<PAGE>
                                                                    EXHIBIT 10.2


CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                               LICENSE AGREEMENT

         THIS LICENSE AGREEMENT, dated as of December 18, 2002 (this
"Agreement"), between NEUROCRINE BIOSCIENCES, INC. ("Neurocrine"), a corporation
organized under the laws of the State of Delaware, 10555 Science Center Drive,
San Diego, California 92121-1102, and PFIZER INC., a corporation organized under
the laws of the State of Delaware, 235 East 42nd Street, New York, New York
10017 ("Pfizer").

         WHEREAS, Neurocrine owns or may acquire certain patents and patent
applications, licenses to patents and patent applications, know-how, trade
secrets and scientific and technical information relating to a compound referred
to as NBI-34060 (indiplon); and

         WHEREAS, Pfizer desires to acquire from Neurocrine exclusive licenses
and sublicenses under said patents and licenses and related know-how, trade
secrets and scientific and technical information, and Neurocrine is agreeable to
granting such licenses and sublicenses pursuant to the terms of this Agreement.

         NOW, THEREFORE, Pfizer and Neurocrine hereby agree as follows:

                                    ARTICLE 1

1.       DEFINITIONS. Any capitalized terms used herein which are not expressly
         defined in this Agreement shall have the meaning set forth in the
         Collaboration Agreement. For purposes of this Agreement, the following
         definitions shall also be applicable:

1.01     "Acceptable Safety Profile" means data with respect to a Product that
         demonstrates that such Product is safe and well-tolerated for use in
         humans.

         [***]

1.03     "Affiliate" means any entity directly or indirectly controlled by,
         controlling, able to control, or under common control with, a party to
         this Agreement, but only for so long as such control shall continue.
         For purposes of this definition, "control" (including, with

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<PAGE>
correlative meanings, "controlled by", "controlling" and "under common control
with") means possession, direct or indirect, of (a) the power to direct or cause
direction of the management and policies of an entity (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise), or (b) at least 50% of the voting securities (whether directly or
pursuant to any option, warrant or other similar arrangement) or other
comparable equity interests. For the avoidance of doubt, neither of the parties
to this Agreement shall be deemed to be an "Affiliate" of the other solely as a
result of their entering into this Agreement.

1.04     "Approval" means receipt of a final Approval Letter from FDA
         authorizing marketing and sale of Products.

1.05     "Bankruptcy Code" means 11 U.S.C Sections 101-1330, as amended.

1.06     "Code" or "Codes" means the Code on Interactions with Healthcare
         Professionals promulgated by the Pharmaceutical Research and
         Manufacturers of America (PhRMA), and the American Medical Association
         Guidelines on Gifts to Physicians, as either of the foregoing may be
         amended from time to time.

1.07     "Collaboration Agreement" means the Collaboration Agreement, dated the
         date hereof, between Neurocrine and Pfizer, as the same shall be
         amended from time to time in accordance with the terms thereof.

1.08     "Combination Product" means any Product which contains, in addition to
         the Product, one or more other therapeutically active ingredients.

1.09     "Commercially Reasonable Efforts" means those efforts and resources
         that Pfizer would use were it promoting and detailing its own
         pharmaceutical products which are of similar market potential as the
         Products, taking into account product labeling, market potential, past
         performance, economic return, the regulatory environment and
         competitive market conditions in the therapeutic area, all as measured
         by the facts and circumstances at the time such efforts are due. In
         evaluating economic return, Pfizer shall not consider payments under
         this Agreement and the Collaboration Agreement to Neurocrine.

1.10     "Compound" means indiplon (NBI-34060), as more specifically described
         as Acetamide, N-Methyl-N-[3-[3-(2-thienylcarbonyl)-pyrazol- [1,5-a]
         pyrimidin-7-yl] phenyl] in any chemical form, including without
         limitation, salts, solvates, metabolites and prodrugs.


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<PAGE>
1.11     [***]

1.12     "DOV Sublicense" means the Sub-License and Development Agreement, dated
         June 30, 1998, between DOV and Neurocrine, as amended from time to
         time.

1.13     "DOV Technical Information" means all scientific or technical
         information relating to the Compound or the Products licensed to
         Neurocrine under the DOV Sublicense, including but not limited to: (a)
         medical, clinical, toxicological or other scientific data, and (b)
         processes and analytical methodology useful in the development,
         testing, analysis, manufacture or packaging of the Compound or
         Products.

1.14     "Effective Date" means the date upon which the applicable waiting
         period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
         as amended ("HSR Act") shall have expired or been terminated, with
         respect to this Agreement and the Collaboration Agreement, as
         applicable.

1.15     "FDA" means the United States Food and Drug Administration and any
         successor agency thereto.

1.16     "Generic Competition" shall exist during a given calendar quarter with
         respect to a Product in any country in the Territory if, during such
         calendar quarter, one or more Generic Products shall be commercially
         available in such country and shall have, in the aggregate, [***] or
         more share of total sales of the aggregate of Products and Generic
         Products (based on data provided by IMS International, or if such data
         is not available, such other reliable data source as reasonably
         determined by Pfizer and agreed by Neurocrine (such agreement not to be
         unreasonably withheld) as measured by unit sales. In the event IMS
         International data (or such other agreed data source) is not sufficient
         to determine the percentage market share for each country in the EU,
         the

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         average percent market share of the EU countries for which data is not
         available will be deemed to be the percent market share for those
         countries in which the data is available.

1.17     "Generic Products" means any pharmaceutical products (other than
         Products developed and commercialized by Pfizer pursuant to this
         Agreement) that contain principally the same active chemical
         entity(ies) as a Product and can reasonably be or are reasonably used
         for the same indication as a Product.

1.18     "Governmental Authority" means any court, agency, department or other
         instrumentality of any foreign, federal, state, county, city or other
         political subdivision.

1.19     "IR" means the immediate release formulation of the Compound as more
         specifically described on Exhibit A or any formulation with equivalent
         release characteristics.

1.20     "IR Product" means a Product with the IR formulation.

1.21     "Joint Technology" means any Technology developed or invented jointly
         by Pfizer and Neurocrine relating to the Compound or the Products
         arising out of the Development Program (as defined in the Collaboration
         Agreement).

1.22     "Key EU Country" means any of the United Kingdom, France, Germany,
         Spain or Italy.

1.23     "Launch" means, on a country by country basis, the shipping of
         commercial quantities of a Product for commercial sale to unaffiliated
         third parties.

1.24     "Law" or "Laws" means all laws, statutes, rules, Codes, regulations,
         orders, judgments and/or ordinances of any Governmental Authority.

1.25     "MR" means the modified release formulation of the Compound as more
         specifically described on Exhibit A or any formulation with an
         equivalent kinetic profile.

1.26     "MR Product" means a Product with the MR formulation.

1.27     "NDA" means a New Drug Application filed with the FDA with respect to a
         pharmaceutical product.

1.28     "Net Sales" means (a) gross sales of Pfizer, its Affiliates and
         sublicensees of Product to unaffiliated third parties in the applicable
         country, less (i) bad debts related to the Product


                                        4
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         and (ii) sales returns and allowances, including, without limitation,
         trade, quantity and cash discounts and any other adjustments,
         including, but not limited to, those granted on account of price
         adjustments, billing errors; rejected goods, damaged or defective
         goods, recalls, returns, rebates, chargeback rebates, fees,
         reimbursements or similar payments granted or given to wholesalers or
         other distributors, buying groups, health care insurance carriers or
         other institutions, adjustments arising from consumer discount
         programs, [***], customs or excise duties, sales tax, consumption tax,
         and other taxes (except income taxes) or duties relating to sales, and
         any payment in respect of sales to any governmental or regulatory
         authority in respect of any government-subsidized program; and (b) in
         the case of Combination Products, (aa) If Pfizer and/or its Affiliates
         separately sells in such country during such Year when it sells such
         Combination Product both (x) one or more Products as a single chemical
         entity and (y) other products containing active ingredient(s) as a
         single entity that are also contained in such Combination Product, the
         Net Sales attributable to such Combination Product during such Year
         shall be calculated [***]; (bb) if Pfizer and/or its Affiliates
         separately sells, in such country during such Year when it sells such
         Combination Product, one or more Products as a single chemical entity
         but do not separately sell, in such country, other products containing
         active ingredient(s) that are also contained in such Combination
         Product, the Net Sales attributable to such Combination Product during
         such Year shall be calculated [***];

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         (cc) if Pfizer and/or its Affiliates do not separately sell each
         Products contained in the Combination Product, the Net Sales
         attributable to such Combination Product shall be calculated by [***].

         With respect to the determination of Net Sales of Combination Products
         above and in considering the financial feasibility of Launching a
         Combination Product, if one or both of the parties determines that the
         formula in (aa), (bb) or (cc), as the case may be, will result in
         commercialization of the Combination Product not being economically
         feasible or equitable, the parties will meet and discuss in good faith
         adjustments or alterations to the applicable formulas above to address
         the concerns of such party(ies).

1.29     "Neurocrine Patent Rights" means all Patent Rights, now or hereafter
         during the term of this Agreement, owned, licensed or controlled by
         Neurocrine or its Affiliates that claim Compound or the Products, or
         uses, formulations, indications, compositions or methods of
         manufacturing thereof including, without limitation, the patents and
         patent applications set forth on Exhibit B. For the purpose of this
         Section 1.29, Neurocrine Patent Rights will also include [***].

1.30     "Neurocrine Technical Information" means all scientific or technical
         information and related know-how and trade secrets, now or hereafter
         during the term of this Agreement, owned or controlled by Neurocrine or
         its Affiliates relating directly to the Compound or the Products,
         including but not limited to: (a) medical, clinical, toxicological or
         other

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<PAGE>
         scientific data, (b) processes and analytical methodology used in the
         development, formulation, testing, analysis, manufacture or packaging
         of the Compound or Products, (c) uses or indications of Products and
         Product compositions, and (d) Neurocrine's interest in any Joint
         Technology.

1.31     "Patents Rights" means the rights and interest in and to all issued
         patents and pending patent applications in any country, including,
         without limitation, all divisionals, continuations, renewals,
         continuations-in-part, patents of addition, supplementary protection
         certificates, extensions, registration or confirmation patents and
         reissues thereof.

