**CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIESAND EXCHANGE COMMISION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF1934, AS AMENDED.**

**EXHIBIT 10.22**

**RESEARCHAND TECHNOLOGY AGREEMENT**

ThisResearch and Technology Agreement (the “Agreement”) is made effective asof  January 24,  2001 (the “Effective Date”) between **INTRABIOTICS PHARMACEUTICALS,INC.**, a Delaware  corporation, having its principal place ofbusiness in Mountain View, California (hereinafter referred to as“INTRABIOTICS”), and **NEW CHEMICAL ENTITIES, INC.**,a Delaware  corporation having aprincipal place of business in Bothell, Washington (hereinafter referred to as“NCE”).

WHEREAS,INTRABIOTICS is a biotechnology company involved in the development of productsuseful for the treatment of infectious diseases or conditions;

WHEREAS,NCE has created a collection of proprietary natural products, related drugdiscovery libraries and technologies to facilitate lead drug discovery; and

WHEREAS,the parties wish to collaborate to identify compounds within NCE’s proprietarydrug discovery libraries which have anti-fungal or anti-bacterial activities,to identify compounds that INTRABIOTICS may develop and commercialize.

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, the parties agree as follows:

1.          DEFINITIONS

             1.1         “Activity”means a response as measured in a specific drug screen, at a level to bedetermined [ * ] in the course of the Research Program.

             1.2         “ConfidentialInformation” shall have the meaning set forth in Section 7.1.

             1.3         “DisclosingParty” shall have the meaning set forth in Section 7.1.

             1.4         “DiversityLibrary” means NCE’s library of unfractionated natural product extracts as itexists as of the Effective Date.

             1.5         "ExclusiveResearch Program Patents” means all patents and patent applications, bothforeign and domestic, including, without limitation, provisionals, convertedprovisionals, continuations, divisionals or continuations in part, (i) coveringExclusive Research Program Technology; or (ii) that claim methods of making orisolating a compound(s) within an Identified Compound Family, provided thatsuch claimed method of making or isolating is limited only to such compound(s).

             1.6         “ExclusiveResearch Program Technology” means all information, know-how, trade secrets,inventions and data made during the course of the parties’ performance underthe Research Program that are directed to a composition, formulation or use ofa compound within an Identified Compound Family.  Exclusive Research Program Technology does not includeinformation, know-how, trade secrets, inventions or data applicable to methodsof making, separating, or purifying compounds within an Identified CompoundFamily.

             1.7         “[ * ]Product” means the [ * ] Product for which a party has paid to the other partythe royalty payment in Section [ * ].

             1.8         “FTE”means one (1) full time equivalent research employee of NCE.

             1.9         “IdentifiedCompound(s)” means (i) a compound(s) that has Activity against a Target, (ii)that is obtained from a Screening Library and (iii) the chemical structure ofwhich INTRABIOTICS requests in writing that NCE identify pursuant to this Agreement.

             1.10       “IdentifiedCompound Family” means an Identified Compound and all [ * ] as determined bythe Research Committee according to the procedure set forth in Appendix B, andmutually agreed to in writing by both parties.

             1.11       “Material”means microorganism cultures or strains provided to INTRABIOTICS pursuant toSection 3.10.

             1.12       “NCEPatents” means all patents and patent applications, both foreign and domesticincluding without limitation, provisionals, converted provisionals,continuations, divisionals or continuations in part covering NCE Technology.

             1.13       "NCEResearch Program Patents" means all patents and patent applications, bothforeign and domestic, including, without limitation, provisionals, convertedprovisionals, continuations, divisionals or continuations in part, covering NCEResearch Program Technology.

             1.14       "NCEResearch Program Technology" means all information, know-how, tradesecrets, inventions and data that are made during the course of the parties’performance under the Research Program that are not Exclusive Research ProgramTechnology.

             1.15       “NCETechnology” means and includes technology, data, information, know-how andinventions, in each case that is useful for producing or isolating a compoundwithin an Identified Compound Family and that was owned by NCE prior to theEffective Date.

             1.16       “NetSales”means the grossamount invoiced by INTRABIOTICS for the sale to a third party of Product infinished form by INTRABIOTICS, its affiliates or its sublicensees, asapplicable, less the following deductions:

                                        (i)                       Amounts repaid or credited by reason of timelyrejections, returns or recalls;

                                        (ii)                      Taxes, excises or other governmental chargesupon or measured by the production, sale, transportation, delivery or use ofgoods;

                                        (iii)                     Transportation and delivery charges actuallyincurred and separately included as an item in the invoice, or as verified byother documentation including shipping insurance and packing costs;

                                        (iv)                     Normal and customary trade, cash and quantitydiscounts and allowances granted to third parties, including mandatory rebatesto governmental agencies; and

                                        (v)                      Third Party royalties owed with respect toProduct.

             For any Products sold in combination with anotherproduct (“Combination Products”), where amounts received by INTRABIOTICS areattributable to sales of such Combination Products, then Net Sales will becalculated for such combination product by multiplying the actual Net Sales ofsuch combination product [ * ].  If, ona country-by-country basis, the Combination Products in the combination are notsold separately in said country, Net Sales for the purpose of determiningroyalties of the combination product shall be calculated by multiplying actualNet Sales of such combination product by [ * ].  If, on a country-by-country basis, neither the Product nor theCombination Products included in the combination product is sold separately insaid country, Net Sales for the purposes of determining royalties of thecombination product shall be determined by the parties in good faith on thebasis of respective fair market values.

