agreement

COLLABORATION AND LICENSE AGREEMENT

This Collaboration and License Agreement (the "Agreement") is entered into as of the 24th day of May, 2001 (the "Effective Date") by and between Isis Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware ("Isis"), and Hybridon, Inc., a corporation organized and existing under the laws of the State of Delaware ("Hybridon").

INTRODUCTION

1. Hybridon is the owner or has the right to use under license certain patents and patent applications relating to the practice of Antisense Technology (as defined below).

2. Isis is the owner or has the right to use under license certain patents and patent applications relating to the practice of Antisense Technology.

3. Hybridon and Isis are interested in licensing or sublicensing to the other party these patents and patent applications and in collaborating from time to time on the further research and development of Antisense Products.

4. Hybridon and Isis have entered into a Master Agreement dated as of the date hereof (the "Master Agreement").

5. Isis and Hybridon each recognizes that the other Party has expended significant efforts and resources in the research and development of Antisense Technology and the payments to be made under the Master Agreement to each Party for the patent licenses and sublicenses granted hereunder will allow each Party to recoup such expenditures.

NOW, THEREFORE, Hybridon and Isis agree as follows:

ARTICLE I
DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this Article I:

Section 1.1 "AFFILIATE". Affiliate shall mean, with respect to a person or entity, any corporation, company, partnership, joint venture or other entity which controls, is controlled by, or is under common control with such person or entity. For purposes of this Section 1.1 and Section 1.21, "control" shall mean
(a) in the case of corporate entities, direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of fifty percent (50%) or more of the equity interest with the

power to direct the management and policies of such non-corporate entities, provided that in either such case such person or entity has the power to direct the management and policies of such entities, whether by contract or through representation on the board of directors or other governing body of such entities.

Section 1.2 "AMINO PATENT RIGHTS". Amino Patent Rights shall mean the claims of all patents and patent applications set forth on EXHIBIT A hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.3 "ANTISENSE PRODUCTS". Antisense Products shall mean oligonucleotides or oligonucleotide analogs or mimics thereof targeted to a specific sequence of RNA that hybridize to such sequence and through such hybridization modulate the production of the targeted gene product. The term Antisense Products shall not include Ribozymes.

Section 1.4 "ANTISENSE TECHNOLOGY". Antisense Technology shall mean the use of any oligonucleotide or oligonucleotide analog or mimic thereof targeted to a specific sequence of RNA that hybridizes to such sequence and through such hybridization modulates the production of the targeted gene product. The term Antisense Technology shall not include Ribozyme Technology.

Section 1.5 "CONFIDENTIAL INFORMATION". Confidential Information shall mean all information, including, without limitation, proprietary information and materials (whether or not patentable) regarding a Party's technology, products, business information or objectives, which is designated as confidential in writing by the disclosing Party, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such information is disclosed by the disclosing Party to the other Party. Notwithstanding the foregoing, all information which is orally, electronically or visually disclosed by a Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information of a Party if the disclosing Party, within thirty (30) days after such disclosure, delivers to the other Party a written document or documents describing the information and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the persons to whom such disclosure was made.

Section 1.6 "DOCKET 104". Docket 104 shall mean all patents and patent applications set forth on EXHIBIT B-1 hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any

supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.7 "DOCKET 105". Docket 105 shall mean all patents and patent applications set forth on EXHIBIT B-2 hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.8 "DRUG POTENTIATION PATENT RIGHTS". Drug Potentiation Patent Rights shall mean the claims of all patents and patent applications set forth on EXHIBIT M hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.9 "EXHIBIT K PATENTS". Exhibit K Patents shall mean the claims of all patents and patent applications set forth on EXHIBIT K hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.10 "FACILITATOR PATENT RIGHTS". Facilitator Patent Rights shall mean the claims of all patents and patent applications set forth on EXHIBIT C hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.11 "FINDERON PATENT RIGHTS". Finderon Patent Rights shall mean the claims of all patents and patent applications set forth on EXHIBIT D hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.12 "HYBRIDON ANTISENSE DRUG". Hybridon Antisense Drug shall mean an Antisense Product which is a therapeutic or prophylactic product for the treatment or prevention of disease in a human or an animal that is discovered,

developed and/or Optimized either by Hybridon or a Subsidiary alone or as part of a "bona fide drug discovery collaboration".

For purposes of this Section 1.12 only, a "bona fide drug discovery collaboration" is an arrangement between Hybridon or a Subsidiary and a third party (i) in which the intent of the collaborators in engaging in discovery, development and/or Optimization activities is to discover, develop, Optimize and commercialize an Antisense Product. [*] Initiation of IND supporting toxicology is the initiation of animal toxicity studies in support of the filing of an Investigational New Drug application with the U.S. Food and Drug Administration or a similar regulatory filing with a similar regulatory authority in another jurisdiction. If a contractor (which is not the third party collaborator) in the business of performing preclinical studies provides such services through the performance of IN VIVO animal studies under the supervision of Hybridon or a Subsidiary, the services so provided shall be treated as work performed directly by Hybridon or a Subsidiary for purposes of this definition. Work performed by a contractor of, and paid for by, Hybridon or a Subsidiary under the supervision of Hybridon or a Subsidiary shall be treated as work performed directly by Hybridon or a Subsidiary for purposes of this definition. The Parties acknowledge that a part of the discovery, development and Optimization of an Hybridon Antisense Drug may involve the validation and prioritization of gene targets to form the basis for antisense drug discovery activities.

In the event of a sale or other transfer of the assets of Hybridon, no Antisense Product developed by the acquiring company prior to the acquisition will be deemed to be a Hybridon Antisense Drug unless (i) such acquiring company acquires all or substantially all of the assets of the antisense business of Hybridon, and (ii) such Antisense Product [*]by the acquiring company prior to the acquisition; provided, however, that an Antisense Product that would qualify as a Hybridon Antisense Drug irrespective of the acquisition will not lose its status as such as a result of such acquisition.

Section 1.13 "HYBRIDON ANTISENSE PATENT RIGHTS". Hybridon Antisense Patent Rights shall mean the claims of all patents and patent applications and any continuations or divisions thereof, whether now existing, now filed or later filed on inventions invented, licensed or sublicensed by Hybridon prior to April 26, 2001, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing, which Hybridon owned or had the right to sublicense as of April 26, 2001 and which are necessary or useful to practice Antisense Technology, including without limitation the patents and patent applications set forth on EXHIBIT E, but not including the Hybridon Excluded Patent Rights and the patents and patent

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applications licensed to Hybridon (the "Hybridon IDT Patent Rights") pursuant to the Non-Exclusive License Agreement dated as of March 12, 1999 between Integrated DNA Technologies, Inc. ("IDT") and Hybridon.

Section 1.14 "HYBRIDON EXCLUDED PATENT RIGHTS". Hybridon Excluded Patent Rights shall mean the Amino Patent Rights, Docket 104, Docket 105, Facilitator Patent Rights, Finderon Patent Rights, Immune Stimulation Patent Rights, Drug Potentiation Patent Rights and the Exhibit K Patents.

Section 1.15 "HYBRIDON INTELLECTUAL PROPERTY". Hybridon Intellectual Property shall mean collectively the Hybridon Antisense Patent Rights and the Hybridon Excluded Patent Rights (all solely to the extent licensed to Isis under
Section 2.1), but shall exclude the Hybridon IDT Patent Rights.

Section 1.16 "IMMUNE STIMULATION PATENT RIGHTS". Immune Stimulation Patent Rights shall mean the claims of all patents and patent applications set forth on EXHIBIT F hereto and any continuations or divisions thereof, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.

Section 1.17 "ISIS INTELLECTUAL PROPERTY RIGHTS". Isis Intellectual Property Rights shall mean the claims that cover Motifs or RNaseH Dependent Mechanisms of Action of all patents and patent applications and any continuations or divisions thereof, whether now existing, now filed or later filed on inventions invented, licensed or sublicensed by Isis prior to April 26, 2001, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any supplemental patent certificate) of any such patent, any confirmation patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing, which Isis owned or had the right to sublicense as of April 26, 2001, including without limitation the patents and patent applications set forth on EXHIBIT G hereto; provided, however, that Isis Intellectual Property Rights shall not include manufacturing methods, including without limitation reagents, synthons and processes used in manufacturing and analyzing oligonucleotides; chemistries, including without limitation modifications made to the backbone, sugar or base of an oligonucleotide and oligonucleotide conjugates (including the chemistries of the conjugate and the conjugation methods); formulations, including without limitation methods and reagents for delivery and uptake of oligonucleotides; gene-related patents, including without limitation patents to specific gene structures, gene targets and treatments based upon a genetic target; and patents and patent applications licensed to

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Isis pursuant to the Non-Exclusive License Agreement dated March 19, 1999 between IDT and Isis.

Section 1.18 [*]

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Section 1.19 "MOTIFS". Motifs shall mean hybrid oligonucleotide structures that have at least two regions within the oligonucleotide that have different chemistries, one of which will support cleavage via RNaseH Dependent Mechanisms of Action. Motifs do not include specific chemistries necessary or useful to create or Optimize such structures, whether or not such chemistries are also disclosed by or claimed in the same patent or patent application.

Section 1.20 "NAKED SUBLICENSE". Naked Sublicense shall mean any license or sublicense of intellectual property granted by a Party or a Subsidiary to a third party other than a license or sublicense which is granted as part of a bona fide research, development, manufacturing or commercialization collaboration between the Party or a Subsidiary and the third party (it being agreed by the Parties that the definition of the term "collaboration" in this
Section 1.20 shall not be interpreted by reference to the definition of collaboration used in Section 1.12). For purposes of this definition, a bona fide research, development, manufacturing or commercialization collaboration may include collaborative research and discovery, including without limitation gene functionalization and target validation.

Section 1.21 "NON-PARENT AFFILIATE". Non-Parent Affiliate shall mean, with respect to a person or entity, any Affiliate of such person or entity other than any corporation, company, partnership, joint venture or other entity which controls (as defined in Section 1.1) such person or entity.

Section 1.22 "OPTIMIZATION". Optimization shall mean the process by which the properties of an Antisense Product are improved by making chemical modifications to such Antisense Product or by selecting a different sequence of RNA for such Antisense Product.

Section 1.23 "PARTY". Party shall mean Isis or Hybridon; "Parties" shall mean Isis and Hybridon. As used in this Agreement, references to "third parties" do not include a Party or its Subsidiaries.

Section 1.24 "RIBOZYMES". Ribozymes shall mean oligonucleotides or oligonucleotide analogs or mimics containing a catalytic core having a bulge or stem loop and regions flanking the catalytic core that hybridize to a targeted RNA and modulate the targeted RNA by cleavage at a site next to a specific ribonucleotide triplet by an oligonucleotide catalyzed transesterification reaction.

Section 1.25 "RIBOZYME TECHNOLOGY". Ribozyme Technology shall mean the use of any oligonucleotides or oligonucleotide analogs or mimics thereof containing a catalytic core having a bulge or stem loop and regions flanking the catalytic core that hybridize to a targeted RNA and modulate the

targeted RNA by cleavage at a site next to a specific ribonucleotide triplet by an oligonucleotide catalyzed transesterification reaction.

Section 1.26 "RNASEH DEPENDENT MECHANISMS OF ACTION". RNaseH Dependent Mechanisms of Action shall mean methods of using RNaseH enzymes to cleave a targeted RNA in vitro or in vivo. RNaseH Dependent Mechanisms of Action do not include chemistries necessary or useful to facilitate or Optimize such cleavage, whether or not such chemistries are also disclosed by or claimed in the same patent or patent application.

Section 1.27 "SUBLICENSE INCOME". Sublicense Income shall mean all consideration received from Sublicensees by Isis or a Subsidiary pursuant to a Naked Sublicense by Isis or a Subsidiary which covers, in whole or in part, Hybridon Intellectual Property and all consideration received from Sublicensees by Isis or an Affiliate pursuant to a Naked Sublicense not involving Hybridon Intellectual Property if such Naked Sublicense arose out of the same transaction as, or was otherwise related to, a Naked Sublicense which covers, in whole or in part, Hybridon Intellectual Property. Sublicense Income does not include (i) payments made by a Sublicensee in consideration for the issuance of equity or debt securities of Isis to the extent such payments do not exceed the fair market value of the securities being issued. [*] If non-monetary consideration is received from Sublicensees by Isis or its Subsidiaries, then a commercially reasonable monetary value will be assigned for purposes of calculating Sublicense Income.

Section 1.28 "SUBLICENSEE". Sublicensee shall mean any third party granted the right hereunder by a Party, its Subsidiaries or a Sublicensee having the right to grant further sublicenses, to discover, develop, make, have made, use, sell, have sold, offer to sell, import or have imported products covered by the Hybridon Intellectual Property (in the case of a Sublicensee of Isis, its Subsidiaries or a Sublicensee having the right to grant further sublicenses) or Isis Intellectual Property or Tullis Patents (in the case of a Sublicensee of Hybridon, its Subsidiaries or a Sublicensee having the right to grant further sublicenses).

Section 1.29 "SUBSIDIARY". Subsidiary shall mean with respect to a Party, any corporation, company, partnership, joint venture or other entity, 100% of the equity securities of which are directly or indirectly owned by such Party; provided, however, that if such Party does not directly or indirectly own 100% of the equity securities of the entity, such entity shall nevertheless be deemed a Subsidiary for purposes of this definition if the equity securities not owned directly or indirectly by such Party consist solely of: (a) director qualifying shares, (b) equity securities of the entity owned by employees, directors or officers of the Party or the entity so long as such ownership by employees, directors and officers does not exceed 10% of the equity securities of the entity and/or (c) in the case of entities, the operations of which are substantially conducted outside the United States, equity securities of the entity owned by financial investors so long as such ownership by financial investors does not exceed 20% of the equity securities of the entity. For

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purposes of this Section 1.29, indirect ownership shall mean ownership through an entity or a chain

Section 1.30 of entities as to each member of which the Party or another entity in the chain owns 100% of the equity securities (other than director qualifying shares).

Section 1.31 "THIRD PARTY LICENSE AGREEMENTS". Third Party License Agreements shall mean those agreements set forth on EXHIBIT H-1 attached hereto pursuant to which Hybridon has licensed Hybridon Intellectual Property to third parties.

Section 1.32 "TULLIS NET SALES". Tullis Net Sales shall mean the gross sales revenues received by Hybridon, its Subsidiaries or Sublicensees from the sale of Tullis Products, minus (a) all sales, use, and excise taxes, and customs duties or other charges; (b) transportation and handling charges (including transport insurance) actually incurred and paid by the buyer as part of the purchase price; and (c) amounts repaid or credited by reason of rejections or returns. Sales of a Tullis Product by Hybridon to a Subsidiary of Hybridon for sale by the Subsidiary shall not be considered a sale of Tullis Products hereunder.

Section 1.33 "TULLIS PATENTS". Tullis Patents shall mean the Technology Rights (as defined in the Non-Exclusive Patent License Agreement dated September 14, 1992 (the "Tullis Agreement") between Isis and Molecular Biosystems, Inc. ("MBI")) licensed by Isis from MBI under the Tullis Agreement, including without limitation the patents and patent applications set forth on EXHIBIT I hereto.

Section 1.34 "TULLIS PRODUCT". Tullis Product shall mean any product whose use, manufacture or sale by Hybridon, its Subsidiaries or Sublicensees, in any jurisdiction in which a patent which is a Tullis Patent has been allowed, would but for the provisions of Section 3.3 constitute an infringement of such patent.

Section 1.35 "UMASS PATENT RIGHTS". UMass Patent Rights shall mean the Patent Rights (as defined in the UMass Agreement (as defined below)) licensed by Hybridon from UMass under the UMass Agreement, including without limitation the patents and patent applications set forth on EXHIBIT L hereto.

Section 1.36 "VALID CLAIM". Valid Claim shall mean a claim which (i) in the case of any unexpired United States or foreign patent, shall not have been donated to the public, disclaimed or held invalid or unenforceable by a court of competent jurisdiction in an unappealed or unappealable decision, or (ii) in the case of any United States or foreign patent application, shall not have been permanently cancelled, withdrawn, abandoned or been pending for more than seven
(7) years.

ARTICLE II
GRANT OF RIGHTS BY HYBRIDON

Section 2.1 LICENSE GRANT.

(a) License Grant to Hybridon Antisense Patent Rights. Subject to the terms and conditions of this Agreement, including without limitation Hybridon's retained rights under Section 2.3 and Section 2.5(a) of this Agreement, Hybridon hereby grants to Isis and its Subsidiaries an exclusive worldwide license or sublicense, as applicable, under the Hybridon Antisense Patent Rights, to practice Antisense Technology and to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products. These rights shall only be sublicensable as explicitly provided in Section 2.2.