1.32     "Payment Computation Period" means each of the periods ending on each
         of the four (4) thirteen (13) week periods as used by Pfizer in filings
         with the Securities and Exchange Commission (a "Pfizer Quarter")
         commencing on January 1 of any year. For sake of clarification, outside
         the United States, Net Sales are computed for a three month period,
         which ends one month prior to the end of the relevant Pfizer Quarter.

1.33     "Pfizer Technical Information" means all scientific or technical
         information and related know-how and trade secrets owned or controlled
         during the term of this Agreement by Pfizer or its Affiliates arising
         in the course of the development of Products by Pfizer and development
         of Products by Neurocrine and Pfizer under the Collaboration Agreement,
         in each case relating directly to Compounds or Products, including but
         not limited to: (a) medical, clinical, toxicological or other
         scientific data, (b) processes and analytical methodology used in the
         development, formulation, testing, analysis, manufacture or packaging
         of the Compound or Products, (c) uses or indications of Products and
         Product compositions, and (d) Pfizer's interest in any Joint
         Technology.

1.34     "Price Approval" means, in countries where governmental or regulatory
         authorities authorize for reimbursement, or approve or determine
         pricing for pharmaceutical products for reimbursement or otherwise,
         such authorization, approval or determination.

1.35     "Products" means all pharmaceutical formulations and dosage forms,
         which contain the Compound either alone or in combination with other
         therapeutically active ingredients.


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<PAGE>
1.36     "Regulatory Authority" means any Governmental Authority with
         responsibility for granting any licenses or approvals necessary for the
         marketing and sale of pharmaceutical products including, without
         limitation, any drug regulatory authority of countries of the European
         Union, Japan and the FDA, and where the context admits any ethics
         committee or any equivalent review board.

1.37     [***].

1.38     [***] means [***] data contained in the final report of [***], that
         demonstrate that [***]; except that if FDA informs Neurocrine that data
         from a different combination of the above-listed trials or other data
         [***], data that meets such FDA requirements shall be required for
         purposes of demonstrating [***].

1.39     [***] means final FDA labeling (package insert) for the Product which
         in the indication statement reflects effective use for [***].

1.40     "Statistically Significant Difference" means [***].

1.41     "Territory" means all countries of the world, as in existence from time
         to time.

1.42.    "Technology" shall mean information and all intellectual property,
         including but not limited to, trade secrets, know-how, inventions and
         technology, whether patentable or not, and Patent Rights in each case
         directed to products, processes, formulations and/or methods but which
         term shall specifically exclude copyright and all registered and
         unregistered trademarks.

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1.43     [***].

1.44     [***].

1.45     "Valid Claim" means any claim from an issued and unexpired patent or
         pending application (which has been pending for less than 7 years in
         Japan and for less than 5 years in any other country) included within
         the Patent Rights which has not been revoked or held unenforceable or
         invalid by a decision of a court or other Governmental Authority of
         competent jurisdiction, and which has not been disclaimed, denied or
         admitted to be invalid or unenforceable through reissue or disclaimer
         or otherwise.

1.46     "Year" means each calendar year during the term of this Agreement.

                                    ARTICLE 2

2.       LICENSES.

2.01     LICENSE. Subject to the terms of this Agreement, Neurocrine hereby
         grants to Pfizer, and Pfizer hereby accepts: (a) an exclusive license
         under the Neurocrine Patent Rights to make, have made, use, sell, offer
         for sale, import, and have imported Products in the Territory; (b) an
         exclusive license under the Neurocrine Technical Information to use in
         the Territory all Neurocrine Technical Information in connection with
         the manufacture,

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         use or sale of Products in the Territory; (c) with respect to the DOV
         Sublicense, an exclusive sublicense under all Patent Rights and DOV
         Technical Information licensed to Neurocrine thereunder to make, have
         made, use, sell, offer for sale, import, and/or have imported Products
         in the Territory; and (d) [***], an exclusive sublicense to the
         Compound and Licensed Product [***], to make, have made, use, sell,
         offer for sale, import and/or have imported Products in the Territory.
         It is understood and agreed that the foregoing exclusive licenses and
         exclusive sublicenses grant to Pfizer the rights enumerated to the
         exclusion of all other parties, including Neurocrine and its
         Affiliates.

2.02     LICENSE GRANT TO NEUROCRINE. Pfizer hereby grants to Neurocrine a
         non-exclusive right and license under the Pfizer Technical Information,
         Neurocrine Technical Information and Neurocrine Patent Rights to carry
         out its activities under the Development Program (as defined in the
         Collaboration Agreement).

2.03     SUBLICENSING. With respect to the licenses and sublicenses granted to
         Pfizer under Section 2.01, Pfizer shall have the right to grant
         sublicenses (a) to its Affiliates, (b) within the United States to
         non-Affiliate third parties which shall be subject to Neurocrine's
         prior approval, which approval may not be unreasonably withheld, and
         (c) outside the United States to non-Affiliate third parties. All
         sublicenses will be consistent with the terms of this Agreement and
         shall not relieve Pfizer of its obligations hereunder.

2.04     CROSS LICENSE OF TRADEMARKS. In order to enable each Party to perform
         its obligations under the Collaboration Agreement, each Party hereby
         grants to the other party a non-assignable, non-sublicensable,
         non-exclusive, royalty free right and license to use the Neurocrine
         corporate logos and trademarks, and (a) the Pfizer corporate logo and
         trademark as well as (b) Pfizer's trademarks for Products (in the case
         of (b) only, the "Pfizer Trademarks").

                                    ARTICLE 3

3.       MILESTONE PAYMENTS, LICENSE FEES AND ROYALTIES.

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         In consideration of the licenses granted to Pfizer hereunder and the
         disclosure to Pfizer of Neurocrine Technical Information, and subject
         to the provisions of this Agreement, Pfizer shall pay to Neurocrine
         milestone payments, license fees and royalties as follows:

3.01     MILESTONE PAYMENTS AND LICENSE FEES. Subject to the terms and
         conditions of this Agreement, Pfizer shall pay to Neurocrine the
         following:

<TABLE>
<CAPTION>
                           EVENT                                   [***]   [***]
<S>                                                 <C>            <C>     <C>
         (a)  Signing of this Agreement,            $50,000,000
              subject to Section 3.03 below.
         (b)  [***]                                                [***]   [***]
         (c)  [***]                                                        [***]
         (d)  FDA Acceptance [***]                                 [***]   [***]
         (e)  FDA Approval of [***]                                [***]   [***]
         (f)  FDA Approval [***]                                   [***]   [***]
</TABLE>


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<PAGE>
<TABLE>
<S>                                                      <C>      <C>      <C>
         (g)  FDA Approval [***]                                  [***]    [***]
         (h)  FDA Approval [***]                                           [***]
         (i)  1st Launch [***]                           [***]
         (j)  Launch [***]                               [***]
</TABLE>

         The parties understand and agree that each of the payments referenced
in this Section 3.01 shall only be made once, and is subject to the following
terms and conditions:

         (i)      Unless otherwise set forth below, all payments pursuant to
                  this Section 3.01 shall be made by Pfizer within twenty (20)
                  days of receipt from Neurocrine of notice of achievement
                  (together with supporting documentation) of the applicable
                  event referenced above; provided, however, with respect to the
                  events referenced in Section 3.01 (b), or (c), which payment
                  shall be made within twenty (20) days of Pfizer's confirmation
                  that the applicable event has been achieved which confirmation
                  shall be provided or withheld in its reasonable discretion
                  (and if withheld, the reasons therefore provided to
                  Neurocrine), within twenty (20) days following Pfizer's
                  receipt of the applicable final study report(s)).

         (ii)     With respect to the events and payments referenced in Section
                  3.01 (b) or (c), if Pfizer reasonably believes such events
                  have not been satisfied or met, Pfizer shall be entitled to
                  refrain from paying the applicable amount unless and until
                  [***],

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                  as the case may be, pursuant to Section 4.3 of the
                  Collaboration Agreement, at which time Pfizer shall pay the
                  applicable milestone amount.

         (iii)    With respect to the events and payments referenced in Section
                  3.01(d), [***] in Section 4.3(c) of the Collaboration
                  Agreement (except to the extent that neither party may object
                  to such filing as provided therein), is a condition to payment
                  of such milestone

         (iv)     With respect to the events and payments referenced in Section
                  3.01(e), mutual agreement on [***] in Section 4.3(d) of the
                  Collaboration Agreement [***], is a condition to payment of
                  such milestone.

3.02     ROYALTIES.

   (a)   Subject to the terms and conditions of this Agreement, Pfizer shall pay
         royalties to Neurocrine based on Net Sales on a country by country
         basis in accordance with the following:

         (i)      With respect to Net Sales of Product in the United States, a
                  royalty equal to the sum of (A) [***] of such Net Sales in
                  consideration of Neurocrine Patent Rights if the Product sold
                  is embraced within any Valid Claim under Neurocrine Patent
                  Rights in the United States, (B) [***] of such Net Sales in
                  consideration of, and during any period of, product
                  exclusivity for new chemical entities (as provided for in 21
                  C.F.R. 314.108(b)) for the Product in the United States, and
                  (C) [***] of such Net Sales in consideration of Neurocrine
                  Technical Information for a period equal to [***] following
                  Launch of the first Product; provided, however, that in no
                  event may the sum of (A), (B) and (C) exceed a [***] royalty;


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         (ii)     With respect to Net Sales of Product in Japan, a royalty of
                  [***] of such Net Sales in consideration of Neurocrine Patent
                  Rights and Neurocrine Technical Information for a period equal
                  to the longer of (A) [***] following Launch of the first
                  Product in Japan, and (B) such date the Product is no longer
                  embraced within any Valid Claim under Neurocrine Patent Rights
                  in Japan; and

         (iii)    With respect to Net Sales of Product in each country of the
                  Territory other than the United States and Japan, a royalty of
                  [***] of such Net Sales in consideration of Neurocrine Patent
                  Rights and Neurocrine Technical Information for a period in
                  each such country equal to the longer of (A) [***] following
                  Launch of the first Product in such country, and (B) such date
                  the Product is no longer embraced within any Valid Claim under
                  Neurocrine Patent Rights in such country.

