<PAGE>


CONFIDENTIAL


                                                                    Exhibit 10.1
                                                CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL TREATMENT REQUESTED: PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED" AND APPROPRIATE
SECTIONS, WHERE TEXT HAS BEEN OMITTED, ARE NOTED WITH "[CONFIDENTIAL TREATMENT
REQUESTED]" OR "[* * *]." AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.







                     LIBRARY SUPPLY AND SUBLICENSE AGREEMENT

                                 BY AND BETWEEN

                                  BIOGEN, INC.

                                       AND

                             TREGA BIOSCIENCES, INC.

                       EFFECTIVE AS OF SEPTEMBER 30, 1998



<PAGE>


CONFIDENTIAL

                                                                    Exhibit 10.1
                                                CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL TREATMENT REQUESTED: PAGES WHERE CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED ARE MARKED "CONFIDENTIAL TREATMENT REQUESTED" AND APPROPRIATE
SECTIONS, WHERE TEXT HAS BEEN OMITTED, ARE NOTED WITH "[CONFIDENTIAL TREATMENT
REQUESTED]" OR "[* * *]." AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                  THIS LIBRARY SUPPLY AND SUBLICENSE AGREEMENT effective as of
         September 30,1998 (the "Agreement"), is entered into between TREGA
         BIOSCIENCES, INC., a Delaware corporation ("Trega"), having a place of
         business at 9880 Campus Point Drive, San Diego, California 92121, and
         BIOGEN, INC., a Massachusetts corporation ("Biogen"), having a place of
         business at Fourteen Cambridge Center, Cambridge, Massachusetts 02142.

                                    RECITALS:

                  WHEREAS, Trega has recognized expertise in small molecule
         subset chemistry and compound optimization and has developed the
         capability to produce subset libraries, based on [* * *] in [* * *], in
         large quantities at high levels of [* * *] ; and

                  WHEREAS, Trega has rights to certain issued patents pertaining
         to devices and methods for the [* * *] of chemical compounds; and

                  WHEREAS, Biogen desires to acquire certain chemical libraries
         and compounds to support its expanding target and screening throughput
         capability and to utilize such compounds in an effort to discover,
         develop and commercialize products;

                  WHEREAS, Biogen desires to obtain a non-exclusive license from
         Trega to certain [* * *] to assist in the [* * *] of materials received
         from Trega; and

                  WHEREAS, Biogen desires to obtain a non-exclusive sublicense
         from Trega to certain patented technologies to support its drug
         discovery, development and commercialization efforts.

                  NOW, THEREFORE, in consideration of the foregoing premises,
         and the mutual covenants set forth below, the parties intending to be
         legally bound hereby agree as follows:


                                      -1-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    ARTICLE 1

                                   DEFINITIONS

The following capitalized terms used in this Agreement shall have the following
meaning:

         1.1 "ACTUAL COMBINATORIAL LIBRARY INFORMATION" shall mean information
describing the one or more Templates and the Building Blocks used to create a
Combinatorial Library.

         1.2 "AFFILIATE" as applied to either Party shall mean any company or
other legal entity other than the Party in question, in whatever country
organized, controlling, controlled by or under common control with that Party.
The term "control" means ownership or control, directly or indirectly, of at
least fifty percent (50%), or such lower maximum ownership permitted of foreign
owners by law, of the outstanding stock or voting rights or the right to elect
or appoint a majority of the directors.

         1.3 "[* * *] SET" shall mean a set of [CONFIDENTIAL TREATMENT
REQUESTED] which contain at least [CONFIDENTIAL TREATMENT REQUESTED].

         1.4 "[* * *] SET COMPOUND" shall mean a compound which is contained in
an [* * *] Set.

         1.5 "BUILDING BLOCKS" shall mean the [CONFIDENTIAL TREATMENT REQUESTED]
that when combined form a Template, or, the structural components appended,
attached, incorporated into or bonded to a Template.

         1.6 "COMBINATORIAL LIBRARY" shall mean a selected subset of a Virtual
Combinatorial Library that is [CONFIDENTIAL TREATMENT REQUESTED] the Virtual
Combinatorial Library, comprises


                                      -2-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED

P
[CONFIDENTIAL TREATMENT REQUESTED] , and which is synthesized by or on behalf of
Trega for use in its chemicals supply business.

         1.7 "CONFIDENTIAL INFORMATION" shall mean the information of a Party
identified as, or acknowledged to be, confidential.

         1.8 "CONTRACT YEAR" shall mean the successive 12-month periods under
this Agreement commencing on the Effective Date and ending on the anniversary of
the Effective Date.

         1.9 "EFFECTIVE DATE" shall mean the date of this Agreement.

         1.10 "FDA" shall mean the United States Food and Drug Administration or
its successor.

         1.11 "IND" shall mean an Investigational New Drug application filed
with the FDA in the United States, or its equivalent filed with the governing
health authority in any other country.

         1.12 "JOINT PATENT RIGHTS" shall mean all patents and patent
applications claiming technology jointly invented by Trega and Biogen during the
term of this Agreement, including any provisional applications, priority
applications, divisionals, continuations, continuations-in-part, reissues,
reexaminations, supplemental protection certificates and the like.

         1.13 "LEAD COMPOUND" shall mean a molecule deemed by Biogen to be
appropriate for additional [* * *] or a molecule actually the subject of such
efforts by or on behalf of Biogen.

         1.14 "[CONFIDENTIAL TREATMENT REQUESTED]" shall mean any Valid Claims
of Joint Patent Rights covering Combinatorial Libraries.

         1.15 "NDA" shall mean a New Drug Application filed with the FDA in the
United States, or the equivalent product license application filed with the
governing health authority in any other country.


                                      -3-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         1.16 "NON-STANDARD REAGENTS" shall mean any reagent, [CONFIDENTIAL
TREATMENT REQUESTED] that costs Trega more than [CONFIDENTIAL TREATMENT
REQUESTED] from the lowest cost, high quality supplier.

         1.17 "PARTY" shall mean Biogen, Inc. and/or Trega Biosciences, Inc. and
their respective Affiliates.

         1.18 "PRODUCT" shall mean any and all items which have been at any time
prior to the Effective Date or at any time during the term of this Agreement
[CONFIDENTIAL TREATMENT REQUESTED]

         1.19 "PROPOSED COMBINATORIAL LIBRARY INFORMATION" shall mean the
information describing one or more Templates and Building Blocks planned to be
used at each diversity site of a Template to create a Combinatorial Library.

         1.20 "RESPONSIBLE PARTY" shall mean the Party responsible for
prosecution, maintenance, enforcement and defense of Joint Patent Rights.

         1.21 "RESUPPLY COMPOUND" shall mean a specific Subset Library Compound
or [* * *] Set Compound that is selected by Biogen for synthesis and supplied by
Trega pursuant to Article 2.7.

         1.22 "[CONFIDENTIAL TREATMENT REQUESTED]" shall mean all patents and
patent applications claiming [CONFIDENTIAL TREATMENT REQUESTED]


                                      -4-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         1.23 "SUBSET LIBRARY" shall mean a set of [* * *] containing a [* * *]
of a Combinatorial Library and which is based on [CONFIDENTIAL TREATMENT
REQUESTED] synthesized by or on behalf of Trega, and having [* * *] based upon
one or more selected Templates.

         1.24 "SUBSET LIBRARY COMPOUND" shall mean a [* * *] contained within a
Subset Library.

         1.25 "SYNTHESIS PROTOCOLS" shall mean, with respect to Trega Materials
delivered to Biogen hereunder, a detailed description of the know-how necessary
for a skilled, [* * *] to create compounds contained within such Trega
Materials, but specifically excluding [CONFIDENTIAL TREATMENT REQUESTED]

         1.26 "TEMPLATE" shall mean, with respect to a Virtual Combinatorial
Library, Combinatorial Library, Subset Library, or [* * *] Set [CONFIDENTIAL
TREATMENT REQUESTED] of compounds within such Virtual Combinatorial Library,
Combinatorial Library, Subset Library or [* * *] Set.

         1.27 "THIRD PARTY" shall mean any person other than Trega, Biogen and
their respective Affiliates.

         1.28 "TREGA MATERIALS" shall mean those Subset Libraries, Subset
Library Compounds, Resupply Compounds, [* * *] Sets and [* * *] Set Compounds
purchased by Biogen hereunder.

         1.29 "TREGA PATENT RIGHTS" shall mean all patents and patent
applications claiming Trega Technology, including any provisional applications,
priority applications, divisionals, continuations, continuations-in-part,
reissues, reexaminations, supplemental protection certificates and the like,
renewals, and extensions which are owned by, licensed to, or controlled by
Trega, as of the Effective Date, or as to which Trega acquires ownership or
control at any time during the term of this Agreement, where ownership or
control includes a right to grant license thereto.


                                      -5-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         1.30 "TREGA SYNTHESIS TECHNOLOGIES" shall mean the following patents
and patent applications including any provisional applications, priority
applications, divisionals, continuations, continuations-in-part, reissues,
reexaminations, supplemental protection certificates and the like, renewals, and
extensions: (1) U.S. Patent 4,631,211, and its foreign counterparts, including
European Patent Publication No. 196174B1 designating Austria, Germany, France,
Great Britain, Italy, Luxembourg, Netherlands, Belgium, Switzerland, and
Liechtenstein; Issued Austrian Patent 49603-1; Issued Germany Patent
3668321.3-08; Issued Australia Patent 594,327; Issued Canada Patent 1,242,701;
and [CONFIDENTIAL TREATMENT REQUESTED], collectively "Tea-Bag Patents" and (2)
U.S. Patent No. 5,556,762; Australian Patent 668,347 "Synthesis of Equimolar
Multiple Oligomer Mixtures, Especially of Oligopeptide Mixtures"; European
Publication Number 92/902209.3, collectively "Positional Scan Patents".

         1.31 "TREGA TECHNOLOGY" shall mean all information, data, results,
ideas, trade secrets, concepts, formulae, methods, procedures, techniques,
designs, compositions, plans, specifications, know-how, processes, technical
data, formulations and the like, whether or not patentable or patented, which
are owned by, licensed to, or controlled by Trega as of the Effective Date or as
to which Trega acquires ownership or control at any time during the term of this
Agreement (where ownership or control includes a right to grant licenses
thereto), and which are used to create Trega Materials, but specifically
excluding [CONFIDENTIAL TREATMENT REQUESTED] and Trega Synthesis Technologies.

         1.32 "VALID CLAIM" shall mean a claim of an issued and unexpired patent
included within Trega Patent Rights which has not been revoked or held invalid
or unenforceable by a decision of a court or other governmental agency of
competent jurisdiction from which no appeal can be or is 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.

         1.33 "VIRTUAL COMBINATORIAL LIBRARY" shall mean a [* * *] collection of
compounds determined by Trega to be chemically feasible. Such compounds


                                      -6-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


comprise [CONFIDENTIAL TREATMENT REQUESTED] from which a Combinatorial Library
is assembled.