(b) Limited License Grant to Hybridon Excluded Patent Rights. Subject to the terms and conditions of this Agreement, including without limitation Hybridon's retained rights under Section 2.3 and Section 2.5(a) of this Agreement, Hybridon hereby grants to Isis and its Subsidiaries the limited worldwide licenses or sublicenses, as applicable, under the Hybridon Excluded Patent Rights to practice Antisense Technology and to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products, in each case solely to the extent specifically described below. These rights shall only be sublicensable as explicitly provided in
Section 2.2.

(i) [*]

(ii) [*]

(iii) under the Immune Stimulation Patent Rights (A) to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products which contain modifications which have neutralized the immune stimulation caused by an immunostimulatory CpG dinucleotide in such Antisense Products, (B) to practice Antisense Technology using oligonucleotides which contain modifications which have neutralized the immune stimulation caused by an immunostimulatory CpG dinucleotide in such oligonucleotides, and (C) to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products which target genes involved in immunity modulation;

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(iv) under the Facilitator Patent Rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, provided that neither such Antisense Products nor such Antisense Technology use, or are used with, a Ribozyme or Ribozyme Technology;

(v) under the Finderon Patent Rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, provided that neither such Antisense Products nor such Antisense Technology use, or are used with, a Ribozyme or Ribozyme Technology;

(vi) under the Amino Patent Rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, provided that such Antisense Products and Antisense Technology use, or are used with, the technology covered by the claims of the Amino Patent Rights solely for the conjugation of functional groups for therapeutic or prophylactic purposes only;

(vii) under the Drug Potentiation Patent Rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology, which Antisense Products and Antisense Technology primarily act against a gene target implicated in cancer through an antisense mechanism, but which may incidentally potentiate an anti-cancer prodrug; and

(viii) under the Exhibit K Patents to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology; provided, however, that the license contemplated by this clause (viii) shall not extend to Antisense Products or Antisense Technology related to specific claimed gene targets or pseudo-cyclic oligonucleotide structures and applications.

The Parties agree that if, during the term of the license and sublicense granted by Hybridon to Isis and its Subsidiaries in this Section 2.1(b), a claim

issues from any patent application included in Hybridon Excluded Patent Rights that is necessary or useful for the practice of Antisense Technology, Hybridon shall not use such claim to preclude or otherwise interfere with the ability of Isis or its Subsidiaries to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products and practice Antisense Technology; provided, however, that to the extent that the license or sublicense grant set forth above in this Section 2.1(b) is limited in scope as to its application to Antisense Products or Antisense Technology, such limitation shall also be applicable to the restrictions on Hybridon's rights to preclude or otherwise interfere with Isis and its Subsidiaries set forth in this paragraph (i.e., if the license or sublicense grant is not applicable, Hybridon shall not be restricted from precluding or interfering).

(c) The licenses and sublicenses granted by Hybridon to Isis and its Subsidiaries in Sections 2.1(a) and (b) to the extent such licenses or sublicenses cover UMass Patent Rights are subject to, without limitation Sections 2.2(a), 2.2(b), 2.2(d), 2.6, 2.7, 4.3(a), 4.3(d), 7.1, 10.4 and 12.4(a) of the License Agreement dated as of February 21, 1990 and restated as of September 8, 1993 by and between Hybridon and University of Massachusetts Medical Center (formerly the Worcester Foundation for Biomedical Research, Inc. and referred to herein as "UMass") (the "UMass Agreement"). A copy of the UMass Agreement is attached to this Agreement as EXHIBIT J. Hybridon hereby represents and warrants as of the date hereof: (i) that Exhibit J is a true, correct and complete copy of the UMass Agreement and all amendments and/or other changes thereto, (ii) that the UMass Agreement is in full force and effect, (iii) that Hybridon is not in default thereunder and (iv) that there has been no waiver of rights by Hybridon thereunder. Hybridon further represents and warrants as of the date hereof that Isis shall have no payment obligation to UMass arising out of the execution and delivery of this Agreement or the sublicensing by Hybridon of the UMass Patent Rights hereby and that any payment obligations that do arise under the UMass Agreement shall be the sole responsibility of Hybridon; provided that Isis may have payment obligations to UMass directly in the case of a termination of the UMass Agreement pursuant to the last paragraph of
Section 2.2(c) of the UMass Agreement.

Section 2.2 SUBLICENSING RIGHT.

(a) Isis and its Subsidiaries shall have the right to grant sublicenses under the licenses and sublicenses from Hybridon set forth in
Section 2.1 above to third parties. Each such sublicense shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement, and shall provide that any Sublicensee shall have no right to grant further sublicenses except on terms consistent with this Section
2.2. In the event of a material default by any

Sublicensee under a sublicense agreement, Isis will inform Hybridon and take commercially reasonable efforts to cause the Sublicensee to cure the default or will terminate the sublicense or, if Isis is not the sublicensor under such sublicense, Isis will cause the sublicensor under such sublicense to take commercially reasonable efforts to cause the Sublicensee to cure the default or to terminate such sublicense; provided, however that none of Isis, its Subsidiaries or the sublicensor under such sublicense shall be responsible to Hybridon for the default by the Sublicensee under the sublicense agreement.

(b) (i) Isis shall provide UMass with a copy of any sublicense granted pursuant to this Section 2.2 by Isis or its Subsidiaries or Sublicensees which includes a sublicense of UMass Patent Rights, within thirty (30) days after the grant of such sublicense. Hybridon shall use its reasonable best efforts to cause UMass to enter into a confidentiality agreement with Isis with respect to sublicenses provided to UMass under this clause (i) (it being understood that Hybridon shall not be obligated to make any payment or to provide any other consideration to UMass for such confidentiality agreement by UMass).

(ii) Isis shall provide Hybridon with written notice of any sublicense (an "Isis Sublicense") granted pursuant to this Section 2.2 by Isis or its Subsidiaries or Sublicensees within thirty (30) days after the grant of such sublicense, such written notice specifying the name of the Sublicensee, the date of the sublicense and whether such Isis Sublicense includes UMass Patent Rights or is a Naked Sublicense. Hybridon shall have the right, not more than twice during any calendar year, to have any Isis Sublicense reviewed by an independent third party chosen by Hybridon to ascertain whether such Isis Sublicense includes UMass Patent Rights or is a Naked Sublicense. Isis shall cooperate in all reasonable respects with the review of such Isis Sublicense by the independent third party under this Section 2.2(b)(ii), including without limitation responding to questions directed at determining whether such Isis Sublicense includes UMass Patent Rights or is a Naked Sublicense. Hybridon shall pay all costs of such review; provided, however, that if, contrary to the information provided by Isis in the written notice provided to Hybridon in connection with the grant of such Isis Sublicense, such Isis Sublicense does in fact include UMass Patent Rights or is a Naked Sublicense, Isis shall reimburse Hybridon for the costs of such review. If the independent third party determines that such Isis Sublicense includes UMass Patent Rights or is a Naked Sublicense, such independent third party shall notify Isis and Hybridon. If Isis disagrees with the determination of the independent third party, the third party shall be permitted hereunder to provide Hybridon with a copy of the Isis Sublicense.

(c) Any Naked Sublicense of Hybridon Intellectual Property by Isis or its Subsidiaries to (i) third parties which are parties to license or sublicense agreements with Isis or its Affiliates or Subsidiaries not involving Hybridon Intellectual Property and (ii) Affiliates of Isis or its Subsidiaries shall be made by Isis or its Subsidiaries on commercially reasonable terms. Isis and its Subsidiaries shall not sublicense Hybridon Intellectual Property separately from any intellectual property of Isis or its Affiliates or Subsidiaries, including without limitation the Isis Intellectual Property, for the purpose of reducing the amount of Sublicense Income payable by Isis or its Subsidiaries to Hybridon under
Section 4.3.

Section 2.3 NO IMPLIED LICENSES; RETAINED RIGHTS. Other than those rights and licenses explicitly granted herein, no right or license under the Hybridon Intellectual Property is granted to Isis or its Subsidiaries or Sublicensees. Notwithstanding the rights and licenses granted herein, Hybridon shall retain its rights under the Hybridon Intellectual Property for all purposes, including without limitation its rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Antisense Products, to practice Antisense Technology and to license or sublicense Hybridon Intellectual Property; provided, that, except for licenses and sublicenses provided under the Third Party License Agreements, Hybridon and its Subsidiaries shall not grant any Naked Sublicenses of the Hybridon Antisense Patent Rights to any third parties (other than Subsidiaries).

Section 2.4 COMMERCIALIZATION EFFORTS. Isis hereby agrees to undertake reasonable efforts to bring one or more products covered by a claim of the UMass Patent Rights into commercial use as quickly as is reasonably possible.

Section 2.5 LICENSE AGREEMENTS TO WHICH HYBRIDON IS A PARTY.

(a) Notwithstanding Section 2.1 of this Agreement, Hybridon shall not and is not licensing or sublicensing to Isis or its Subsidiaries any rights under the Hybridon Intellectual Property to the extent that such Hybridon Intellectual Property has been licensed or sublicensed by Hybridon under the Third Party License Agreements.

(b) Hybridon hereby represents and warrants as of the date hereof that, except for the agreements set forth on EXHIBIT H-2 attached hereto: (i) Hybridon has not entered into any agreement under which it has licensed from another party any of the Hybridon Intellectual Property and
(ii) Hybridon has not entered into any agreement under which it has licensed to another party any of the Hybridon Intellectual Property other than the Third Party License Agreements.

(c) Hybridon agrees that it shall not amend or expand any Third Party License Agreement in a manner that is inconsistent with this Agreement, including without limitation amending any Third Party License Agreement to grant any new exclusive license under the Hybridon Antisense Patent Rights, without the prior written consent of Isis, which consent shall not be unreasonably withheld or delayed.

(d) Hybridon hereby represents and warrants as of the date hereof as to the Third Party License Agreements: (i) that it has provided true

and correct copies of all such agreements to Isis, (ii) that all such agreements are in full force and effect, (iii) that Hybridon is not in default under any such agreement and (iv) that there has been no waiver of rights by Hybridon thereunder.

Section 2.6 METHYLGENE LICENSE AGREEMENT. If Methylgene Inc. ("Methylgene") designates a target which Methylgene desires to select as a Second Molecular Target or a Third Molecular Target (as such terms are defined in the Amended and Restated License Agreement made effective as of January 4, 1996, as amended and restated on September 21, 2000 (the "Methylgene License Agreement")) pursuant to the terms of the Methylgene License Agreement [*].

Section 2.7 ORIGENIX LICENSE AGREEMENT. Hybridon shall [*] License Agreement dated as of January 22, 1999 (the "OriGenix License Agreement") between Hybridon and OriGenix Technologies Inc. ("OriGenix")) and shall [*]

Section 2.8 AFFILIATES. Hybridon hereby represents and warrants as of the date hereof that no Affiliate of Hybridon owns or controls any patents, patent applications or inventions invented, licensed or sublicensed by such Affiliate prior to April 26, 2001 which are necessary or useful to practice Antisense Technology.

ARTICLE III
GRANT OF RIGHTS BY ISIS

Section 3.1 LICENSE GRANT. Subject to the terms and conditions of this Agreement, Isis hereby grants to Hybridon and its Subsidiaries a worldwide non-exclusive license or sublicense, as applicable under the Isis Intellectual Property Rights to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Hybridon Antisense Drugs. These rights shall only be sublicensable as explicitly provided in Section 3.2.

Section 3.2 SUBLICENSING RIGHT. Hybridon and its Subsidiaries shall have the right to grant sublicenses under the license from Isis set forth in Section 3.1 above to third parties only to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Hybridon Antisense Drugs. Each such sublicense shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement, and shall provide that any Sublicensee shall have no right to grant further sublicenses except on

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terms consistent with this Section 3.2. In the event of a material default by any Sublicensee under a sublicense agreement, Hybridon will inform Isis and take commercially reasonable efforts to cause the Sublicensee to cure the default or will terminate the sublicense or, if Hybridon is not the sublicensor under such sublicense, Hybridon will cause the sublicensor under such sublicense to take commercially reasonable efforts to cause the Sublicensee to cure the default or to terminate such sublicense; provided however that none of Hybridon, its Subsidiaries or the sublicensor under such sublicense shall be responsible to Isis for the default by the Sublicensee under the sublicense agreement. Notwithstanding the rights granted under this Section 3.2, Hybridon and its Subsidiaries shall [*]

Section 3.3 TULLIS PATENTS.

(a) Subject to the terms and conditions of this Agreement, Isis hereby grants to Hybridon and its Subsidiaries a worldwide non-exclusive sublicense, with the right to grant sublicenses as provided in Section 3.3(b), under the Tullis Patents to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Hybridon Antisense Drugs, provided that such Hybridon Antisense Drugs employ technology covered by the Isis Intellectual Property as a material element thereof.

(b) (i) Hybridon and its Subsidiaries shall have the right to grant sublicenses under the license from Isis set forth in Section 3.3(a) to third parties (x) provided that such sublicense may only be granted to third parties in connection with the grant of a sublicense to such third parties of Isis Intellectual Property under Section 3.2, and (y) solely to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Hybridon Antisense Drugs that employ technology covered by the Isis Intellectual Property as a material element thereof. Each such sublicense shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement, and shall provide that any such Sublicensee shall have no right to grant further sublicenses except on terms consistent with this Section 3.3(b).

(ii) Hybridon shall provide MBI with a copy of any sublicense granted by Hybridon or its Subsidiaries or Sublicensees pursuant to this Section 3.3(b) within thirty (30) days after the grant of such sublicense. Isis shall use its reasonable best efforts to cause MBI to enter into a confidentiality agreement with Hybridon with respect to sublicenses provided to MBI under this Section 3.3(b) (it being understood that Isis shall not be obligated to make any payment or to provide any other consideration to MBI for such confidentiality agreement by MBI). In the event that MBI does not sign such a confidentiality agreement with Hybridon, Isis shall enforce against MBI, for and on behalf of Hybridon, the confidentiality provisions of the Tullis

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Agreement with respect to the sublicenses provided by Hybridon, its Subsidiaries or Sublicensees to MBI and with respect to any other confidential information of Hybridon or a Subsidiary or Sublicensee of Hybridon that MBI receives.

(iii) In the event of a material default by any Sublicensee under a sublicense agreement pursuant to this Section 3.3(b), Hybridon will inform Isis and take commercially reasonable efforts to cause the Sublicensee to cure the default or will terminate the sublicense, or if Hybridon is not the sublicensor under such sublicense, Hybridon will cause the sublicensor under such sublicense to take commercially reasonable efforts to cause the Sublicensee to cure the default or to terminate such sublicense; provided however that none of Hybridon, its Subsidiaries or the sublicensor under such sublicense shall be responsible to Isis for the default by the Sublicensee under the sublicense agreement. Notwithstanding the rights granted under this Section 3.3(b), Hybridon shall [*]

(c) A copy of the Tullis Agreement is attached to this Agreement as EXHIBIT N. Isis hereby represents and warrants as of the date hereof: (i) that Exhibit N is a true, correct and complete copy of the Tullis Agreement and all amendments and/or other changes thereto that affect the rights of Hybridon as a sublicensee thereunder, (ii) that the Tullis Agreement is in full force and effect, (iii) that Isis is not in default thereunder and (iv) that there has been no waiver of rights by Isis thereunder. Isis further represents and warrants as of the date hereof that Hybridon shall have no payment obligation to MBI arising out of the execution and delivery of this Agreement or the sublicensing by Isis of the Tullis Patents hereby and that any payment obligations that do arise shall be the sole responsibility of Isis.

Section 3.4 SCOPE OF LICENSE. Hybridon acknowledges that Isis claims intellectual property covering numerous chemical modifications to oligonucleotides including without limitation modifications to backbone linkages, sugars, heterocyclic bases and conjugates and to methods of making the same, including methods of making various oligonucleotide intermediates (the "Isis Chemistry Intellectual Property"). Hybridon acknowledges and agrees that no Isis Chemistry Intellectual Property is included in the Isis Intellectual Property being licensed or sublicensed to Hybridon and its Subsidiaries pursuant to Section 3.1 of this Agreement, except as expressly set forth below in this
Section 3.4. [*] Isis hereby agrees that any patents owned or controlled by Isis or an Affiliate as of the date hereof or any patents that may issue in the future to Isis or an Affiliate from or in respect of any patent applications which Isis or an Affiliate owned or had the right to sublicense as of April 26, 2001, which would otherwise be infringed by the practice of the Hybridon 2'-O Methyl Chemistry, shall constitute Isis Intellectual Property for all purposes of this Agreement, including without limitation the license grant provided in Section

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3.1; provided, however, that the license grant with respect to such patents shall only provide Hybridon and its Subsidiaries with the right to discover, develop, make, have made, use, sell, have sold, offer to sell, import and have imported Hybridon Antisense Drugs which incorporate the Hybridon 2'-O

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Methyl Chemistry. If any patent of Isis or an Affiliate includes claims to a combination of modifications to both substitution with 2'-O-methyl and Isis Chemistry Intellectual Property in addition to 2'-O-methyl substituents, nothing in this Section 3.4 shall be deemed to be a grant of rights to Hybridon or its Subsidiaries to practice the Isis Chemistry Intellectual Property other than 2'-O-methyl substituents.