             1.17       "OtherProduct" means a Product for use in the Product Field that is not aScreening Product.

             1.18      “Premium Library” means NCE’s library of fractionated natural products extractsas it exists as of the Effective Date.

             1.19       “Product”means a product that is or includes a compound within an Identified CompoundFamily(s) in all formulations and for all uses.

             1.20       “ProductField” means any diagnostic, preventive or therapeutic application.

             1.21       “ReceivingParty” shall have the meaning set forth in Section 7.1.

             1.22       “RequestedUnavailable Compound(s)” shall have the meaning set forth in Section 2.7.

             1.23       “ResearchProgram” means the work to be performed pursuant to the plan set forth inAppendix B, by INTRABIOTICS, and by NCE in identifying the chemical structureof Identified Compound(s) that is paid for by INTRABIOTICS. 

             1.24       "ResearchTerm" means the initial [ * ] term of the Research Program or anyextension thereof agreed to by the parties in writing.

             1.25       “ScreeningData” means the data resulting or derived from the screening of the librariesby INTRABIOTICS, including but not limited to the data describing the specificActivity of each of the samples of interest to INTRABIOTICS, including [ * ].

             1.26       “ScreeningField” means the identification of compounds having anti-bacterial oranti-fungal properties.

             1.27       “ScreeningLibraries” means individually and collectively the Diversity Library andPremium Library.

             1.28       "ScreeningProduct" means a Product for use as an anti-bacterial agent or anti-fungalagent in each case in the Product Field.

             1.29       “SuccessiveProducts” means all Products for which a party makes the royalty payment setforth in Section 5.6 after it has made such payment for the [ * ] Product.

             1.30       “Target”means INTRABIOTICS’ targets of interest as listed in Appendix B, as may beamended from time to time by INTRABIOTICS during the Research Program.

             1.31       “TechnologyAccess Fee” shall have the meaning set forth in Section 5.2.

             1.32       “[ * ]”means the [ * ] Product for which a party makes the royalty payment set forthin Section [ * ].

2.          SCREENING LIBRARIES

             2.1         UponINTRABIOTICS’ request, NCE shall supply to INTRABIOTICS one (1) aliquot, [ * ]of no less than the equivalent of [ * ] of the original [ * ] or [ * ] of eachsample, [ * ] in the Screening Libraries, at NCE’s expense, in accordance withAppendix A.

             2.2         INTRABIOTICSagrees that all right, title and interest in and to the Screening Librariesshall be vested in NCE.  NCE shall befree to provide the Screening Libraries to third parties for screening purposesboth inside and outside the Screening Field.

             2.3         INTRABIOTICSagrees that the Screening Libraries: (i) will be maintained and used byINTRABIOTICS only at the sites designated in Appendix C; (ii) will not betransferred to any other location; (iii) will only be used by employees ofINTRABIOTICS, or its permitted sublicensees and those consultants ofINTRABIOTICS who agree to be bound by the terms and conditions of thisAgreement including but not limited to this Section 2.3 listed in Appendix C,who will require access thereto for the performance of this Agreement; (iv)will only be used for screening against the Targets and for no other purpose,with such use permitted only during the [ * ] period following the date thatthe relevant Screening Library is received by INTRABIOTICS; (v) thatINTRABIOTICS will not attempt to identify any of the components contained inthe Screening Libraries except as expressly permitted in Section 2.5 withrespect to [ * ]; and (vi) will not be transferred to any third partyexcept in connection with a sublicense pursuant to Section 4.1.  INTRABIOTICS may, in its sole discretion,amend Appendix B from time to time to add targets to the Target list.

             2.4         In theevent that INTRABIOTICS uses the Screening Libraries for any purpose notpermitted under this Agreement, in addition to any other remedies NCE may have,NCE may cause INTRABIOTICS to (i) assign to NCE all right, title and interestto all intellectual property arising from such use (except to the extent suchintellectual property would also cover a permitted use) and (ii) execute thosedocuments as requested by NCE necessary to document and/or perfect theassignment of such intellectual property.

             2.5         INTRABIOTICSshall have the right to conduct [ * ] studies of the samples contained in theScreening Libraries, solely in order to identify a [ * ] of such sample likelyto demonstrate Activity. Such studies will not include attempts to identify thechemical structures of any components of any such [ * ].  INTRABIOTICS and its designees’ rights tosuch [ * ] and such [ * ] methods shall be used solely for the benefit ofINTRABIOTICS or NCE, as applicable, under this Agreement.

             2.6         In theevent that INTRABIOTICS desires to isolate and/or identify the chemicalstructure of a  compound within aScreening Library, INTRABIOTICS agrees, except to the extent permitted underunder Section 2.5,  that it will not attemptto perform such separation and or identification itself, and will not requestany person or entity other than NCE to perform such separation oridentification.