         After the expiration of the above-referenced payment periods with
         respect to Neurocrine Technical Information, Pfizer, its Affiliates and
         sublicensees shall have a fully paid-up non-exclusive license with
         regard to Neurocrine Technical Information for use in such country.

   (b)   (i)      If, during a given calendar quarter, there is Generic
                  Competition in any country in the Territory, then, for each
                  such country in which there is Generic Competition, the
                  royalties on Neurocrine Patent Rights and Neurocrine Technical
                  Information payable to Neurocrine for the Net Sales of such
                  Product in such country during such calendar quarter will be
                  reduced by [***].

         (ii)     [***].


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   (c)   [***].

3.03     HSR. Promptly following signing of this Agreement and the Collaboration
         Agreement, Pfizer and Neurocrine will take (i) all actions necessary to
         make the filing required under the Hart-Scott-Rodino Act ("HSR Act"),
         and (ii) reply at the earliest possible date with any requests for
         information received from the Federal Trade Commission ("FTC") or
         Antitrust Division of the Department of Justice ("DoJ") pursuant to the
         HSR Act. The parties will, to the extent reasonably practicable,
         consult with one another prior to making any filings, responses to
         inquiries or other contacts with the FTC or DoJ concerning the
         transactions contemplated hereby. Payment of the signing fees in
         Section 3.01(a) and Section 8.4(a) of the Collaboration Agreement may
         be deferred until such time as Pfizer receives notice of clearance from
         the FTC or DoJ until the waiting period (and any extension thereof)
         applicable to this Agreement under the HSR Act shall have been
         terminated or shall have expired, at which time Pfizer shall pay within
         ten (10) days such signing fees, plus interest thereon from the date
         that is twenty (20) days after signing of this Agreement to the date of
         payment, at the one year U.S. dollar LIBOR rate as published in The
         Financial Times effective for the date on which this Agreement was
         signed, and computed on an actual/360 basis.

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                                    ARTICLE 4

4.       ACCOUNTING, PROCEDURES FOR PAYMENTS, AND REPORTS.

         Payments hereunder shall be subject to the following provisions:

4.01     Sales between or among Pfizer, its Affiliates or sublicensees shall not
         be subject to royalties under Article 3; royalties shall only be
         calculated upon Net Sales to an independent third party. Pfizer shall
         be responsible for payments on Net Sales by its Affiliates or
         sublicensees.

4.02     Pfizer shall make royalty payments to Neurocrine on Net Sales with
         respect to each Payment Computation Period within thirty (30) days
         after the end of each such period, and each payment shall be
         accompanied by a report, on a country-by-country basis, identifying the
         Product, gross sales, Net Sales, the specific deductions used in
         arriving at Net Sales, the amount of royalties payable to Neurocrine,
         and the deductions contained in the definition of "Net Sales" in the
         DOV Sublicense. In addition, upon any termination of the Collaboration
         Agreement where this Agreement does not terminate, Pfizer shall forward
         to Neurocrine the information listed on Exhibit C. Said reports shall
         be kept confidential by Neurocrine and not disclosed by Neurocrine to
         any party other than DOV, ACY and their respective accountants,
         officers and Boards of Directors (solely to the extent Neurocrine in
         its good faith opinion believes it is obligated to make any such
         disclosure under the terms of the DOV Sublicense), and Neurocrine
         covenants that Neurocrine, and shall use reasonable efforts to insure
         that DOV and ACY, and its or their respective accountants, officers and
         Board members shall be obligated to keep such information confidential
         and such information and reports shall only be used for the purposes of
         determining payments under this Agreement.

4.03     All payments made hereunder shall be made in U.S. Dollars and shall be
         made by electronic transfer in immediately available funds via either a
         bank wire transfer, an ACH (automated clearing house) mechanism, or any
         other means of electronic funds transfer, at Pfizer's election, to such
         bank account as Neurocrine shall designate in writing at least five (5)
         business days before the payment is due. For the purposes of
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<PAGE>
         amount of royalties due for the relevant Payment Computation Period,
         the amount of Net Sales in any foreign currency shall be computed by
         (a) converting such amount for the relevant Payment Computation Period
         into U.S. dollars at the Average Exchange Rate for the Payment
         Computation Period (the "Average Exchange Rate" means, for each Payment
         Computation Period for each currency in which Products sales to third
         parties are denominated, the average of the prevailing commercial rate
         of exchange for purchasing U.S. Dollars with such currency on the last
         Business Day of each Pfizer accounting period in the relevant Pfizer
         Quarter as published in The Wall Street Journal), and (b) deducting the
         amount of any governmental tax, duty, charge or other fee actually paid
         by Pfizer or its Affiliates in respect of such conversion into and
         remittance of U.S. dollars. All payments under this Agreement shall
         bear interest from the date due until paid at a rate equal to the prime
         rate of Citibank, NA as announced on the date such payment was due plus
         two percent (2%).

4.04     All payments under this Agreement will be made without any deduction or
         withholding for or on account of any tax unless such deduction or
         withholding is required by applicable law or regulations. If the paying
         party is so required to deduct or withhold such party will (i) promptly
         notify the other party of such requirement, (ii) pay to the relevant
         authorities the full amount required to be deducted or withheld
         promptly upon the earlier of determining that such deduction or
         withholding is required or receiving notice that such amount has been
         assessed against the other party, (iii) promptly forward to the other
         party an official receipt (or certified copy) or other documentation
         reasonably acceptable to the other party evidencing such payment to the
         authorities. In case the other party can not take a full credit against
         its tax liability for the withholding tax deducted or withheld by the
         paying Party, then such other party may propose a change to the then
         current arrangement with respect to the flow of moneys under this
         Agreement in order to reduce or eliminate the extra cost for any party
         and the parties, with no obligation as to outcome, shall discuss such
         proposal in good faith.

4.05     Pfizer shall, and shall cause its Affiliates and sublicensees to, keep
         full and accurate books and records setting forth, on a
         country-by-country basis, gross sales, Net Sales, the specific
         deductions in arriving at Net Sales, and royalties payable to
         Neurocrine. Pfizer


                                       17
<PAGE>
         shall permit Neurocrine, at Neurocrine's sole expense (or ACY or DOV at
         their expense) by independent qualified public accountants employed by
         Neurocrine (or by ACY or DOV, as the case may be) and acceptable to
         Pfizer, to examine such books and records at any reasonable time, but
         not later than five (5) years following the rendering of any such
         reports, accountings and payments. The foregoing right of ACY and DOV
         to authorize such examination shall be subject to the good faith legal
         judgment by counsel to Neurocrine that is legally entitled thereto
         under the terms of the DOV Sublicense. The foregoing right of review
         may be exercised only once by Neurocrine with respect to any such
         periodic report and payment. Such accountants may be required by Pfizer
         to enter into a reasonably acceptable confidentiality agreement, and in
         no event shall such accountants disclose to Neurocrine, DOV or ACY any
         information other than such as relates to the accuracy of reports and
         payments made or due hereunder. The opinion of said independent
         accountants regarding such reports, accountings and payments shall be
         binding on the parties hereto. In the event any payment by Pfizer shall
         prove to have been incorrect by more than five percent (5%) to
         Neurocrine's detriment, Pfizer will pay the reasonable fees and costs
         of the independent auditor(s) for conducting such audit.

4.06     If at any time conditions or legal restrictions exist which conditions
         or restrictions prevent the prompt remittance of the royalties due
         hereunder, or if conversion into United States Dollars pursuant to the
         provisions of Section 4.03 hereof cannot be effectuated, the parties
         shall cooperate fully with each other and make reasonable efforts to
         permit such remittance; if such efforts shall be unsuccessful, Pfizer,
         its Affiliates or sublicensees shall then, as long as such conditions
         or restrictions shall exist in such countries, pay the royalties in the
         currency of the country of sale to such person, company or bank in said
         country, as shall be nominated by Neurocrine.

4.07     In consideration for Pfizer lending or causing one or more of its
         Affiliates to loan proceeds and make other advances of credit pursuant
         to the Secured Loan Agreement, dated as of the date hereof, (the "Loan
         Agreement") by and between Neurocrine and Pfizer, Neurocrine hereby
         acknowledges and agrees that Pfizer shall, in the event a default shall
         have occurred and is continuing after any applicable cure period, be
         entitled, in its absolute and sole discretion, to offset, in part or in
         full, from time to time, any and all


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         amounts due and unpaid by Pfizer under this Agreement against any and
         all amounts due and unpaid under the Loan Agreement.

4.08     In the event the Collaboration Agreement terminates, on a quarterly
         basis Pfizer shall provide to Neurocrine a report summarizing Pfizer's
         developmental, regulatory, manufacturing and commercialization
         activities with respect to the Products. Pfizer also agrees to provide
         quarterly to Neurocrine the information set forth on Exhibit C hereto.

                                    ARTICLE 5

5.       TECHNICAL AND OTHER INFORMATION.

5.01     Promptly following the Effective Date, and thereafter periodically
         during the term of this Agreement (periodically shall mean, except as
         otherwise provided in the Collaboration Agreement, at least quarterly),
         (a) Neurocrine shall provide to Pfizer reports disclosing all
         Neurocrine Technical Information not previously disclosed (it being
         understood between the parties that upon completion of the Registration
         Program (as defined in the Collaboration Agreement) it is unlikely that
         Neurocrine will conduct any research or development activities with
         respect to Compound or Products and it is therefore, unlikely that any
         new Neurocrine Technical Information will arise thereafter), and (b) so
         long as the Collaboration Agreement shall remain in effect, Pfizer
         shall provide to Neurocrine reports disclosing all Pfizer Technical
         Information not previously disclosed. For so long as the Collaboration
         Agreement is in effect the reports by each party shall be done through
         reports of the Committees. Each report will be in the format and in the
         level of detail as shall be agreed between the parties. All Neurocrine
         Technical Information and Pfizer Technical Information heretofore
         disclosed by each to the other shall be deemed to have been disclosed
         pursuant to this Agreement and shall be subject to the provisions of
         this Agreement, including but not limited to this Section 5.