Section 3.5 NO IMPLIED LICENSES. Other than those rights and licenses explicitly granted herein, no right or license under the Isis Intellectual Property or the Tullis Patents is granted to Hybridon or its Subsidiaries or Sublicensees.

Section 3.6 LIMITATION ON LICENSE GRANT WITH RESPECT TO TARGET VALIDATION AND GENE FUNCTIONALIZATION ACTIVITIES. Notwithstanding anything to the contrary in Sections 3.1 and 3.3(a), the licenses set forth in Sections 3.1 and 3.3(a) above do not grant Hybridon and its Subsidiaries the right:

(a) to use the Isis Intellectual Property and the Tullis Patents for target validation and gene functionalization activities, except when, and only to the extent that, (i) such activities are directed to the discovery, development, Optimization and commercialization of a Hybridon Antisense Drug and (ii) such activities are performed only by Hybridon or a Subsidiary and not by a contractor or a collaborator, or

(b) to use, or enable any third party to use, any information that is developed during such target validation and gene functionalization activities in the development of a drug other than a Hybridon Antisense Drug, including without limitation, small molecules, ribozymes, proteins and pseudocyclic oligonucleotide structures.

Section 3.7 NOTICE OF HYBRIDON ANTISENSE DRUGS. Hybridon shall provide Isis with written notice of any Hybridon Antisense Drugs developed under a sublicense granted by Hybridon or its Subsidiaries under Section 3.2 (a "Hybridon Antisense Drug Sublicense") promptly after such Hybridon Antisense Drug is developed. Isis shall have the right, not more than twice during any calendar year, to have any Hybridon Antisense Drug Sublicense reviewed by an independent third party chosen by Isis to confirm whether such Hybridon Antisense Drug qualifies as a Hybridon Antisense Drug as defined under this Agreement. Hybridon shall cooperate in all reasonable respects with the review of such Hybridon Antisense Drug Sublicense by the independent third party under this Section 3.6, including without limitation responding to questions directed at determining whether such Hybridon Antisense Drug qualifies as a Hybridon Antisense Drug. Isis shall pay all costs of such review; provided, however, that if such Hybridon Antisense Drug does not qualify as a Hybridon Antisense Drug as defined under this Agreement, Hybridon shall reimburse Isis for the costs of such review. If the independent third party determines that such Hybridon Antisense Drug does not qualify as

a Hybridon Antisense Drug as defined under this Agreement, such independent third

party shall notify Hybridon and Isis. If Hybridon disagrees with the determination of the independent third party, the third party shall be permitted to provide Isis with a copy of the Hybridon Antisense Drug Sublicense.

Section 3.8 AFFILIATES. Isis hereby represents and warrants as of the date hereof that no Affiliate of Isis owns or controls any patents, patent applications or inventions invented, licensed or sublicensed by such Affiliate prior to April 26, 2001 which cover or claim Motifs or RNaseH Dependent Mechanisms of Action.

ARTICLE IV
PAYMENT OBLIGATIONS

Section 4.1 CONSIDERATION FOR LICENSES OF HYBRIDON INTELLECTUAL PROPERTY AND ISIS INTELLECTUAL PROPERTY. In consideration of the licenses and sublicenses granted under Sections 2.1 and 3.1 of this Agreement and the restrictions on use agreed to by Hybridon under this Agreement, Hybridon and Isis each shall pay to the other the consideration set forth in the Master Agreement and Section 4.2 and Section 4.3 of this Agreement. Isis and Hybridon each recognizes that the other Party has expended significant efforts and resources in the research and development of Antisense Technology and the payments to be made under the Master Agreement to each Party for the patent licenses and sublicenses granted hereunder will allow each Party to recoup such expenditures.

Section 4.2 CONSIDERATION FOR SUBLICENSE OF TULLIS PATENTS. In consideration of the sublicense granted by Isis to Hybridon under Section 3.3 of this Agreement, Hybridon shall pay to Isis the annual maintenance fee and royalties provided below:

(a) On the date hereof and each anniversary of such date thereafter (until the earlier of the termination of the sublicense grant under Section 3.3 or the date on which there ceases to be any Valid Claims included in the Tullis Patents), an annual maintenance fee of [*]

(b) Hybridon shall pay to Isis earned royalties at the rate of
[*] of Tullis Net Sales of Tullis Products. Hybridon shall be obligated to pay such royalties on a country-by-country basis, so long as there continues to be a Valid Claim included in the Tullis Patents which covers the manufacture, use or sale of the applicable Tullis Product in such country. During the term of the sublicense under Section 3.3 and for so long thereafter as Hybridon is required to report royalties payable under this Section 4.2, Hybridon shall deliver to Isis within thirty (30) days after March 31, June 30, September 30 and December 31 of each year a report indicating (i) Tullis Net Sales for each Tullis Product, on a Tullis

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Product-by-Tullis Product and country-by-country basis, including an accounting of the deductions from Tullis Net Sales permitted by the definition thereof and (ii) total royalties owed. Simultaneously with the delivery of each such report, Hybridon shall pay to Isis the royalty payments due under this Agreement for the period covered by such report. If no royalties are due, it shall be so reported.

Section 4.3 ISIS SUBLICENSE INCOME. Isis shall pay to Hybridon [*] of all Sublicense Income, [*] in respect of Sublicense Income received in connection with a Naked Sublicense [*]. Such payment by Isis shall be paid to Hybridon within 30 days after the calendar quarter in which the Sublicense Income was received by Isis or a Subsidiary. Isis shall deliver to Hybridon with such payment a report describing such Sublicense Income and how such Sublicense Income was calculated, all on a country-by-country and product-by-product basis.

Section 4.4 RECORDS; AUDITS. For a period not less than three (3) years after the relevant period, each Party shall keep full, true and accurate books of account sufficient to determine the amounts payable pursuant to Section 4.2(b) or 4.3, as the case may be. Each Party shall have the right, not more than once during any calendar year, to have the books and records of the other Party audited by a qualified independent accounting firm of its choosing, under appropriate confidentiality provisions, to ascertain the accuracy of the reports and payments hereunder and compliance by the other Party and its Subsidiaries and Sublicensees with their obligations under Section 4.2(b) or 4.3, as the case may be. Such audit shall be conducted upon at least ten (10) days' advance notice during normal business hours and in a manner that does not interfere unreasonably with the business of the audited entity. Any underpayment or overpayment determined by such audit shall promptly be paid or refunded by Hybridon or Isis, as the case may be. If a Party has underpaid an amount due under Section 4.2(b) or 4.3, as the case may be, by more than five percent (5%), such Party shall also reimburse the other Party for the cost of such audit (with the cost of the audit to be paid by the other Party in all other cases).

Section 4.5 PAYMENT CURRENCY. All amounts due under this Agreement shall be paid to the designated Party in United States currency by wire transfer to an account in a United States bank specified by such Party or in such other form and/or manner as such Party may reasonably request. The payments due on sales in currencies other than United States dollars shall be calculated using the appropriate exchange rate of such currency quoted in the Wall Street Journal on the close of business on the last business day prior to which such payment is made.

Section 4.6 LATE PAYMENTS; COLLECTIONS. Any amount not paid when due under this Agreement or the Master Agreement shall bear interest at the lesser

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of (i) one and one-half percent (1.5%) per month, compounded monthly, or (ii) the highest rate permitted by law. Each Party agrees to pay all costs of collection, including reasonable attorneys' fees, incurred by the other Party in enforcing the payment obligations of the first Party under this Agreement and the Master Agreement.

ARTICLE V
COLLABORATION

In addition to the collaboration between the Parties with respect to intellectual property protection under Article VI, the Parties shall further collaborate hereunder through a committee (the "Collaboration Committee") consisting of two representatives of each Party. The Parties shall establish the Collaboration Committee within thirty (30) days after the Effective Date. The Collaboration Committee shall meet at least twice each calendar year in person or by video conference during the term of this Agreement to review the progress of Isis' development efforts with respect to Isis' Antisense Products that are covered by Hybridon Intellectual Property. The Parties intend that the Collaboration Committee shall act as a forum for the Parties to work cooperatively [*] The Parties also anticipate that the Collaboration Committee may recommend to the Parties from time to time that certain aspects of the drug development process be performed by Hybridon for Isis or that the Parties consider entering into further collaborations. Neither Party shall be bound by any recommendation of the Collaboration Committee but shall consider its recommendations in good faith. In addition, neither Party shall be obligated to disclose any Confidential Information to the Collaboration Committee.

ARTICLE VI
INTELLECTUAL PROPERTY PROTECTION

Section 6.1 Patent Prosecution and Cooperation.

(a) PROSECUTION AND MAINTENANCE OF HYBRIDON ANTISENSE PATENT RIGHTS.

(i) Hybridon will be responsible for prosecuting and maintaining the Hybridon Antisense Patent Rights. Hybridon shall promptly forward to Isis' patent counsel any substantive actions prepared for or received from the U.S. Patent and Trademark Office or any foreign patent office which may materially affect patent rights, e.g., claim scope or patent term. Isis' patent counsel shall provide any comments to Hybridon in sufficient time for Hybridon to reflect such comments in any response. Any comments made by Isis shall be made in good faith and shall be directed to maximizing the claims covered by the Hybridon Antisense Patent Rights.

(ii) If Hybridon agrees with the comments of Isis' patent counsel, it shall reflect such comments in its response. If Hybridon

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disagrees with such comments, it shall notify Isis, and either Party may then submit such dispute (a "Patent Comment Dispute") for resolution by an intellectual property lawyer (the "Neutral Lawyer") with at least five years of experience and a background in biotechnology or pharmaceutical patent matters. The Neutral Lawyer shall be selected by mutual agreement of the Parties; provided, however, that if the Parties

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cannot agree on a Neutral Lawyer within five days of a Party's request for a Neutral Lawyer under this provision, the Neutral Lawyer shall be selected by the American Arbitration Association in Washington, D.C. Each Party shall submit its position as to the Patent Comment Dispute to the Neutral Lawyer, who shall resolve the dispute by agreeing to one of the submitted positions of the Parties without any changes to such position. The Parties agree that the position agreed to by the Neutral Lawyer shall be reflected in the action or response being prepared and that the costs of the Neutral Lawyer shall be paid by the Party whose position is not agreed to by the Neutral Lawyer. The decision of the Neutral Lawyer shall be final and binding on the Parties. In light of the foregoing dispute resolution mechanism, neither Party shall submit a Patent Comment Dispute to binding arbitration in accordance with the provisions of Article VIII. The Parties shall cooperate in all respects to resolve any Patent Comment Dispute in sufficient time to avoid any loss of rights, including without limitation jointly instructing the Neutral Lawyer to make a decision in sufficient time to avoid any loss of rights.

(iii) Isis will be responsible for and pay fifty percent (50%) of Hybridon's costs incurred in prosecuting and maintaining the Hybridon Antisense Patent Rights, net of amounts paid to Hybridon for such costs by other licensees and not including any costs of Hybridon incurred in connection with a Patent Comment Dispute (except as otherwise specified in the foregoing Section 6.1(a)(ii)). Hybridon shall direct its counsel to invoice Isis directly for Isis' share of such costs as such costs are incurred.

(b) JOINT PATENT COMMITTEE. Hybridon and Isis will, within sixty (60) days after the execution of this Agreement, establish a committee (the "Joint Patent Committee") consisting of three representatives of each Party. The Joint Patent Committee shall confer twice each calendar year or as necessary to support timely decision making during the term of this Agreement to discuss patent prosecution issues, budgets and strategies relating to the Hybridon Antisense Patent Rights. The Joint Patent Committee shall also, as set forth in Section 5.2(b), determine which Party faces the greatest competitive threat in the event of infringement by a third party of any of the Hybridon Antisense Patent Rights. In the event that the Joint Patent Committee is unable to resolve any matter presented for resolution,. either Party shall have the right to submit such matter to binding arbitration in accordance with the provisions of Article VIII.

(c) INTERFERENCE BETWEEN ISIS INTELLECTUAL PROPERTY AND HYBRIDON ANTISENSE PATENT RIGHTS. If an interference is declared between any of the Isis Intellectual Property and any of the Hybridon Antisense Patent Rights (other than the UMass Patent Rights), each Party shall be represented by its own counsel in the interference proceedings; provided, however, that Hybridon's counsel shall be jointly selected by Isis and

Hybridon; and provided further that if Hybridon and Isis can not agree on counsel for Hybridon, a patent lawyer with at least five years of experience in interference practice and a background in biotechnology or pharmaceutical patent matters shall be selected to represent Hybridon by the American Arbitration Association in Washington, D.C. Each Party shall seek to resolve the interference in a manner that maximizes the value to both parties of the combined portfolio of the Hybridon Antisense Patent Rights and the Isis Intellectual Property. If an interference is declared between any UMass Patent Rights and any Isis Intellectual Property, Hybridon will cooperate with Isis in the resolution thereof to the extent permitted under the UMass Agreement or, if Hybridon cannot so cooperate due to obligations to UMass, Isis will not be obligated to reimburse Hybridon for any expenses related to the interference proceedings. If an interference is declared between any of the Hybridon Antisense Patent Rights and the intellectual property of a third party or between any of the Isis Intellectual Property and the intellectual property of a third party, then Hybridon or Isis, as the case may be, shall have sole control of prosecuting the interference.

(d) PATENT COOPERATION. Isis hereby represents and warrants as of the date hereof that since April 26, 2001, neither Isis nor any of its Affiliates has challenged, opposed or taken any action to provoke any interference with any Hybridon Intellectual Property, and Isis agrees that from and after the date of this Agreement Isis shall not, and shall cause its Non-Parent Affiliates to not, challenge, oppose or take any action to provoke any interference with, or maintain any current challenge or opposition to, any Hybridon Intellectual Property. Hybridon hereby represents and warrants as of the date hereof that since April 26, 2001, neither Hybridon nor any of its Affiliates has challenged, opposed or taken any action to provoke any interference with any Isis Intellectual Property, and Hybridon agrees that from and after the date of this Agreement Hybridon shall not, and shall cause its Non-Parent Affiliates to not, challenge, oppose or take any action to provoke any interference with, or maintain any current challenge or opposition to, any Isis Intellectual Property. Hybridon further agrees that it will not use any Hybridon Antisense Patent Rights to challenge or interfere with any patents owned by Isis arising out of inventions invented, licensed or sublicensed by Isis prior to April 26, 2001, including those included in the Isis Intellectual Property, and that Hybridon will not oppose any patents claiming inventions invented, licensed or sublicensed by Isis prior to April 26, 2001, including those included in the Isis Intellectual Property, that cover chemical modifications to antisense oligonucleotides. The foregoing obligations not to challenge, oppose or interfere include, without limitation obligations not to directly or indirectly provoke an interference, participate in an opposition or make any claims of invalidity; PROVIDED THAT either Party and its Affiliates may raise a claim

of invalidity as a defense in a lawsuit filed by the other Party or its Affiliates. In addition, in the context of any interference between any of the Isis Intellectual Property and any of the Hybridon Antisense Patent Rights provoked by the U.S. Patent and Trademark Office, the Parties shall use commercially reasonable efforts to reach a settlement that maximizes the value to both Parties of the combined portfolio of the Hybridon Antisense Patent Rights and the Isis Intellectual Property.

