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Under the amended agreement, we assigned toOncoGenexour rights in the patents claiming the composition and therapeutic
methods of using custirsen andgrantedOncoGenex aworldwide, nonexclusive license toour know-how andpatents coveringour core
antisense technology andmanufacturing technology solely for usewith custirsen. The keyproduct-relatedpatent thatwe assigned to
OncoGenexwasU.S. Patent number 6,900,187having an expirationdate of at least 2020; and the core antisense technologypatents
we licensedOncoGenex areU.S. Patent number 7,919,472having an expirationdate of 2026, its foreign equivalents granted in
Australia andCanada, and its foreign equivalent pendingunder theEuropeanPatent Convention. In addition, we agreed that so long
asOncoGenexor its commercialization partner is using commercially reasonable efforts todevelop and commercialize custirsen, we
will not research, developor commercialize an antisense compounddesigned tomodulate clusterin. The amended agreement will
continue until OncoGenexor its commercialization partner is no longer developingor commercializing custirsenor untilwe terminate
the agreement forOncoGenex’s uncured failure tomake a payment requiredunder the agreement.
InDecember 2009, OncoGenexgrantedTeva the exclusiveworldwide right and license todevelop and commercialize any
products containing custirsen and related compounds, withOncoGenexhaving anoption to co-promote custirsen in theUnitedStates
andCanada, forwhichwe received$10million of the upfront payment OncoGenex received fromTeva. We are also eligible to
receive 30percent of up to $370million inpaymentsOncoGenexmay receive fromTeva in addition to royalties on any product sales
of custirsen rangingbetween3.88percent and sevenpercent. Under the agreement, this royalty is due on a country-by-countrybasis
until the later of ten years following the first commercial sale of custirsen in the relevant country, and the expirationof the last patent
we assignedor licensed toOncoGenex that covers themaking, usingor sellingof custirsen in such country.
To facilitate the execution andperformance ofOncoGenex’s agreementwithTeva, we andOncoGenex amendedour license
agreement primarily to giveTeva the ability to cure any future potential breachbyOncoGenexunder our agreement. As part of this
amendment, OncoGenex agreed that ifOncoGenex is the subject of a change of controlwith a thirdparty, where the surviving entity
immediately following such change of control has the right todevelop and sell custirsen, then a payment of $20millionwill be due
and payable tous 21days following the first commercial sale of the product in theUnitedStates. Anynon-royaltypayments
OncoGenexpreviouslypaid tous are creditable towards the $20million payment, so as a result of the $10millionpaymentwe
received fromOncoGenex related to its license toTeva, the remaining amount owing in the event of a change of control as discussed
above is amaximumof $10million.
InAugust 2003, we andOncoGenex entered into a separate collaboration and license agreement for the development of a
second-generation antisense anti-cancer drug, OGX-225. OncoGenex is responsible for all development costs and activities, andwe
have no further performance obligations. OncoGenex issued to us $750,000ofOncoGenex securities as payment for anupfront fee. In
addition, OncoGenexwill payus substantivemilestone payments totalingup to$3.5million for the achievement of development and
regulatorymilestones, includingup to$1.5million for the achievement of developmentmilestones andup to$2million for the
achievement of regulatorymilestones. In addition, we are eligible to receive royalties on future product sales ofOGX-225. As of
December 31, 2013, OncoGenex hadnot achieved anymilestone events related toOGX-225.Wewill earn the nextmilestone payment
of $500,000 ifOncoGenex initiates aPhase 2 study forOGX-225.
In January2005, we entered into a further agreementwithOncoGenex to allow for the development of an additional second-
generation antisense anti-cancer drug, apatorsen, formerlyOGX-427. Under the terms of the agreement, OncoGenex is responsible for
all development costs and activities, andwe have no further performance obligations. OncoGenexwill payus substantivemilestone
payments totalingup to$5.8million for the achievement of keydevelopment and regulatorymilestones, includingup to$1.3million
for the achievement of developmentmilestones andup to$4.5million for the achievement of regulatorymilestones. In addition, we
are eligible to receive royalties on future product sales of the drug. In January2011, we earned a $750,000milestone payment related
toOncoGenex’s Phase 2 trial inmenwithmetastatic prostate cancer.Wewill earn the nextmilestone payment of $1.3million if
OncoGenex initiates aPhase 3 study for apatorsen.
During2011,we earned$750,000 in revenue fromour relationshipwithOncoGenex. During2013 and2012, we didnot earn
any revenue fromour relationshipwithOncoGenex.
Regulus Therapeutics Inc.
InSeptember 2007, we andAlnylam establishedRegulus as a company focusedon the discovery, development and
commercializationofmicroRNA-targeting therapeutics. Regulus combines our andAlnylam’s technologies, know-how, and
intellectual property relating tomicroRNA-targeting therapeutics. In addition, Regulus has assembled a strong leadership teamwith
corporatemanagement, business and scientific expertise, a boardof directors that includes industry leaders indrugdiscovery and
development, and a scientific advisoryboard that consists ofworld-class scientists including some of the foremost authorities in the
fieldofmicroRNA research. We andAlnylam retain rights todevelop and commercialize, onpre-negotiated terms,microRNA
therapeutic products that Regulus decides not todevelop either by itself orwith a partner.