                                    ARTICLE 2

                          COMPOUND PURCHASE PROVISIONS

         2.1 SUPPLY OF SUBSET LIBRARIES. Commencing on the Effective Date and
continuing for a period of two (2) Contract Years thereafter, Trega shall make
available to Biogen during each of the first two Contract Years, upon completion
of synthesis or from existing inventories, Subset Libraries comprising
[CONFIDENTIAL TREATMENT REQUESTED]. Subset Libraries will be based on
Combinatorial Libraries [CONFIDENTIAL TREATMENT REQUESTED] per Contract Year.

         Subset Libraries shall be [CONFIDENTIAL TREATMENT REQUESTED] on average
as determined by statistical sampling using appropriate analytical methods,
[CONFIDENTIAL TREATMENT REQUESTED] of [CONFIDENTIAL TREATMENT REQUESTED]. Trega
will test each Subset Library by mass spectrometry to confirm the presence of
each Subset Library Compound. Such testing must confirm the presence of
[CONFIDENTIAL TREATMENT REQUESTED] of Subset Library Compounds. In order to [* *
*] within each Combinatorial Library Trega will implement the process and will
meet the [* * *] described in Exhibit A. Those compounds that compose a
Combinatorial Library that does not meet such [* * *] will not be counted
against Trega's [* * *] described above unless Biogen exercises it right under
Article 6.5 and purchases a Subset Library from such Combinatorial Library. The
process described in Exhibit A may be updated from time to time to enhance [* *
*] whenever feasible. Trega shall promptly notify Biogen, if, subsequent to the
Effective Date, Trega executes an agreement with a Third Party which includes
provisions for the purchase of compounds and which includes [* * *] (AThird
Party [* * *]") different than the then-current [* * *]


                                      -7-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


described in Exhibit A. Biogen shall have the option to replace such
then-current [* * *] with such Third Party [* * *].

         Within fourteen (14) days of the Effective Date, Trega will present to
Biogen the Actual Combinatorial Library Information for Combinatorial Libraries
in inventory and Proposed Combinatorial Library Information for Combinatorial
Libraries in production for Biogen to determine whether or not it will purchase
Subset Libraries from such Combinatorial Libraries. Prior to the synthesis of
each subsequent Combinatorial Library, Trega will make available to Biogen the
Proposed Combinatorial Library Information of such Combinatorial Library in
order for Biogen to determine, based on the information provided, whether or not
it will likely purchase Subset Libraries based on each such Combinatorial
Library. Within fourteen (14) days from receipt of the Proposed Combinatorial
Library Information, Biogen shall have the opportunity to make suggestions that
may influence the final production of each such Combinatorial Library. Trega
shall, in its sole discretion, determine the Templates and Building Blocks used
to create each Combinatorial Library.

         Following completion of each Combinatorial Library, Trega shall present
Biogen the Actual Combinatorial Library Information used in the creation of such
Combinatorial Library. Biogen will notify Trega within fourteen (14) days of
receipt of the Actual Combinatorial Library Information, the number, if any, of
compounds it will purchase from that Combinatorial Library, and provide shipping
instructions including carrier and insurance designations. The Parties may
mutually agree to extend or modify such fourteen (14) day period as appropriate.
Trega shall ship to Biogen a Subset Library containing the agreed upon number of
compounds from such Combinatorial Library. Failure of Biogen to notify Trega of
its decision during such fourteen (14) day period shall be deemed to be
acceptance of such Combinatorial Library structure and composition. Thereafter,
Trega shall be entitled to ship a Subset Library comprising [CONFIDENTIAL
TREATMENT REQUESTED] from such Combinatorial Library to Biogen pursuant to terms
of this Agreement. Trega shall use [* * *] to obtain such shipping insurance as
Biogen shall request.



                                      -8-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         2.2 SUBSET LIBRARY COMPOUND PURCHASE OBLIGATIONS. Biogen shall be
obligated to purchase [CONFIDENTIAL TREATMENT REQUESTED] Subset Library
Compounds during each of the first two Contract Years.

         2.3 OPTION TO EXTEND TERM. The term of supply and purchase of Subset
Libraries may be extended annually beyond the two Contract Years described in
Articles 2.1 and 2.2 upon the mutual written consent of the Parties.
[CONFIDENTIAL TREATMENT REQUESTED] may be obtained. For each annual extension,
if any, the obligations of each Party shall be as described in the provisions of
this Agreement unless changes are mutually agreed upon in writing by the
Parties.

         2.4 [* * *] SETS. Biogen may order from Trega, and Trega shall provide,
[* * *] Sets based upon Lead Compounds identified by Biogen from Trega
Materials. Biogen's orders shall be in writing to Trega. Trega shall provide a
proposed delivery date for such [* * *] Set and a cost estimate for any
Non-standard Reagents in writing within fourteen (14) days of receipt of
Biogen's order. Within fourteen (14) days of receipt of Trega's proposed
delivery date, Biogen shall either accept or reject such proposed delivery date
in writing. If Trega does not receive a written response within the fourteen
(14) day period, Trega shall deem the proposed date to be acceptable and will
commence synthesis of the [* * *] Set. [* * *] Sets ordered by Biogen and
provided by Trega shall be sold by Trega exclusively to Biogen and shall not be
sold to any Third Party, nor used by Trega or its Affiliates or collaborators.

         [* * *] Sets purchased by Biogen from Trega shall be designated by
Biogen and Trega and will be constructed from the Virtual Combinatorial Library
from which such Lead Compound was identified or derived. [* * *] Sets provided
hereunder shall comprise [CONFIDENTIAL TREATMENT REQUESTED] from the Subset
Library Compounds provided to Biogen, and further distinct from [* * *] Set
Compounds designated by Trega for its use or delivered to Third Parties. [* * *]
Set Compounds shall be provided in [CONFIDENTIAL TREATMENT REQUESTED] with an
average [* * *] Set [CONFIDENTIAL TREATMENT REQUESTED] as determined by
statistical sampling using appropriate analytical methods, sampling
[CONFIDENTIAL TREATMENT REQUESTED] of the [* * *] Compounds in each [* * *] Set.
Trega will test each [* * *] Set by [* * *] to confirm the presence of each [* *
*] Set Compound.


                                      -9-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         2.5 TERM FOR SUPPLY OF [* * *] SETS. Biogen's option to have Trega
supply [* * *] Sets shall expire [CONFIDENTIAL TREATMENT REQUESTED] under this
Agreement.

         2.6 RESUPPLY COMPOUNDS. Biogen may order from Trega, and Trega shall
provide to Biogen, Resupply Compounds based upon Lead Compounds identified by
Biogen from Trega Materials. Biogen's order shall be in writing to Trega. Trega
shall respond in writing within fourteen (14) days of receipt of Biogen's order
with a proposed delivery date for such Resupply Compounds. Biogen, within
fourteen (14) days of receipt of Trega's proposed delivery date quote, shall'
either accept or reject in writing Trega's proposed delivery date. If Trega does
not receive a written response within such fourteen (14) day period, Trega shall
deem the proposed delivery date to be acceptable and will commence synthesis of
the Resupply Compounds.

         Resupply Compounds shall meet the same [* * *] parameters as the
earlier delivered [* * *] Set Compound or Subset Library Compound for which the
resupply has been requested. Resupply Compounds shall be requested and ordered
at a minimum, [CONFIDENTIAL TREATMENT REQUESTED] ordered on a single invoice
basis.

         2.7 TERM FOR SUPPLY OF RESUPPLY COMPOUNDS. Biogen's option to have
Trega supply Resupply Compounds shall [CONFIDENTIAL TREATMENT REQUESTED].

         2.8 GENERAL TERMS FOR SUPPLY OF TREGA MATERIALS. Trega shall supply
Trega Materials to Biogen pursuant to the following terms and conditions:

                  (a) The supply of Trega Materials to Biogen shall be governed
by the terms of this Agreement. None of the terms or conditions of any order,
invoice, confirmation or similar instrument shall be applicable, except those
specifying the identity of Trega Materials, quantity ordered, delivery date,
designated carrier and invoice information.


                                      -10-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                  (b) All Trega Materials supplied under this Agreement shall be
shipped [CONFIDENTIAL TREATMENT REQUESTED]. At the time each Subset Library is
shipped to Biogen hereunder, Trega shall send to Biogen, with respect to each
such Subset Library, a release memo substantially in the form of Exhibit B
attached hereto and release information substantially comprising the items set
forth on Exhibit C attached hereto.

         2.9 MANAGEMENT OF INTERACTIONS. Trega and Biogen each shall designate a
person to serve as project manager who shall be the primary contact for all
scientific interactions. Meetings will be held in person or via teleconference,
at least quarterly for Biogen and Trega to exchange information and manage the
activities under this Agreement.

                                    ARTICLE 3

                                    LICENSES

         3.1 TECHNOLOGY GRANT. Trega hereby grants to Biogen and its Affiliates:

                  (a) a world-wide, nonsublicensable, nonexclusive sublicense
under Trega Synthesis Technologies to make, have made, use, sell, offer for sale
and import Products, subject to the terms of the License Agreement [CONFIDENTIAL
TREATMENT REQUESTED], and such other agreements described in Exhibit D. This
sublicense shall specifically include the right to [CONFIDENTIAL TREATMENT
REQUESTED];


                                      -11-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                  (b) [CONFIDENTIAL TREATMENT REQUESTED] license under Trega
Patent Rights and Trega Technology to make, have made, use, offer for sale,
import and sell [* * *] Set Compounds purchased hereunder; and

                  (c) a world-wide, sublicensable, nonexclusive license under
Trega Patents Rights and Trega Technology to make, have made, use, offer for
sale, import and sell Products [CONFIDENTIAL TREATMENT REQUESTED].

         The foregoing rights and licenses granted in this Article 3 hereby
specifically exclude the right to: (i) [CONFIDENTIAL TREATMENT REQUESTED]; (ii)
evaluate, investigate, or characterize Trega Materials or Products derived from
or based upon Trega Materials for purposes of [CONFIDENTIAL TREATMENT
REQUESTED]; provided, however, that Biogen may evaluate, investigate, or
characterize Trega Materials and Products derived from or based upon Trega
Materials that have [CONFIDENTIAL TREATMENT REQUESTED]; (iii) make, have made,
use, sell, offer for sale, or import Products derived from or based upon Trega
Materials which result from the activities in clauses (i) and (ii) above.
Notwithstanding the foregoing (i), (ii) and (iii), Biogen shall have the right
to screen Trega Materials or Products derived from or based upon Trega Materials
for [CONFIDENTIAL TREATMENT REQUESTED].

         Additionally, the foregoing rights and licenses granted to Biogen
hereunder shall [CONFIDENTIAL TREATMENT REQUESTED].