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<PAGE>
5.02     Until the earlier of (a) expiration of this Agreement, and (b) if this
         Agreement is terminated prior to expiration, [***] following such
         termination, each party shall maintain Confidential Information (as
         defined in Section 5.03) of the other party in confidence, and shall
         not disclose, divulge or otherwise communicate such Confidential
         Information to others or use it for any purpose other than as permitted
         under this Agreement or in connection with the development,
         manufacture, marketing, promotion, distribution or sale of the Products
         pursuant to this Agreement or the Collaboration Agreement, and each
         party agrees to exercise its reasonable efforts to prevent and restrain
         the unauthorized disclosure of such Confidential Information by any of
         its directors, officers, employees, consultants, subcontractors,
         licensees or agents.

5.03     For purposes of this Article 5, "Confidential Information" means all
         materials, trade secrets or other information, including without
         limitation, any data, proprietary information and materials (whether or
         not patentable, or protectable as a trade secret) regarding a party's
         technology, Products, business information or objectives, which is
         disclosed in writing by a party to the other party and which is
         designated as confidential by the disclosing party. All information
         disclosed prior to the Effective Date by Neurocrine to Pfizer under or
         pursuant to the confidentiality agreement between the parties dated
         February 24, 2002 as amended, shall be deemed "Confidential
         Information" of Neurocrine. There shall be excluded from the foregoing
         definition of Confidential Information such information or data which:

                  (i)      was known by the receiving party prior to its date of
                           disclosure to the receiving party as shown by the
                           receiving party's written records; or

                  (ii)     either before or after the date of the disclosure to
                           the receiving party is lawfully disclosed to the
                           receiving party by third parties not in violation of
                           any obligation to the other party; or

                  (iii)    either before or after the date of the disclosure to
                           the receiving party becomes published or generally
                           known to the public through no fault or omission on
                           the part of the receiving party or its Affiliates; or

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            (iv)  is independently developed by or for the receiving party
                  without reference to or reliance upon the Confidential
                  Information; or

            (v)   is required to be disclosed by the receiving party to comply
                  with applicable Laws, to defend or prosecute litigation or to
                  comply with governmental regulations, provided that the
                  receiving party provides prior notice of such disclosure to
                  the other party and takes reasonable and lawful actions to
                  avoid and/or minimize the degree of such disclosure.

5.04  PUBLIC ANNOUNCEMENTS.

      (a)   Coordination. The parties agree on the importance of coordinating
            their public announcements respecting this Agreement and the subject
            matter thereof. Neurocrine and Pfizer will, from time to time, and
            at the request of the other party discuss and agree on the general
            information content relating to this Agreement and the Collaboration
            Agreement which may be publicly disclosed.

      (b)   Announcements. The joint press release announcing the signing of the
            transactions contemplated by this Agreement and the Collaboration
            Agreement is attached to the Collaboration Agreement as Schedule
            15.14 thereto and will be promptly disseminated following signing.

      (c)   In addition, Pfizer acknowledges that certain events related to the
            progress of the collaboration contemplated hereunder and under the
            Collaboration Agreement may be material to Neurocrine and therefore
            the parties agree to make public disclosures, whether by press
            release or publication, regarding the fact of the completion of
            Phase III Product Studies and top line data therefrom, the filing of
            an NDA, the First Approval with respect to the IR Product and the MR
            Product, and the occurrence of any serious adverse events. These
            releases may be Neurocrine releases or joint Neurocrine/ Pfizer
            releases at Pfizer's option, and the parties agree to jointly draft
            and will agree on the content of such disclosure. Except as
            otherwise provided in this Section 5.04, neither party will make any
            public announcement regarding this Agreement and/or the
            collaboration (other


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<PAGE>
            than the peer-reviewed publications which are subject to the
            publication provisions set forth in Section 11.3 of the
            Collaboration Agreement).

      Notwithstanding the foregoing, a party may make any disclosure where in
      such party's reasonable legal opinion it is required by applicable Law or
      applicable stock exchange regulation or order or other ruling of a
      competent court, provided that prior to such disclosure, the disclosing
      party shall use reasonable efforts to notify the other party prior to
      making such disclosure, and will provide the other party with an
      opportunity to review and comment prior to release provided the disclosing
      party shall not be required to delay any such disclosure by more than
      forty-eight (48) hours to receive and discuss comments, so long as the
      disclosing party has provided to the other party as much advance notice as
      is reasonably practicable under the circumstances. Each party agrees that
      it shall reasonably cooperate with the other with respect to all
      disclosures regarding this Agreement to the Securities Exchange Commission
      and any other governmental or regulatory agencies, including requests for
      confidential treatment of proprietary information of either party included
      in any such disclosure.

5.05  The confidentiality obligations of the parties under this Section 5 shall
      be applicable to such parties, as well as their respective Affiliates,
      employees, directors, agents, independent contractors and consultants.

                                    ARTICLE 6

6.    PATENTS.

6.01  Neurocrine and Pfizer shall cooperate in connection with the continued
      prosecution and maintenance by Neurocrine of the Neurocrine Patent Rights
      listed on Exhibit B [***]. Pfizer shall pay all reasonable and customary
      expenses, including all reasonable fees for patent counsel, incurred by
      Neurocrine in connection with annuities and other routine maintenance for
      Neurocrine Patent Rights in the Territory. Neurocrine shall not abandon
      any Neurocrine Patent Rights without at least ninety (90) days' prior
      notice of such abandonment to Pfizer. If

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      Neurocrine decides to abandon a Neurocrine Patent, Pfizer shall have the
      option to obtain ownership of such Neurocrine Patent and related
      applications free of charge and to continue the prosecution and
      maintenance of such Neurocrine Patent and related applications in its own
      name and at its expense. If Pfizer desires that Neurocrine file any
      application for a patent in specific countries other than those enumerated
      in Exhibit B hereto, or file any patent applications on improvements and
      variations upon inventions disclosed in the Neurocrine Patent Rights or
      otherwise relating to the Compound or the Products, Pfizer shall advise
      Neurocrine of such countries or improvements, variations or inventions, as
      the case may be. Neurocrine shall thereupon file patent applications as
      requested, and Pfizer shall pay reasonable expenses, including reasonable
      fees for patent counsel, for filing and prosecuting such requested patent
      applications. Pfizer shall have reasonable access to all documentation,
      filings and communications to or from the respective patent offices and
      shall be kept fully advised as to the status of all pending applications
      to the extent pertaining to the Compound or any Products. Neurocrine, its
      agents and attorneys will give due consideration to all suggestions and
      comments of Pfizer regarding any aspect of such patent prosecutions. In
      addition, Neurocrine shall take all necessary steps and pay all expenses
      necessary to maintain for the full life thereof all Neurocrine Patent
      Rights, except that Pfizer shall pay expenses as provided above. [***].

6.02  If Pfizer (a) reasonably determines in good faith with respect to any
      country in the Territory that, in order to avoid infringement of any
      patent not licensed hereunder, it is reasonably necessary to obtain a
      license in order to make, use, sell, offer for sale or import IR or MR
      Product and to pay a royalty or other payment under such license
      (including, without limitation, in connection with settlement of a patent
      infringement claim), or (b) shall be subject to a final court or other
      binding order or ruling requiring the payment of a royalty or other
      payment to a third party patent holder in respect of sales of any Product,
      then the amount of Pfizer's royalty payments under Section 3.02 with
      respect to Net Sales in such country shall be reduced by the lesser of (i)
      [***] of the amount of the royalty paid under such other license or (ii)
      [***] of the sum of the amounts payable by Pfizer under Section 3.02(a)
      hereof and Section 8.2(a) of the Collaboration Agreement


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<PAGE>
      with respect to each such country, provided, however, in no event shall
      royalty reduction under this Section 6.02, when aggregated with any
      reduction in royalties due to Section 3.02(b), result in Pfizer paying
      royalties under Section 3.02(a)(i) and Section 8.2 (a) of the
      Collaboration Agreement of less than [***] in the United States, and
      royalties under Section 3.02(a) (ii) or (iii), as applicable, of less than
      [***] when Generic Competition exists or [***] when no Generic Competition
      exists, in each case with respect to all other countries in the Territory.

6.03  If any third party shall in the reasonable opinion of either party, within
      any country in the Territory, infringe any Neurocrine Patent Rights, the
      party learning of such infringement shall promptly notify the other party
      and provide it with any available evidence of such possible infringement.
      Pfizer shall have the exclusive right to bring suit and to take action
      against any infringer of the Neurocrine Patents in its own name, or in the
      name of Neurocrine where necessary, in which case Pfizer shall control the
      prosecution of any such suit or claim, including without limitation the
      choice of counsel, and shall have the exclusive right to settle or dispose
      of any such suit or claim. In this connection it is understood, without
      limitation, that Pfizer shall have the unlimited right, with prior
      consultation with Neurocrine, to commence an action for infringement of
      any Neurocrine Patent within the forty-five (45) day period described in
      Act (as defined in the Collaboration Agreement) against any applicant for
      approval to sell a drug product in the United States which applicant makes
      a certification, of the type referred to in section 505 (b) of the Act, to
      the effect that any Neurocrine Patent is invalid or not infringed by the
      drug product for which such applicant is seeking approval. Neurocrine
      shall, at Pfizer's request, take all action reasonably necessary to assist
      in any such suit, including joining as a party. In the event Pfizer shall
      exercise its right to bring suit against any such infringer, Pfizer shall
      bear the entire costs of such suit; provided, however, that if Neurocrine
      is a party to any such suit and decides to be represented by its own
      counsel, it shall be responsible for the fees of such counsel. The
      proceeds of any recovery, court award or settlement of such action shall
      first be applied to reimburse the parties for the costs and expenses of
      such prosecution and the balance shall be paid [***].

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6.04  In case any actions, claims, demands, suits or other legal proceedings
      ("Patent Claims") are brought or threatened to be brought against Pfizer
      by a third party for infringement of such third party's patent(s) relating
      to Product by virtue of Pfizer's manufacture, use, sale or offer for sale
      of the Product hereunder, Pfizer shall notify Neurocrine forthwith of the
      threat or existence of such actions with sufficient evidence thereof, to
      enable the parties to prepare an appropriate defense strategy. The parties
      shall consult together as to the action to be taken and as to how the
      defense will be handled. Each party shall be entitled to participate in
      the defense of Patent Claims and to be represented in such matters by
      counsel of its choice. Each party shall be responsible for the fees of its
      counsel. Subject to the other terms of this Section 6.04, Pfizer shall
      have the right to manage the defense of Patent Claims consistent with this
      Article 6.

