This Clinical Supply Agreement ("Agreement") between ISIS PHARMACEUTICALS, INC.

of 2292 Faraday Avenue, Carlsbad, CA 92008, USA ("ISIS") and ANTISENSE

THERAPEUTICS LTD., ACN 095 060 745 of Level 1, 10 Wallace Avenue, Toorak,

Victoria 3142, AUSTRALIA ("ATL") is entered into and made effective in

accordance with the provisions of the agreement entitled "Master Agreement"

between ATL and ISIS, dated October 30 2001. The effective date of this Clinical

Supply Agreement will be the date upon which all of the conditions in the Master

Agreement have been met (the "Effective Date"). If the Effective Date has not

occurred by March 28, 2002, this Agreement will be null and void and will not

become effective.







                            INTRODUCTION AND OVERVIEW





      ISIS and ATL will collaborate in the discovery and development of Products

pursuant to the related Collaboration and License Agreement. When ATL submits an

order to ISIS for a Collaboration Compound which ATL is committed to use in

IND-enabling studies, ISIS will manufacture active pharmaceutical ingredient

("API") for each such Collaboration Compound ordered, using ISIS Standard

Chemistry, for use by ATL in IND-enabling toxicology studies and subsequent

clinical studies, during the term of this Agreement.



      During the term of this Agreement, the parties will also work together to

facilitate the transfer of antisense drug manufacturing technology to ATL or its

Contractors. As of the Effective Date, ISIS will supply ATL with API, and ATL

will be responsible for the formulation, filling, finishing, labeling and

packaging of all Products, including stability studies. By the time the term of

this Agreement ends, however, it is the parties' intent that ATL will be solely

responsible for manufacturing its requirements of API and Product.



      Therefore, in consideration of the foregoing premises and the mutual

covenants herein contained, the parties hereby agree as follows.



                                    ARTICLE 1



                                   DEFINITIONS



      Capitalized terms used in this Agreement have the meanings set forth in

Exhibit 1 hereto.









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                                    ARTICLE 2



           MANUFACTURE AND SUPPLY OF API AND ISIS 107248 PRODUCT



2.1   RESPONSIBILITIES OF ATL AND ISIS



      ISIS will provide API for Collaboration Compounds to ATL for use

      consistent with this Agreement and the Collaboration and License

      Agreement, and ISIS will also perform API stability studies on all API

      provided by ISIS. Except as provided in Section 2.3, ATL will be

      responsible for the formulation, filling, finishing, labeling and

      packaging of all Products, including stability studies.



2.2   FORMULATION, FILL AND FINISH OF PRODUCT



      The parties acknowledge that as of the Effective Date, a Third Party

      manufacturer typically performs the formulation, filling and finishing of

      Product. Following the Effective Date, ATL will be responsible for the

      formulation, filling and finishing of Product and will use commercially

      reasonable efforts to promptly establish, by itself or through a Third

      Party manufacturer, the manufacturing process for formulating, filling,

      and finishing Product. If requested by ATL, ISIS will cooperate with ATL,

      as appropriate, to enable ATL to enter into an agreement with the Third

      Party manufacturer used by ISIS to perform the formulation, filling and

      finishing of Product.



2.3   PURCHASE, FORMULATION AND CERTIFICATION OF ISIS 107248 PRODUCT FOR

      IND-ENABLING STUDIES



(a)   Within 30 days of the Effective Date, ATL will purchase from ISIS the

      [***] grams of ISIS 107248 API that ISIS has in its inventory and will pay

      ISIS for that API in the amount of [***], consistent with the provisions

      of Article 7. ISIS will hold such API for ATL's account in order to

      formulate and certify such ISIS 107248 API in January 2002, as further

      described herein.



(b)   Pursuant to ATL's request, and at ATL's expense, ISIS will formulate and

      certify the ISIS 107248 API referenced in (a) above. ATL and/or an ATL

      Contractor other than ISIS will participate in the formulation and

      certification process, at ATL's expense, to facilitate the Technology

      Transfer, as further described in Section 6.2.