             2.7         ShouldINTRABIOTICS [ * ] the Screening Libraries which exhibit the relevant Activity,and should INTRABIOTICS desire to learn the chemical structure of the compoundexhibiting such Activity, INTRABIOTICS may, at its election and in its solediscretion, request in writing that NCE disclose to INTRABIOTICS the chemicalstructure of such compound (which shall be known thereafter as an IdentifiedCompound). INTRABIOTICS shall provide NCE with all Screening Data which it hasaccumulated regarding such [ * ] in electronic format. NCE shall conductstatistical analyses of the Screening Data provided by INTRABIOTICS and performsuch other work as necessary to determine the chemical structure of theIdentified Compound. NCE shall conduct these analyses under a mutually agreedtimetable established after the submission of such Screening Data by INTRABIOTICS.Both parties acknowledge that [ * ]. Promptly following identification by NCE of the structure of theIdentified Compound, NCE shall provide INTRABIOTICS with the chemical structureof the Identified Compound and the relevant underlying data and statisticalanalysis that NCE relied on in making such determination (the “WrittenMaterials”), and INTRABIOTICS shall have thirty (30) days from receipt of suchchemical structure and Written Materials to accept the licenses set forth inArticle 3 with respect to the relevant Identified Compound Family in accordancewith the procedures set forth in Section 3.2. INTRABIOTICS shall reimburse NCE as described in Sections 2.8 and 2.9for the work performed in conducting such data analysis.  If NCE has granted rights to the compound ofinterest to a third party prior to identifying the chemical structure of suchcompound for INTRABIOTICS, such compound shall be designated “RequestedUnavailable Compound(s).”  If at any timeduring the term of this Agreement, NCE is able to grant to INTRABIOTICS alicense to any or all of such Requested Unavailable Compound(s), NCE shall sonotify INTRABIOTICS in writing and such Requested Unavailable Compounds shallbe deemed Identified Compounds under this Agreement if the parties mutuallyagree to the terms of a license.

             2.8         NCEagrees to commit the personnel, facilities, expertise and other resourcesreasonably necessary to perform its responsibilities under the ResearchProgram. During each year of the Research Program, NCE will, at INTRABIOTICS’ expense in accordancewith Section 2.9, maintain a minimum of [ * ] and a maximum of [ * ] devoted toperforming NCE’s responsibilities under the Research Program, each of whomshall be appropriately qualified to perform such work.  The number of FTEs allocated by NCE shall beset forth in Appendix B, as amended from time to time by mutual consent of theparties.  In addition, from time to time, upon theparties’ mutual agreement, NCE will maintain at INTRABIOTICS’ cost additional FTEs in excess of [ * ]committed to performance of work under the Research Program.  In the first year, INTRABIOTICS agrees tofund [ * ] at NCE under the Research Program.

             2.9         INTRABIOTICS agrees to pay NCE researchfunding based on the number of FTEs of NCE involved in performing researchactivities under the Research Program, both during the initial [ * ] termthereof and any extensions to which the Parties may agree, as determined underSection 2.8. For each such FTE, INTRABIOTICSshall pay NCE at an annualized rate of [ * ] per FTE, per year.  [ * ].

             2.10       INTRABIOTICSacknowledges that the Screening Libraries and [ * ] thereof, as well asIdentified Compounds, are experimental products of unknown toxicity and hazard,and are furnished solely for research purposes.  During the term of this Agreement, NCE shall inform INTRABIOTICSof any actual or potential toxicity or other possible hazardous property orhandling condition related to the Screening Libraries and parts thereof, aswell as Identified Compounds, which are known to NCE.  INTRABIOTICS agrees to take all reasonable precautions andconform with all applicable local regulations in the handling, storage, use anddisposal of the Screening Libraries and parts thereof, as well as IdentifiedCompounds.

             2.11       Theparties agree to cooperate with each other with respect to the ResearchProgram.

             2.12       NCEagrees to provide to INTRABIOTICS technical information available to NCE thatis reasonably requested by INTRABIOTICS to enable INTRABIOTICS to use the ScreeningLibraries for screening against Targets during the Research Term as permittedby this Agreement and INTRABIOTICS shall have the right to use such technicalinformation for such purpose.

3.          CLINICAL AND COMMERCIAL LICENSES.

             3.1         Subjectto the terms and conditions of this Agreement, NCE grants to INTRABIOTICS:

                           (i)          aworldwide exclusive license, with the right to sublicense, under ExclusiveResearch Program Patents and Exclusive Research Program Technology to conductresearch and development with respect to, and to make, have made, use, sell,offer to sell and import Product for use in the Product Field;

                           (ii)         aworldwide non-exclusive license, with the right to sublicense,  under NCE Research Program Patents, NCEResearch Program Technology, NCE Technology and NCE Patents to make and havemade Product, in research quantities as permitted under Section 3.8, and underthen-current GMP conditions to support the clinical program and forcommercialization of such Product.

             3.2         Commencingupon receipt by INTRABIOTICS, pursuant to Section 2.7, of (i) the chemicalstructure of the relevant Identified Compound and (ii) written notice thatrights to such Identified Compound are available for license, INTRABIOTICSshall have thirty (30) days in which to accept the licenses set forth inSection 3.1 with respect to the relevant Identified Compound Family and pay thesum due pursuant to Section 5.4, and such licenses shall be effective upon thedate such sum is paid to NCE. INTRABIOTICS acknowledges and agrees that if INTRABIOTICS fails to makethe payment required under Section 5.4 when due, it shall have no further rightto obtain such license with respect to the relevant Identified Compound Family.