                                      -12-
<PAGE>

CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    ARTICLE 4

                                 CONFIDENTIALITY

         4.1 CONFIDENTIAL INFORMATION. For purposes of Article 4, a Party
communicating Confidential Information shall be referred to as the "Disclosing
Party" and the Party receiving such Confidential Information shall be referred
to as the "Recipient Party." During the term of this Agreement, and for [* * *]
Contract Years following the expiration or earlier termination hereof, the
Recipient Party shall maintain in confidence all Confidential Information and
shall not use, disclose or grant the use of the Confidential Information except
on a need-to-know basis to those directors, officers, affiliates, employees,
consultants, clinical investigators or contractors of the Recipient Party, to
the extent such disclosure is reasonably necessary in connection with the
Recipient Party's activities as expressly authorized by this Agreement. To the
extent that disclosure is authorized by this Agreement, prior to disclosure,
each Party hereto shall obtain agreement of any such person to whom Confidential
Information will be disclosed to hold in confidence and not make use of the
Confidential Information for any purpose other than those permitted by this
Agreement. In order to be treated as Confidential Information hereunder, oral
disclosures shall be identified as confidential at the time of disclosure.

         4.2 PERMITTED DISCLOSURES. The confidentiality obligations contained in
Article 4.1 above shall not apply to the extent that:

                  (a) any Recipient Party is required (i) to disclose
information by law, order or regulation of a governmental agency or a court of
competent jurisdiction, or (ii) to disclose information to any governmental
agency for purposes of obtaining approval to test or market a product or obtain
patent protection, provided in either case that the Recipient shall provide
written notice thereof to the other Party; or

                  (b) the Recipient Party can demonstrate that (i) the disclosed
information was public


                                      -13-
<PAGE>


CONFIDENTIAL

knowledge at the time of such disclosure to the Recipient Party, or thereafter
became public knowledge, other than as a result of actions of the Recipient
Party in violation hereof; (ii) the disclosed information was rightfully known
by the Recipient Party (as shown by its written records) prior to the date of
disclosure to the Recipient Party by the Disclosing Party hereunder; (iii) the
disclosed information was disclosed to the Recipient Party from a source
unrelated to any Party to this Agreement and not under a duty of confidentiality
to the Disclosing Party; or (iv) the disclosed information was independently
developed by the Recipient Party without such Confidential Information as shown
through reasonable documentary evidence thereof.

         4.3 ANNOUNCEMENTS. The Parties acknowledge that the ability to make
certain information public may be governed by existing or future contractual
obligations of the Parties with Third Parties. To the extent permissible, and
notwithstanding the confidentiality provisions contained in this Article 4,
Biogen hereby grants to Trega the right to publicly disclose achievement of the
following milestones with respect to Products. Biogen shall give Trega
reasonably prompt notice of these events but shall not be required to disclose
to Trega the chemical structure or biological activity of such Product.

                  (a) Commencement of pre-clinical toxicology;

                  (b) Filing of the first IND or foreign equivalent thereof;

                  (c) Initiation of the first Phase II clinical study;

                  (d) Initiation of the first Phase III clinical study;

                  (e) Submission of the first NDA, or foreign equivalent
                      thereof; and

                  (f) Approval of the first NDA, or foreign equivalent thereof.

         Notwithstanding the foregoing, Trega shall not disclose the identity of
such compounds or the targets at which they are directed without the consent of
Biogen. Biogen shall have the right to review and consent to the contents of
such announcements prior to disclosure to the extent that they pertain to
Biogen. Biogen's consent shall not be unreasonably withheld or delayed. The
Parties acknowledge that following the Effective Date, this Agreement shall be
publicly announced in a press release that, prior to its release, is agreed to
in writing by both


                                      -14-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


Parties and shall be filed with the U.S. Securities and Exchange Commission in
satisfaction of Trega's responsibilities as a public company.

                                    ARTICLE 5

                          INVENTIONS AND PATENT RIGHTS

         All matters pertaining to the ownership of inventions, the prosecution
of patents and infringements, the defense against any claims of infringement and
all other intellectual property matters shall be governed by the following
Article 5.

         5.1 OWNERSHIP OF INVENTIONS. The entire right, title, and interest in
and to any and all [CONFIDENTIAL TREATMENT REQUESTED] shall be [CONFIDENTIAL
TREATMENT REQUESTED] shall be [CONFIDENTIAL TREATMENT REQUESTED].

         5.2      PATENT ENFORCEMENT, PROSECUTION AND MAINTENANCE.

                  (a) Trega shall have the right, in its sole discretion and at
its expense (except as otherwise set forth herein), to control the preparation,
filing, prosecution, enforcement and maintenance of [CONFIDENTIAL TREATMENT
REQUESTED], including oppositions, re-examinations, interferences, nullity
actions, reissues, patent term extensions and similar actions, and will respond
to claims made against [CONFIDENTIAL TREATMENT REQUESTED]. Trega shall keep
Biogen apprised of all activity related to [CONFIDENTIAL TREATMENT REQUESTED]
and shall provide copies of all non-privileged correspondence to and from the
Patent and Trademark Office or foreign equivalent thereof upon Biogen's request.

                  (b) Trega shall have the right, in its discretion and at its
expense to control the preparation, filing, prosecution, maintenance,
enforcement and defense of all [CONFIDENTIAL TREATMENT REQUESTED], including
oppositions, re-examinations, interferences and nullity actions, reissues,
patent term extensions and similar actions, and will respond to any claims made
against


                                      -15-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


[CONFIDENTIAL TREATMENT REQUESTED]. Biogen shall receive copies of all
correspondence to and from the U.S. Patent Office, or foreign equivalent
thereof, and copies of all documentation related to procurement of [CONFIDENTIAL
TREATMENT REQUESTED]. Trega shall copy Biogen on all correspondence and
pleadings related to [CONFIDENTIAL TREATMENT REQUESTED].

         A determination will be made of which Party shall be responsible for
filing, prosecuting, maintaining, enforcing and defending all other [* * *]
based upon a good faith determination of the relative contributions to, and
interest of each Party in, the claimed invention. The Parties shall equally
share all out-of-pocket costs related to filing, prosecuting, maintaining,
defending and enforcing [* * *], except that a Party may at any time choose to
terminate, or to reduce, the funding of costs associated with any of the [* *
*]. In the event that a recovery is obtained by either Party as a result of
enforcing or defending [* * *], such recovery shall first be applied to
reimbursement of unreimbursed legal fees and out-of-pocket expenses incurred by
the Parties in a proportion commensurate to the financial contribution of each
Party to such enforcement and/or defense. The remainder of any such recovery
shall be divided between the Parties in proportion to their financial
contributions to such enforcement and/or defense. The Responsible Party shall
provide drafts of all correspondence to the U.S. Patent and Trademark Office and
foreign equivalent thereof to the other Party for review, allowing a reasonable
time for such other Party to provide comments prior to filing. Additionally, the
Responsible Party shall copy the other Party on all correspondence and pleadings
relevant to enforcement and/or defense of such [* * *]. The Responsible Party
shall give good faith consideration to the comments of the other Party. Each
Party shall cooperate fully with the other Party, execute all lawful papers and
instruments and make all rightful oaths and declarations as may be necessary in
the preparation, prosecution and maintenance of all applications and patents
described therein. Additionally, the Parties shall cooperate fully as necessary
for obtaining supplemental protection certificates, patent extensions, or
equivalents thereof. Neither Party shall settle any action or otherwise consent
to an adverse judgment in such action that diminishes the rights or interest of
the other Party without the express consent of the other Party.


                                      -16-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         5.3      INFRINGEMENT.

                  (a) If Biogen learns that a Third Party has infringed and/or
misappropriated [CONFIDENTIAL TREATMENT REQUESTED] (referred to hereinafter as
"Infringement"), it shall promptly notify Trega of such apparent Infringement.
Promptly after such notice by Biogen, the Parties shall meet to exchange
information. Trega shall have the right, but not the obligation to institute,
prosecute, and control any actions or proceedings relating to such suspected
Infringement at its sole discretion and at its sole cost and expense. Trega
shall be entitled to receive and retain for its sole use and benefit, any
recovery, settlement, amount awarded in any such suit, including without
limitation, awards of lost profits, damages and/or punitive damages and/or
costs, attorney's fees and awards of sanction.

                  (b) If either Party shall receive a claim or assertion that
practice of the activities claimed in [CONFIDENTIAL TREATMENT REQUESTED], or the
practice of [* * *] licensed under this Agreement infringes or otherwise
violates the intellectual property rights of any Third Party, then the Party
against whom such claim was made shall promptly notify the other Party to this
Agreement of the claim and all reasonable details relating thereto. The Party
against whom the claim was made shall have the right to defend against such
claim and the other Party shall reasonably cooperate with the Party against whom
the claim was made in the defense of such claim, at the request and expense of
the Party against whom the claim was made. Each Party shall have the right to be
represented by counsel of its own choice and at its own expense in any
proceedings.

         5.4      UTILITY. Trega and its designees shall be entitled to
screen all [CONFIDENTIAL TREATMENT REQUESTED] (including, without limitation,
[CONFIDENTIAL TREATMENT REQUESTED] which are suitable, or can be made
suitable, and to evaluate, test, analyze, and use the Combinatorial Libraries
to discover the [CONFIDENTIAL TREATMENT REQUESTED] with respect thereto.

                                      -17-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         5.5 [CONFIDENTIAL TREATMENT REQUESTED]

         5.6 LIMITATIONS. TREGA HEREBY DISCLAIMS THE OBLIGATION TO INDEMNIFY
BIOGEN OR ITS COLLABORATORS AGAINST COSTS, LOSSES, DAMAGES, OR LIABILITIES
REGARDING CLAIMS OF INFRINGEMENT OR MISAPPROPRIATION BY THIRD PARTIES PERTAINING
TO TREGA MATERIALS, SYNTHESIS PROTOCOLS, TREGA SYNTHESIS TECHNOLOGIES OR USES
THEREOF OR IMPROVEMENTS THERETO UNLESS CAUSED BY THE GROSS NEGLIGENCE OR
INTENTIONAL MISCONDUCT OF TREGA.

                                    ARTICLE 6

                               PAYMENT OBLIGATIONS

         6.1 SUBLICENSE FEE. Biogen shall pay to Trega a [CONFIDENTIAL TREATMENT
REQUESTED], payable on the Effective Date of this Agreement, [CONFIDENTIAL
TREATMENT REQUESTED].

         6.2 PAYMENTS FOR SUBSET LIBRARIES. Biogen shall pay to Trega the sum of
[CONFIDENTIAL TREATMENT REQUESTED]. Upon shipment of any Trega Materials to
Biogen hereunder, Trega shall submit an invoice therefor to Biogen, and Biogen
shall pay each such invoice in full within thirty (30) days of receipt.

         6.3 [* * *] SET PAYMENTS. Biogen shall pay Trega a [CONFIDENTIAL
TREATMENT REQUESTED] Set delivered to Biogen under Article 2.5 above.


                                      -18-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         6.4 RESUPPLY COMPOUND PAYMENTS. Biogen shall pay Trega a [CONFIDENTIAL
TREATMENT REQUESTED] sample of Resupply Compounds, [CONFIDENTIAL TREATMENT
REQUESTED]. For quantities actually synthesized by Trega that are greater or
less than the amount requested by Biogen, Biogen may, at its option, purchase
such material [CONFIDENTIAL TREATMENT REQUESTED], provided that the quality and
identity standards are met.