                                    ARTICLE 7

7.    REPRESENTATIONS, WARRANTIES AND COVENANTS.

7.01  Neurocrine Representations and Warranties. Neurocrine hereby represents
      and warrants, as of the date hereof, to Pfizer as follows:

(a)         To Neurocrine's knowledge and except as disclosed to Pfizer in
            Exhibit B, the issued patents encompassed within Neurocrine's Patent
            Rights are valid and enforceable patents, no third party is
            infringing any such patents and the manufacture, use, sale, offer
            for sale or importation by Pfizer or Neurocrine of Compound or
            Product does not and will not infringe any issued patents of third
            parties, or patent applications which would, if issued, infringe the
            rights of any third party. Neurocrine has furnished to Pfizer all
            material information in its possession requested by Pfizer as to the
            foregoing. Except as listed on Exhibit B [***] of all Neurocrine
            Patent Rights and all Neurocrine Technical Information, and no other
            person, firm, corporation or other entity has any right, interest or
            claim in or to, and Neurocrine has not entered into any agreement
            granting any right, interest or claim in or to, the Neurocrine
            Patent Rights or Neurocrine Technical Information

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            [***]. Exhibit E contains a complete list of all agreements
            presently in effect in connection with the development and
            manufacture of Products. Exhibit B contains a complete and correct
            list of all patents and patent applications in the Territory owned
            by or licensed to Neurocrine or any of its Affiliates (and
            indicating which are owned and which are licensed) relating to the
            manufacture, use, sale, offer for sale or importation of the
            Compound or any Product. Neurocrine or its Affiliates own or possess
            adequate licenses or other valid rights to use all patents, patent
            rights and know-how (collectively, "Intellectual Property")
            reasonably believed by Neurocrine as necessary to manufacture the
            Products in the Territory, and to distribute, use and sell the
            Products in the Territory, all free of any lien, encumbrance,
            liability or other restriction [***].

      (b)   Neurocrine has heretofore disclosed to Pfizer all material
            information, known to it or its Affiliates, with respect to (i) the
            safety or efficacy of the Compound or the Product or (ii) [***].

      (c)   Neurocrine has the corporate power and authority to execute and
            deliver this Agreement, the Collaboration Agreement and [***] and to
            perform its obligations hereunder and thereunder, and the execution,
            delivery and performance of this Agreement, the Collaboration
            Agreement and [***] by Neurocrine have been duly and validly
            authorized and approved by proper corporate action on the part of
            Neurocrine, and Neurocrine has taken all other action required by
            law, its certificate of incorporation or by-laws or any agreement to
            which it is a party or to which it may be subject required to
            authorize such execution, delivery and performance (other than
            compliance with all applicable requirements of the HSR Act).
            Assuming due authorization, execution and delivery on the part of
            Pfizer [***], each of this Agreement and the Collaboration Agreement
            and [***] constitutes a legal, valid and binding obligation of
            Neurocrine, enforceable against Neurocrine in accordance with its



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            respective terms, except as such enforceability may be limited by
            bankruptcy, insolvency, reorganization, moratorium and similar laws
            relating to or affecting creditors generally or by general equitable
            principles (regardless of whether such enforceability is considered
            in a proceeding in equity or at law).

      (d)   The execution and delivery of this Agreement, the Collaboration
            Agreement and [***] by Neurocrine and the performance by Neurocrine
            contemplated hereunder and thereunder will not violate any
            ordinance, law, decree or government regulation or any order of any
            court or other governmental department, authority, agency or
            instrumentality therein.

      (e)   Except for filings pursuant to the HSR Act, neither the execution
            and delivery of this Agreement or the Collaboration Agreement or
            [***] nor the performance hereof or thereof by Neurocrine requires
            Neurocrine to obtain any permits, authorizations or consents from
            any governmental body or from any other person, firm or corporation,
            and such execution, delivery and performance will not result in the
            breach of or give rise to any termination of any agreement or
            contract to which (i) Neurocrine may be a party which relates to the
            Neurocrine Patent Rights, Neurocrine Technical Information, the
            Compound or the Product or (ii) [***] which relates to the
            Neurocrine Patent Rights, Neurocrine Technical Information, the
            Compound or the Product.

      (f)   There is no action, claim, demand, suit, proceeding, arbitration,
            grievance, citation, summons, subpoena, inquiry or investigation of
            any nature, civil, criminal, regulatory or otherwise, in law or in
            equity, pending or relating to or, to Neurocrine's knowledge,
            threatened against Neurocrine, or, to Neurocrine's knowledge, any
            action, claim, demand, suit, proceeding, arbitration, grievance,
            citation, summons, subpoena, inquiry or investigation of any nature,
            civil, criminal, regulatory or otherwise, in law or equity, pending
            or relating to or threatened [***], in each case in connection with
            the Compound, the Product or any Neurocrine Patent Rights or


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            Neurocrine Technical Information or against or relating to the
            transactions contemplated by this Agreement or the Collaboration
            Agreement.

      (g)   [***], there are no agreements to which Neurocrine or any of its
            Affiliates is a party pursuant to which Neurocrine or any of its
            Affiliates has a license, or an option to obtain a license, or holds
            an immunity from suit, with respect to patents which (i) are
            pending, applied for, granted or registered, and (ii) but for
            Neurocrine's rights under such agreements, could be asserted by
            third parties to be infringed by the manufacture, distribution, use,
            sale, offer for sale or importation of the Products in the
            Territory. Neurocrine has previously disclosed and provided complete
            copies to Pfizer of all of Neurocrine's agreements with any third
            parties regarding supply and manufacture of all goods and services
            relating to the Compound and the Products, none of which have been
            modified, supplemented or amended.

      (h)   [***].




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      (i)   Exhibit E sets forth all sources of funding, grants or loans
            Neurocrine has received and, [***] in connection with the discovery,
            research and development of the Compound and any Product.

      (j)   Exhibit F sets forth a complete and accurate listing of all
            pre-clinical and clinical studies, together with the dates and brief
            descriptions of such studies, previously or currently undertaken or
            sponsored by Neurocrine, [***] and their respective Affiliates and
            by any third-party investigator with any contact with Neurocrine,
            [***], data and reports relating to which true and complete copies
            have been previously provided to Pfizer. Neurocrine has heretofore
            disclosed to Pfizer all material correspondence and contact
            information between Neurocrine and the FDA and other Regulatory
            Authorities regarding the Compound and the Products, [***] and FDA
            and other Regulatory Authorities relating thereto.

      (k)   No person owns fifty percent (50%) or more of the voting securities
            of Neurocrine. Neurocrine has no subsidiaries other than
            subsidiaries whose financial statements are reported on a
            consolidated basis with Neurocrine.

      For purposes of this Section 7.01, "to Neurocrine's knowledge" shall mean
to Neurocrine's knowledge after reasonable due inquiry.

7.02  Pfizer Representations and Warranties. Pfizer hereby represents and
      warrants, as of the date hereof, to Neurocrine as follows:

      (a)   Pfizer has the corporate power and authority to execute and deliver
            this Agreement and the Collaboration Agreement and to perform its
            obligations hereunder and thereunder, and the execution, delivery
            and performance of this Agreement and the Collaboration Agreement by
            Pfizer have been duly and validly authorized and approved by proper
            corporate action on the part of Pfizer, and Pfizer has taken all



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            other action required by law, its certificate of incorporation or
            by-laws or any agreement to which it is a party or to which it may
            be subject required to authorize such execution, delivery and
            performance (other than compliance with all applicable requirements
            of the HSR Act). Assuming due authorization, execution and delivery
            on the part of Neurocrine, each of this Agreement and the
            Collaboration Agreement constitutes a legal, valid and binding
            obligation of Pfizer, enforceable against Pfizer in accordance with
            its respective terms, except as such enforceability may be limited
            by bankruptcy, insolvency, reorganization, moratorium and similar
            laws relating to or affecting creditors generally or by general
            equitable principles (regardless of whether such enforceability is
            considered in a proceeding in equity or at law).

      (b)   The execution and delivery of this Agreement and the Collaboration
            Agreement and the performance by Pfizer contemplated hereunder and
            thereunder will not violate (subject to obtaining appropriate
            governmental health, pricing and reimbursement approvals) any state,
            federal or other statute or regulation or any order of any court or
            other governmental department, authority, agency or instrumentality
            therein.

      (c)   There is no action, claim, demand, suit, proceeding, arbitration,
            grievance, citation, summons, subpoena, inquiry or investigation of
            any nature, civil, criminal, regulatory or otherwise, in law or in
            equity, pending or relating to or, to the knowledge of Pfizer,
            threatened against Pfizer in connection with or relating to the
            transactions contemplated by this Agreement or the Collaboration
            Agreement, and assuming the accuracy of the representations and
            warranties of Neurocrine contained herein Pfizer is unaware and has
            no reason to be aware of any basis for the foregoing.

      (d)   Except for filings pursuant to the HSR Act, neither the execution
            and delivery of this Agreement or the Collaboration Agreement nor
            the performance hereof or thereof by Pfizer requires Pfizer to
            obtain any permits, authorizations or consents from any governmental
            body, (subject to obtaining all necessary governmental



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<PAGE>
            approvals with respect to the manufacture, use, sale, offer for sale
            or importation of the Product) or from any other person, firm or
            corporation and such execution, delivery and performance will not
            result in the breach of or give rise to any termination of any
            agreement or contract to which Pfizer may be a party, except that
            may reasonably be expected to adversely affect the ability to
            perform its obligations under this Agreement.

7.03  Covenants.

      (a)   Neurocrine covenants and agrees with Pfizer that Neurocrine shall
            maintain the [***] in good standing and shall not take any actions
            (or omit or fail to take any actions) which would result in a [***].
            Neurocrine agrees that (i) it shall not amend, modify or supplement
            the [***] or (ii) agree to or consent to any amendment, modification
            or supplement to the [***], in such case without the consent of
            Pfizer. In addition, Neurocrine shall not sell, assign, convey,
            pledge, hypothecate or otherwise transfer the [***] or Neurocrine's
            rights or obligations thereunder, or otherwise make any commitments
            in a manner that conflicts with Pfizer's rights hereunder without
            the consent of Pfizer. Neurocrine shall immediately notify Pfizer
            upon receipt by Neurocrine or its Affiliates of any notice from
            [***], or otherwise take any action which may affect Pfizer's rights
            under this Agreement.