(e) Notwithstanding any provision of this Section 6.1 to the contrary, nothing in this Section 6.1 shall (x) prevent Hybridon from complying with its obligations with respect to the Hybridon Intellectual Property under the UMass Agreement or the Third Party License Agreements, as applicable, or (y) limit the rights of the third parties under such agreements with respect to the Hybridon Intellectual Property, including as to clauses (x) and (y):

(i) UMass' right to prepare, file, prosecute and maintain certain patents and patent applications in the name of UMass pursuant to
Section 8.1 of the UMass Agreement;

(ii) Hybridon's obligation to use counsel acceptable to UMass and to consult with UMass regarding the preparation, filing, prosecution or maintenance of certain patents and patent applications pursuant to Section 8.1 of the UMass Agreement;

(iii) Hybridon's obligation pursuant to Section 8.2 of the UMass Agreement (A) to provide notice to UMass prior to abandoning, or failing to make payment or take other necessary actions to maintain, certain patents and patent applications and (B) to continue the prosecution or maintenance of such patents after notice has been provided and before UMass has had sufficient time to assume the prosecution or maintenance of such patent;

(iv) Methylgene's right under Section 5.5 of the Methylgene License Agreement to take measures to ensure the registration and maintenance of certain patents and patent applications if Hybridon fails to register and maintain such patents and patent applications;

(v) Methylgene's right under Section 5.5 of the Methylgene License Agreement to (A) approve the patent agent selected to prosecute certain patents and patent applications, (B) be kept informed regarding progress or problems related to certain patents and patent applications and (C) have its comments on such progress or problems be considered;

(vi) OriGenix's right under Section 5.5 of the OriGenix License Agreement to take measures to ensure the registration and maintenance of certain patents and patent applications if Hybridon fails to register and maintain such patents and patent applications;

(vii) OriGenix's right under Section 5.5 of the OriGenix License Agreement to (A) approve the patent agent selected to prosecute certain patents and patent applications, (B) be kept informed regarding progress or problems related to certain patents and patent applications and (C) have its comments on such progress or problems be considered;

(viii) EpiGenesis' right pursuant to Section 6.2.2 of the Development and License Agreement between EpiGenesis Pharmaceuticals, Inc. and Hybridon, dated as August 9, 2000 (the "EpiGenesis License Agreement") to file, prosecute and maintain certain patents and patent applications if Hybridon elects not to continue to seek or maintain patent protection on such patents or patent applications;

(ix) EpiGenesis' right pursuant to Section 6.2.2 of the EpiGenesis License Agreement to (A) have Hybridon consult with EpiGenesis regarding the prosecution of certain patents and patent applications, (B) have a reasonable amount of time to consider and comment on any document to be filed in connection with the prosecution of such patents and patent applications and (c) have its comments on such comments be seriously considered;

(x) Hybridon's obligation pursuant to Section 6.2.3 of the EpiGenesis License Agreement (A) to provide notice to EpiGenesis prior to abandoning, or failing to make payment or take other necessary actions to maintain certain patents and patent applications and (B) to continue the prosecution or maintenance of such patents and patent applications after notice has been provided and before EpiGenesis has had sufficient time to assume the prosecution or maintenance of such patents and patent applications; and

(xi) Boston Biosystems, Inc.'s (BBI) right and Avecia Holdings plc's right to prosecute or maintain certain patents and patent applications if Hybridon declines to prosecute or maintain such patents or patent applications pursuant to (A) Section 4.03 of the PNT Monomer Patent License and Option Agreement dated as of September 20, 2000 by and between Hybridon and BBI, (B) Section 4.03 of the Oligonucleotide Purification Patent License Agreement

dated as of September 20, 2000 by and between Hybridon and BBI, and
(C) Section 5.03 of the Interference Patent Sublicense Option Agreement dated as of September 20, 2000 by and between Hybridon and BBI.

Section 6.2 ENFORCEMENT OF HYBRIDON ANTISENSE PATENT RIGHTS

(a) NOTICE. If Hybridon or Isis becomes aware that any of the Hybridon Antisense Patent Rights is infringed by a third party or is subject to a declaratory judgment action relating to infringement or invalidity, Hybridon or Isis, as the case may be, shall promptly notify the other Party.

(b) FIRST RIGHT OF ENFORCEMENT. In the event of infringement of the Hybridon Antisense Patent Rights by a third party, the Party facing the greatest competitive threat from the infringement shall have the first right (but not the obligation), at its sole expense, to undertake such action as it shall determine, in its discretion, appropriate to enforce the Hybridon Antisense Patent Rights; provided, however, that such Party shall not admit the invalidity or unenforceability of any Hybridon Antisense Patent Rights, grant a license to the allegedly infringing third party or enter into any settlement agreement without the other Party's prior written consent. The determination of which Party faces the greatest competitive threat from the infringement shall be made by the Joint Patent Committee. If the Joint Patent Committee determines that neither Party faces a greater competitive threat than the other Party, then Hybridon shall have the first right to enforce the Hybridon Antisense Patent Rights. The Party enforcing the Hybridon Antisense Patent Rights shall keep the other Party reasonably informed on a quarterly basis, in person or by telephone, prior to and during any such enforcement. The other Party shall assist the Party enforcing the Hybridon Antisense Patent Rights, upon the enforcing Party's request and at the enforcing Party's sole expense, in taking any action to enforce the Hybridon Antisense Patent Rights and shall join in any such action if deemed by a court of competent jurisdiction to be a necessary party. Neither Party shall incur liability to the other Party as a consequence of such litigation or any unfavorable decision resulting therefrom, including any decision holding any of the Hybridon Antisense Patent Rights invalid, not infringed or unenforceable. Notwithstanding the foregoing, if Isis is the Party enforcing the Hybridon Antisense Patent Rights under this Section 6.2(b) and such Hybridon Antisense Patent Rights are included in the claims that are the subject matter of the UMass Agreement or are licensed by Hybridon under the Third Party License Agreements, Isis' rights to enforce such Hybridon Antisense Patent Rights shall be limited to the rights of Hybridon to enforce such Hybridon Antisense Patent Rights, and subject to and limited by the rights of the other parties to the

UMass Agreement and the Third Party License Agreements, as set forth in the UMass Agreement or the Third Party License Agreements, as applicable, including:

(i) UMass's right pursuant to Section 9.2 of the UMass Agreement to prosecute any infringements of certain patents and patent applications licensed to Hybridon pursuant to the UMass Agreement;

(ii) Hybridon's obligation pursuant to Section 9.3 of the UMass Agreement to seek the consent of UMass to any settlement, consent judgement or other voluntary final disposition of a suit involving certain patents and patent applications licensed to Hybridon pursuant to the UMass License;

(iii) UMass' right to intervene and take over the sole defense of a declaratory judgment action pursuant to Section 9.6 of the UMass Agreement;

(iv) Methylgene's right pursuant to Section 5.1(b) of the Methylgene License Agreement to initiate infringement actions related to certain patents and patent applications as it may in its discretion deem necessary or desirable;

(v) OriGenix's right pursuant to Section 5.1(v) of the OriGenix License Agreement to initiate infringement actions related to certain patents and patent applications as it may in its discretion deem necessary or desirable; and

(vi) EpiGensesis' right pursuant to Section 6.6 of the EpiGenesis License Agreement to initiate infringement actions related to certain patents and patent applications and to consent to any settlement of infringement litigation that would materially diminish the rights of EpiGenesis in certain patents and patent applications.

Items (i) through (vi) of this Section 6.2(b) are collectively referred to as the "Other Enforcement Rights".

(c) ENFORCEMENT BY OTHER PARTY. If the Party having the first right to enforce the Hybridon Antisense Patent Rights pursuant to Section 5.2(b) above fails to file an action to abate an infringement of the Hybridon Antisense Patent Rights, within six (6) months after a written request from the other Party to do so, or if such Party fails to diligently prosecute or discontinues the prosecution of any such action, the other Party at its sole expense may, in its discretion, undertake such action as it determines appropriate (other than the grant of a license to the allegedly infringing third party) to enforce such Hybridon Antisense

Patent Rights. Such other Party shall keep the Party that had the first right to enforce the Hybridon Antisense Patent Rights reasonably informed on a quarterly basis, in person or by telephone, prior to and during any such enforcement. In such case, the Party that had the first right to enforce the Hybridon Antisense Patent Rights shall assist such other Party, upon such other Party's request and at such other Party's sole expense, in taking any action to enforce the Hybridon Antisense Patent Rights and shall join in any such action if deemed by a court of competent jurisdiction to be a necessary party. Neither Party shall incur liability to the other Party as a consequence of such litigation or any unfavorable decision resulting therefrom, including any decision holding any of the Hybridon Antisense Patent Rights invalid, not infringed or unenforceable. Notwithstanding the foregoing, if Isis is the Party enforcing the Hybridon Antisense Patent Rights under this Section 6.2(c) and such Hybridon Antisense Patent Rights are included in the claims that are the subject matter of the UMass Agreement or are licensed by Hybridon under the Third Party License Agreements, Isis' rights to enforce such Hybridon Antisense Patent Rights shall be limited to the rights of Hybridon to enforce such Hybridon Antisense Patent Rights, and subject to and limited by the rights of the other parties to the UMass Agreement and the Third Party License Agreements, as set forth in the UMass Agreement or the Third Party License Agreements, as applicable, including the Other Enforcement Rights.

(d) RECOVERIES. All monies recovered upon the final judgment or settlement of any action involving the enforcement of Hybridon Antisense Patent Rights as contemplated by this Section 6.2 shall be allocated in the following order of priority: (i) first to reimburse the costs and expenses (including reasonable attorney fees and costs) incurred by the Parties in prosecuting such action, and (ii) any remaining portion of the recovery shall be divided between the Parties in proportion to the respective total losses, determined by aggregating both past and prospective losses, each Party would have been reasonably likely to have suffered had such infringement continued unabated. Notwithstanding the foregoing, if the Hybridon Antisense Patent Rights that were the subject of the action are included in the claims that are the subject matter of the UMass Agreement or are licensed by Hybridon under the Third Party License Agreements, the provisions of this Section 6.2(d) shall only apply to such monies recovered upon the final judgment or settlement of such action as remain following payment of monies to third parties as required under the UMass Agreement and the Third Party License Agreements.

ARTICLE VII
CONFIDENTIALITY

Section 7.1 CONFIDENTIAL INFORMATION. Each Party agrees that all Confidential Information of a Party that is disclosed by a Party to the other

Party (a) shall be maintained in confidence by the receiving Party and shall not be used by the receiving Party for any purpose other than as permitted under this Agreement, and (b) shall not be disclosed by the receiving Party to any third party who is not a Subsidiary of the receiving Party, or a consultant or an advisor to the receiving Party or a Subsidiary of the receiving Party, without the prior written consent of the disclosing Party; provided, however, that Confidential Information may only be disclosed by the receiving Party to Subsidiaries or consultants or advisors to the receiving Party or its Subsidiaries if such Subsidiaries, consultants or advisors, as the case may be, have agreed in writing to be bound by the obligations of the receiving Party under this Section 7.1. Notwithstanding the foregoing, the receiving Party shall be entitled to use and disclose Confidential Information that:

(a) was known or used by the receiving Party or its Subsidiaries prior to its date of disclosure to the receiving Party as demonstrated by legally admissible evidence available to the receiving Party or its Subsidiaries; or

(b) either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Subsidiaries by sources other than the disclosing Party rightfully in possession of the Confidential Information and not bound by confidentiality obligations to the disclosing Party or its Subsidiaries; or

(c) either before or after the date of the disclosure to the receiving Party is or becomes published or otherwise is or becomes part of the public domain through no breach hereof on the part of the receiving Party or its Subsidiaries; or

(d) is independently developed by or for the receiving Party or its Subsidiaries without reference to or reliance upon the Confidential Information as demonstrated by competent written records; or

(e) is reasonably necessary to conduct clinical trials or for regulatory approval of products or for the filing, prosecution and maintenance of patents and patent applications, PROVIDED THAT the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure; or

(f) is required to be disclosed by the receiving Party to comply with applicable laws, to defend or prosecute litigation or to comply with governmental regulations, PROVIDED THAT the receiving Party provides prior written notice of such disclosure to the disclosing Party

and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure.

ARTICLE VIII
DISPUTE RESOLUTION

Section 8.1 Except as set forth in Section 6.1(a)(ii), each Party must submit any dispute under this Agreement or the Master Agreement to arbitration by notifying the other Party, in writing, of such dispute. Within 30 days after receipt of such notice, the Parties shall designate in writing one arbitrator to resolve the dispute; PROVIDED, that if the Parties cannot agree on an arbitrator within such 30 days period, the arbitrator shall be selected by the office of the American
Arbitration Association in the city where arbitration will take place. The arbitrator shall not be an employee, consultant, officer, director or stockholder of any Party or its Affiliates. If neither the Parties nor the applicable office of the American Arbitration Association is able to identify an individual to serve as the arbitrator, the American Arbitration Association shall select an arbitrator from the CPC Panel of Distinguished Neutrals of the CPR Institute for Dispute Resolution.

Section 8.2 Within 30 days after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time the Parties shall be required to set forth in writing all disputed issues and a proposed ruling on the merits of each such issue.

Section 8.3 The arbitrator shall set a date for a hearing, which shall be no later than 45 days after the submission of written proposals to discuss each of the issues identified by the Parties. Each Party shall have the right to be represented by counsel. Except as provided herein, the arbitration shall be governed by the Commercial Arbitration Rules of the American Arbitration Association; PROVIDED, HOWEVER, that the Federal Rules of Evidence shall apply with regard to the admissibility of evidence and the arbitration shall be conducted by a single arbitrator.

Section 8.4 The arbitrator shall use his or her best efforts to rule on each disputed issue within 30 days after the completion of the hearings. The determination of the arbitrator as to the resolution of any dispute shall be final and binding and conclusive upon all parties hereto. All determinations of the arbitrator shall be in writing and shall be delivered to the Parties. The determinations of the arbitrator may be entered in any court of competent jurisdiction.

Section 8.5 The attorneys' fees of the Parties in any arbitration, the fees of the arbitrator, and the costs and expenses of the arbitration (collectively, the "Arbitration Costs") shall be borne by the Parties as determined by the arbitrator.

Section 8.6 The arbitration shall take place in Boston, Massachusetts if brought by Isis and in San Diego, California if brought by Hybridon.

Section 8.7 Nothing in this Article VIII shall prevent either Party from seeking a preliminary injunction, temporary restraining order or similar relief in order to prevent or limit and irreparable harm that might occur in the absence thereof from a court of competent jurisdiction.

ARTICLE IX
TERM AND TERMINATION

Section 9.1 TERM. This Agreement shall commence as of the date hereof and shall continue until the last of the patents and patent applications included in the Hybridon Intellectual Property, the Isis Intellectual Property and the Tullis Patents has expired, subject to earlier termination of this Agreement in accordance with this Article IX. Notwithstanding the foregoing, the licenses or sublicenses granted hereunder shall terminate on a country-by-country basis concurrently with the expiration or termination of the applicable Valid Claim under the Hybridon Intellectual Property, the Isis Intellectual Property or the Tullis Patents, as the case may be, in the applicable country.

Section 9.2 TERMINATION OF LICENSES AND SUBLICENSES FOR BREACH.

(a) Except as set forth in Section 9.2(b), (i) if an arbitrator has rendered a ruling pursuant to Article VIII that a Party or a Subsidiary has materially breached this Agreement or the Master Agreement, which ruling specified the remedies imposed on such breaching party for such breach, including without limitation a ruling on a dispute as to breach of a Party's obligation to issue stock or pay cash in lieu of stock as required under the Master Agreement (the "ADVERSE RULING"), and
(ii) the breaching Party has failed to comply with the terms of the Adverse Ruling within the time period specified therein for compliance, or if such compliance cannot be fully achieved by such date, the breaching Party has failed to commence compliance and to use diligent efforts to achieve full compliance as soon thereafter as is reasonably possible, then the non-breaching Party shall be entitled to terminate the licenses and sublicenses granted to the breaching Party and its Subsidiaries by such non-breaching Party under this Agreement (without prejudice to any of the other rights of the non-breaching Party under this Agreement or the Master Agreement) upon written notice to the breaching Party.

(b) (i) If a Party breaches an obligation to issue stock or pay cash in lieu of stock as required under the Master Agreement, then the non-breaching Party may terminate the licenses and sublicenses granted to the breaching Party and its Subsidiaries by such

non-breaching Party under this Agreement immediately upon written notice to the breaching Party if the breaching Party fails to cure such breach within ten (10) business days of written notice of such breach from the non-breaching Party; provided, however, that if the breaching Party believes that a bona fide dispute exists as to the amount of any payment, then the breaching Party may, not later than five business days following the notice of the breach, (i) provide the non-breaching Party with a written notice setting forth the nature of the dispute and the amount in dispute, (ii) at the same time, pay to the non-breaching Party the amount of the payment which is not in dispute and (iii) promptly submit the dispute to binding arbitration pursuant to Article VIII, in which case the non-payment of the disputed portion shall not be deemed a breach during the pendency of the arbitration.

(ii) If the final arbitration order or ruling issued in the arbitration proceeding resolves the dispute against the breaching Party and orders the breaching Party to pay all or part of the disputed portion to the non-breaching Party, then the arbitrator shall include in its award, in addition to such other remedies as it deems appropriate, the following against the breaching Party: (A) the Arbitration Costs, (B) [*] and (C) if the arbitrator finds that a cash payment was due, an amount equal to interest at the rate equal to the lower of 1.5% per month, compounded monthly, or the highest rate permitted by law on the amount of cash determined to have been due commencing on the due date determined by the arbitrator through the date of actual payment.

(c) The right of either Party to terminate the licenses and sublicenses granted by such Party under this Agreement pursuant to this
Section 9.2 shall not be affected in any way by its waiver of, or failure to take action with respect to any previous default.