         6.5 NON-CONFORMING TREGA MATERIALS. For any Trega Materials which do
not meet the applicable quality or identity requirements Biogen may, in its sole
discretion, choose to purchase such Trega Materials.
[CONFIDENTIAL TREATMENT REQUESTED].

         6.6 MILESTONE PAYMENTS. Biogen shall pay to Trega the following
nonrefundable amounts upon achievement of the milestones set forth below by a
Product [CONFIDENTIAL TREATMENT REQUESTED].

<TABLE>

         <S>                                                       <C>
         a)       [* * *] or foreign equivalent thereof            $[* * *]
         b)       [* * *]                                          $[* * *]
         c)       [* * *]                                          $[* * *]
         d)       [* * *] or foreign equivalent thereof            $[* * *]
         e)       [* * *] or foreign equivalent thereof            $[* * *]

</TABLE>

         6.7 CHANGE OF CONTROL TERMINATION FEE. Biogen shall pay to Trega a
[CONFIDENTIAL TREATMENT REQUESTED] within ten (10) days of its written notice to
Trega to terminate this Agreement under Article 7.5 below.


                                      -19-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         6.8 PAYMENT METHOD. Upon shipment of any Trega Materials to Biogen
hereunder, Trega shall submit an invoice therefore to Biogen, and Biogen shall
pay each such invoice in full within thirty (30) days of receipt. All payments
under this Agreement shall be paid in United States dollars to Trega by bank
wire transfer in immediately available funds to such account as designated by
Trega on or before the date on which such payment is due.

         6.9 LATE PAYMENTS. Unless otherwise provided in this Agreement, Biogen
shall pay interest to Trega hereunder on the aggregate amount of any payments
that are not paid on or before the date such payments are due under this
Agreement, at a rate per annum equal to the [CONFIDENTIAL TREATMENT REQUESTED].

         6.10 TAXES AND OTHER CHARGES . Biogen shall pay all federal, state,
county or municipal sales or use taxes, excise or similar charges (other than
taxes that may be assessed on the income of Trega), assessed or charged in
connection with the purchase of the Trega Materials pursuant to this Agreement.

         6.11 ENTIRE CONSIDERATION. The payments in Article 6 shall constitute
the entire consideration for the rights and licenses granted hereunder, and no
further consideration, payments or royalties shall be paid by Biogen to Trega.

                                    ARTICLE 7

                              TERM AND TERMINATION

         7.1 EXPIRATION. Unless terminated earlier pursuant to Article 7.2
below, the term of this Agreement shall expire on the expiration of Biogen's and
Trega's obligations under this Agreement.


                                      -20-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         7.2 TERMINATION FOR CAUSE. Either Party may terminate this Agreement
upon or after the breach of any material provision of this Agreement, if the
breaching Party has not cured such breach within ninety (90) days after notice
thereof from the other Party.

         7.3 CONSEQUENCES OF BREACH. If Biogen terminates this Agreement under
Section 7.2 for breach by Trega [CONFIDENTIAL TREATMENT REQUESTED]:

         [CONFIDENTIAL TREATMENT                 [CONFIDENTIAL TREATMENT
         REQUESTED]                              REQUESTED]

                       [CONFIDENTIAL TREATMENT REQUESTED]

         If Trega terminates this Agreement under Article 7.2 for breach by
Biogen, Biogen shall [CONFIDENTIAL TREATMENT REQUESTED]. The foregoing shall be
Trega's sole remedy for such breach.

         7.4 EFFECT OF EXPIRATION AND TERMINATION. Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior to
such expiration or termination except as set forth above. The provisions of
Articles 3, 4, 5, and 9 shall survive the expiration or termination of this
Agreement. [CONFIDENTIAL TREATMENT REQUESTED]


                                      -21-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


[CONFIDENTIAL TREATMENT REQUESTED], except in the case of breach by Trega, as
described in Article 7.3 above, in which case [* * *] shall be reduced.

         7.5 CHANGE OF CONTROL. In the event of a change of control of Trega
during the term of this Agreement, Biogen may terminate its obligations to [* *
*] hereunder within [CONFIDENTIAL TREATMENT REQUESTED] such change of control if
such change of control materially interferes with Trega's ability to perform
under the Agreement. Additionally, within [* * *] days of a change of control
Biogen may terminate its obligations to [* * *] hereunder if such change of
control results in control by a [CONFIDENTIAL TREATMENT REQUESTED]

         A termination under this Article 7.5 shall not, however relieve Biogen
of its obligations to pay milestones as set forth in Article 6. In the event
that Biogen chooses to terminate under this Article 7.5, Biogen shall continue
to be entitled to [CONFIDENTIAL TREATMENT REQUESTED].

         A change of control shall be deemed to have occurred if: (a) any Person
who is not as of the Effective Date a Beneficial Owner, becomes the Beneficial
Owner (as hereinafter defined), directly or indirectly, of securities of Trega
representing more than 50% of the combined voting power of Trega's then
outstanding securities; (b) the stockholders of Trega approve a plan of complete
liquidation or dissolution or there is consummated an agreement for the sale or
disposition by Trega of all or substantially all of the Company's assets, or the
sale or disposition of all or substantially all of its subset chemistry business
to another Person. For purposes hereof, (1) the term "Person" shall have the
meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) Trega or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of Trega or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such


                                      -22-
<PAGE>


CONFIDENTIAL

securities, (iv) a Person , more than 50 % of which is owned, directly or
indirectly, by the stockholders of Trega in substantially the same proportions
as their ownership of stock of Trega, or (v) any Person who is, on the Effective
Date, a 5% Beneficial Owner of Trega's securities who comes to acquire 50% or
more of Trega's securities, and whose principal business is financial
investment. The term "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.

                                    ARTICLE 8

                         REPRESENTATIONS AND WARRANTIES

         Each Party hereby represents and warrants to the other Party as
follows:

         8.1 EXISTENCE AND POWER. It (a) is duly organized, validly existing and
in good standing under the laws of the state or other jurisdiction of
incorporation in which it is organized, (b) has the requisite power and
authority and the legal right to own and operate its property and assets, to
lease the property and assets it operates under lease, and to carry on its
business as it is now being conducted, and (c) is in compliance with all
requirements of applicable law, except to the extent that any noncompliance
would not have a material adverse effect on the properties, business, financial
or other condition of such Party and would not materially adversely affect such
Party's ability to perform its obligations under this Agreement.

         8.2 AUTHORIZATION AND ENFORCEMENT OF OBLIGATIONS. Such Party (a) has
the requisite power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such Party, and constitutes a
legal, valid and binding obligation, enforceable against such Party in
accordance with its terms.


                                      -23-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         8.3 RIGHT TO SUBLICENSE. Trega represents and warrants that (a) it is a
licensee of the Trega Synthesis Technologies sublicensed hereby with the right
to sublicense the same, (b) that to its knowledge such rights are not the
subject of a claim of ownership by a Third Party other than The Scripps Research
Institute and its predecessors, and (c) its interest is not to its knowledge the
subject of any encumbrance or lien.

         8.4 CONSENTS. All necessary consents, approvals and authorizations of
all governmental authorities and other persons required to be obtained by such
Party in connection with this Agreement have been obtained.

         8.5 NO CONFLICT. The execution and delivery of this Agreement and the
performance of such Party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations and (b) do not
conflict with, or constitute a default under, any contractual obligation of such
Party.

         8.6 PENDING ACTIONS. Each represents that it is not aware of any
action, suit, inquiry or investigation, or any claim, demand or notice of
default against it, which if adversely determined would affect the rights
granted under this Agreement.

         8.7      PATENTS.  Trega hereby represents and warrants to Biogen that:

                  (a) Exhibit E contains a complete and accurate list of all
patents and patent applications contained in the Trega Patent Rights in
existence as of the Effective Date.

                  (b) Trega represents that it has not as of the Effective Date
been notified by a Third Party or received an opinion of counsel to the effect
that there are any granted patents owned or controlled by a Third Party which
would be infringed by the practice of the rights granted under this Agreement,
including manufacture, use or sale of a Product or use of Trega Materials, Trega
Synthesis Technologies, or Synthesis Protocols.


                                      -24-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                  (c) To the best of Trega's knowledge, Trega has disclosed to
Biogen all facts Trega reasonably believes to be relevant to patentability,
validity and enforceability of Trega Patent Rights known to Trega as of the
Effective Date.

         8.8 EXPERIMENTAL MATERIALS. Biogen hereby acknowledges that all Trega
Materials are experimental in nature, are for research purposes only, and have
not been approved for use in humans or animals.

         8.9 DISCLAIMER OF WARRANTIES. NOTHING IN THIS AGREEMENT SHALL BE
CONSTRUED AS A REPRESENTATION MADE, OR WARRANTY GIVEN, BY TREGA THAT ANY PATENT
WILL ISSUE BASED UPON ANY PENDING PATENT APPLICATION WITHIN THE TREGA PATENT
RIGHTS, THAT ANY PATENT WITHIN THE TREGA PATENT RIGHTS WHICH ISSUES WILL BE
VALID, OR THAT THE USE OF ANY TREGA MATERIALS, TREGA PATENT RIGHTS OR ANY TREGA
KNOW-HOW WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY OTHER PERSON.
TREGA SHALL PROMPTLY NOTIFY BIOGEN OF ANY CLAIM MADE AGAINST TREGA BY A THIRD
PARTY THAT THE PRACTICE OF THE TREGA SYNTHESIS TECHNOLOGIES SUBLICENSED
HEREUNDER TO BIOGEN OR USE OF THE TREGA MATERIALS SOLD TO BIOGEN HEREUNDER
INFRINGES SUCH THIRD PARTY'S INTELLECTUAL PROPERTY RIGHTS.

         TREGA WARRANTS ONLY THAT THE TREGA MATERIALS SHALL MATERIALLY CONFORM
TO SPECIFICATIONS AND CERTIFICATES OF ANALYSIS PROVIDED BY TREGA TO BIOGEN.
EXCEPT AS EXPRESSLY PROVIDED IN THIS ARTICLE 8.9, TREGA EXPRESSLY DISCLAIMS ALL
WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION
WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES AND
WARRANTIES ARISING FROM A COURSE OF DEALING, USAGE OR TRADE PRACTICES. IN NO
EVENT WILL TREGA OR ANY OF ITS THIRD PARTY LICENSORS WHOSE TECHNOLOGY IS
UTILIZED IN PROVIDING TREGA MATERIALS HEREUNDER BE


                                      -25-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM
EXERCISE OF THE RIGHTS AND LICENSES GRANTED TO BIOGEN HEREUNDER OR USE OF THE
TREGA MATERIALS, TREGA TECHNOLOGY OR TREGA SYNTHESIS TECHNOLOGIES.