             3.3         INTRABIOTICSshall make reasonable commercial efforts to develop and commercializeProducts.  In the event thatINTRABIOTICS, in its sole discretion, is not interested in pursuing research,development and commercialization of at least one compound within an IdentifiedCompound Family, INTRABIOTICS shall notify NCE thereof in writing.  If requested by NCE, INTRABIOTICS shallgrant to NCE a worldwide exclusive sublicense (with the right to furthersublicense) under the Exclusive Research Program Patents, and Exclusive ResearchProgram Technology, each to the extent they are directed to such abandonedIdentified Compound Family, to make, have made, use, sell, offer to sell andimport Product, and NCE shall pay to INTRABIOTICS all future milestone paymentsand royalties that would have been paid by INTRABIOTICS to NCE under Section5.5 with respect to such Product. INTRABIOTICS shall provide to NCE all records and files related to anypatents required to be licensed to NCE pursuant to this Section 3.3, and shallexecute such documents and reasonably cooperate with NCE as may be necessary toperfect and maintain such patent protection or term extension.  NCE shall promptly reimburse INTRABIOTICSfor all reasonable expenses that INTRABIOTICS incurs in connection withrendering this assistance.  Effective onthe date of grant from INTRABIOTICS, NCE shall assume all responsibility forprosecuting, maintaining and defending, at NCE’s cost and expense, the relevantExclusive Research Program Patent(s).

             3.4         At therequest of NCE, INTRABIOTICS shall actively and in a timely fashion and usingreasonable efforts consider granting to NCE a worldwide, exclusive sublicenseunder the relevant Exclusive Research Program Technology and Exclusive ResearchProgram Patents, to make, have made, use, sell, offer to sell and import one ormore Other Products for the purpose of granting a further sublicense to a thirdparty.  The decision to grant asublicense shall be at INTRABIOTICS sole discretion. In such event, NCE shallpay to INTRABIOTICS [ * ] of the sublicense and milestone fees and royaltiesreceived by NCE for and under such sublicense.

             3.5         (a)         During the Research Term, NCE shallretain, consistent with its usual commercial practices, all microbial culturesfrom which the samples, [ * ] provided to INTRABIOTICS were fermented or otherwiseobtained or derived.

                           (b)        Atthe written request of INTRABIOTICS, NCE shall identify, maintain and retain inthe possession of NCE the microbial culture that produces an IdentifiedCompound or Identified Compound Family specified in such writing byINTRABIOTICS to the extent that such microbial culture is within the possessionand control of NCE at the time of the request, using commercially reasonableefforts to maintain viability of each such culture.  Subject to Section 3.5(a), NCE shall not be obligated to retainmore than [ * ] microbial cultures under this Section 3.5(b).  Where required for the filing or granting ofan Exclusive Research Program Patent pursuant to this Agreement, as reasonablydetermined by counsel for INTRABIOTICS, NCE will cooperate with INTRABIOTICS inthe required deposit of the producing culture with ATCC or such other mutuallyacceptable depository.   INTRABIOTICSshall be responsible for all fees and expenses charged by the depository.

             3.6         INTRABIOTICSshall make payment to NCE for each microbial culture that is retained by NCEpursuant to Section 3.5(b), as follows:

             (i)          [ * ]per year for the first culture and [ *] per year for each additional culture.

             (ii)         Theamount of Section 3.6(i) shall be paid for each culture at the time of therequest and shall be prorated as appropriate for the balance of the calendaryear in which the request is made.  Foreach additional calendar year the applicable amount shall be due and payable onthe first business day of the calendar year.

             3.7         NCEshall have the right to supply to INTRABIOTICS compounds of an IdentifiedCompound Family for research purposes at the FTE rate set forth in Section2.9.  INTRABIOTICS agrees to purchaseall of INTRABIOTICS’ research requirements of compounds within an IdentifiedCompound Family that NCE is willing to supply except those quantities ofcompounds that can be made using synthetic methods, and shall make all ordersof compounds in writing, specifying quantity and delivery dates.  Not later than thirty (30) days after thedate of such written order, NCE shall confirm in writing the quantity ofcompound that it will supply and the delivery dates.

             3.8         INTRABIOTICSshall have the right to produce or to obtain from a third party such quantitiesof compound that NCE does not confirm it will supply on the requestedreasonable delivery dates, or that, despite confirmation of INTRABIOTICS’order, NCE does not deliver on the requested delivery date or such otherdelivery date as is mutually agreed upon.

             3.9         Uponwritten request of INTRABIOTICS to NCE, if available to NCE, NCE shall provideto INTRABIOTICS a microbial culture that produces the compound within theIdentified Compound Family that is or is included in a Product underdevelopment by INTRABIOTICS (the “Commercial Product”). INTRABIOTICS shall payNCE [ * ] concurrent with the delivery of such written request.

             3.10       INTRABIOTICSshall have the right to use the culture for making and having made theCommercial Product under then-current GMP conditions for clinical andcommercial uses and INTRABIOTICS agrees to use such culture obtained pursuantto Section 3.10 only for such purposes as are permitted under the non-exclusivelicense grant set forth in Section 3.1(ii) and only for the period that INTRABIOTICSretains a license under this Agreement for such Commercial Product.

             3.11       INTRABIOTICSagrees that INTRABIOTICS will use NCE Technology, NCE Research ProgramTechnology and Exclusive Research Program Technology only as licensed underthis Agreement and only for the period of the license grant.

4.          RESEARCH LICENSE

             4.1         NCEhereby grants to INTRABIOTICS a non-exclusive, worldwide, royalty-free license,with the right to grant sublicenses to the third party contractors named inAppendix C, to use the Screening Libraries in the Screening Field to conductthe Research Program in accordance with this Agreement.