(d) If the licenses and sublicenses granted by Hybridon to Isis and its Subsidiaries under this Agreement are terminated by Hybridon pursuant to this Section 9.2, (i) Hybridon shall be entitled to retain the licenses granted to it and its Subsidiaries pursuant to Article III, subject to the payment obligations of Hybridon specified in the Master Agreement and in Article IV, and to continue to receive the stock of Isis issuable to it pursuant to Section 2.3 of the Master Agreement, and (ii) the provisions of Articles V and VI shall terminate in their entirety. If the licenses and sublicenses granted by Isis to Hybridon and its Subsidiaries under this Agreement are terminated by Isis pursuant to this
Section 9.2, Isis shall be entitled to retain the licenses granted to it and its Subsidiaries pursuant to Article II, subject to the payment obligations of Isis specified in the Master Agreement and in Article IV, and to continue to receive the stock of Hybridon issuable to it pursuant to Section 2.2 of the Master Agreement.

Section 9.3 TERMINATION OF SUBLICENSE OF TULLIS PATENTS. Hybridon shall have the right to terminate the sublicense granted to it and its Subsidiaries pursuant to Section 3.3 (and the related payment obligations under Section 4.2) for any reason or no reason at any time upon fifteen (15) days prior written notice to Isis.

Section 9.4 SURVIVAL. The expiration or termination of this Agreement for any reason shall not relieve the Parties of any obligation due and accruing, or for any liability as to any breach occurring, prior to such expiration or termination. In addition, the provisions of Section 4.4, Article VII, Article VIII, Section 9.4, Section 9.5, and Article X shall survive the expiration or termination of this Agreement.

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Section 9.5 SUBLICENSE SURVIVAL.

(a) Notwithstanding the termination of this Agreement or any of the licenses or sublicenses granted hereunder pursuant to this Article IX, any sublicenses to Isis Intellectual Property and the Tullis Patents granted by Hybridon or its Subsidiaries pursuant to Section 3.2 or 3.3(b) hereof prior to such termination shall survive such termination. In such event, Isis shall have the right to receive directly from the Sublicensee any payments or other consideration otherwise payable to Hybridon or its Subsidiaries as the sublicensor under such sublicense, and to otherwise exercise all of the rights of Hybridon or its Subsidiaries as the sublicensor under such sublicense; provided however that Isis shall not assume, and shall not be responsible for, any representations, warranties or obligations of Hybridon or its Subsidiaries as the sublicensor to any Sublicensees other than the licenses under such sublicenses.

(b) Notwithstanding the termination of this Agreement or any of the licenses or sublicenses granted hereunder pursuant to this Article IX, any sublicenses of Hybridon Intellectual Property granted by Isis or its Subsidiaries pursuant to Section 2.2 hereof prior to such termination shall survive such termination. In such event, Hybridon shall have the right to receive directly from the Sublicensee any payments or other consideration otherwise payable to Isis or its Subsidiaries as the sublicensor, under such sublicense and to otherwise exercise all of the rights of Isis or its Subsidiaries as the sublicensor under such sublicense; provided however that Hybridon shall not assume, and shall not be responsible for, any representations, warranties or obligations of Isis or its Subsidiaries as the sublicensor to any Sublicensees other than the licenses under such sublicenses.

Section 9.6 FAILURE TO MAKE MASTER AGREEMENT DELIVERIES. Notwithstanding any provision in this Agreement to the contrary, including without limitation Article VIII, [*] Hybridon shall have the right, at its sole election, effective immediately upon written notice to Isis, [*]

ARTICLE X
MISCELLANEOUS PROVISIONS

Section 10.1 INDEMNIFICATION. Each Party (the "Indemnifying Party") agrees to defend the other Party and such other Party's Subsidiaries and their respective directors, officers, employees and agents (the "Indemnified Parties") at the Indemnifying Party's cost and expense, and shall indemnify and hold the Indemnified Parties harmless from and against any losses, costs, damages, fees or expenses arising out of any third party claim relating to (i) any breach by the Indemnifying Party of any of its representations, warranties or obligations

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pursuant to this Agreement, (ii) provided that the third party is not an Affiliate of the Indemnified Parties, infringement of such third party's patents resulting from the exercise by the Indemnifying Party or a Subsidiary or a Sublicensee of the

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rights granted by the Indemnified Parties to the Indemnifying Party hereunder or
(iii) product liability resulting from use of a product made, sold or imported by or for the Indemnifying Party or by or for a Subsidiary or a Sublicensee under the rights granted by the Indemnified Parties hereunder. In the event of any claim against the Indemnified Parties by any third party for which indemnification may be sought pursuant to this Agreement, the Indemnified Parties shall promptly notify the Indemnifying Party in writing of the claim; provided that the failure to promptly notify the Indemnifying Party of such claim shall not result in the loss of rights of indemnification hereunder except to the extent that the Indemnifying Party was materially prejudiced by such failure. The Indemnifying Party shall assume, at its sole expense, the defense of the claim and its settlement. The Indemnified Parties shall cooperate with the Indemnifying Party and may, at their option and expense, be represented in any such action or proceeding. The Indemnifying Party shall not be liable for any litigation costs or expenses incurred by the Indemnified Parties. In addition, the Indemnifying Party shall not be responsible for the indemnification of any Indemnified Party arising from any negligent or wrongful acts by such Indemnified Party, or as the result of any settlement or compromise by the Indemnified Parties without the Indemnifying Party's prior written consent. The Indemnifying Party may not settle or compromise any matter without the consent of the Indemnified Parties unless such settlement or compromise imposes no obligations on the Indemnified Parties and does not restrict the rights of the Indemnified Parties.

Section 10.2 GOVERNING LAW. This Agreement shall be construed and the respective rights of the Parties determined according to the laws of the State of Delaware (without regard to the conflict of law rules of any jurisdiction), except matters of the intellectual property law, which shall be determined in accordance with the national intellectual property laws relevant of the intellectual property in question.

Section 10.3 ASSIGNMENT. Neither Hybridon nor Isis may assign this Agreement in whole or in part without the consent of the other Party, except if such assignment occurs in connection with the sale or transfer of all or substantially all of the business or assets of the assigning Party to which the subject matters of this Agreement pertains.

Section 10.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement, together with the Master Agreement, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all previous arrangements with respect to the subject matter hereof, whether written or oral. Any amendment or modification to this Agreement shall be made in writing signed by both Parties.

Section 10.5 NOTICES.

Notices to Hybridon shall be addressed to:
Hybridon, Inc.
345 Vassar Street
Cambridge, Massachusetts 02139 Attention: Chief Executive Officer

with a copy to:

Holland and Knight, LLP
10 St. James Avenue
Boston, Massachusetts 02116 Attention: James Pollock, Esq.

And

Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: David E. Redlick, Esq.

Notices to Isis shall be addressed to:

Isis Pharmaceuticals, Inc. 2292 Faraday Avenue
Carlsbad, California 92008 Attention: Chief Executive Officer Copy to: Executive Vice President

Any Party may change its address by giving notice to the other Party in the manner herein provided. Any notice required or provided for by the terms of this Agreement shall be in writing and shall be (a) delivered personally, (b) sent by registered or certified mail, return receipt requested, postage prepaid,
(c) sent via a reputable overnight courier service, or (d) sent by facsimile transmission with an original to be followed the same day via a reputable overnight courier service, in each case properly addressed in accordance with the paragraph above. The effective date of notice shall be the actual date of receipt by the Party receiving the same.

Section 10.6 FORCE MAJEURE. No failure or omission by a Party in the performance of any of its obligations of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the control of such Party, including, but not limited to, the following: acts of God; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; and invasion and provided that such failure or omission resulting from one of the above causes is cured as soon as is practicable after the occurrence of one or more of the above-mentioned causes.

Section 10.7 DISCLOSURE OF PROVISIONS OF AGREEMENT.

(a) Each Party agrees to hold as confidential the terms of this Agreement, except that (i) Hybridon may furnish a copy of this Agreement to UMass, Isis may furnish a copy of this Agreement to MBI (other than Exhibits containing information relating to patent applications of Hybridon) and each Party shall have the right to disclose the terms of this Agreement (other than the information on the Exhibits hereto relating to patent applications of Isis or Hybridon) to potential investors and other third parties in connection with financing activities and to potential collaborators, provided that any such third party has entered into a written obligation with the disclosing Party to treat such information and materials as confidential and to not use the information and materials for any purposes other than the evaluation of the potential

investment or collaboration and that the disclosing Party shall enforce against the third party recipient of such information and materials, for and on behalf of the other Party, such written obligation, and (ii) each Party may furnish a copy of this Agreement or disclose the terms of this Agreement if such is required to be disclosed by the receiving Party to comply with applicable laws, to defend or prosecute litigation or to comply with governmental regulations, PROVIDED THAT the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid and/or minimize the degree of such disclosure. At the request of the other Party, the disclosing Party shall use commercially reasonable efforts to enforce such obligations against such third parties.

(b) Notwithstanding Section 10.7(a) to the contrary, either Party may include this Agreement, in any report, statement or other document filed by such Party with the United States Securities and Exchange Commission (the "SEC"). In such event, the disclosing Party shall use reasonable efforts to obtain, to the extent permitted by law, confidential treatment from the SEC of any trade secrets and commercial or financial information of a privileged or confidential nature, including without limitation all information on the Exhibits hereto relating to patent applications of Isis or Hybridon, and shall notify the other Party as to such efforts and all related communications with the SEC; provided that notwithstanding the foregoing no Party shall submit a confidentiality request or include this Agreement without the prior review and approval of the confidentiality request by the other Party, which review and approval shall not be unreasonably withheld or delayed.

Section 10.8 INDEPENDENT CONTRACTORS. It is understood and agreed that the relationship between the Parties hereunder is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Party to act as agent for the other.

Section 10.9 NO STRICT CONSTRUCTION. This Agreement has been prepared jointly and shall not be strictly construed against any Party.

Section 10.10 HEADINGS. The captions or headings of the Sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.

Section 10.11 NO IMPLIED WAIVERS; RIGHTS CUMULATIVE. No failure on the part of either Party to exercise, and no delay in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial

exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege. In particular, the Parties hereby agree that termination of the licenses or sublicenses granted under this Agreement as provided in Article IX shall not be the exclusive remedy of a Party in the event of a breach of this Agreement or the Master Agreement by the other Party and that the non-breaching Party shall be entitled to seek any and all other remedies to which the non-breaching Party may be entitled at law or in equity.

Section 10.12 SEVERABILITY. If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, then, to the fullest extent permitted by law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in order to carry out the intentions of the Parties as nearly as may be possible and (b) such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of such provision in any other jurisdiction.

Section 10.13 EXECUTION IN COUNTERPARTS. This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

Section 10.14 NO CONSEQUENTIAL DAMAGES. NEITHER PARTY HERETO WILL BE LIABLE FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.

Section 10.15 PATENT VALIDITY. Notwithstanding anything in this Agreement to the contrary, neither Party represents and warrants or shall be deemed to have represented and warranted to the other Party that the Hybridon Intellectual Property (in the case of Hybridon) and the Isis Intellectual Property and the Tullis Patents (in the case of Isis) are valid or otherwise enforceable.

[Remainder of page intentionally omitted]

IN WITNESS WHEREOF, the Parties have executed this License Agreement as of the Effective Date.

ISIS PHARMACEUTICALS, INC.

By: /s/ B. Lynne Parshall
    --------------------------------
Name: B. Lynne Parshall
      ------------------------------
Title: Executive Vice President
       -----------------------------

HYBRIDON, INC.

By: /s/ Sudhir Agrawal
    --------------------------------
Name: Sudhir Agrawal
      ------------------------------
Title: President and CSO
       -----------------------------
       /s/ Robert Andersen, CFO

EXHIBIT A

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EXHIBIT B1

[ * ]

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EXHIBIT B2

[ * ]

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EXHIBIT C

[ * ]

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EXHIBIT D

[ * ]

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EXHIBIT E

[*]

*Confidential Treatment Requested

EXHIBIT F

[ * ]

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EXHIBIT G

[ * ]

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EXHIBIT H-1

THIRD PARTY LICENSE AGREEMENTS

Methylgene

AMENDED AND RESTATED LICENSE AGREEMENT MADE EFFECTIVE AS OF JANUARY 4, 1996, AS AMENDED AND RESTATED ON SEPTEMBER 21, 2000.

Origenix

LICENSE AGREEMENT DATED AS OF JANUARY 22, 1999 BETWEEN HYBRIDON AND ORIGENIX.

Epigenesis

DEVELOPMENT AND LICENSE AGREEMENT BETWEEN EPIGENESIS PHARMACEUTICALS, INC. AND HYBRIDON, INC., DATED AS OF AUGUST 9, 2000.

Boston Biosystems, Inc. (BBI)

PNT MONOMER PATENT LICENSE AND OPTION AGREEMENT DATED AS OF SEPTEMBER 20, 2000 BY AND BETWEEN HYBRIDON AND BBI.

OLIGONUCLEOTIDE PURIFICATION PATENT LICENSE AGREEMENT DATED AS OF SEPTEMBER 20, 2000 BY AND BETWEEN HYBRIDON AND BBI.

INTERFERENCE PATENT SUBLICENSE OPTION AGREEMENT DATED AS OF SEPTEMBER 20, 2000 BY AND BETWEEN HYBRIDON AND BBI.

EXHIBIT H-2

OTHER LICENSE AGREEMENTS

UMass Agreement

LICENSE AGREEMENT DATED AS OF FEBRUARY 21, 1990 AND RESTATED AS OF SEPTEMBER 8, 1993 BY AND BETWEEN HYBRIDON AND UNIVERSITY OF MASSACHUSETTS MEDICAL CENTER
(FORMERLY THE WORCESTER FOUNDATION FOR BIOMEDICAL RESEARCH, INC.)

IDT Agreement

Non-Exclusive License Agreement dated as of March 12, 1999 between Integrated DNA Technologies, Inc. and Hybridon

EXHIBIT I

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EXHIBIT J

UMASS AGREEMENT

Incorporated by reference to Exhibit 10.1 to Hybridon's Registration Statement on Form S-1 (File No. 33-99024)

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EXHIBIT K

[ * ]

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EXHIBIT L

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EXHIBIT M

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EXHIBIT N

TULLIS AGREEMENT

Incorporated by reference to Exhibit 10.1 to Isis's Quarterly Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 1992, on Form 10-Q (File No. 0-19125).

*Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4) 200.83 and 240.24b-2

COLLABORATIVE RESEARCH AND LICENSE AGREEMENT

This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the "Agreement") is

made as of July 9, 2001 (the "Effective Date"), by and between ISIS PHARMACEUTICALS, INC., a Delaware corporation ("Isis"), having a principal place of business at Carlsbad Research Center, 2292 Faraday Avenue, Carlsbad, California 92008 and PE CORPORATION (NY), a New York corporation, through the CELERA GENOMICS GROUP, ("Celera"), having a principal place of business at 45 West Gude Drive, Rockville, Maryland 20850. Celera and Isis may be referred to herein individually as a "Party" and collectively as the "Parties".

RECITALS

WHEREAS, Isis possesses proprietary technology and know-how related to anti-sense technologies; and

WHEREAS, Celera possesses proprietary technology and know-how related to genomics; and

WHEREAS, Celera and Isis desire collaborate to generate information on gene function for up to [*] novel targets.

NOW, THEREFORE, in consideration of the various promises and undertakings set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

1.1 "Affiliate" with respect to either Party, will mean any Person controlling, controlled by, or under common control with such Party. For the purposes of this Section 1.1 only, "control" will refer to (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, together with (b) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of a Person. Notwithstanding the foregoing, [*]

1.2 "Agreement NPV" means the net present value of any agreement calculated pursuant to Section Article 6.3(d) or as determined by the JEC by unanimous recorded vote.

1.3 "Antisense Inhibitor" means an Oligonucleotide that is designed to inhibit protein synthesis at the nucleic acid level by specifically binding to the sequence of a selected messenger or viral ribonucleic acid by base-paring.

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1.4 "Celera Exclusive Collaboration Patents" means all Patent Rights comprising method of use, method of prevention, treatment or diagnosis of a disease or condition or other identification of gene function associated with a Celera Exclusive Target arising out of the collaboration and for which Collaboration Data is used in the prosecution, maintenance or defense of such Patent Rights. Celera Exclusive Collaboration Patents specifically includes Collaboration Patents to the extent they otherwise come under the definition of Celera Exclusive Collaboration Patents.

1.5 "Celera Exclusive Targets" means the Celera Gene Targets selected by Celera pursuant to Section 3.2 (c), or any fragment or allelic variant of such Celera Gene Target or degenerative sequence of the foregoing encoding the identical amino acid sequence.

1.6 "Celera Gene Availability Pool" means the Celera Gene Targets available for Celera to designate for exclusive use pursuant to Section
3.2(c). Once the Option Period has expired for a specific Celera Gene Target it will cease to be part of the Celera Gene Availability Pool.

1.7 "Celera Gene Target" means a Gene selected for High Throughput Gene Functionalization.