                                    ARTICLE 9

                                    INDEMNITY

         9.1 DIRECT INDEMNITY. Each Party shall indemnify and hold the other,
its Affiliates, directors, officers, employees, agents and stockholders harmless
and hereby forever releases and discharges the other Party, its Affiliates,
directors, officers, employees, agents and stockholders from and against all
losses, liabilities, damages and expenses (including reasonable attorneys' fees
and costs) that the other Party, its Affiliates, directors, officers, employees,
agents and stockholders may suffer or incur as a result of any claims, demands,
actions or other proceedings made or instituted by a Third Party against any of
them arising out of or relating to (a) any breach by the indemnifying Party of
its obligations under this Agreement, or (b) the negligence, recklessness or
intentional acts or omissions in connection with the work performed by or on
behalf of the indemnifying Party hereunder.

         9.2 OTHER INDEMNITY. Biogen shall indemnify and hold Trega, its
Affiliates, directors, officers, employees, agents and stockholders harmless and
hereby forever releases and discharges Trega, its Affiliates, directors,
officers, employees, agents and stockholders from and against all losses,
liabilities, damages and expenses (including reasonable attorneys' fees and
costs) that Trega, its Affiliates, directors, officers, employees, agents and
stockholders may suffer or incur as a result of any claims, demands, actions or
other proceedings made or instituted by a Third Party against any of them
arising out of or relating to (a) the use by or on behalf of Biogen, its
Affiliates or (sub)licensees of the research results and the Trega Materials,
Trega Technology and Trega Synthesis Technologies or (b) the research,
development, manufacture, storage, use, consumption, sale, administration or
advertisement of a Product (without regard to culpable conduct) developed,


                                      -26-
<PAGE>

CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


designed, manufactured or commercialized by or on behalf of Biogen, its
Affiliates or (sub)licensees.

         9.3 PROCEDURE. The Party that intends to claim indemnification under
this Article (the "Indemnitee") shall promptly notify the indemnifying Party
(the "Indemnitor") or any loss, claim, damage, liability or action with respect
to which the Indemnitee intends to claim such indemnification, and the
Indemnitor shall assume the defense thereof with counsel mutually satisfactory
to the Indemnitee whether or not such claim is rightfully brought; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume
the defense, or if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other person represented by such
counsel in such proceedings. The indemnity agreement in this Article shall not
apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor,
which consent shall not be withheld or delayed unreasonably. The failure to
deliver notice to the Indemnitor within a reasonable time after the commencement
of any such action, only if prejudicial to its ability to defend such action,
shall relieve such Indemnitor of any liability to the Indemnitee under this
Article, but the omission to deliver notice to the Indemnitor will not relieve
it of any liability that it may have to any Indemnitee otherwise than under this
Article. The Indemnitor shall not settle the action or otherwise consent to an
adverse judgment in such action that diminishes the rights or interest of the
Indemnitee without the express consent of the Indemnitee. The Indemnitee under
this Article, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigations of any action,
claim or liability covered by this indemnification. The Indemnitee shall keep
the Indemnitor informed of any investigation and the Indemnitor shall have the
right to review and comment on the conduct of the investigation.


                                      -27-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


         9.4      INSURANCE.

                  (a) Biogen and Trega shall each maintain, through self
insurance or otherwise, insurance to cover property and casualty risks, personal
injury, product and general liability and such other risks as are typically
covered in respect of their research, development, manufacture and sale of
Products by Biogen or Trega, as the case may be, in such amounts and for as long
as Biogen or Trega reasonably considers prudent.

                  (b) Effective as of such time as a Product enters human
clinical trials, Biogen, with respect to such Product, at its sole cost and
expense, or through its (sub)licensee(s), shall insure its activities under this
Agreement and obtain, keep in force and maintain insurance, including without
limitation product liability insurance, in amounts consistent with reasonable
business practice in the industry. Upon reasonable request, Biogen shall furnish
Trega with certificates of insurance evidencing compliance with all
requirements.

                                   ARTICLE 10

                                  FORCE MAJEURE

         Neither Party shall be held liable or responsible to the other Party
nor be deemed to have defaulted under or breached this Agreement for failure or
delay in fulfilling or performing any term of this Agreement to the extent, and
for so long as, such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party including but not limited to fire,
earthquakes, floods, embargoes, war, acts of war (whether war be declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party.


                                      -28-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                   ARTICLE 11

                                   ASSIGNMENT

         This Agreement may not be assigned or otherwise transferred, nor,
except as expressly provided hereunder, may any right or obligations hereunder
be assigned, sublicensed, or transferred by either Party without the consent of
the other Party; PROVIDED, HOWEVER, that either Trega or Biogen may, without
such consent, assign this Agreement and its rights and obligations hereunder in
connection with the transfer or sale of all or substantially all of its business
(or, in the case of Trega, all or substantially all of its [* * *],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 this Agreement. In the event that such Assignment by Trega constitutes a
change of control of Trega, the provisions of Article 7.5 shall apply.

                                   ARTICLE 12

                                  SEVERABILITY

         Each Party hereby acknowledges that it does not intend to violate any
public policy, statutory or common laws, rules, regulations, treaty or decision
of any government agency or executive body thereof of any country or community
or association of countries. Should one or more provisions of this Agreement be
or become invalid, the Parties shall substitute, by mutual consent, valid
provisions for such invalid provisions which valid provisions in their economic
effect are sufficiently similar to the invalid provisions that it can be
reasonably assumed that the Parties would have entered into this Agreement with
such provisions. In case such provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
Parties would not have entered into this Agreement without the invalid
provisions.


                                      -29-
<PAGE>


CONFIDENTIAL


                                   ARTICLE 13

                                  MISCELLANEOUS

         13.1 NOTICES. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties to the other shall be
in writing, delivered personally or by facsimile (and promptly confirmed by
personal delivery, U.S. first class mail or courier), U.S. first class mail or
courier, postage prepaid (where applicable), addressed to such other Party at
its address indicated below, or to such other address as the addressee shall
have last furnished in writing to the address or and (except as otherwise
provided in this Agreement) shall be effective upon receipt by the addressee.

         If to Trega:               Trega Biosciences, Inc.
                                    9880 Campus Point Drive
                                    San Diego, California 92121
                                    Attention:  President

         If to Biogen:              Biogen, Inc.
                                    Vice President of Marketing, Sales and
                                    Business Development
                                    Fourteen Cambridge Center
                                    Cambridge, MA 02142
                                    With copy to: Vice President-General Counsel

         13.2 APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without regard to the
conflicts of law principles thereof.

         13.3 COMPLIANCE WITH APPLICABLE LAWS. Biogen, its Affiliates and
(sub)licensees shall use reasonable efforts to comply with all applicable laws,
regulations and governmental orders in connection with their respective
activities related to this Agreement, including without limitation the research,


                                      -30-
<PAGE>


CONFIDENTIAL


development, manufacture, use and sale of Products. Without limiting the
foregoing, Biogen, its Affiliates and (sub)licensees shall use reasonable
efforts to observe and comply with all applicable United States and foreign laws
with respect to the transfer of Products and related technical data to foreign
countries.

         13.4 ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the Parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly superseded by this Agreement. This Agreement may be amended, or any
term hereof modified, only by a written instrument duly executed by both
Parties.

         13.5 HEADINGS. The captions to the several Articles hereof are not part
of this Agreement, but are merely guides or labels to assist in locating and
reading the several Articles hereof.

         13.6 INDEPENDENT CONTRACTORS. It is expressly agreed that Trega and
Biogen shall be independent contractors and that the relationship between the
two Parties shall not constitute a partnership, joint venture or agency. Neither
Trega nor Biogen 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 Party to do so.

         13.7 WAIVER. The waiver by either Party of any (i) right hereunder,
(ii) of a failure to perform or of 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.

         13.8 COUNTERPARTS. This 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.


                                      -31-
<PAGE>


CONFIDENTIAL


IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first set forth above.

                                              TREGA BIOSCIENCES, INC.

                                              By: Robert S. Whitehead
                                                 -------------------------------
                                              Signature: /s/ Robert S. Whitehead
                                                        ------------------------
                                              Title: President and CEO
                                                    ----------------------------

                                              BIOGEN, INC.

                                              By: James B. Tobin
                                                 -------------------------------
                                              Signature:/s/ James B. Tobin
                                                        ------------------------
                                              Title: President and CEO
                                                    ----------------------------


                                      -32-
<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT A

         COMBINATORIAL LIBRARY [CONFIDENTIAL TREATMENT REQUESTED] DESCRIPTION

[CONFIDENTIAL TREATMENT REQUESTED] OF A COMBINATORIAL LIBRARY

         The following description will be used to represent Trega's approach
for [CONFIDENTIAL TREATMENT REQUESTED] within each Combinatorial Library. This
process may be updated from time to time to enhance [CONFIDENTIAL TREATMENT
REQUESTED] whenever feasible.

         To illustrate the process, a [* * *] is assumed [CONFIDENTIAL TREATMENT
REQUESTED] and will be [* * *] and [CONFIDENTIAL TREATMENT REQUESTED] will be [*
* *] to [CONFIDENTIAL TREATMENT REQUESTED] the Combinatorial Library.

         The [* * *] of a Combinatorial Library begins with [CONFIDENTIAL
TREATMENT REQUESTED] This is accomplished by [* * *] Once Trega chemists believe
they have [CONFIDENTIAL TREATMENT REQUESTED] they [* * *] In conjunction with
[CONFIDENTIAL TREATMENT REQUESTED] the chemists employ [* * *] to prepare
[CONFIDENTIAL TREATMENT REQUESTED] Combinatorial Library [* * *]

         A [CONFIDENTIAL TREATMENT REQUESTED] is then [* * *] using
[CONFIDENTIAL TREATMENT REQUESTED] The number [* * *] equals the number of
[CONFIDENTIAL TREATMENT REQUESTED] for the Combinatorial Library. Once
[CONFIDENTIAL TREATMENT REQUESTED] is completed, [CONFIDENTIAL TREATMENT
REQUESTED] Those [* * *] are [CONFIDENTIAL TREATMENT REQUESTED] in the
Combinatorial Library [CONFIDENTIAL TREATMENT REQUESTED].