             4.2         INTRABIOTICSshall have the right to have such screening performed by the contractors listedin Appendix C, provided that such contractors agree in writing to be bound bythe terms and conditions of this Agreement with respect to use of the ScreeningLibraries including, but not limited to, Section 2.3.  The screening work performed by such contractors shall beconsidered work performed by INTRABIOTICS for the purposes of this Agreement,

             4.3         Nolicenses, other than those expressly granted in this Agreement, whether expressor implied, are granted by this Agreement.

5.          FEES

             5.1         INTRABIOTICSagrees to pay to NCE an initial payment of [ * ] payable upon the EffectiveDate.

             5.2         INTRABIOTICSshall pay to NCE a “Technology Access Fee” of [ * ] which shall be due andpayable in [ * ] due each quarter. The first such installment shall be due uponthe Effective Date and each of the following [ * ] payments shall be due on thefirst day of each calendar quarter following the first calendar quarter of2001.  [ * ].

             5.3         In theevent that this Agreement is terminated for any reason other than breach byNCE, any portion of the Technology Access Fee that has not been paid, shallbecome immediately due and payable.

             5.4         (a)         INTRABIOTICS shall pay to NCE thefollowing payments:

i.                         [* ] payable with respect to the [ * ] within [ * ] after NCE provides toINTRABIOTICS the structure of the [ * ] and notifies INTRABIOTICS in writingthat NCE has not granted rights to a third party with respect to such [ * ].

ii.                        [* ] payable with respect to [ * ] after NCE provides to INTRABIOTICS thestructure of [ * ] and notifies INTRABIOTICS in writing that NCE has not grantedrights to a third party with respect to such [ * ].

             5.5         INTRABIOTICSshall pay to NCE the following payments not later than [ * ] after theachievement of the corresponding milestone event:

             i.                         [ * ]*

             ii.                        [* ]*

             iii.                       [ * ]*

             iv.                       [ * ]**

             *           [ * ]

**             **       **[ * ]

             Each party acknowledges that although INTRABIOTICSdesires to develop several Products under this Agreement, there is no guaranteethat INTRABIOTICS will be able to develop any Products under this Agreement.

**            **[ * ].

             5.6         Subjectto Section 5.8, INTRABIOTICS will pay to NCE royalty payments of (i) [ * ] ofNet Sales of the [ * ], and (ii) [ * ] of Net Sales of the [ * ].

             i.                         If[ * ] is a [ * ] product then the royalty payment owed shall be reduced by [ *]

             ii.                        Theparties shall each keep complete and accurate records pertaining to the sale orother disposition of all Products for which royalty payments are due hereunderand the royalty payments and other amounts payable under this Agreement insufficient detail to permit the receiving party to confirm the accuracy of allpayments due hereunder.  The receivingparty shall have the right to cause an independent, certified public accountantto audit such records to confirm the paying party’s or its licensee’s Net Salesas reported hereunder and royalty payments for the preceding year.  Such audit rights may be exercised no moreoften than once a year, within three (3) years after the calendar quarter towhich such records relate, upon reasonable notice to the party whose recordsare being audited and during normal business hours.  The party conducting the audit will bear the full cost of suchaudit unless such audit discloses an underpayment of more than ten percent(10%) from the amount of royalty payments due. In such case, the audited party shall bear the full cost of suchaudit.  Within thirty (30) days of thecompletion of such audit, the audited party shall pay to the other party theamount of any underpayment disclosed in such audit.  The terms of this Section 5.6 shall survive any termination orexpiration or termination of this Agreement for a period of three (3) years.

             5.7         INTRABIOTICSagrees that INTRABIOTICS will not research, develop, make, use or sellIdentified Compound and/or Product without making the payments of Sections 5.2and 5.4 of this Agreement.

             5.8         In theevent that INTRABIOTICS grants a license to a third party to make, have made,use, import, offer for sale or sell Other Product, then INTRABIOTICS shall payto NCE the greater of (i) [ * ] of the license and milestone fees and royaltiesreceived by INTRABIOTICS for and under such license or (ii) the amounts [ * ]from INTRABIOTICS with respect to such Other Product under [ * ].

             5.9         Theroyalty obligations under Section 5.6 shall expire on a Product-by-Product andcountry-by-country basis on the later of (i) ten (10) years from the date offirst commercial sale of a royalty-bearing Product in the relevant country or(ii) the expiration of the last to expire Exclusive Research Program Patentcovering the Product in such country.

6.          INTELLECTUAL PROPERTY

             6.1         Inventorshipof any inventions arising out of the Research Program shall be determinedaccording to U.S. patent law.  NCE shallown all right, title and interest in the NCE Research Program Patents,Exclusive Research Program Patents, Exclusive Research Program Technology andNCE Research Program Technology in each case, regardless of inventorship.  INTRABIOTICS shall own all Screening Dataand all intellectual property rights related thereto.

             6.2         Eachparty shall continue to own all intellectual property owned by such party priorto the Effective Date.

             6.3         Exceptas provided in this Section 6, each party shall file, prosecute, defend andmaintain, at its sole discretion and expense, any and all patent applications andpatents covering technology owned by such party.

             6.4         INTRABIOTICSshall have the right to file, prosecute, maintain and defend, at the cost andexpense of INTRABIOTICS and with counsel selected by INTRABIOTICS, theExclusive Research Program Patents.