1.8 "Celera Licensed Patents" means (i) all Patent Rights that are Controlled by Celera prior to the selection of Celera Gene Target pursuant to Section 3.1 that claim inventions consisting of any Celera Gene Target or any fragment of such Celera Gene Target, and/or any nucleic acid sequence, protein, peptide or other composition of matter encoded thereby, including, without limitation, inventions claiming method of use or treatment of a disease or condition by inhibiting such gene or other identification of gene function, and (ii) all Patent Rights whether or not Controlled by Celera not arising out of the collaboration where Collaboration Data is used in the prosecution, maintenance or defense of such Patent Rights. Celera Licensed Patents will specifically exclude Collaboration Patents, Celera Exclusive Collaboration Patents, Joint Patents and any Patent Rights that are Controlled by Celera claiming solely diagnosis of a disease or condition.

1.9 "Celera Product" means any Gene Therapy Product, Protein Therapeutic Product, Small Molecule Therapeutic Product or Vaccine Product discovered by Celera alone or as part of a bona fide drug discovery collaboration that, but for the licenses granted herein, would infringe a Celera Exclusive Collaboration Patent.

1.10 "Collaboration Data" means any and all data created using an Antisense Inhibitor pursuant to the Research Plan, including without limitation, in Isis's HGTF system.

1.11 "Collaboration Patents" means all Patent Rights comprising method of use, method of prevention, treatment or diagnosis of a disease or condition or other identification of gene function associated with a Celera Gene Target arising out of the collaboration and for which Collaboration Data is included in or used in the prosecution,

maintenance or defense of such Patent Rights. Collaboration Patents specifically excludes Oligonucleotide Patents. Collaboration Patents specifically includes jointly invented Patent Rights to the extent that they otherwise come under the definition of Collaboration Patents, and any such jointly invented Patent Rights will not be Joint Patents.

1.12 "Common Product" means (i) any and all Licensed Products that are neither Isis Products nor Celera Products for a Celera Exclusive Target, and (ii) any and all License Products that are not Isis Products for a Celera Gene Target that is not a Celera Exclusive Target.

1.13 "Confidential Information" means a Party's confidential information, inventions, know-how, data and materials relating to the Research, or the Celera Gene Targets, Celera Exclusive Targets, Lead Oligos or Licensed Products, including without limitation research, technical, clinical development, manufacturing, marketing, financial personnel and other business information and plans, which, if disclosed in written, graphic or electronic form, is marked or otherwise designated as "confidential" or "proprietary" and, if disclosed orally, is summarized and designated as "confidential" or "proprietary" in a writing provided to the receiving Party not later than sixty (60) days after such disclosure. All information presented at the JRC, Intellectual Property Committee or JEC meetings will be rebuttably presumed to be Confidential Information, regardless of whether it would otherwise qualify as such pursuant to the preceding sentence.

1.14 "Control" means, with respect to an item of Information or an intellectual property right, possession of the ability, whether by ownership or license, to grant a license or sublicense as provided for herein under such item or right without violating the terms of any agreement or other arrangements with any Third Party.

1.15 "Effective Date" means the effective date of this Agreement as set forth in the first paragraph above.

1.16 "Extended Term" has the meaning set forth in Section 5.1(e).

1.17 "Gene" means a DNA or RNA sequences of human or other origin that encodes a protein or other molecule.

1.18 "Gene Therapy Product" means any nucleic acid molecule, other than an Antisense Inhibitor or Oligonucleotide, that is introduced into human cells for the treatment or prevention of any disease, condition or risk based on modifying the expression of the target gene or modifying the genetic code of the target gene.

1.19 "High Throughput Gene Functionalization" or "HTGF" means Isis's High Throughput Screening system and standard phenotypic assays as it may exist from time-to-time and as more fully described in the Research Plan.

1.20 "Information" means any data, results, information, know-how, techniques, methods, development, material, or compositions of matter of any type or kind.

1.21 "Intellectual Property Committee" has the meaning set forth in
Section 6.2.

1.22 "Isis Product" means any Oligonucleotide used in the treatment or prevention of a disease or condition that, but for the licenses granted herein, would infringe a Collaboration Patent.

1.23 "Joint Executive Committee" or "JEC" means that committee to be formed pursuant to Section 6.3.

1.24 "Joint Patents" means all Patent Rights that claim inventions that are made by employees or agents of Celera and Isis jointly and name as inventors one or more employees of Celera and Isis together with one or more employees or agents of the other Party. Joint Patents will not include any Collaboration Patents or Oligonucleotide Patents.

1.25 "Joint Research Committee" or "JRC" means that committee to be formed pursuant to Section 6.1.

1.26 "Lead Oligo" means an Antisense Inhibitor to a Celera Gene Target which decreases expression of such Celera Gene Target by at least [ *].

1.27 "Lead Oligo Reagent" means a Lead Oligo derived using the 2'-methoxyethyl gapmer with fully phosphorothioate backbone chemistry of the HTGF system or an alternative for certain limited applications.

1.28 "Licensed Product" means any composition, material, device, kit, process or other product or process, the manufacture, use or sale of which would infringe a Collaboration Patent.

1.29 "Licensing Revenue" means revenue derived from the licensing of Collaboration Patents to Third Parties including without limitation, license fees, maintenance fees, milestones, and royalties but excluding payments for research and development. If either Party licenses Collaboration Patents to Third Parties together with other material intellectual property, the consideration received for such license, will be allocated by such Party in good faith among the components of the license. If payments are made in non-cash consideration, such Party will, at its option, either provide the other Party consideration in kind or in cash (based on a reasonable determination of value).

1.30 "Minimum Permitted Value" means a net present value of an agreement equal to [*].

1.31 "Oligonucleotide" means any compound containing between [* ] nucleotides and/or nucleosides, including oligonucleotide analogs which may include natural or modified heterocycles, sugars and or backbone linkages.

1.32 "Oligonucleotide Patent" means all Patent Rights arising out of the collaboration that claims Antisense Inhibitors or Oligonucleotides and/or their method of use including without limitation the prevention or treatment of a disease or condition.

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Oligonucleotide Patents will include any jointly invented Patent Rights that otherwise meets this definition.

1.33 "Option" has the meaning set forth in Section 3.2(c).

1.34 "Option Period" has the meaning set forth in Section 3.2(c).

1.35 "Patent Right" means (i) an issued and existing patent, including any extensions, supplemental protection certificates, registrations, confirmations, reissues, reexaminations or renewals thereof, (ii) pending applications, including any continuation, divisional, or continuation-in-part application thereof, for any of the foregoing, and (iii) all counterparts to any of the foregoing issued by or filed in any country or other jurisdiction.

1.36 "Person" means any natural person, corporation, firm, business trust, business unit, joint venture, association, organization, company, limited liability company, partnership or other business entity, or any government or agency or political subdivision thereof.

1.37 "Protein Therapeutic Product" means a protein, peptide or peptidomimetic analogous to a peptide or any derivative of the foregoing that is used for the treatment or prevention of any disease, condition or risk thereof.

1.38 "Research" means the collaborative research program undertaken by the Parties pursuant to the Research Plan during the Research Term.

1.39 "Research Plan" means the specific plan for HTGF screening of Celera Gene Targets, as described in Section 2.1, which will be attached hereto as Exhibit A.

1.40 "Research Term" means the period commencing on the Effective Date and terminating eighteen (18) months thereafter (or such earlier date as of which this Agreement is terminated hereunder).

1.41 "Small Molecule Therapeutic Product" means a small organic or inorganic molecule (less than 800 daltons) used for the treatment or prevention of any disease, condition or risk thereof, excluding any such molecule whose primary mode of activity is binding to RNA.

1.42 "Sublicensee" means a Person other than an Affiliate of Isis or Celera to which Isis or Celera has granted sublicense rights under the licenses granted hereunder, which rights include at least the rights to make and sell Licensed Products.

1.43 "Third Party" means any Person other than Celera, Isis or Affiliates of either of them, or any Sublicensee.

1.44 "Vaccine Product" means a protein, peptide or a nucleic acid molecule other than an Oligonucleotide, that stimulates an active specific immune response for the treatment or prevention of a disease or condition.

1.45 "Valid Claim" means a claim of an issued and unexpired patent which 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, after mutual consultation and agreement, an appeal is not taken within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

ARTICLE 2

RESEARCH

2.1 Subject to the terms and conditions herein, the Parties will each use commercially reasonable diligent efforts to conduct the Research on a collaborative basis. Subject to Section 2.2(d) and other applicable provisions, the Parties will conduct the Research as specified in the Research Plan. The Research Plan attached hereto as Exhibit A describes the HTGF screening process that will be used to create Antisense Inhibitors to Celera Gene Targets and screen such Antisense Inhibitors in Isis' phenotypic assays to provide information useful in gene functionalization and target validation.

2.2 Conduct of the Research.

(a) The Research will be managed and directed by the JRC, as provided in 6.1.

(b) During the course of the Research, each Party will disclose to the other such Information as the other Party reasonably needs to conduct its obligations and assigned tasks under the Research Plan.

(c) In order to protect the Parties' patent rights in any inventions conceived or reduced to practice during or as a result of the Research, each Party agrees to implement a policy which requires its employees to record and maintain all data and information developed during the Research in such a manner as to enable the Parties to use such records to establish the earliest date of invention and/or diligence to reduction to practice.

(d) The Parties agree to commit the quality and quantity of resources required to perform their obligations under the Research Plan.

2.3 Liability. In connection with the conduct of the Research, each Party will be responsible for, and hereby assumes, any and all risks of personal injury or property damage attributable to the negligent acts or omissions of that Party and its directors, officers, employees and agents.

ARTICLE 3

SELECTION OF CELERA GENE TARGETS AND CELERA EXCLUSIVE
TARGETS

3.1 Selection of Celera Gene Targets.

(a) Celera will select Genes for functionalization studies under the Research Plan ("Celera Gene Targets") and notify Isis of the identity of such Celera Gene Target in writing.

(b) Genes selected by Celera under Section 3.1(a) will be included in the HTGF queue unless prior to such selection: (i) such Genes were prioritized by Isis for the HTGF queue; (ii) Isis had generated Antisense Inhibitors to such Gene; or (iii) Isis has bona fide pre-existing agreement to work on such Gene with a Third Party (Subsections (i), (ii) and (iii), "Rejected Genes"); and provided that Isis notifies Celera of the identity of any Rejected Gene in writing within ten (10) business days of Celera's selection of such Gene. Celera may select a replacement Gene for any Rejected Gene and such Rejected Gene will be treated as if it had never been selected by Celera. The identity of any Celera Gene Target or Rejected Gene will be the Confidential Information of Celera.

(c) Isis agrees to conduct the Research under the Research Plan and will provide reports to the JRC on a quarterly basis. These reports will contain all information necessary to keep the JRC fully informed regarding the performance of the Research Plan. Notwithstanding the preceding sentence, the Parties acknowledge that there is no guarantee that a Lead Oligo will be discovered using the HTS process.

(d) Celera knows and understands that it will be the primary source of Celera Gene Targets under the Research Plan and that Isis will not conduct any patent due diligence regarding its freedom to synthesize or screen Antisense Inhibitors to such targets or to provide Antisense Inhibitors to Celera hereunder. Subject to Sections 10.1 and 10.3, Celera will indemnify and hold Isis harmless from any liability to Third Parties by reason of the use by Isis of Celera Gene Targets solely for Isis' work under the Research Plan during the Research Term. For clarification, Celera will not indemnify Isis, and Celera will not be liable to Isis for any use of Celera Gene Targets after Isis is notified to cease use of any Celera Gene Target, any use of Celera Gene Targets in any Isis database, any use of Celera Gene Targets outside the Research Plan, or any use of Celera Gene Targets in the development and/or commercialization of Common Products or Isis Products.

3.2 Selection of Celera Exclusive Targets.

(a) Isis will perform the work described in the Research Plan and deliver any resulting data to the JRC and the Intellectual Property Committee in a timely fashion ("Collaboration Data"). Such Collaboration Data will include the assay and phenotype data as set forth in the Research Plan.

(b) Promptly after receiving the Collaboration Data with regard to a Celera Gene Target, the JRC and the Intellectual Property Committee will review the Collaboration Data. Upon delivery of the Collaboration Data, such Celera Gene Target will become part of a pool of Celera Gene Targets available to Celera for its use in accordance with the terms of this Agreement (the "Celera Gene Availability Pool"). If Isis informs the JRC that it is unable to create an optimized Antisense Inhibitor to such

Celera Gene Target and, as a result, will not be delivering Collaboration Data to the JRC for such Celera Gene Target, such Celera Gene Target will not be included in the Celera Gene Availability Pool.

(c) Celera will have the option, on a rolling basis, to designate up to [* ] Celera Gene Targets from the Celera Gene Availability Pool, together with the Collaboration Data for such Celera Gene Targets, for Celera's exclusive use ("Celera Exclusive Targets") for Celera Products pursuant to Section 4.3(a) (the "Option"). For any given Celera Gene Target, Celera will exercise such Option, if at all, by giving written notice to Isis during a period commencing on the date that the JRC determines that no further work will be done on such Celera Gene Target and Isis delivers the Collaboration Data as outlined in the Research Plan for such target to the JRC and ending [* ] (the "Option Period"). Celera may replace any Celera Exclusive Target with any Celera Gene Target in the Celera Gene Availability Pool provided (i) the number of Celera Exclusive Targets does not [*] and (ii) the Option Period for any such Celera Gene Target has not expired. For clarification, only Celera Gene Targets in the Celera Gene Availability Pool will be subject to the Option. If Celera does not exercise its Option for any given Celera Gene Target during the applicable Option Period, or if Celera notifies Isis in writing that it will not exercise its Option for such Celera Gene Target, such Celera Gene Target will be deemed excluded from the Celera Gene Availability Pool. After any such exclusion, such Celera Gene Target will cease to be a Celera Gene Target, and Celera may not exercise its Option with regard thereto.

ARTICLE 4

LICENSES AND OTHER RIGHTS

4.1 Licenses to Conduct the Research. Subject to the other provisions of this Agreement, Celera hereby grants to Isis during the Research Term a nonexclusive worldwide, paid up right and license, without the right to sublicense, under the Celera Licensed Patents solely to conduct the Research.

4.2 Isis Database. Isis will have the right to commercialize the Collaboration Data in a database format unless such Collaboration Data (i) is subject to Celera's Option during the Option Period pursuant to Section 3.2, or
(ii) contains or comprises in whole or in part any Collaboration Data for a Celera Exclusive Target. Notwithstanding the foregoing, Celera may provide Isis, upon Isis's written request, with written approval to use any Collaboration Data in a database format, which would be otherwise restricted from use under the first sentence of this Section. Isis will inform its subscribers regarding the Collaboration Data added to the Isis Database pursuant to this Section 4.2 that Collaboration Patents, if any, associated with such data are subject to the licensing requirements set forth in Section 4.3.

4.3 Use of the Joint Patents, Collaboration Patents and Other Data. Both Parties will have the right to practice the Joint Patents and the Collaboration Patents and use the Collaboration Data and the data provided by a Party to the other Party pursuant to Section 5.1(c), for internal research purposes; provided however,

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(a) Isis hereby grants Celera an exclusive right and license (including with regard to Isis), with the right to sublicense and without obligation to Isis, under Isis's rights in the Joint Patents and the Celera Exclusive Collaboration Patents, to conduct development on, and to make, have made, import, use, sell and have sold Celera Products;

(b) Celera hereby grants Isis an exclusive right and license (including with regard to Celera), with the right to sublicense and without obligation to Celera, under Celera's rights in the Joint Patents and the Collaboration Patents, to conduct development on, and to make, have made, import, use, sell and have sold Isis Products; and

(c) Both Parties will have the right and license, without obligation of notice or payment to the other Party, to conduct development on, and to make, import, use, sell and offer for sale Common Products with the limited right to sublicense solely for development and commercialization.

(d) Celera will have the exclusive right and license (including with regard to Isis), to grant sublicenses to make, import, use, sell and offer for sale Common Products under the Celera Exclusive Collaboration Patents (subject to the provisions of Section 7.2 regarding Revenue Sharing). Isis will have the exclusive right and license (including with regard to Celera), to grant sublicenses to make, import, use, sell, and offer for sale Common Products under the Joint Patents and the Collaboration Patents except the Celera Exclusive Collaboration Patents (subject to the provisions of Section 1.63 regarding Revenue Sharing).

4.4 License to Celera Licensed Patents. Celera hereby grants Isis a nonexclusive right and license, without the right to sublicense except in connection with the sublicense of an Isis Product discovered by Isis alone or as part of a bona fide drug discovery collaboration, under Celera's rights in the Celera Licensed Patents, to conduct development on, and to make, have made, import, use, sell and have sold Isis Products. Notwithstanding the foregoing, if Isis is unable to generate a Lead Oligo to a Celera Gene Target pursuant to the Research Plan, any and all Patent Rights that claim such Celera Gene Target will be excluded from the license set forth in the preceding sentence.