         The [CONFIDENTIAL TREATMENT REQUESTED] are used to [CONFIDENTIAL
TREATMENT REQUESTED] Combinatorial Library of the [CONFIDENTIAL TREATMENT
REQUESTED] Combinatorial Library [CONFIDENTIAL TREATMENT REQUESTED]. From this
[* * *] Combinatorial Library, [CONFIDENTIAL TREATMENT REQUESTED] is
[CONFIDENTIAL TREATMENT REQUESTED], using [CONFIDENTIAL TREATMENT REQUESTED] of
the [* * *] Combinatorial Library. The [CONFIDENTIAL TREATMENT REQUESTED] does
not place any [CONFIDENTIAL TREATMENT REQUESTED] for the [* * *] Combinatorial
Library. Using this [CONFIDENTIAL TREATMENT REQUESTED] Those [CONFIDENTIAL
TREATMENT REQUESTED] are [CONFIDENTIAL TREATMENT REQUESTED] in the [* * *]
Combinatorial Library and are [CONFIDENTIAL TREATMENT REQUESTED]. With a
[CONFIDENTIAL TREATMENT REQUESTED], the [CONFIDENTIAL TREATMENT REQUESTED]
Combinatorial Library [CONFIDENTIAL TREATMENT REQUESTED] is [CONFIDENTIAL
TREATMENT REQUESTED] to [* * *] Combinatorial Library [CONFIDENTIAL TREATMENT
REQUESTED]


<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT A

            COMBINATORIAL LIBRARY [CONFIDENTIAL TREATMENT REQUESTED]
                                   DESCRIPTION

[CONFIDENTIAL TREATMENT REQUESTED]

         As a parameter [* * *] at least [CONFIDENTIAL TREATMENT REQUESTED] of a
[* * *] Combinatorial Library shall [CONFIDENTIAL TREATMENT REQUESTED]
Combinatorial Libraries [* * *] Combinatorial Library [CONFIDENTIAL TREATMENT
REQUESTED]. The [* * *] Combinatorial Library [CONFIDENTIAL TREATMENT REQUESTED]
shall be [* * *] Combinatorial Libraries [CONFIDENTIAL TREATMENT REQUESTED]. [*
* *] shall be defined as [CONFIDENTIAL TREATMENT REQUESTED] Combinatorial
Library [* * *]

[CONFIDENTIAL TREATMENT REQUESTED] COMBINATORIAL LIBRARY [CONFIDENTIAL TREATMENT
REQUESTED]

         At the completion of [* * *] Combinatorial Library [CONFIDENTIAL
TREATMENT REQUESTED] Combinatorial Library [* * *] Combinatorial Library
[CONFIDENTIAL TREATMENT REQUESTED]. These [* * *] are [CONFIDENTIAL TREATMENT
REQUESTED] each [* * *]

         Previously [CONFIDENTIAL TREATMENT REQUESTED] the [* * *] were
[CONFIDENTIAL TREATMENT REQUESTED] into [* * *] based on [CONFIDENTIAL TREATMENT
REQUESTED] and [* * *] such that [CONFIDENTIAL TREATMENT REQUESTED] Next, the [*
* *] Combinatorial Library [CONFIDENTIAL TREATMENT REQUESTED] is [* * *] using
[CONFIDENTIAL TREATMENT REQUESTED] of the [* * *].

         In order to [CONFIDENTIAL TREATMENT REQUESTED] the [* * *] are
[CONFIDENTIAL TREATMENT REQUESTED] to [* * *] with [CONFIDENTIAL TREATMENT
REQUESTED] is [CONFIDENTIAL TREATMENT REQUESTED] to [* * *]. These [* * *] are
[* * *] to [CONFIDENTIAL TREATMENT REQUESTED] the [* * *]. This is [CONFIDENTIAL
TREATMENT REQUESTED] the [* * *] from [CONFIDENTIAL TREATMENT REQUESTED] to [* *
*]. This [CONFIDENTIAL TREATMENT REQUESTED] by [* * *], each [CONFIDENTIAL
TREATMENT REQUESTED] Additionally, [* * *] are [CONFIDENTIAL TREATMENT
REQUESTED] each [* * *]. Within the [CONFIDENTIAL TREATMENT REQUESTED] are [* *
*] from each of the [CONFIDENTIAL TREATMENT REQUESTED] and [* * *] from each of
the [CONFIDENTIAL TREATMENT REQUESTED] Therefore, within [* * *] Combinatorial
Library Trega has [CONFIDENTIAL TREATMENT REQUESTED] that [* * *] from each of
the [CONFIDENTIAL TREATMENT REQUESTED] and [* * *] each which is [CONFIDENTIAL
TREATMENT REQUESTED]


<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT B
                             LIBRARY RELEASE LETTER

December 25, 1998

William T. Random, Ph.D.
ABC Inc.
1234 Main Street
Anytown, 99321

Dear Bill:

Enclosed is your Subset Library from [CONFIDENTIAL TREATMENT REQUESTED]. This
Subset Library is composed of [* * *] that have [* * *] and [* * *] that have [*
* *]. The enclosed CD contains in depth documentation regarding the [* * *]
library.

The CD was created on a Windows NT machine and has three subdirectories. The
HTML directory contains [* * *]. The docs directory contains several excel
documents listing [* * *]. These documents are stored as Office 97 Excel
documents. The release memo for this library is also here in Office 97 Word
format. [* * *] information is stored as [* * *] files. Finally, the
[CONFIDENTIAL TREATMENT REQUESTED] directory contains a description of [* * *].
We are not aware of [* * *] at this time.

The best way to read the files on this CD is via a Windows 95 or Windows NT
machine. Since the files were generated from a WinNT source file, you may need
to [* * *]. I will be glad to help you do this.

The [* * *] may [CONFIDENTIAL TREATMENT REQUESTED] if you try to [* * *] them [*
* *]. If the [* * *] are [CONFIDENTIAL TREATMENT REQUESTED] with either a [* *
*] or a [CONFIDENTIAL TREATMENT REQUESTED], they will [* * *].

Please feel free to contact me 619-410-9876 with questions about the release
documents or the [CONFIDENTIAL TREATMENT REQUESTED]. Please contact Susan Smith
with other requests or questions.

Sincerely,


Sam Shipper

cc:
 TREGA BIOSCIENCES                          ABC INC.
 Susan Smith


<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT B

                             LIBRARY RELEASE LETTER



To:               Sam Shipper                                   cc:     J. Kiely
From:             Charlie Chemist
Date:             November 30, 1998
Subject:          [CONFIDENTIAL TREATMENT REQUESTED] Final Release Package


Attached is the information for the Final Release of [CONFIDENTIAL TREATMENT
REQUESTED] a library of [CONFIDENTIAL TREATMENT REQUESTED]

This package includes:
[CONFIDENTIAL TREATMENT REQUESTED]

[CONFIDENTIAL TREATMENT REQUESTED] consists of [CONFIDENTIAL TREATMENT
REQUESTED]

The library was prepared from [CONFIDENTIAL TREATMENT REQUESTED] and
[CONFIDENTIAL TREATMENT REQUESTED] where were [CONFIDENTIAL TREATMENT REQUESTED]
The library [CONFIDENTIAL TREATMENT REQUESTED]

[CONFIDENTIAL TREATMENT REQUESTED]


<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT C
                       [CONFIDENTIAL TREATMENT REQUESTED]
                   [Four (4) Pages of Text Have Been Omitted]



<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                   EXHIBIT D

                      April 11, 1985 LICENSE AGREEMENT
              BETWEEN THE SCRIPPS RESEARCH INSTITUTE AND TREGA
                     AND SUMMARY OF RELATED DOCUMENTS


<PAGE>


CONFIDENTIAL                                    CONFIDENTIAL TREATMENT REQUESTED


                                   EXHIBIT D
                       SUMMARY OF RELATED DOCUMENTS TO THE
                           HISTORY OF TEA-BAG LICENSE


1.       Copy of License Agreement (the Tea-Bag License) dated April 11, 1985
         between Scripps Clinic and Research Foundation and Richard Houghten.

2.       Letter Agreement, dated November 17, 1988, [CONFIDENTIAL TREATMENT
         REQUESTED]

3.       Assignment, dated March 23, 1990 [CONFIDENTIAL TREATMENT REQUESTED]

4.       Assignment, dated May 1, 1990 [CONFIDENTIAL TREATMENT REQUESTED]

5.       Assignment, dated May 1, 1990 [CONFIDENTIAL TREATMENT REQUESTED]

6.       Letter, dated June 12 1992 [CONFIDENTIAL TREATMENT REQUESTED]

7.       Letter, dated June 12 1992 [CONFIDENTIAL TREATMENT REQUESTED]

8.       Overview of the organic history of Trega, including matters bearing on
         the assignment of the Tea-Bag license (this overview is page 22 of the
         final prospectus in respect of Trega's initial public offering).

9.       Three assignment documents, two of which are dated February 27, 1997
         and one of which is dated February 28, 1997 [CONFIDENTIAL TREATMENT
         REQUESTED]



<PAGE>

CONFIDENTIAL TREATMENT REQUESTED                         CONFIDENTIAL TREATMENT
THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION


                                LICENSE AGREEMENT

         THIS AGREEMENT is entered into as of April 11, 1985, by and between
SCRIPPS CLINIC AND RESEARCH FOUNDATION, a California nonprofit corporation
(hereinafter referred to as "SCRIPPS") and RICHARD A. HOUGHTEN (hereinafter
referred to as "HOUGHTEN"), with respect to the following:

                                    RECITALS
         WHEREAS, SCRIPPS, a nonprofit institution engaged in medical and
biomedical research, owns all rights to the means for sequential solid phase
organic synthesis and methods using the same, [CONFIDENTIAL TREATMENT REQUESTED]
and desires to grant an exclusive worldwide license to HOUGHTEN to further
develop, make, have made, use, sell and otherwise commercially exploit these
rights;

         WHEREAS, SCRIPPS has determined that nonexclusive licensing of rights
to discoveries and developments will not be on a worldwide basis in a
satisfactory manner and that exclusive possession of the rights is necessary for
proper satisfaction of health care needs and commercial management of same;

         WHEREAS, HOUGHTEN, in his capacity as an independent contractor,
desires to obtain such license from SCRIPPS to engage in such commercial
development and worldwide distribution of the means for sequential solid phase
organic synthesis and methods using the same, [CONFIDENTIAL TREATMENT REQUESTED]


<PAGE>

                                                         CONFIDENTIAL TREATMENT

         WHEREFORE, the parties hereto mutually agree as follows:

         1. DEFINITIONS

                  1.1 "LICENSED PRODUCTS" shall be that disclosed and claimed in
[CONFIDENTIAL TREATMENT REQUESTED] to the Research Institute of Scripps Clinic
on September 11, 1984, and know-how associated therewith.

                  1.2 "NET SALES" shall mean the gross revenue derived by
HOUGHTEN from any sale of Licensed Products, less discounts actually allowed,
credits for claims or allowances and returns, prepaid freight, and less taxes
and other governmental charges added to the face of the invoices and actually
paid by HOUGHTEN.

         2. GRANT OF LICENSE

                  2.1 LICENSE. Subject to the reservation of rights in Paragraph
2.7 hereof, SCRIPPS hereby grants to HOUGHTEN an exclusive worldwide license to
further develop, make, have made, use, sell and otherwise commercially exploit
the Licensed Products.

                  2.2 TERM. HOUGHTEN's license in any country shall be for the
term of each patent covering any of the Licensed products in that country, or
for a term [CONFIDENTIAL TREATMENT REQUESTED] years from the date of first
commercial sale of said Licensed Products in that country which is not covered
by any patent in that country, whichever is longer.

                  2.3 DUE DILIGENCE AND ABANDONMENT. HOUGHTEN agrees to use his
reasonable diligence and efforts to develop commercially and market the Licensed
Products. If at any time HOUGHTEN abandons his interest in pursuing commercial
development of the


<PAGE>

                                                         CONFIDENTIAL TREATMENT

Licensed Products or if HOUGHTEN fails to use reasonable diligence and efforts
commercially to develop and market said Licensed Products, then SCRIPPS may
terminate HOUGHTEN's license as to said Licensed Products sixty (60) days after
so notifying HOUGHTEN, unless within a reasonable period of time after receiving
such notice HOUGHTEN reasonably satisfies SCRIPPS of his interest or diligent
efforts, as the case may be, to commercially develop and market the Licensed
Products.