      (b)   Pfizer agrees to cooperate with Neurocrine in connection with
            Neurocrine's [***] and will provide what NBI reasonably believes is
            required, provided, however, Pfizer shall have no obligations or
            liabilities under the [***].

      (c)   Pfizer covenants and agrees that it will use Commercially Reasonable
            Efforts to develop and commercialize the Product in the Territory,
            subject to the provisions of the Collaboration Agreement.




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                                    ARTICLE 8

8.    TERM. Subject to Section 9.01, this Agreement shall be effective as of the
      Effective Date and shall remain in effect for so long as Pfizer is
      obligated to make payments under Section 3 hereof, unless earlier
      terminated as provided herein.

                                    ARTICLE 9

9.    EFFECTIVENESS AND TERMINATION.

9.01  Effectiveness.

      (a)   Notwithstanding to the contrary any of the provisions of this
            Agreement but subject to Section 9.01(b) below, this Agreement shall
            only become effective upon the Effective Date, and prior to the
            Effective Date neither Neurocrine nor Pfizer shall have any rights
            or obligations hereunder.

      (b)   Effective immediately as of the date first written above, Neurocrine
            covenants and agrees that it will not negotiate, engage in or
            otherwise enter into any one or more transactions involving (i) any
            sale or grant of any rights to any Neurocrine Patent Rights or
            Neurocrine Technical Information (including without limitation any
            licenses or sublicenses), or (ii) any joint venture, co-promotion or
            similar relationship involving any Neurocrine Patent Rights or
            Neurocrine Technical Information. Effective immediately as of the
            date first written above, each of Pfizer and Neurocrine covenant and
            agree that Article 11 shall be in full force and effect. The parties
            understand and agree that the obligations set forth in this Section
            9.01(b) shall terminate on the 90th day following the date of this
            Agreement if, but only, if the Effective Date has not occurred on or
            before such 90th day (other than liability with respect to any
            breaches prior to such 90th day under this Section 9.01(b) which
            shall survive such termination).


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<PAGE>
9.02  Termination For Breach.

      (a)   (i)   If either Pfizer or Neurocrine materially breaches or
                  materially defaults in the performance or observance of any of
                  the provisions of this Agreement, and such material breach or
                  material default is not cured within ninety (90) days or, in
                  the case of failure to pay any amounts due hereunder sixty
                  (60) days, after the giving of notice by the other party
                  specifying such breach or default, the other party shall have
                  the right to terminate this Agreement in full upon a further
                  thirty (30) days' notice.

            (ii)  If Pfizer terminates all of its development activities for a
                  period of six (6) months or longer in the US Territory at any
                  time after it has the final decision making authority with
                  respect to the Development Program (other than for regulatory
                  restraints) and [***].

            (iii) If Pfizer terminates the Development Program with respect to
                  any country in the ROW Territory or otherwise fails to conduct
                  any development activities directed to any such country,
                  [***], Pfizer will thereafter have six (6) months [***]. If
                  Pfizer fails within thirty (30) days to notify Neurocrine
                  [***], Neurocrine shall have the right to terminate this
                  Agreement with respect to such country effective upon thirty
                  (30) days notice.

      (b)   For purposes of this Agreement, materiality in all cases shall be
            considered in the context of this Agreement and the Collaboration
            Agreement taken as a whole; provided, however, no party shall be
            deemed to be in material breach or material



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                                       33
<PAGE>
            default if its actions or omissions primarily resulted from: (i)
            compliance with any specific unanimous decision of a committee or
            subcommittee under the Collaboration Agreement, or (ii) compliance
            with any directive by the non-defaulting party for a matter in which
            the non-defaulting party or any of its designees, representatives or
            employees have exercised sole or final decision making authority
            under the Collaboration Agreement, or (iii) compliance with the
            express terms of this Agreement or the Collaboration Agreement, or
            (iv) to the extent Pfizer uses efforts in substantial conformity
            with Commercially Reasonable Efforts or Neurocrine uses efforts in
            substantial conformity with commercially reasonable efforts
            consistent with Section 2.12 of the Collaboration Agreement. A
            material breach or material default in the performance of any of the
            provisions of this Agreement shall include a material inaccuracy in
            any representation or warranty contained herein.

      (c)   Upon the giving of any notice of default under Section 9.02(a), the
            parties will in good faith meet to see if a plan to remedy the
            alleged breach or default can be mutually agreed.

      (d)   Upon any termination under this Section 9.02, the provisions of
            Section 9.05 shall apply.

9.03  Other Termination.

      (a)   Upon one hundred and eighty (180) days prior notice to Neurocrine,
            Pfizer shall have the right at any time, without cause at Pfizer's
            sole discretion, to terminate in full this Agreement, whereupon this
            Agreement together with the Collaboration Agreement (if still in
            effect) shall terminate one hundred and eighty (180) days after the
            date of such notice.

      (b)   This Agreement shall terminate following any termination by Pfizer
            of the Collaboration Agreement, except this Agreement shall not
            terminate if Pfizer terminates the Collaboration Agreement due to
            the events described under Sections



                                       34
<PAGE>
            13.5 or 13.7 thereunder or upon a Change in Control (as defined in
            the Collaboration Agreement).

      (c)   Upon one hundred and eighty (180) days prior notice to Neurocrine,
            Pfizer shall have the right at any time or times, without cause at
            its sole discretion, to terminate the licenses granted hereunder by
            Neurocrine on a country-by-country basis other than with respect to
            the United States and Japan. Upon a termination of licenses in any
            country, the provisions of Section 9.05 shall apply with respect to
            such country terminated.

      (d)   This Agreement shall automatically terminate upon termination by
            Neurocrine of the Collaboration Agreement pursuant to Section
            13.2(a) thereof or pursuant to the first sentence of Section 13.2(b)
            thereof with respect to the US Territory.

      (e)   Upon any termination of this Agreement pursuant to this Section
            9.03, the provisions of Section 9.05 shall apply.

9.04  Bankruptcy. Each party may, in addition to any other remedies available to
      it by law or in equity, exercise the rights set forth below by written
      notice to the other party (the "Insolvent Party"), in the event the
      Insolvent Party shall have become insolvent or bankrupt, or shall have
      made a general assignment for the benefit of its creditors, or there shall
      have been appointed a trustee or receiver of the Insolvent Party or for
      all or a substantial part of its property, or any case or proceeding shall
      have been commenced or other action taken by or against the Insolvent
      Party in bankruptcy or seeking reorganization, liquidation, dissolution,
      winding-up arrangement, composition or readjustment of its debts or any
      other relief under any bankruptcy, insolvency, reorganization or other
      similar act or law of any jurisdiction now or hereafter in effect, and any
      such event shall have continued for sixty (60) days undismissed, unbonded
      and undischarged. All rights and licenses granted under or pursuant to
      this Agreement by Neurocrine and Pfizer are, and shall otherwise be deemed
      to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code,
      licenses of rights to "intellectual property" as defined under Section 101
      of the U.S. Bankruptcy Code. The parties agree that the parties as
      licensees of such rights under this Agreement shall retain and may fully
      exercise all of


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<PAGE>
      their rights and elections under the U.S. Bankruptcy Code. The parties
      further agree that, in the event of the commencement of a bankruptcy
      proceeding by or against either party under the U.S. Bankruptcy Code, the
      other party shall be entitled to a complete duplicate of (or complete
      access to, as appropriate) any such intellectual property and all
      embodiments of such intellectual property, and same, if not already in the
      their possession, shall be promptly delivered to them (i) upon any such
      commencement of a bankruptcy proceeding upon its written request
      therefore, unless the party subject to such proceeding elects to continue
      to perform all of their obligations under this Agreement or (ii) if not
      delivered under (i) above, upon the rejection of this Agreement by or on
      behalf of the party subject to such proceeding upon written request
      therefore by the other party. In the event Neurocrine shall be an
      Insolvent Party, Pfizer may retain the licenses set forth herein subject
      to the payment of all milestones, license fees, royalties and other
      payments or reimbursements set forth herein subject to Section 13.8 of the
      Collaboration Agreement and Section 9.07 below.

9.05  Termination of Pfizer. In the event that this Agreement is terminated in
      accordance with Sections 9.02 or 9.03, on a country-by-country basis:

      (a)   All licenses granted by Neurocrine to Pfizer in this Agreement will
            revert to Neurocrine;

      (b)   Pfizer will pay to Neurocrine such amounts required to complete any
            on-going Product Studies (including the Registration Program Product
            Studies) plus any non-cancelable obligations with respect to future
            Product Studies approved by a Committee;

      (c)   Pfizer will provide to Neurocrine, at no cost to Neurocrine, all
            remaining clinical quantities of Product supplies and all remaining
            commercial quantities of Product (including intermediates and work
            in progress);

      (d)   Pfizer will disclose to Neurocrine all Pfizer Technical Information
            generated prior to the date of termination of this Agreement not
            previously disclosed to Neurocrine;



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<PAGE>
      (e)   Pfizer will assign to Neurocrine all filings with Governmental
            Authorities relating to Products worldwide;

      (f)   Pfizer will grant to Neurocrine a perpetual, irrevocable,
            non-exclusive, royalty-free, fully-paid, license under any Pfizer
            Technical Information and Pfizer Trademarks, together with any
            Patent Rights owned by Pfizer and used in connection with the
            research, development, manufacture, use and sale of the Products;

      (g)   Pfizer will provide to Neurocrine any other assignable contracts
            relating to the Products, reasonably required to allow Neurocrine to
            continue the research and development of Products with no delay,
            provided Pfizer shall have no continuing liability or obligation
            thereunder.