4.5 Negative Covenants.

(a) Isis covenants to Celera that Isis will not research, develop or commercialize or license any Third Party or an Affiliate to research, develop or commercialize any Celera Product claimed by Celera Exclusive Collaboration Patents.

(b) Celera covenants to Isis that:

(i) Celera will not research, develop or commercialize, or license any Third Party or an Affiliate to research, develop or commercialize any Isis Product claimed by Collaboration Patents; and

(ii) Celera will not enter into any agreement with any Third Party whose core business includes the provision of Antisense Inhibitors for gene functionalization during the Research Term.

4.6 Limited Rights. Nothing in this Agreement is intended or will be interpreted as granting to Isis or any Third Party any right or interest in any Patent Rights, Information, trade secrets, copyrights, trademarks, trade names or other intellectual property rights (a) invented, discovered, developed, or otherwise created by PE Corporation (NY), or its Affiliates, other than by the Celera Genomics Group, or (b) acquired or licensed by PE Corporation (NY), or its Affiliates, other than solely for the benefit of the Celera Genomics Group.

ARTICLE 5

OTHER SERVICES

5.1 Supply of Antisense Inhibitors.

(a) Isis will provide Lead Oligo Reagent to each Celera Exclusive Target and to [* ] Celera Gene Targets that are not Celera Exclusive Targets claimed by Celera Licensed Patents as provided in Section 4.4, at a rate of [* ] per order for up to [* ] of a Lead Oligo, for Celera's internal research and development of Celera Products and/or Common Products as applicable ("Other Services"). Celera may request and Isis may agree to negotiate commercially reasonable terms for the provision to Celera of additional Lead Oligo Reagent to other Celera Gene Targets.

(b) Except as otherwise provided under this Agreement, all such Antisense Inhibitors delivered to Celera will be used only in furtherance of the Research, will not be used or delivered to or for the benefit of any Third Party without the prior written consent of Isis, and will not be used in research or testing involving human subjects. The Antisense Inhibitors supplied under this Section 5.1 must be used with prudence and appropriate caution in any experimental work, since not all of their characteristics may be known.

(c) THE ANTISENSE INHIBITORS BEING PROVIDED TO CELERA HEREUNDER ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE OF THE MATERIALS WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY.

(d) Celera agrees that it will not, nor will it request any Third Party, to synthesize Antisense Inhibitors to any Celera Gene Target during the Research Term or for the longer of [ *] thereafter or (ii) such time as the discovery, manufacture, use or sale of such Antisense Inhibitors would no longer infringe a Valid Claim of a Patent Right Controlled by Isis.

(e) Antisense Inhibitors discovered under the Research Plan are identified using patented technology.

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(i) During the Research Term and for [*] thereafter (the "Extended Term"), if Celera derives any Information from research not under the Research Plan using Lead Oligo Reagent provided by Isis to Celera pursuant to
Section 5.1(a), Celera will promptly provide such Information to Isis. Notwithstanding the obligation to provide such Information, Celera hereby grants Isis an exclusive right and license (including with regard to Celera), without the right to sublicense, except in connection with the sublicense of an Isis Product discovered by Isis alone or as part of a bona fide drug discovery collaboration, and without obligation to Celera, under Celera's rights in any Patents Rights in which information derived using such Lead Oligo Reagent during and after the Extended Term is used in the filing prosecution, maintenance or defense of such Patent Rights, to conduct development on, and to make, have made, import, use, sell and have sold Isis Products.

(ii) During the Extended Term, if Isis derives any Information from research not under the Research Plan on Celera Exclusive Targets using Antisense Inhibitors identified under the Research Plan, and/or on Celera Gene Targets that are claimed by Celera Licensed Patent Rights as provided in Section 4.4, Isis will promptly provide all data derived from such research to Celera, excluding data derived from any use in humans. Notwithstanding the obligation to provide such Information, Isis hereby grants Celera a non-exclusive right and license, without the right to sublicense, except in connection with the sublicense of a Celera Product discovered by Celera alone or as part of a bona fide drug discovery collaboration, and without obligation to Isis, under any Patent Rights claiming all Information derived from such research during and after the Extended Term, to conduct development on, and to make, have made, import, use, sell and have sold Celera Products.

5.2 Custom Target Validation. Celera will have an option to identify up to [*] Celera Gene Targets for custom target validation. Custom target validation may include pharmacology studies of effects of antisense inhibitor in additional cell-based or animal models. Terms and conditions for custom target validation will be negotiated in good faith but no less than Isis' fully-burdened cost plus appropriate milestones and royalties.

ARTICLE 6

MANAGEMENT OF THE COLLABORATION

6.1 Creation and Structure of the Joint Research Committee.

(a) Within ten (10) business days of the Effective Date, the Parties will create a Joint Research Committee of two (2) persons to facilitate the research collaboration called for herein. The JRC will consist one (1) representative nominated by each Party. Members of the JRC may be represented at any meeting by a designee appointed by such member for such meeting. Each Party will be free to change its representatives on notice to the other or to send a substitute representative of equal qualification and authority to any JRC meeting.

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(b) The JRC will meet as necessary but no less frequently than every three (3) months during the Research Term. Meetings will be via teleconference or videoconference. At its first meeting the JRC will determine such procedures as it will reasonably require to conduct its business.

(c) During the Research Term, the JRC will be the primary vehicle for interaction between the Parties with respect to the Research. Without limiting the foregoing, the JRC will be responsible for (i) determining for each Celera Gene Target whether to proceed to conduct Secondary Assays as described in the Research Plan. (ii) reviewing and commenting upon the patent filing strategies of the Collaboration Patents, the Celera Exclusive Collaboration Patents and the Joint Patent Rights as provided in Article 8;
(iii) reviewing and commenting upon publications as contemplated by Section 9.2; and (iv) managing the activities of the Intellectual Property Committee. The items in Subsections (ii) and (iii) will be delegated to the Intellectual Property Committee.

(d) All decisions of the JRC will be made by the unanimous vote of the members. If the members of the JRC cannot agree with respect to a particular issue such issue will be referred to the JEC which will make a reasonable good faith effort to reach agreement thereon within a ten (10) business day period after such issue is presented to the JEC in writing.

6.2 Creation and Structure of the Intellectual Property Committee.

(a) At the first meeting of the JRC, the JRC will create an Intellectual Property Committee. The Intellectual Property Committee will be managed and directed by the JRC. The Intellectual Property Committee will be composed of the two (2) JRC members plus two (2) additional members, one from each of Isis and Celera.

(b) The roles of the Intellectual Property Committee will be
(i) to conduct the IP mining described in the Research Plan, (ii) to review and approve any publications containing Collaboration Data except inclusion of Collaboration Data in the Isis database as anticipated by this Agreement, and
(iii) to manage the prosecution, defense and maintenance of the Collaboration Patents and the Joint Patents.

(c) The Intellectual Property Committee will meet as needed either in person, by teleconference or via videoconference. At the first meeting of the Intellectual Property Committee, the Committee will adopt such roles and procedures as it may deem necessary or appropriate to conduct their business.

(d) All decisions of the Intellectual Property Committee will be made by the unanimous vote of the members, if the members of the Intellectual Property Committee cannot agree with respect to a particular issue such issue will be referred to the JEC which will make a reasonable good faith effort to reach agreement thereon within ten (10) business days after such issue is presented to the JEC in writing.

(e) The Intellectual Property Committee will continue in effect after the termination of this Agreement for so long as Collaboration Patents or Joint Patents are

being prosecuted and maintained, or such shorter time as mutually agreed to by the Parties in writing.

6.3 Creation and Structure of the Joint Executive Committee.

(a) Within ten (10) business days of the Effective Date, the Parties will create a Joint Executive Committee of two (2) people, one from each Party to oversee the research collaboration and commercialization activities called for herein. The JEC will be composed of one (1) representative appointed by each of Celera and Isis. Either Party may replace one (1) its representative at any time upon written notice to the other Party with a person of equal authority and expertise.

(b) The JEC will exist for so long as the JRC or Intellectual Property Committee is in existence or either Party has the right to conduct commercialization activities pursuant to Section 4.3(d). The JEC will meet as requested by the JRC or Intellectual Property Committee. On matters requiring the approval of the JEC, such approval will be by the unanimous vote of all JEC members participating in the meeting. In the event the JEC is unable to reach agreement on all issues, it will be resolved in accordance with Section 12.11. The JEC will meet within thirty (30) days of the Effective Date and thereafter as needed or at the request of either Party to carry out the function set forth in this Section 6.3.

(c) The JEC will be the primary vehicle for oversight of the research collaboration activities. Without limiting the foregoing, the JEC will be responsible for (i) review and resolution of any material deviation from the Research Plan; and (ii) review and resolution of any dispute elevated to it by the JRC or the Intellectual Property Committee.

(d) Through the JEC the Parties will keep each other reasonably informed on an ongoing basis of the substantive terms of any proposed agreement to grant sublicenses pursuant to Section Article 4.3(d).

(i) [*]

(ii) [*]

ARTICLE 7

PAYMENTS AND REVENUE SHARING

7.1 Research Funding.

(a) Celera will pay Isis [*] to conduct the Research under the Research Plan. Celera will pay Isis [*] of the Effective Date. Notwithstanding the foregoing, if Isis fails in a material way to conduct the Research according to the Research Plan Celera may withhold payment of the following [*] until such material failure is remedied, whereupon such [*] will be paid in full or in such fraction as the Parties shall reasonably agree. Any

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dispute with regard to such payment withholding will be promptly elevated to dispute resolution pursuant to Section 12.11(a).

(b) Delivery schedule and funding for Other Services described in Article 5 will be agreed upon and paid in advance in the amounts agreed to by the Parties.

7.2 [*].

7.3 Mode of Payment and Reports. All payments to hereunder will be made to the receiving Party within sixty (60) days of the end of the quarter in which the receiving Party receives the payment by deposit of United States Dollars in the requisite amount to such bank account as the receiving Party may from time-to-time designate by notice to the paying Party. The paying Party will provide to the receiving Party with each such payment a report in sufficient detail to show the basis for such payment.

7.4 Audits.

(a) Upon the written request of the receiving Party and not more than once in each calendar year, the paying Party will permit an independent certified public accounting firm of nationally recognized standing selected by the paying Party, and reasonably acceptable to the receiving Party at the receiving Party's expense, to have access during normal business hours, and upon reasonable prior written notice, to such of the records of the paying Party as may be reasonably necessary to verify the accuracy of the reports under Section 7.3 for the prior calendar year only. The accounting firm will disclose to the Parties only whether the reports are correct or incorrect and the specific details concerning any discrepancies. No other information will be provided to Celera.

(b) If such accounting firm concludes that additional payments were owed during such period, the paying Party will pay the additional payments, with interest from the date originally due at the prime rate, as published in The Wall Street Journal (Eastern U.S. Edition) on the last business day preceding such date, within thirty (30) days after the date the receiving Party delivers to the paying Party such accounting firm's written report. [*]

(c) For any sublicense granted by either Party hereunder which triggers payments to the other Party pursuant to this Article 7, the grantor of such sublicense will include in each sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to keep and maintain records of sales made, pursuant to such sublicense and to grant access to such records by the licensing Party's independent accountant to the same extent required by such grantor under this Agreement.

(d) Celera and Isis will treat all information subject to review under this Section 7.4 or under any sublicense agreement in accordance with the confidentiality provisions of Article 9 of this Agreement.

7.5 Taxes. If any taxes are required to be withheld by the licensing Party, it will (a) deduct such taxes from the remitting payment,
(b) timely pay the taxes to the proper

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taxing authority, and (c) send proof of payment to the receiving Party and certify its receipt by the taxing authority within sixty (60) days following such payment.

ARTICLE 8

INVENTIONS AND PATENTS

8.1 Title to Inventions.

(a) Any Patent Rights covering inventions by the Parties during the Collaboration that do not constitute Collaboration Patents will be owned exclusively by the inventing party, subject to Subsection 8.1(c).

(b) Joint Patents will be jointly owned, subject to Subsection 8.1(c).

(c) Any inventions constituting Oligonucleotide Patents will be solely owned and assigned to Isis. Inventions with an antisense component and a broader compound will be broken into separate patent applications with the antisense-related inventions filed separately as Oligonucleotide Patents.

(d) Any inventions constituting Celera Exclusive Collaboration Patents will be solely owned and assigned to Celera (subject to the licenses granted to Isis hereunder).

(e) Inventorship will be determined by the applicable laws of the country or jurisdiction in which the particular Patent Right is sought.

(f) In the event that there is a dispute between the Parties as to ownership under this Section, the Intellectual Property Committee will establish a procedure to resolve such dispute, which may include engaging a Third Party patent attorney completely unaffiliated and independent of the Parties and jointly selected by the Parties, as an expert to resolve such dispute.

8.2 Patent Prosecution.

(a) The Parties expect that patent applications will be filed and maintained as required to secure the Collaboration Patent Rights. Celera, with reasonable and timely input from Isis, will be responsible for filing, prosecuting and/or maintaining the Celera Exclusive Collaboration Patents throughout the world. Isis with reasonable and timely input from Celera, will be responsible for filing, prosecuting and/or maintaining the Collaboration Patents other than Celera Exclusive Collaboration Patents throughout the world. Celera and Isis will share equally the costs of filing, prosecuting and/or maintaining such Patent Rights. Notwithstanding the above, either Party may decline to pay its share of the costs for filing, prosecuting and/or maintaining any Collaboration

Patent(s) (a "Declining Party"), in which case such Declining Party will notify the other Party promptly in writing and in good time to enable the other Party to meet any applicable deadlines, and the other Party will have the right, but not the obligation, to undertake the responsibility for filing, prosecuting and/or maintaining such Collaboration Patents at its own expense, and the Declining Party will reasonably cooperate with and assist the other Party therein. A Declining Party will maintain its license under such Collaboration Patent pursuant to Article 4, except that any right to grant sublicenses therein (other than the sublicensing rights set forth in Sections 4.3(a) 4.3(b)), and any right to receive Licensing Revenue pursuant to
Section 7.2 under such Collaboration Patents, will terminate as of the date a Declining Party provides such written notice. Such terminated sublicense rights shall be granted to the other Party, provided such other Party has exercised its right of filing, prosecuting and/or maintaining such Collaboration Patents.

(b) The Parties anticipate that there may be Joint Patents that arise out of the Collaboration (that do not constitute Collaboration Patents or Oligonucleotide Patents). To the extent that such a Joint Patent represents an improvement of one Party's technology and not the other, the Party whose technology is improved will have the sole right and responsibility, at its own expense, to prosecute and maintain such Joint Patent. To the extent that such a Joint Patent either represents an improvement to both Party's technology or does not improve either Party's technology, the Intellectual Property Committee will determine which of the Parties will be responsible for prosecution, maintenance, enforcement and defense of such Patent and what procedures will be put in place for coordination among the Parties including, without limitation, cost-sharing and input.

(c) Isis will be solely responsible, at its own expense, for prosecution, maintenance, defense and enforcement of any Oligonucleotide Patents.

8.3 Enforcement of Patents.

(a) If either Party considers that any Collaboration Patent is being infringed by a Third Party, it will notify the other Party and provide it with any evidence of such infringement which is reasonably available. Subject to any limitations in the license agreements between Celera or Isis and Third Party licensors covering licensed Patent Rights, the JEC will determine the steps to take to attempt to remove such infringement by commercially appropriate steps, including filing an infringement suit or taking other similar action.

(b) The Party not enforcing the applicable Patent Rights will provide reasonable assistance to the other Party, including providing access to relevant documents and other evidence and making its employees available, subject to the enforcing Party's reimbursement of any out-of-pocket expenses incurred by the non-enforcing Party.

(c) Any amounts recovered by a Party pursuant to Section 8.3(a) whether by settlement or judgment, will be allocated in the following order: (i) to reimburse Isis and Celera for their reasonable out-of-pocket expenses in making such

recovery (which amounts will be allocated pro rats if insufficient to cover the totality of such expenses); and (ii) the remainder will be allocated as the Parties will reasonably agree based upon damages suffered.

(d) Except for Third Party infringement activities covered by the provisions of Section (j) each Party will retain the sole and exclusive right to enforce its Patent Rights against all infringers at its sole cost and expense.