             6.5         Bothparties shall cooperate as necessary to effect the intentions of this Section 6including, without limitation:

                           (a) executing all papers and instruments, or using reasonable efforts tocause its employees or agents to execute such papers and instruments, so as toeffectuate the ownership of intellectual property rights set forth in thisSection 6 and to enable the other party to file and to prosecute patentapplications and to maintain patents in any country;

                           (b) effecting any required microorganism or other biological deposits tosupport the Exclusive Research Program Patents, as reasonably determined bycounsel for INTRABIOTICS;

                           (c) promptly informing the other party of any matters coming to such party’sattention that may affect the preparation, filing or prosecution or maintenanceof any NCE Research Program Patents and Exclusive Research Program Patents; and

                           (d) undertaking no actions that are potentially deleterious to thepreparation, filing, prosecution or maintenance of NCE Research Program Patentsand Exclusive Research Program Patents.

             6.6         IfINTRABIOTICS elects (i) to abandon a granted Exclusive Research Program Patentor (ii) not to file an application for patent protection with respect toExclusive Research Program Technology or (iii) to abandon a filed ExclusiveResearch Program Patent without refiling thereof, INTRABIOTICS shall provide toNCE reasonable notice thereof in writing, and NCE, at its option, shall havethe right to maintain, file and prosecute any such Exclusive Research ProgramPatents at the cost and expense of NCE, with the consent of INTRABIOTICS, whichshall not be unreasonably withheld. INTRABIOTICS shall retain INTRABIOTICS’ license under any such ExclusiveResearch Program Patents.

             6.7         Eachparty shall promptly notify the other party in writing of any alleged orthreatened infringement of the NCE Research Program Patents or ExclusiveResearch Program Patents of which it becomes aware and provide any informationavailable to that party relating to such infringement.

             6.8         INTRABIOTICSshall have the right and option, but not the obligation, to bring and control,by counsel of its own choice and at its own expense, any action or proceedingwith respect to third party infringement of any Exclusive Research ProgramPatents that are either issued at the time of commencement of, or issue duringthe pendency of, any such action or proceeding, and under which NCE has granteda license to INTRABIOTICS.  Upon writtennotice to NCE, INTRABIOTICS may require NCE to participate in such action as anecessary party, at INTRABIOTICS’s expense. No settlement, consent judgment or other voluntary final disposition ofthe action which adversely affects any Exclusive Research Program Patent may beentered into without the consent of NCE, which consent shall not unreasonablybe withheld.  Any recovery of damages byINTRABIOTICS for any such action shall be retained by INTRABIOTICS.

7.          CONFIDENTIALITY

             7.1         “ConfidentialInformation” shall mean any technical or business information furnished by oneparty (the “Disclosing Party”) to the other party (the “Receiving Party”) inconnection with this Agreement, whether orally or in writing.  Such Confidential Information shall include,without limitation, the existence and terms of this Agreement (which shall beConfidential Information of both parties), trade secrets, know-how, inventions,technical data or specifications, testing methods, business or financialinformation, research and development activities, product and marketing plans,and customer and supplier information, including, but not limited to, suchitems that become known to a party during visits to the facilities of the otherparty. The Screening Data shall be deemed INTRABIOTICS’ ConfidentialInformation.

             7.2         TheReceiving Party agrees that it shall:

                           (a)                      Maintainall Confidential Information and Material in strict confidence, except that theReceiving Party may disclose or permit the disclosure of any ConfidentialInformation and Material to its affiliates, directors, officers, employees,consultants, advisors and contractors listed in Appendix C and commercial andclinical manufacturers of Product covered by Exclusive Research Program Patentsor Exclusive Research Program Technology licensed to INTRABIOTICS who are obligatedto maintain the confidential nature of such Confidential Information and whoneed to know such Confidential Information and Material for the purposes setforth in this Agreement;

                           (b)                      Useall Confidential Information and Material solely for the purposes set forth in,or as permitted by, this Agreement; and

                           (c)                      Allowits affiliates, directors, officers, employees, consultants and advisors toreproduce the Confidential Information and Material only to the extentnecessary to effect the purposes set forth in this Agreement, with all suchreproductions being considered Confidential Information and Material.

             7.3         Eachparty shall be responsible for any breaches of Section 7.2. by any of itsaffiliates, directors, officers, employees, consultants , advisors andcontractors. Each party will require those of its affiliates, directors,officers, employees, consultants, advisors and contractors who have access tothe Confidential Information and Material be bound by written agreement to theconfidentiality obligations and use restrictions herein.

             7.4         Theobligations of the Receiving Party under Section 7.2. above shall not apply toany portion of the Disclosing Party’s Confidential Information to the extentthat the Receiving Party can demonstrate by competent proof that suchConfidential Information:

                           (a)                      Wasgenerally known to the public or otherwise part of the public domain prior tothe time of its disclosure under this Agreement;

                           (b)                      Enteredthe public domain after the time of its disclosure under this Agreement throughmeans other than an unauthorized disclosure resulting from an act or omissionby the Receiving Party or its affiliates, directors, officers, employees,consultants, advisors, agents and contractors;

                           (c)                      Wasalready known to the Receiving Party, other than under an obligation ofconfidentiality, at the time of disclosure by the Disclosing Party;

                           (d)                      Isor was disclosed to the Receiving Party at any time, whether prior to or afterthe time of its disclosure under this Agreement, by a third party having nofiduciary relationship with the Disclosing Party and having no obligation ofconfidentiality to the Disclosing Party with respect to such ConfidentialInformation; or,

                           (e)                      Isrequired to be disclosed to comply with applicable laws or regulations (such asdisclosure to the United States Securities and Exchange Commission, the UnitedStates Environmental Protection Agency, the United States Food and DrugAdministration, or the United States Patent and Trademark Office or to theirforeign equivalents), or to comply with a court or administrative order,provided that the Disclosing Party receives prior written notice of suchdisclosure and that the Receiving Party takes all reasonable and lawful actionsto obtain confidential treatment for such disclosure and, if reasonablypossible, to minimize the extent of such disclosure.