                  2.4 SUBLICENSES. Subject to the approval of SCRIPPS, which
approval shall not be unreasonably withheld, HOUGHTEN shall have the right to
grant sublicenses to any third party with respect to any rights conferred upon
HOUGHTEN under this Agreement; provided, however, that any such sublicense shall
be subject in all respects to the same terms, conditions and provisions
contained in this Agreement, and shall expressly so provide. Such sublicensed
third parties shall thereafter report Net Sales to HOUGHTEN and HOUGHTEN shall
include the activities of such third parties in any reports made by HOUGHTEN to
SCRIPPS.

                  2.5 TERMINATION RIGHT. HOUGHTEN may terminate his license
rights in part or in whole under this Agreement and cease all further
development, manufacture and sale of any of the Licensed Products [CONFIDENTIAL
TREATMENT REQUESTED] of his intentions to so terminate. Such termination,
however, shall not release HOUGHTEN from his obligations to pay royalties
accrued and unpaid for any sales of said Licensed Products prior to the
effective date of said notice and for all sales of said Licensed Products which
HOUGHTEN may make out of his existing inventories after the effective date of
said notice.

                  2.6 EFFECT OF TERMINATION. Upon any termination of this
Agreement prior to the scheduled expiration of the term for payment of
royalties, HOUGHTEN shall have no further


<PAGE>

                                                         CONFIDENTIAL TREATMENT

rights under this Agreement to develop, manufacture, use, sell, market or
otherwise commercially exploit the Licensed Products; and upon such a
termination, HOUGHTEN shall promptly return to SCRIPPS all of SCRIPPS'
proprietary materials, including without limit all samples, reagents,
hybridomas, cell lines, monoclonals, documents and other information related to
the Licensed Products.

                  2.7 RESERVATION OF RIGHTS. Notwithstanding the foregoing,
SCRIPPS reserves the right to make and use the Licensed Products for SCRIPPS'
own education and research purposes, without SCRIPPS being obligated to pay any
royalties or other compensation related to same and without diminishing
HOUGHTEN's obligations otherwise to pay royalties to SCRIPPS.

         3. ROYALTIES

                  3.1 BASE ROYALTY RATE. For the term of this License Agreement,
HOUGHTEN shall pay to SCRIPPS a royalty of [CONFIDENTIAL TREATMENT REQUESTED] of
Net Sales of the Licensed Products, or where any sublicense is granted,
[CONFIDENTIAL TREATMENT REQUESTED] of royalties derived by HOUGHTEN from all
such sublicenses under Section 2.4, all on a [CONFIDENTIAL TREATMENT REQUESTED]

                  3.2 (a) In countries where any patent is issued covering the
Licensed Products, the royalty rate for such country shall be as set forth in
Section 3.1.

                      (b) In countries where there is no issued patent covering
the Licensed Products, but a patent application is pending and where HOUGHTEN
sells the Licensed Products falling within the scope of the claims of said
patent application, the royalty rate shall be


<PAGE>

                                                         CONFIDENTIAL TREATMENT

[CONFIDENTIAL TREATMENT REQUESTED] for a period not to exceed [CONFIDENTIAL
TREATMENT REQUESTED] years from the priority filing date of said patent
application. [CONFIDENTIAL TREATMENT REQUESTED] Upon such issuance, the royalty
rate shall be as set forth in Section 3.2(a).

                      (c) In countries where there is no patent covering the
Licensed Products and where there is no pending patent application [CONFIDENTIAL
TREATMENT REQUESTED]. The payment of royalties under this subsection 3.2(c)
shall not exceed a period of [CONFIDENTIAL TREATMENT REQUESTED] years from the
date of first sale of the Licensed Products.

                  3.3 REDUCTION IN ROYALTY DUE TO COMPETITION. If in the
Relevant Market of any country HOUGHTEN's sales of the Licensed Products shall
become subject to substantial competition, [CONFIDENTIAL TREATMENT REQUESTED]

                  3.5 GOVERNMENTAL PROHIBITION. HOUGHTEN's obligation to pay
royalties under this Section 3 shall be waived and excused if the statutes,
laws, codes or government regulations of the country as to which such payments
are to be paid prohibit such payments.

                  3.6 CURRENCY. The remittance of royalties payable on sales
outside the United States will be payable to SCRIPPS in United States dollar
equivalents at the official rate of exchange of the currency of the country from
which the royalties are payable as quoted by Citibank N.A. for the day upon
which the check for the royalty payment is dated. If the transfer or the
conversion into the remittance of United States dollar equivalents in any such
instance is not lawful or possible, the payment of such part of the royalties as
is necessary shall be made by the deposit thereof, in the currency of the
country where the sales were made on which the


<PAGE>

                                                         CONFIDENTIAL TREATMENT

royalty was based to the credit and account of SCRIPPS or its nominee in any
commercial bank or trust company of HOUGHTEN's choice located in that country,
prompt notice of which shall be given by HOUGHTEN to SCRIPPS.

                  3.7 TAX WITHHELD. Any tax required to be withheld on royalties
payable to SCRIPPS under the laws of any foreign country shall be promptly paid
by HOUGHTEN for and on behalf of SCRIPPS to the appropriate governmental
authority, and HOUGHTEN shall furnish SCRIPPS with proof of payment of such tax
together with official or other appropriate evidence issued by the appropriate
governmental authority sufficient to enable SCRIPPS to support a claim for
income tax credit in respect of any sum so withheld. Any such tax required to be
withheld shall be an expense of and borne solely by SCRIPPS.

                  3.8 RECORDS; QUARTERLY PAYMENTS. HOUGHTEN shall keep complete
and accurate records [CONFIDENTIAL TREATMENT REQUESTED] with respect to which
royalty is payable according to this Agreement. [CONFIDENTIAL TREATMENT
REQUESTED] HOUGHTEN shall render to SCRIPPS a written report setting forth the
total Net Sales and the royalty due and payable, and HOUGHTEN shall, upon
rendering such report, remit to SCRIPPS the amount of royalty payments shown
thereby to be due. Any royalties not paid when due shall thereafter bear
interest at the prime rate of interest charged by Citibank N.A., compounded
daily.

                  3.9 AUDIT. SCRIPPS shall have the right at its own expense to
nominate an independent certified public accountant acceptable to and approved
by HOUGHTEN (which approval shall not be unreasonably withheld) who shall have
access to HOUGHTEN's records during reasonable business house for the sole
purpose of verifying the royalties payable as


<PAGE>

                                                         CONFIDENTIAL TREATMENT

provided for in this Agreement, but this right may not be exercised more than
once in any calendar year, and said accountant shall disclose to SCRIPPS only
information relating solely to the accuracy of the royalty report and the
royalty payments made according to this Agreement.

         4. PATENT APPLICATIONS.

                  4.1 U.S. PATENT APPLICATION. SCRIPPS agrees to diligently
prepare, file, and prosecute patent applications in the United States covering
the Licensed Products to the extent SCRIPPS deems such applications to be
warranted or to the extent HOUGHTEN requests any such applications. Said
preparation, filing and prosecution shall be by an attorney of SCRIPPS'
choosing, subject to the approval of HOUGHTEN, said approval not to be
unreasonably withheld by HOUGHTEN.

                  4.2 FOREIGN PATENT APPLICATION. SCRIPPS agrees, when requested
in writing by HOUGHTEN, to file patent applications by attorneys of SCRIPPS' own
choosing, subject to the approval of HOUGHTEN, said approval not to be
unreasonably withheld by HOUGHTEN, in countries outside the United States
corresponding to the patent applications filed by SCRIPPS in the United States.

                  4.3 PATENT COSTS. [CONFIDENTIAL TREATMENT REQUESTED]

                  4.4 CREDIT ON ROYALTIES FOR PATENT COSTS. [CONFIDENTIAL
TREATMENT REQUESTED]


<PAGE>

                                                         CONFIDENTIAL TREATMENT

         5. LITIGATION.

                  5.1 HOUGHTEN'S RIGHT TO PROSECUTE AND DUTY TO DEFEND ACTIONS.
HOUGHTEN shall have the sole right to prosecute at his discretion, any and all
infringements of any patents covering the Licensed Products or other actions and
agrees to defend, indemnify and hold harmless SCRIPPS and its employees and
trustees from all charges of infringement arising as a result of said patents
and all other actions, including product liability actions, all at his own
expense. Provided, however, that SCRIPPS shall permit any action to be brought
in its name if required by law, and SCRIPPS agrees to provide any assistance of
a technical nature that HOUGHTEN may require in any litigation arising in
accordance with the provisions of this subsection, for which SCRIPPS shall be
paid reasonable compensation. In the event HOUGHTEN elects not to prosecute any
such infringement or other action, HOUGHTEN shall notify SCRIPPS promptly, and
thereafter SCRIPPS shall have the right to prosecute such infringement or other
action.

                  5.2 ROYALTY REDUCTION. [CONFIDENTIAL TREATMENT REQUESTED]
HOUGHTEN's royalty payments to SCRIPPS shall be reduced by an equitable amount
to be negotiated by the parties at that time.

         6. GOVERNMENTAL APPROVALS AND MARKETING OF PRODUCTS.

         HOUGHTEN shall bear the costs of commercializing the Licensed Products,
including all costs of obtaining the necessary governmental approvals for the
marketing of such product. HOUGHTEN shall utilize reasonable efforts within his
sole discretion consistent with his overall business strategy in obtaining said
governmental approvals and marketing said product.


<PAGE>

         7. WARRANTIES.

         SCRIPPS warrants and represents that it has the full right, title and
power to grant the license set forth in this Agreement, and that there are no
outstanding agreements, assignments, claims or encumbrances applicable to
SCRIPPS which are inconsistent with the provisions of this Agreement. SCRIPPS
makes no expressed or implied warranty as to merchantability or fitness for any
particular purpose as to the Licensed Products.

         HOUGHTEN warrants and represents that he is not bound by any agreement
to any other party, including without limit any present or previous employer or
partner which precludes him from entering into or performing the Agreement or
which would be violated or infringed upon by entering into or performing this
Agreement.

         8. COMMUNICATIONS.

         Any payment, notice or other communication required or permitted to be
made or given to either party hereto pursuant to this Agreement shall be
sufficiently made or given on the date of mailing if sent to such party by
certified or registered mail, postage prepaid, addressed to it at its address
set forth or to such other address as its shall designate by written notice
given to the other party as follows:

                  In the case of SCRIPPS:

                           Associate Director of the Research Institute
                               of SCRIPPS Clinic
                           Scripps Clinic and Research Foundation
                           10666 North Torrey Pines Road
                           La Jolla, California  92037


<PAGE>

                  In the case of HOUGHTEN:

                           Richard A. Houghten, Ph. D.
                           558 Ford Avenue
                           Solana Beach, CA  92075

         9. ASSIGNMENT.

         This Agreement shall not be assignable by either party without the
prior written consent of the other party, except to a successor in ownership of
all or substantially all of the business assets of a party hereto, and which
successor shall expressly assume in writing the performance of all the terms and
conditions of this Agreement to be performed by the assigning party.