ARTICLE 9

CONFIDENTIALITY

9.1 Confidentiality Obligations. Each Party agrees that, for the term of this Agreement and for five (5) years thereafter, such Party will keep, and will ensure that its officers, directors, employees and agents keep, completely confidential and will not publish or otherwise disclose and will not use for any purpose except as permitted hereunder any Confidential Information furnished to it by the other Party pursuant to this Agreement (including, without limitation, Know-How of the disclosing Party). The foregoing obligations will not apply to any information to the extent that it can be established by such receiving Party that such information:

(a) was already known to the receiving Party as evidenced by its written records, other than under an obligation of confidentiality, at the time of disclosure;

(b) was generally available to the public or was otherwise part of the public domain at the time of its disclosure to the receiving Party;

(c) became generally available to the public or otherwise becomes part of the public domain after its disclosure and other than through any act or omission of the receiving Party in breach of this Agreement;

(d) was subsequently lawfully disclosed to the receiving Party by a Third Party other than in contravention of a confidentiality obligation of such Third Party to the disclosing Party; or

(e) was developed or discovered by employees of the receiving Party or its Affiliates who had no access to the Confidential Information of the disclosing Party. Each Party may disclose the other's Confidential Information to the extent such disclosure is reasonably necessary in filing or prosecuting patent applications, prosecuting or defending litigation, advising investors and the investment community of the results of the Research aid/or development activities hereunder (subject to reasonable prior written notice of, and good faith consultation about, such disclosure to the other Party), complying with applicable governmental regulations, making a permitted sublicense of its rights hereunder or otherwise in performing its obligations or exercising its rights hereunder, provided that if a Party is required to make any such disclosure of the other Party's Confidential Information, it will give reasonable advance notice to that other Party of such disclosure requirement, will cooperate with the other Party in its efforts to secure confidential treatment of such Information prior to its disclosure, and, save to the extent

inappropriate in the case of patent applications, will use all reasonable efforts to secure confidential treatment of such information prior to its disclosure (whether through protective orders or confidentiality agreement or otherwise).

9.2 Publications.

(a) The Collaboration Data will be the Confidential Information of Isis and Celera. Either Party may publish or present Collaboration Data subject to the prior review by the Intellectual Property Committee for patentability and protection of such other Party's Confidential Information. The Intellectual Property Committee will review any proposed abstracts, manuscripts or summaries of presentations which contain Collaboration Data. No publication or presentation containing Collaboration Data may be submitted or made without approval by the Intellectual Property Committee. The Intellectual Property Committee may delay any such approval to ensure protection of Patent Rights. Notwithstanding the foregoing, nothing contained herein will preclude Isis from including the Collaboration Data in its marketed database in accordance with the terms of this Agreement or presenting the Collaboration Data to Isis' potential customers for such database or in connection with either Parties active drug discovery programs, without approval of the Intellectual Property Committee.

(b) To the extent appropriate and within the Party's control, in any publication permitted under this Section 9.2, each Party will acknowledge its collaboration with the other Party under this Agreement

9.3 Press Releases. Except to the extent required by law or as otherwise permitted in accordance with this Section 9.3, neither Party will make any public announcements concerning this Agreement or the terms hereof without the prior written consent of the other, which will not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Parties will issue a joint press release promptly following execution of this Agreement announcing
(i) the execution of this Agreement; (ii) Celera and Isis will jointly identify novel gene function utilizing Celera's expertise in genomics and Isis' expertise in antisense technology; (iii) Celera will retain exclusive rights to a limited number of genes for the research and development of certain therapeutic products; and (iv) that functional information on [*] of these genes will be incorporated into Isis' Gene Function Database, and agree that each Party may desire or be required to issue subsequent press releases relating to the Agreement or activities thereunder, and the Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of such press releases prior to the issuance thereof, provided that a Party may not unreasonably withhold consent to such releases, and that either Party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure.

ARTICLE 10

INDEMNIFICATION

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10.1 Indemnification by Celera. Celera will indemnify, defend and hold Isis and its agents, employees, officers and directors (the "Isis Indemnitees") harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorneys' fees) arising out of Third Party claims or suits related to (a) Celera's performance of its obligations under this Agreement; or (b) breach by Celera of its representations and warranties set forth in Section 12.3 or (c) Isis' use of Celera Gene Targets under the Research Plan pursuant to Section 3.1(d); PROVIDED, HOWEVER, that Celera's obligations pursuant to this Section 10.1 will not apply to the extent such claims or suits result from the gross negligence or willful misconduct of any of the Isis Indemnitees. Notwithstanding the foregoing, Celera will have no obligation to indemnify the Isis Indemnitees with respect to claims arising out of breach by Isis of its representations and warranties set forth in Sections 12.3.

10.2 Indemnification by Isis. Isis will indemnify, defend and hold Celera and its Affiliates and each of their respective agents, employees, officers and directors (the "Isis Indemnitees") harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorney's fees) arising out of Third Party claims or suits related to (a) Isis's performance of its obligations under this Agreement; or (b) breach by Isis of its representations and warranties set forth in Sections 12.3; provided however, that Isis's obligations pursuant to this Section 10.2 will not apply to the extent that such claims or suits result from the gross negligence or willful misconduct of any of the Celera Indemnitees. Notwithstanding the foregoing, Celera will have no obligation to indemnify the Celera Indemnitees with respect to claims arising out of a breach by Celera of its representations and warranties set forth in Section 12.3.

10.3 Notification of Claims. Conditions to Indemnification Obligations. As a condition to a Party's right to receive indemnification under this Article 10 it will (i) promptly notify the other Party as soon as it becomes aware of a claim or action for which indemnification may be sought pursuant hereto, (ii) cooperate with the indemnifying Party in the defense of such claim or suit, and (iii) permit the indemnifying Party to control the defense of such claim or suit, including without limitation the right to select defense counsel. In no event, however, may the indemnifying Party compromise or settle any claim or suit in a manner which admits fault or negligence on the part of the indemnified Party without the prior written consent of the indemnified Party. The indemnifying Party will have no liability under this Article 10 with respect to claims or suits settled or compromised without its prior written consent.

ARTICLE 11

TERMINATION AND EXPIRATION

11.1 Term and Termination. This Agreement will commence upon the Effective Date and, unless earlier terminated as provided herein, will expire on the expiration of all royalty and other payment obligations herein.

11.2 Termination upon Material Breach. Failure by a Party to comply with any of its material obligations contained herein will entitle the Party not in default to give to

the Party in default notice specifying the nature of the default, requiring it to make good or otherwise cure such default, and stating its intention to terminate if such default is not cured. If such default is not cured within ninety (90) days after the receipt of such notice (or, if such default cannot be cured within such ninety (90) day period, if the Party in default does not commence and diligently continue actions to cure such default), the Party not in default will be entitled, without prejudice to any of its other rights conferred on it by this Agreement, and in addition to any other remedies available to it by law or in equity, to terminate this Agreement; PROVIDED HOWEVER, that such right to terminate will be stayed in the event that, during such ninety (90) day period, the Party alleged to have been in default will have initiated dispute resolution in accordance with Section 12.11 with respect to the alleged default, which stay will last so long as the initiating Party diligently and in good faith cooperates in the prompt resolution of such dispute resolution proceedings.

11.3 Consequences of Termination.

(a) Upon termination of this Agreement (but not upon expiration of its term under Section 11.1);

(i) each Party will promptly return all relevant records and materials in its possession or control containing or comprising the other Party's Confidential Information and to which the former Party does not retain rights hereunder (except one copy of which may be retained in a Party's confidential files in its legal department for archival purposes); and

(ii) all licenses granted under Sections 4.1, 4.1(a) and 4.3(d) will terminate; provided however, that all sublicenses previously granted will survive termination. All licenses granted under Section 4.2 and 4.3 will survive termination.

(b) The right of a Party to terminate this Agreement, as herein above provided, will not be affected in any way by its waiver or failure to take action with respect to any prior default.

11.4 Accrued Rights; Surviving Obligations.

(a) Termination, relinquishment or expiration of this Agreement for any reason will be without prejudice to any rights which will have accrued to the benefit of a Party prior to such termination, or expiration. Such termination, relinquishment or expiration will not relieve a Party from obligations which are expressly indicated to survive termination or expiration of this Agreement.

(b) Without limiting the foregoing, Sections 2.3, 3.1(d), 4.3(a), 4.3(b), 4.3(c), 4.5, 4.6, 7.3, 7.4, 7.5, 8.1, 8.2, 9.1, 11.3, 11.4 and 11.5 and Articles 10 and 12 of this Agreement will survive the expiration or termination of this Agreement for any reason.

11.5 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Isis or Celera are, and will otherwise be deemed to be, for purposes of

Section 365(n) of the U.S. Bankruptcy Code, licenses of right to "intellectual property" as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this Agreement, will retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding-by or against either Party under the U.S. Bankruptcy Code, the Party hereto which is not a party to such proceeding will be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, and same, if not already in their possession, will be promptly delivered to them (i) upon any such commencement of a bankruptcy proceeding upon their written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (ii) if not delivered under (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.

ARTICLE 12

MISCELLANEOUS PROVISIONS

12.1 Relationship of the Parties. Nothing in this Agreement is intended or will be deemed to constitute a partnership, agency or employer-employee relationship between the Parties. Neither Party will incur any debts or make any commitments for the other.

12.2 Assignments. Neither this Agreement nor any interest hereunder will be assignable, nor any other obligation delegable, by a Party without the prior written consent of the other Party; provided however, that either Party may assign this Agreement without consent to any successor in interest by way of merger or sale of all or substantially all of its assets in a manner such that the assignor will remain liable and responsible for the performance and observance of all of the assigning Party's duties and obligations hereunder, except that no intellectual property of any Third Party acquirer of Celera or Isis will be included in the licenses granted hereunder. This Agreement will be binding upon the successors and permitted assigns of the Parties. Any assignment not in accordance with this Section 12.2 will be void.

12.3 Representations and Warranties. Each Party represents and warrants to the other Party that, as of the date of this Agreement:

(a) Such Party is duly organized and validly existing under the laws of the state of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b) Such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance its obligations under this Agreement;

(c) This Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement The execution, delivery and performance of this Agreement by such

Party does not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a party or by which such Party may be bound, and does not violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party. All consents, approvals and authorizations from all governmental authorities or other Third Parties required to be obtained by such Party in connection with this Agreement have been obtained

(d) It has the full and exclusive right, power and authority to enter into this Agreement, to perform the Research and to grant the licenses granted under Article 4;

(e) There are no agreements between such Party and any Third Parties which would preclude or otherwise limit such Party's ability to conduct its tasks and obligations under the Research Plan or otherwise fulfill its obligations under this Agreement;

(f) All individuals who will perform any activities on its behalf in connection with the Research have assigned to it or its Affiliates the whole of their rights in any intellectual property conceived or reduced to practice by them as a result of the Research, and no Third Party will have any rights to any such intellectual property.

12.4 Disclaimer of Warranties. THE PARTIES EXPRESSLY DISCLAIM ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT.

12.5 Further Actions. Each Party agrees to execute, acknowledge and deliver such further instruments and to do all such other acts as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

12.6 Force Majeure. Neither Party will be liable to the other for failure or delay in the performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by earthquake, riot, civil commotion, war, strike, flood, governmental acts or restrictions or any other reason which is beyond the control of the respective Party. The Party affected by force majeure will provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities), and will use commercially reasonable efforts to overcome the difficulties created thereby and to resume performance of its obligations as soon as practicable. If the performance of any obligation under this Agreement is delayed owing to a force majeure for any continuous period of more than six
(6) months, the Parties hereto will consult with respect to an equitable solution, including the possibility of the mutual termination of this Agreement.

12.7 No Trademark Rights. Except as expressly set forth herein, no right, express or implied, is granted by this Agreement to a Party to use in any manner the name or any other trade name or trademark of a Party in connection with the performance of this Agreement.

12.8 Entire Agreement of the Parties; Amendments. This Agreement and the exhibits hereto constitute and contain the entire understanding and agreement of the Parties respecting the subject matter hereof and cancel and supersede any and all prior negotiations, correspondence, understandings and agreements between the Parties, whether oral or written, regarding such subject matter. No waiver, modification or amendment of any provision of this Agreement will be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

12.9 Captions. The captions to this Agreement are for convenience only, and are to be of no force or effect in construing or interpreting any of the provisions of this Agreement

12.10 Applicable Law. This Agreement will be governed by and interpreted in accordance with the laws of the State of Delaware, USA, applicable to contracts entered into and to be performed wholly within the State of Delaware, excluding conflict of law principles.

12.11 Disputes. In the event of any controversy or claim arising out of, relating to or in connection with any provision of this Agreement or the rights or obligations of the Parties hereunder, the Parties will try to settle their differences amicably between themselves as contemplated herein. To the extent not provided for herein, either Party may initiate such informal dispute resolution by sending written notice of the dispute to the other Party, and within ten (10) days after such notice.

(a) The Chief Business Officer of Celera and the President of GeneTrove of Isis will meet for discussion and resolution. If such personnel are unable to resolve such dispute within thirty (30) days of initiating such negotiations, the Parties agree to settle any unresolved controversy or claim arising out of, relating to or in connection with this Agreement (except as to any issue relating to the ownership of intellectual property of either Party) in Dallas, Texas by binding arbitration under the American Arbitration Association in accordance with its Commercial Arbitration Rules as modified by this Section, and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Within fifteen (15) days after the commencement of arbitration, each Party will select one (1) person to act as arbitrator, and the two (2) selected by the Parties will select a third arbitrator within ten (10) days of their appointment. The Parties agree that in cases in which this Agreement explicitly provides that their disagreement will be settled by this Section, the arbitration method to be employed will be "baseball-style arbitration." This means that each Party will submit in writing to the Panel and the other Party at an appropriate time its final, detailed proposed resolution of the dispute. The panel will have the right to ask for and receive (at the same time as the other Party) clarification of a Party's proposed resolution. In its arbitration award, the panel will be limited to choosing, without material modification, one of the two proposed resolutions, together with an award of reasonable attorneys' fees to the prevailing Party. The arbitrators will have no authority to award punitive damages or any other damages not measured by the prevailing Party's actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Agreement. Neither Party nor the arbitrators may disclose the existence,

content, or results of any arbitration hereunder without the prior written consent of both Parties.

12.12 Notices and Deliveries. Any notice, request, delivery, approval or consent required or permitted to be given under this Agreement will be in writing and will be deemed to have been sufficiently given if delivered in person, transmitted by facsimile (receipt verified) or by express courier service (signature required) or five (5) days after it was sent by registered letter, return receipt requested (or its equivalent), to the Party to which it is directed at its address or facsimile number shown below or such other address or facsimile number as such Party will have last given by notice to the other Party.

If to Isis, addressed to:

Isis Pharmaceuticals, Inc. 2292 Faraday Drive Carlsbad, California 92008 Attn: Richard Brown, B. Lynne Parshall Cc: GeneTrove President

If to Celera, addressed to:

Celera Genomics 45 West Gude Drive Rockville, Maryland
Attn: Peter Barrett, Ph.D.

Cc: Group Counsel, Legal Affairs

12.13 No Consequential Damages. IN NO EVENT WILL EITHER PARTY OR ANY
OF ITS RESPECTIVE AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

12.14 Non-Solicitation. During the Research Term, and for a period of one (1) year thereafter, neither Party will solicit, induce, encourage or attempt to induce or encourage any employee of the other Party to terminate his or her employment with such other Party or to breach any other obligation to such other Party.

12.15 Waiver. A waiver by either Party of any of the terms and conditions of this Agreement in any instance will not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement will be cumulative and none of them will be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

12.16 Compliance with Law. Nothing in this Agreement will be deemed to permit a Party to export, re-export or otherwise transfer any Licensed Product sold under this Agreement without compliance with applicable laws.

12.17 Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. The Parties will make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the invalid or unenforceable provision.

12.18 Counterparts. This Agreement may be executed simultaneously in any number of counterparts, any one of which need not contain the signature of more than one Party but all such counterparts taken together will constitute one and the same agreement

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective duly authorized officers as of the day and year first above written, each copy of which will for all purposes be deemed to be an original.

ISIS PHARMACEUTICALS, INC.            PE CORPORATION

By:                                   By:
    ----------------------------         ----------------------------
           (signature)                           (signature)

Name:  B. Lynne Parshall              Name:  Peter Barrett, Ph.D.

Title: Executive Vice President       Title: E.V.P. and Chief Business Officer

Date:                                 Date:
     ---------------------------           --------------------------

EXHIBIT A
RESEARCH PLAN

This Exhibit A to the Collaborative Research and License Agreement (the "Agreement") dated as of July 9, 2001 addresses the conduct of the Research. Capitalized terms will have the meanings set forth in the Agreement.

The generation of functional information on [* ] Celera Target Genes will follow a multi-step process: prioritization of genes, generation and validation of lead antisense oligos, and bioassay readout in four therapeutic areas (cancer, angiogenesis, inflammation, and metabolic disease). After the Collaboration Data is reviewed by the Joint Research Committee and Intellectual Property Committee and appropriate patent applications filed, the information will be used to populate the Gene Trove Gene Function Database, excluding information on [* ] Celera Exclusive Targets.

Isis will provide reports to the JRC on a quarterly basis or more frequently. These reports will contain all information necessary to keep the JRC fully informed regarding the performance of the research plan.

[*]

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EXHIBIT B

[* ]

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