9.06  Divestiture by Pfizer.

      (a)   If in connection with any proposed acquisition or merger or inquiry
            of a Governmental Authority, Pfizer determines that in order to
            facilitate clearance or obtain approval from any Governmental
            Authority with responsibility for enforcing antitrust or competition
            Laws regarding such acquisition or merger or inquiry, it would be
            advisable, in Pfizer's business judgement, to assign or sublicense
            or otherwise transfer (any such assignment, sublicense or transfer,
            a "Divestiture Transaction") Pfizer's rights and obligations under
            this Agreement to any third party, Pfizer shall notify Neurocrine
            thereof ("Notice of Divestiture"). The Notice of Divestiture shall
            not be required to disclose any details of any such proposed
            Divestiture Transaction.

      (b)   [***].




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<PAGE>
9.07  Survival of Obligations. Notwithstanding any termination of this
      Agreement, (a) neither party shall be relieved of any obligations incurred
      prior to such termination, including the payment obligations, and (b) the
      obligations of the parties with respect to (I) the protection and
      nondisclosure of Confidential Information (Article 5) and Indemnification
      (Article 10) shall survive termination of this Agreement, and (II) each
      other Section or schedule of this Agreement which is expressed to survive
      termination or which is required to give effect to such termination or the
      consequences of such termination shall survive termination, and (c)
      subject to Section 10.04(c)(vi) and Section 10.06, termination of this
      Agreement shall not release either party from any obligation or liability
      which shall have accrued at the time of termination or preclude either
      party from pursuing all rights at law and in equity with respect to any
      default under this Agreement, and (d) unless this Agreement expressly
      provides that termination shall be the sole and exclusive remedy for a
      particular breach hereof, either party's right to commence an action, suit
      or other proceeding claiming breach of this Agreement by the other party
      shall survive termination. Upon a termination of this Agreement by Pfizer,
      Neurocrine shall promptly return to Pfizer all written Confidential
      Information previously disclosed by Pfizer, and all copies thereof. Upon
      any other termination of this Agreement, each party shall promptly return
      to the other party all





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<PAGE>
      written Confidential Information, and all copies thereof, of such other
      party, except as specifically provided in this Agreement.

                                   ARTICLE 10

10.    INDEMNIFICATION.

10.01 Pfizer. Subject to the terms and conditions of this Agreement, Pfizer will
      indemnify, defend and hold harmless Neurocrine and its Affiliates, (each,
      a "Neurocrine Indemnified Party") from and against any and all Liability
      (as defined below) which:

      (a)   is incurred, suffered or sustained by a Neurocrine Indemnified Party
            or to which a Neurocrine Indemnified Party becomes subject (whether
            or not in connection with any claim by any Third Party (as defined
            in Section 10.05 below)), arising out of or resulting from (i) any
            misrepresentation or breach of any representation or warranty made
            by Pfizer in this Agreement or the Collaboration Agreement, or (ii)
            any breach of any of the covenants or agreements of Pfizer in this
            Agreement or the Collaboration Agreement; and/or

      (b)   the Neurocrine Indemnified Party may be required to pay to one or
            more Third Parties resulting from or arising out of any claims of
            any nature (i) solely in connection with the Supplemental Program
            (including without limitation any Product Liability related thereto)
            or (ii) directly resulting from Pfizer's failure to manufacture, or
            to cause third parties to manufacture, Products in accordance with
            the then-existing Specifications as determined in accordance with
            the terms of the Collaboration Agreement but in the case of this
            clause (ii) only to the extent [***] (collectively, the Liabilities
            described in this Section 10.01(b) are referred to as the "Pfizer
            Liability").





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                                       39
<PAGE>
      [***]

10.02 Indemnification by Neurocrine. Subject to the terms and conditions of this
      Agreement, Neurocrine will indemnify, defend and hold harmless Pfizer and
      its Affiliates (each, a "Pfizer Indemnified Party") from and against any
      and all Liability which:

      (a)   is incurred, suffered or sustained by a Pfizer Indemnified Party or
            to which a Pfizer Indemnified Party becomes subject (whether or not
            in connection with any claim by any Third Party), arising out of or
            resulting from (i) any misrepresentation or breach of any
            representation or warranty made by Neurocrine in this Agreement or
            the Collaboration Agreement, or (ii) any breach of any of the
            covenants or agreements of Neurocrine in this Agreement or the
            Collaboration Agreement; and/or



                                       40
<PAGE>
      (b)   the Pfizer Indemnified Party may be required to pay to one or more
            Third Parties arising out of any claims of any nature: (i) solely in
            connection with Neurocrine's development of the Product prior to the
            Effective Date and the Registration Program (including without
            limitation any Product Liability related thereto) or (ii) directly
            resulting from Neurocrine's failure to manufacture, or to cause
            third parties to manufacture, Products in accordance with the
            then-existing Specifications as determined in accordance with the
            terms of the Collaboration Agreement but in the case of this clause
            (ii) only to the extent (***) (collectively, the Liabilities
            described in this Section 10.02(b) are referred to as the
            "Neurocrine Liability").

      [***].

      [***].




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      Notwithstanding anything to the contrary contained herein, Pfizer shall be
      entitled, at all times, to avail itself of the right to obtain specific
      performance and other injunctive relief in relation to all matters under
      this Agreement and/or the Collaboration Agreement [***]. In connection
      with any litigation referenced in this paragraph, Neurocrine hereby agrees
      to waive all defenses involving laches and statutes of limitations. [***].

      [***].




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<PAGE>
      [***]:

      (i)   [***].

      (ii)  [***].

10.03 Definitions of Liability and Product Liability. For purposes of this
      Agreement, "Liability" shall mean, subject to Section 10.06, any and all
      (a) claims, losses, liabilities, damages, fines, royalties, governmental
      penalties or punitive damages, deficiencies, interest, awards, and
      judgements, and (b) with respect to third parties, settlement amounts and
      all of the items referred to in clause (a) above which, in accordance with
      Section 10.06, include special, indirect, incidental and consequential
      damages (including without limitation lost profits), and (c) in connection
      with all of the items referred in clauses (a) and (b) above, any and all
      costs and expenses (including reasonable attorneys' fees and all other
      expenses reasonably incurred in investigating, preparing or defending any
      litigation or proceeding, commenced or threatened). For purposes of this
      Agreement, "Product Liability" shall mean any and all Liability and claims
      of Third Parties relating to any actual or alleged death or bodily injury
      caused or allegedly caused by the use of the Products; it being understood
      and agreed that all Liability as and to the extent referenced in Section
      10.01 or Section 10.02 or breaches of any representations or warranties in
      this Agreement or the Collaboration Agreement shall be excluded from the
      definition of






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                                       43
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      "Product Liability" as used herein, except with respect to Product
      Liability as specifically provided in Sections 10.01(b)(i) and
      10.02(b)(i).

10.04 Co-Indemnity and Neurocrine Contractual Indemnity.

      (a)   Product Liability.

            (i)   Notwithstanding anything to the contrary contained herein
                  (except with respect to Product Liability as specifically
                  provided in Sections 10.01(b)(i) and 10.02(b)(i)), the Parties
                  understand and agree that all indemnification obligations for
                  Product Liability shall be governed by the provisions of this
                  Section 10.04 (but not be governed by the provisions of either
                  Sections 10.01 or 10.02).

            (ii)  Subject to the timing of payments as provided in Section
                  10.04(c) below and the provisions of this sentence, Neurocrine
                  shall indemnify, defend and hold the Pfizer Indemnified
                  Parties harmless under the terms hereof from and against [***]
                  of the amount of any and all Product Liability as and when
                  such Product Liability arises on and after the Effective Date,
                  and Pfizer shall indemnify, defend and hold Neurocrine
                  Indemnified Parties harmless under the terms hereof from and
                  against [***] of the amount of any and all of such Product
                  Liability as and when such Product Liability arises on and
                  after the Effective Date; it being understood and agreed that
                  (X) the purpose of the provisions of this sentence is that
                  Neurocrine and Pfizer shall pay for and otherwise share the
                  cost of all Product Liability [***] and [***], respectively,
                  and (Y) in the event of any termination in full of
                  Co-Promotion activities by Neurocrine under the Collaboration
                  Agreement, Pfizer shall indemnify, defend and hold Neurocrine
                  Indemnified Parties harmless under the terms hereof from and
                  against [***] of the amount of any and all of any Product
                  Liability directly resulting from Products sold after the date
                  of termination in full of Co-Promotion activities by
                  Neurocrine as and when


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                  such Product Liability arises, and (Z) in the event of any
                  termination of the Collaboration Agreement where, as a result,
                  this Agreement terminates, Neurocrine shall indemnify, defend
                  and hold Pfizer Indemnified Parties harmless under the terms
                  hereof from and against [***] of the amount of any and all of
                  any Product Liability directly resulting from Products sold
                  after the date of termination of this Agreement by or on
                  behalf of or under the authority of Neurocrine as and when
                  such Product Liability arises.

            (iii) For purposes of this Agreement, Pfizer shall be entitled to
                  become the "Indemnifying Party" as that term is used in
                  Section 10.05 and therefore Pfizer shall have full control of
                  any such claim from a Third Party involving Product Liability
                  as contemplated in Section 10.05 (other than in respect of
                  circumstances where Section 10.04(a)(ii)(Z) shall apply) so
                  long as the Litigation Conditions are satisfied.

      (b)   IP Liability.

            (i)   Notwithstanding anything to the contrary contained herein, the
                  Parties understand and agree that all indemnification
                  obligations for IP Liability shall be governed by the
                  provisions of this Section 10.04 (but not be governed by the
                  provisions of either Sections 10.01 or 10.02).

