technology Verva licensed to us, we will pay milestone payments to Verva totaling up to $6.1 million for the
achievement of key patent, clinical, and regulatory milestones. If we convert our license from an exclusive
license to a nonexclusive license we could significantly reduce the milestone payments due to Verva. In addition,
we will also pay royalties to Verva on sales of ISIS-FGFR4R
x
if our product incorporates the technology we
licensed fromVerva.
Cold Spring Harbor Laboratory
We have a collaboration and license agreement with the Cold Spring Harbor Laboratory under which we
acquired an exclusive license to the Cold Spring Harbor Laboratory’s patent rights related to ISIS-SMN
Rx
. If we
successfully develop and commercialize a drug incorporating the technology we licensed from the Cold Spring
Harbor Laboratory, we will pay a milestone payment of $0.5 million to the Cold Spring Harbor Laboratory for
the achievement of a key regulatory milestone. In addition, we will pay the Cold Spring Harbor Laboratory a
portion of any sublicense revenue and post licensing milestone payments up to $11.3 million we receive in
consideration for sublicensing the Cold Spring Harbor Laboratory’s technology and a royalty on sales of
ISIS-SMN
Rx
if our product incorporates the technology we licensed from the Cold Spring Harbor Laboratory.
Manufacturing
In the past, except for small quantities, it was generally expensive and difficult to produce chemically
modified oligonucleotides like the antisense drugs we use in our research and development programs. As a result,
we have dedicated significant resources to develop ways to improve manufacturing efficiency and capacity. Since
we can use variants of the same nucleotide building blocks and the same type of equipment to produce our
oligonucleotide drugs, we found that the same techniques we used to efficiently manufacture one oligonucleotide
drug could help improve the manufacturing processes for many other oligonucleotide drugs. By developing
several proprietary chemical processes to scale up our manufacturing capabilities, we have greatly reduced the
cost of producing oligonucleotide drugs. For example, we have significantly reduced the cost of rawmaterials
through improved yield efficiency, while at the same time increasing our capacity to make the drugs. Through
both our internal research and development programs and collaborations with outside vendors we may achieve
even greater efficiency and further cost reductions.
Due to the growing numbers of our antisense drug development partners and the clinical successes of our
antisense drugs, including KYNAMRO, in 2009 we increased our manufacturing capacity by upgrading and
optimizing the efficiency of our manufacturing facility. Our drug substance manufacturing facility is located in a
28,700 square foot building in Carlsbad, California. We lease this building under a lease that has an initial term
ending on December 31, 2031 with an option to extend the lease for up to four additional five-year periods. In
addition, we have a 25,800 square foot building that houses support functions for our manufacturing activities.
We lease this facility under a lease that has an initial term ending in June 2021 with an option to extend the
lease for up to two additional five-year periods. Our manufacturing facility is subject to periodic inspections by
the FDA to ensure that it is operating in compliance with current GoodManufacturing Practices, or cGMP,
requirements.
As part of our collaborations we may agree to manufacture clinical trial materials and/or commercial supply
for our partners. For example, in the past we have manufactured clinical supply materials for ATL, Atlantic
Pharmaceuticals, AstraZeneca, Biogen Idec, Bristol-Myers Squibb, Eli Lilly and Company, Genzyme, iCo,
OncoGenex and Ortho-McNeil-Janssen Pharmaceuticals, Inc.
We believe we have sufficient manufacturing capacity to meet our current and future obligations under
existing agreements with our partners for commercial, research and clinical needs, as well as to meet our current
internal research and clinical needs, including for the Phase 3 clinical trials for ISIS-TTR
Rx
, ISIS-SMN
Rx
, and
ISIS-APOCIII
Rx
. We believe that we have, or will be able to develop or acquire, sufficient supply capacity to
meet our anticipated needs, including the initial launch supplies for ISIS-TTR
Rx
, ISIS- SMN
Rx
, and
ISIS-APOCIII
Rx
. We also believe that with reasonably anticipated benefits from increases in scale and
improvements in chemistry, we can manufacture antisense drugs at commercially competitive prices.
In January 2013, the FDAapproved the marketing application for KYNAMRO for patients with HoFH. We
provided the drug substance necessary for the initial launch of KYNAMRO and Genzyme is responsible for the
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