         10. PUBLICATION; CONFIDENTIALITY.

                  10.1 PUBLICATIONS. With respect to reporting results of
research and development relating to the Licensed Products, SCRIPPS will submit
to HOUGHTEN drafts of all proposed publications relating to said product at the
earliest possible date, but in any event not less than thirty (30) days prior to
the submission of said proposed publications; and HOUGHTEN shall advise SCRIPPS
as to the patentability of any inventions disclosed therein. At the end of such
thirty (30) day period, SCRIPPS shall have the right, at its sole discretion, to
submit such proposed publications for publication, but HOUGHTEN reserves the
right to request that his name not be used in connection with said publications.

                  10.2 PUBLICITY. Neither party will originate any publicity,
news release, or other public announcement, written or oral, whether to the
public press, to stockholders, or otherwise, relating to this Agreement, to any
amendment hereto or to performance hereunder or the


<PAGE>

existence of an arrangement between the parties without the prior written
approval of the other party.

                  10.3 SCRIPPS CONFIDENTIALITY. SCRIPPS shall not disclose to
others or use for its own benefit any confidential information acquired from
HOUGHTEN concerning existing or contemplated products, processes, techniques,
know-how, marketing information or the like obtained as a result of any
provisions of this Agreement or the relationship established hereunder. This
covenant shall not be applicable to information which at the time of the
disclosure or use is in the public domain. The obligations of confidentiality
under this Section 10 shall survive any expiration or termination of this
Agreement.

                  10.4 HOUGHTEN CONFIDENTIALITY. HOUGHTEN shall maintain the
confidentiality of SCRIPPS' trade secrets and proprietary information and
materials which SCRIPPS furnishes to HOUGHTEN in connection with the Licensed
Products, to the extent such confidentiality does not interfere with the full
commercialization of the Licensed Products. The obligations of confidentiality
under this Section 10.4 shall survive any expiration or termination of this
Agreement.

                  10.5 EXCHANGE OF INFORMATION. Consistent with the provisions
of this Agreement and to the extent permitted by law and legal obligations
respecting confidential information of third parties, SCRIPPS and HOUGHTEN shall
promptly exchange any newly acquired or developed information relating to the
Licensed Products.


<PAGE>

         11. GENERAL.

                  11.1 SIGNATURES. This Agreement will not be binding upon the
parties until it has been signed hereinbelow by or on behalf of each party, in
which event it shall be effective as of the date first above written. No
amendment or modification hereof shall be valid or binding upon the parties
unless made in writing and signed as aforesaid.

                  11.2 ENTIRETY. This Agreement embodies the entire
understanding of the parties with respect to the license for the Licensed
Products, and shall supersede all previous communications, representations or
undertakings, either verbal or written, between the parties relating to the
subject matter hereof.

                  11.3 SEVERABILITY. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.

                  11.4 GOVERNING LAW. This Agreement shall be construed, and the
legal relations between the parties determined, in accordance with the laws of
the State of California.

                  11.5 U.S. MANUFACTURE. To the extent required by applicable
laws or governmental regulations, HOUGHTEN agrees that the Licensed Products
will be manufactured substantially in the United States, subject to such waivers
as may be obtained from the U.S. Department of Health and Human Services, or its
designee.


<PAGE>

                  11.6 HEADINGS. The headings of the several Sections are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.


                                  SCRIPPS CLINIC AND RESEARCH FOUNDATION

Witness:                          By: /s/ Raymond  H. Kahn
                                      --------------------

/s/                               Title: Associate Director
    ------------------------             ------------------


                                  RICHARD A. HOUGHTEN

Witness:

/s/                               /s/ Richard A. Houghten
    ------------------------          -------------------


<PAGE>

CONFIDENTIAL                                   CONFIDENTIAL TREATMENT REQUESTED


                                    EXHIBIT E
                                  TREGA PATENTS


TEA-BAG RELATED
1.       U.S. Patent 4,631,211 and its foreign counterparts including:
         --        European Patent Publication No. 196174B1 designating Austria,
                   Belgium, Germany, France, Great Britain, Italy, Luxembourg,
                   Netherlands, Belgium, Switzerland, and Liechtenstein
         --        Issued Austrian Patent 49603-1
         --        Issued Germany Patent 3668321.3-08
         --        Issued Australia Patent 594,327
         --        Issued Canada Patent 1,242,701
         [CONFIDENTIAL TREATMENT REQUESTED]

POSITIONAL SCAN RELATED

1.       U.S. Patent No. 5,556,762
2.       Australian Patent 668,347 "Synthesis of Equimolar Multiple Oligomer
         Mixtures, Especially of Oligopeptide Mixtures"
3.       European Publication Number 92/902209.3

[CONFIDENTIAL TREATMENT REQUESTED]


<PAGE>

CONFIDENTIAL                                   CONFIDENTIAL TREATMENT REQUESTED

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                PAGE
<S>                                                                             <C>
ARTICLE 1         DEFINITIONS.....................................................2
         1.1      "Actual Combinatorial Library Information"......................2
         1.2      "Affiliate".....................................................2
         1.3      "[* * *] Set"...................................................2
         1.4      "[* * *] Set Compound"..........................................2
         1.5      "Building Blocks"...............................................2
         1.6      "Combinatorial Library".........................................2
         1.7      "Confidential Information"......................................3
         1.8      "Contract Year".................................................3
         1.9      "Effective Date"................................................3
         1.10     "FDA"...........................................................3
         1.11     "IND"...........................................................3
         1.12     "Joint Patent Rights"...........................................3
         1.13     "Lead Compound".................................................3
         1.14     "[CONFIDENTIAL TREATMENT REQUESTED]"............................3
         1.15     "NDA"...........................................................3
         1.16     "Non-standard Reagents".........................................4
         1.17     "Party".........................................................4
         1.18     "Product".......................................................4
         1.19     "Proposed Combinatorial Library Information"....................4
         1.20     "Responsible Party".............................................4
         1.21     "Resupply Compound".............................................4
         1.22     "[CONFIDENTIAL TREATMENT REQUESTED]"............................4
         1.23     "Subset Library"................................................5
         1.24     "Subset Library Compound".......................................5
         1.25     "Synthesis Protocols"...........................................5
         1.26     "Template"......................................................5
         1.27     "Third Party"...................................................5
         1.28     "Trega Materials"...............................................5
         1.29     "Trega Patent Rights"...........................................5
         1.30     "Trega Synthesis Technologies"..................................6
         1.31     "Trega Technology"..............................................6
         1.32     "Valid Claim"...................................................6
         1.33     "Virtual Combinatorial Library".................................6

ARTICLE 2         COMPOUND PURCHASE PROVISIONS....................................7
         2.1      Supply of Subset Libraries......................................7
         2.2      Subset Library Compound Purchase Obligations....................9
         2.3      Option to Extend Term...........................................9
         2.4      [* * *] Sets....................................................9
         2.5      Term for Supply of [* * *] Sets................................10
         2.6      Resupply Compounds.............................................10
         2.7      Term for Supply of Resupply Compounds..........................10
         2.8      General Terms for Supply of Trega Materials....................10


<PAGE>

CONFIDENTIAL                                   CONFIDENTIAL TREATMENT REQUESTED

         2.9      Management of Interactions.....................................11

ARTICLE 3         LICENSES.......................................................11
         3.1      Technology Grant...............................................11

ARTICLE 4         CONFIDENTIALITY................................................13
         4.1      Confidential Information.......................................13
         4.2      Permitted Disclosures..........................................13
         4.3      Announcements..................................................14

ARTICLE 5         INVENTIONS AND PATENT RIGHTS...................................15
         5.1      Ownership of Inventions........................................15
         5.2      Patent Enforcement, Prosecution and Maintenance................15
         5.3      Infringement...................................................17
         5.4      Utility........................................................17
         5.5      ...............................................................18
         5.6      Limitations....................................................18

ARTICLE 6         PAYMENT OBLIGATIONS............................................18
         6.1      Sublicense Fee.................................................18
                  6.2      Payments for Subset Libraries.........................18
                  6.3      [* * *] Set Payments..................................18

         6.4      Resupply Compound Payments.....................................19
                  6.5      Non-conforming Trega Materials........................19
                  6.6      Milestone Payments....................................19

         6.7      Change of Control Termination Fee..............................19

         6.8      Payment Method.................................................20
                  6.9      Late Payments.........................................20
                  6.10     Taxes and Other Charges...............................20
                  6.11     Entire Consideration..................................20

ARTICLE 7         TERM AND TERMINATION...........................................20
         7.1      Expiration.....................................................20
         7.2      Termination for Cause..........................................21
         7.3      Consequences of Breach.........................................21
         7.4      Effect of Expiration and Termination...........................21
         7.5      Change of Control..............................................22

ARTICLE 8         REPRESENTATIONS AND WARRANTIES.................................23
         8.1      Existence and Power............................................23
         8.2      Authorization and Enforcement of Obligations...................23
         8.3      Right to Sublicense............................................24
         8.4      Consents.......................................................24
         8.5      No Conflict....................................................24
         8.6      Pending Actions................................................24


<PAGE>

         8.7      Patents........................................................24
         8.8      Experimental Materials.........................................25
         8.9      DISCLAIMER OF WARRANTIES.......................................25

ARTICLE 9         INDEMNITY......................................................26
         9.1      Direct Indemnity...............................................26
         9.2      Other Indemnity................................................26
         9.3      Procedure......................................................27
         9.4      Insurance......................................................28

ARTICLE 10        FORCE MAJEURE..................................................28

ARTICLE 11        ASSIGNMENT.....................................................29

ARTICLE 12        SEVERABILITY...................................................29

ARTICLE 13        MISCELLANEOUS..................................................30
         13.1     Notices........................................................30
         13.2     Applicable Law.................................................30
         13.3     Compliance with Applicable Laws................................30
         13.4     Entire Agreement...............................................31
         13.5     Headings.......................................................31
         13.6     Independent Contractors........................................31
         13.7     Waiver.........................................................31
         13.8     Counterparts...................................................31
</TABLE>


EXHIBIT A         COMBINATORIAL LIBRARY [CONFIDENTIAL TREATMENT REQUESTED]
                  DESCRIPTION

EXHIBIT B         LIBRARY RELEASE LETTER

EXHIBIT C         [CONFIDENTIAL TREATMENT REQUESTED] [Four (4) Pages of Text
                  Have Been Omitted]

EXHIBIT D         April 11, 1985 LICENSE AGREEMENT BETWEEN THE SCRIPPS RESEARCH
                  INSTITUTE AND TREGA AND SUMMARY OF RELATED DOCUMENTS

EXHIBIT D         SUMMARY OF RELATED DOCUMENTS TO THE HISTORY OF TEA-BAG LICENSE

EXHIBIT E         TREGA PATENTS