             7.5         The obligations set forth in this Article7 shall remain in effect after termination or expiration of this Agreement fora period of ten (10) years.

8.          INDEMNIFICATION

             8.1         INTRABIOTICSshall defend, indemnify and hold NCE and its directors, officers, employees,shareholders and agents, harmless from and against any and all third partyclaims, suits or demands for liabilities, damages, losses, costs and expenses(including the reasonable fees of attorneys and other professionals) arisingout of or resulting from (i) the development, manufacture, use, distribution orsale of any Product by INTRABIOTICS, its affiliates, distributors,co-marketers, licensees or sublicensees or any person or entity that preparesor manufactures  Product for or onbehalf of any of the foregoing or any person or entity who receives or obtains(directly or indirectly)  Product fromany of the foregoing, (ii) any breach of Section 10 of this Agreement, (iii)INTRABIOTICS’ use of the Screening Libraries (except to the extent arising fromthird party claims of infringement of intellectual property rights related tothe Screening Libraries), and/or (iv) the breach by a subcontractor listed inAppendix C of any term of this Agreement. Such obligation shall not apply to those losses which arise out of thenegligence or intentional misconduct of NCE.

             8.2         NCEshall defend, indemnify and hold INTRABIOTICS and its directors, officers, employees,shareholders and agents, harmless from and against any and all third partyclaims, suits or demands for liabilities, damages, losses, costs and expenses(including the reasonable fees of attorneys and other professionals) arisingout of or resulting from (i) any breach of Section 10 of this Agreement, and/or(ii) the development, manufacture, use, distribution or sale of any Product byNCE, its affiliates, distributors, co-marketers or sublicensees or any personor entity that prepares or manufactures Product for or on behalf of any of the foregoing or any person or entitywho receives or obtains (directly or indirectly)  Product from any of the foregoing.  Such obligation shall not apply to those losses which arise outof the negligence or intentional misconduct of INTRABIOTICS.

             8.3         Aperson or entity that intends to claim indemnification under this Section (the“Indemnitee”) shall promptly notify the other party (the “Indemnitor”) of anyloss, claim, damage, liability or action in respect of which the Indemniteeintends to claim such indemnification, and the Indemnitor shall assume thedefense thereof with counsel mutually satisfactory to the Indemnitee whether ornot such claim is rightfully brought; provided, however, that an Indemniteeshall have the right to retain its own counsel, with the reasonable fees andexpenses to be paid by the Indemnitor if Indemnitor does not assume thedefense, or if representation of such Indemnitee by the counsel retained by theIndemnitor would be inappropriate due to actual or potential differinginterests between such Indemnitee and any other person represented by suchcounsel in such proceedings. The indemnity agreement in this Section shall notapply to amounts paid in settlement of any loss, claim, damage, liability oraction if such settlement is effected without the consent of the Indemnitor,which consent shall not be withheld or delayed unreasonably. The Indemnitorshall not settle any claim to be indemnified that could adversely affect theIndemnitee without the consent of the Indemnitee, which consent shall not beunreasonably withheld. The failure to deliver notice to the Indemnitor within areasonable time after the commencement of any such action, only if prejudicialto its ability to defend such action, shall relieve such Indemnitor of anyliability to the Indemnitee under this Section. The Indemnitee under thisSection, its employees and agents, shall cooperate fully with the Indemnitorand its legal representatives in the investigations of any action, claim orliability covered by this indemnification.

9.          TERMINATION

             9.1         (a)         This Agreement shall commence as of theEffective Date and, unless sooner terminated as provided hereunder, shallterminate when neither party has any remaining payment obligations to the otherparty under this Agreement (i.e., upon the date that both parties have ceasedto research, develop and commercialize Products);

                           (b)        Whena party has made all of the payments required by this Agreement with respect toa Product, such party shall have a fully paid up license to make, have made,use, import, offer for sale or sell such Product that shall survive terminationof this Agreement.

             9.2         INTRABIOTICSmay terminate this Agreement at will effective no earlier than [ * ] byproviding NCE with [ * ] months prior written notice.

             9.3         Breach.

                           (a)         Failureby either party to comply with any of its material obligations contained inthis Agreement shall entitle the other party to give to the party in defaultnotice specifying the nature of the default and requiring it to cure suchdefault. If such default is not cured within sixty (60) days (thirty (30) daysin the event of a default with respect to an obligation to pay money) after thereceipt of such notice, the notifying party shall be entitled, withoutprejudice to any of its other rights conferred on it by this Agreement, and inaddition to any other remedies available to it by law or in equity, toterminate this Agreement in its entirety, by giving written notice to takeeffect immediately upon delivery of such notice. The right of either party toterminate this Agreement, as provided in this Section 9.3, shall not beaffected in any way by its waiver or failure to take action with respect to anyprevious default.