(c)   As ISIS will be performing the formulation and certification of the ISIS

      107248 API and the release of Clinical Product for ATL as a Contractor,

      ATL is responsible for certain losses prior to Delivery, consistent with

      the provisions of Section 5.2.



2.4   FORMULATION AND RELEASE OF ISIS 107248 CLINICAL PRODUCT FOR HUMAN

      STUDIES



      ATL will bear sole responsibility for the formulation, fill, finish and

      release of ISIS 107248 Clinical Product for use in human studies pursuant

      to the Collaboration and License Agreement. ATL will use commercially

      reasonable efforts to promptly establish,





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      by itself or through a Third Party manufacturer, the manufacturing

      process for formulating, filling, finishing, and releasing ISIS 107248

      Clinical Product.





                                    ARTICLE 3



                         ORDERS AND LIMITATION OF SUPPLY



3.1   PRODUCTION AND DELIVERY PLANS AND ORDERS



(a)   With the exception of 2001, not later than July 1 of each year in

      which this Agreement is in effect, up to and including July 1, 2005,

      ATL will provide ISIS with a written API order estimate indicating

      the amount of API ATL will require during the subsequent Calendar

      Year, which estimate will indicate the quantity and identity of each

      Collaboration Compound for which API is requested.  ISIS has agreed,

      pursuant to the Collaboration and License Agreement, to supply API

      for up to [***] different Collaboration Compounds in active

      development by ATL each year from 2002-2006.  The total quantity of

      such API to be supplied by ISIS in any Calendar Year during the term

      of this Agreement will not exceed [***], and the minimum order of

      API for each Collaboration Compound must be at least [***] kg.  Each

      estimate and order submitted by ATL will indicate which

      Collaboration Compound API(s) is/are being ordered and the quantity

      of each such API ordered.



(b)   At the time ATL provides each API order estimate for Calendar Years

      2003 through 2006, ATL representatives will meet with ISIS

      representatives to discuss and agree upon a production and delivery

      plan for the next Calendar Year (the "Production and Delivery

      Plan").  Each year's agreed-upon Production and Delivery Plan will

      specify the quantity and identity of each Collaboration Compound for

      which ISIS will supply API to ATL during the subsequent Calendar

      Year, taking into account all relevant factors including, without

      limitation, ISIS' obligations to other parties.  Each such

      Production and Delivery Plan will be deemed a firm purchase order of

      ATL for the quantity of API for each Collaboration Compound

      specified therein, and a firm commitment of ISIS to Manufacture and

      supply such quantities of API to ATL. Each lot of API Manufactured

      and supplied to ATL by ISIS after the Effective Date and during the

      term of this Agreement will be for use in IND-enabling studies and

      human clinical studies.



(c)   [***]



(d)   The Production and Delivery Plan for Calendar Year 2002 is attached as

      Exhibit 3.1 hereto and is considered ATL's firm purchase order of API for

      Calendar Year 2002.



(e)   The Production and Delivery Plan will further specify one or more

      dates upon which Delivery of the API to be supplied by ISIS will

      occur during the relevant Calendar Year.  ISIS will use commercially

      reasonable efforts to Deliver the API to ATL according to the

      agreed-upon Delivery schedule set forth in the Production and

      Delivery Plan.  The Production and Delivery Plan will provide for

      Delivery of API promptly after completion





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      of Manufacture and release.  The date on which the parties agree upon a

      Production and Delivery Plan for the following Calendar Year will be

      referred to herein as the "API Order Date."



(f)   ISIS will perform a mutually agreed upon stability program for API

      Manufactured by ISIS at ATL's expense. ISIS will invoice ATL for such

      activities and for materials and expenses incurred in accordance

      therewith, as further described in Article 7.

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