                           (b)        Anelection of remedy by a party for a material breach of this Agreement underthis Section 9.3 on one occasion shall not constitute a waiver as to any otherremedy that may be available to such party under this Section 9.3 as to anymaterial breach on another occasion.

             9.4         Thefollowing sections shall survive termination of this Agreement:   2.2, 2.3, 2.4, 2.6, 3.11, 5.3, 5.6 (ii),5.7, 6.1, 6.2, 6.3, 6.5, 9.1(b), 9.4 and 10.4, and Articles 7, 8, 11 and 12.

             9.5         Uponthe earlier of termination of this Agreement or termination of the ResearchProgram, INTRABIOTICS shall return all Screening Libraries to NCE.

10.                      REPRESENTATIONS AND WARRANTIES

             10.1       MutualRepresentations and Warranties

             Each party represents to the other that:

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

                           (b)        Suchparty is duly authorized to execute and deliver this Agreement and to performits obligations hereunder;

                           (c)         ThisAgreement is a legal and valid obligation binding upon it and enforceable inaccordance with its terms. The execution, delivery and performance of thisAgreement by such party does not conflict with any agreement, instrument orunderstanding, oral or written, to which it is a party or by which it may bebound, nor violate any law or regulation of any court, governmental body oradministrative or other agency having jurisdiction over it;

                           (d)        Ithas not entered into any agreement with any third party which is in conflictwith the rights granted to the other party under this Agreement, and shall nothave taken any action that would in any way prevent it from granting the rightsgranted to the other party under this Agreement, or that would otherwisematerially conflict with or adversely affect the rights granted to the otherparty under this Agreement. and

             10.2       INTRABIOTICSfurther represents and warrants to NCE that as of the Effective Date, withouthaving made an investigation, INTRABIOTICS has no actual knowledge that thescreening procedures that are to be used by INTRABIOTICS under this Agreementinfringes the intellectual property rights of a third party.

             10.3       NCEfurther represents and warrants to  INTRABIOTICSthat:

                           (a)         Allinformation provided to INTRABIOTICS with respect to its ownership rights withregard to Identified Compounds, and Products, and related intellectual propertyrights, shall, to its knowledge, but without obligation to investigate, becomplete and accurate.

                           (b)        Asof the Effective Date, NCE has not received any notices of infringement ormisappropriation or any written communications relating in any way to apossible infringement or misappropriation with respect to the use of theScreening Libraries, and without having made an investigation it has noknowledge that the use of the Screening Libraries as contemplated by thisAgreement will or may involve any infringement or unauthorized use of anyintellectual property rights of any third party;

                           (c)         Tothe best of NCE’s knowledge, as of the Effective Date, NCE owns the ScreeningLibraries that are to be provided to INTRABIOTICS under this Agreement and hasthe right to grant the license thereto that is granted to INTRABIOTICS underthis Agreement.

                           (d)        Tothe best of its knowledge, but without the obligation to investigate, as of theEffective Date, NCE has no actual knowledge that any data or information givento INTRABIOTICS relating to the Screening Libraries is untrue or inaccurate inany material respect; and

                           (e)         Asof the Effective Date, without having made an investigation, NCE has no actualknowledge that the Screening Libraries that are to be provided to INTRABIOTICSunder this Agreement or that the procedures that NCE plans to use foridentifying compounds under this Agreement infringes the intellectual propertyrights of a third party.

                           (f)         NCEwill not grant to INTRABIOTICS a license in accordance with Sections 3.1 and3.2 of this Agreement unless NCE has the right to grant to INTRABIOTICS such alicense.

             10.4       Eachparty will follow good scientific practices in the performance of its dutiespursuant to this Agreement.  HOWEVER,THE WORK TO BE PERFORMED HEREIN IS EXPERIMENTAL AND EACH PARTY EXPRESSLYDISCLAIMS ANY STATED OR IMPLIED WARRANTIES OF PATENTABILITY, MERCHANTABILITY,OR FITNESS FOR PARTICULAR PURPOSE OF ANY MATERIALS TO BE SUPPLIED BY SUCH PARTYTO THE OTHER PARTY UNDER THIS AGREEMENT.  IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE AFFILIATES AND PERMITTEDSUBLICENSEES BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVEDAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE,EXCEPT TO THE EXTENT SUCH PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER PARTYFROM SUCH DAMAGES CLAIMED BY THIRD PARTIES UNDER SECTION 8.

11.        NOTICE

             11.1       NOTICESshall be sent as follows:

| If to NCE:          |   | New Chemical Entities, Incorporated |
|---------------------|--------|-------------------------------------|
|                |   | 18804 North Creek Parkway           |
|                |   | Bothell, WA 98011 USA               |
|                |   | Attn.: Dr. Dwight Baker             |
|                |   | Tel. (425) 424-7250                 |
|                |   | Fax (425) 424-7299                  |
| If to INTRABIOTICS: |   | IntraBiotics Pharmaceuticals, Inc.  |
|                |   | 2021 Stierlin Court                 |
|                |   | Mountain View, CA 94043 USA         |
|                |   | Attn.: Dr. John Fiddes              |
|                |   | Tel. (650) 526-6800                 |
|                |   | Fax  (650) 969-0663                 |