            (ii)  Subject to the timing of payments as provided in Section
                  10.04(c) below and the provisions of this sentence, Neurocrine
                  shall indemnify, defend and hold the Pfizer Indemnified
                  Parties harmless under the terms hereof from and against [***]
                  of the amount of any and all IP Liability as and when such IP
                  Liability arises, and Pfizer shall indemnify, defend and hold
                  Neurocrine Indemnified Parties harmless under the terms hereof
                  from and against [***] of the amount of any and all of such IP
                  Liability as and when such IP Liability arises; it being
                  understood and agreed that (X) the purpose of the provisions
                  of this sentence is that Neurocrine and Pfizer shall pay for
                  and otherwise share the cost of all IP


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                  Liability [***] and [***], respectively, and (Y) in the event
                  of any termination in full of Co-Promotion activities by
                  Neurocrine under the Collaboration Agreement, Pfizer shall
                  indemnify, defend and hold Neurocrine Indemnified Parties
                  harmless under the terms hereof from and against [***] of the
                  amount of any and all of any IP Liability directly resulting
                  from Products sold after the date of termination in full of
                  Co-Promotion activities by Neurocrine as and when such IP
                  Liability arises, and (Z) in the event of any termination of
                  the Collaboration Agreement where, as a result, this Agreement
                  terminates, Neurocrine shall indemnify, defend and hold Pfizer
                  Indemnified Parties harmless under the terms hereof from and
                  against [***] of the amount of any and all of any IP Liability
                  directly resulting from Products sold after the date of
                  termination of the Collaboration Agreement by or on behalf of
                  or under the authority of Neurocrine as and when such IP
                  Liability arises.

            (iii) For purposes of this Agreement, Pfizer shall be entitled to
                  become the "Indemnifying Party" as that term is used in
                  Section 10.05 and therefore Pfizer shall have full control of
                  any such claim from a Third Party involving IP Liability as
                  contemplated in Section 10.05 (other than in respect of
                  circumstances where Section 10.04(b)(ii)(Z) shall apply) so
                  long as the Litigation Conditions are satisfied.

      (c)   [***]:

            (i)   [***].




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            (ii)  [***].

            (iii) [***].








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            (iv)  [***].

            (v)   [***].

            (vi)  [***].






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            (vii) [***].







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10.05 Indemnification Procedure.

      (a)   A party seeking indemnification pursuant to Article 10 (an
            "Indemnified Party") shall give prompt notice to the party from whom
            such indemnification is sought (the "Indemnifying Party") of the
            commencement or assertion of any claim from any unaffiliated third
            party (a "Third Party") (which in no event includes any claims by
            any Pfizer Indemnified Party or any Neurocrine Indemnified Party) in
            respect of which indemnity may be sought hereunder, shall give the
            Indemnifying Party such information with respect thereto as the
            Indemnifying Party may reasonably request, and shall not make any
            admission concerning such claim from a Third Party, unless such
            admission is required by applicable Law or legal process, including
            in response to questions presented in depositions or
            interrogatories. Any admission made by the Indemnified Party, except
            for an admission required by applicable Law or legal process, or the
            failure to give such notice shall relieve the Indemnifying Party of
            any liability hereunder only to the extent that the ability of the
            Indemnifying Party to defend such claim from a Third Party is
            prejudiced thereby. The Indemnifying Party shall have the right,
            exercisable by written notice to the Indemnified Party within thirty
            (30) days of receipt of notice from the Indemnified Party of the
            commencement or assertion of a claim from a Third Party, to assume
            and conduct the defense of such claim from a Third Party, with
            counsel selected by the Indemnifying Party and reasonably acceptable
            to the Indemnified Party, provided that (i) other than with respect
            to claims for Product Liability and IP Liability for which Pfizer
            has assumed the defense as provided herein (which shall not include
            Product Liability as set forth in Section 10.02), the claim from a
            Third Party does not seek (and continues not to seek) specific
            performance of the Indemnified Party; and (ii) the Indemnifying
            Party expressly agrees in writing that as between the Indemnifying
            Party and the Indemnified Party, the Indemnifying Party shall be
            solely obligated to satisfy and discharge the claim from a Third
            Party in full, subject to Section 10.04 (where Pfizer only shall be
            responsible for Product Liability and IP Liability as provided
            herein). (The conditions set forth above are collectively referred
            to as the "Litigation Conditions"). Subject to the initial and
            continuing satisfaction in full


                                       50
<PAGE>
            of the Litigation Conditions and the terms and conditions of Article
            10, the Indemnifying Party shall have full control of such claim
            from a Third Party, including settlement negotiations and any legal
            proceedings. If the Indemnifying Party does not assume the defense
            of such claim from a Third Party in accordance with this Section
            10.05 or the Litigation Conditions are not at any time then
            satisfied in full, the Indemnified Party may defend the claim from a
            Third Party.

      (b)   The Indemnifying Party or the Indemnified Party, as the case may be,
            shall have the right to participate in (but not control), at its own
            expense (subject to the immediately succeeding sentence), the
            defense of any claim from a Third Party which the other is defending
            as provided in this Agreement. The Indemnifying Party shall not be
            liable for any litigation costs or expenses incurred, without its
            consent, by the Indemnified Party where the action or proceeding is
            under the control of the Indemnifying Party and the Indemnifying
            Party is conducting such defense diligently; provided, however, that
            if (i) the Litigation Conditions have not been met or cease to be
            met in full, or (ii) the Indemnifying Party fails in any material
            way to take reasonable steps necessary to defend diligently such
            claim from a Third Party, the Indemnified Party may assume its own
            defense, and the Indemnifying Party will be liable for all
            reasonable costs or expenses paid or incurred in connection
            therewith.

      (c)   The Indemnifying Party, if it shall have assumed the defense of any
            claim from a Third Party as provided in this Agreement, shall not
            consent to a settlement of, or the entry of any judgment arising
            from, any such claim from a Third Party to the extent such claim
            from a Third Party involves equitable or other non-monetary relief
            from the Indemnified Party. No party shall, without the prior
            written consent of the other parties, enter into any compromise or
            settlement which commits the other parties to take, or to forbear to
            take, any action.

      (d)   Whether or not the Indemnifying Party chooses to defend or prosecute
            any claim from a Third Party, all the parties hereto shall cooperate
            in the defense or prosecution thereof and shall furnish such
            records, information and testimony, and


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            attend such conferences, discovery proceedings, hearings, trials and
            appeals, as may be reasonably requested in connection therewith.

      (e)   Any indemnification hereunder shall be made net of any insurance
            proceeds recovered by the Indemnified Party from Third Party;
            provided, however, that if, following the payment to the Indemnified
            Party of any amount under this Article 10, such Indemnified Party
            recovers any such insurance proceeds in respect of the claim for
            which such indemnification payment was made, the Indemnified Party
            shall promptly pay an amount equal to the amount of such proceeds
            (but not exceeding the amount of such indemnification payment) to
            the Indemnifying Party.

10.06 Limitation of Damages/Sole Remedy. IN NO EVENT SHALL PFIZER OR NEUROCRINE
      BE LIABLE UNDER THIS AGREEMENT OR THE COLLABORATION AGREEMENT FOR (X)
      SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT
      LIMITATION, LOSS OF PROFITS) SUFFERED BY ANY NEUROCRINE PARTIES OR ANY
      PFIZER PARTIES, RESPECTIVELY, OR [***], EXCEPT (A) TO THE EXTENT ANY SUCH
      DAMAGES ARE PAID TO A THIRD PARTY AS PART OF A THIRD PARTY CLAIM, AND (B)
      IN THE EVENT OF AN INTENTIONAL AND WILLFUL BREACH IN BAD FAITH OF ANY
      REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT BY NEUROCRINE OR PFIZER
      (AS THE CASE MAY BE) OF THIS AGREEMENT. EXCEPT FOR SUITS FOR SPECIFIC
      PERFORMANCE OR OTHER INJUNCTIVE RELIEF AND EXCEPT AS EXPRESSLY PROVIDED IN
      THIS AGREEMENT AND THE COLLABORATION AGREEMENT, INDEMNIFICATION PURSUANT
      TO THIS ARTICLE 10 SHALL BE THE SOLE AND EXCLUSIVE REMEDY (WHETHER BASED
      ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY) AVAILABLE TO NEUROCRINE OR
      PFIZER FOR ANY MISREPRESENTATION UNDER OR BREACH OF THIS AGREEMENT OR THE
      COLLABORATION AGREEMENT. [***].



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10.07 Insurance. Pfizer will name Neurocrine, [***] as additional insureds on
      its product liability insurance, which insurance shall provide coverage of
      not less than [***]. Promptly after the Effective Date Pfizer will supply
      Neurocrine with evidence of such coverage and during the term of this
      Agreement, Pfizer will inform Neurocrine of any modifications to such
      coverages.

                                   ARTICLE 11

11.   NON-COMPETITION.

11.01 Pfizer Non-Competition. If during the term of this Agreement Pfizer or any
      of its Affiliates intends to Commercialize (as hereinafter defined) a
      prescription pharmaceutical product having an Insomnia Indication in the
      Territory (a "Competitive Product"):

      (a)   If such Competitive Product's [***]:

            (i)   [***]

            (ii)  [***].

      (b)   If such Competitive Product's [***]:

            (i)   [***]





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            (ii)  [***]:

                  [***].

      (c)   If Pfizer Launches any Competitive Product defined in Section
            11.01(b) ("Section 11.01(b) Product"), then neither Pfizer or its
            Affiliates shall:

            (i)   Engage in negative promotional activities, [***]

            (ii)  [***].






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            (iii) [***].

            (iv)  [***].

      (d)   Notwithstanding to the contrary any provisions of this Agreement or
            the Collaboration Agreement, in no event shall Pfizer be required
            under this Agreement or under the Collaboration Agreement to engage
            in any activity regarding a Product which Pfizer is prohibited from
            undertaking under Section 11.01(c) with respect to a Section
            11.01(b) Product, and Section 11.01(c) shall be applicable, on the
            same basis, mutatis mutandis, to promotional activities regarding
            the Product vis-a-vis any Competitive Product of Pfizer.

11.02 Neurocrine Non-Competition. If, during the term of this Agreement,
      Neurocrine or any of its Affiliates proposes to Commercialize a
      Competitive Product in the Territory, Neurocrine or such Affiliate shall,
      if such Competitive Product's primary mechanism of






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      action is through binding with [***], divest (by license, sale or similar
      transaction) such Competitive Product.

11.03 [***].

11.04 For purpose of this Section 11 "Commercialize" means directly or
      indirectly to market, sell, detail, promote or distribute, but in no event
      shall include an out-license or other divestiture of intellectual property
      rights to a person who markets sells details, promotes or distributes.

                                   ARTICLE 12

12.   MISCELLANEOUS.

12.01 Force Majeure. No party shall be liable for failure of or delay in
      performing obligations set forth in this Agreement, and no party shall be
      deemed in breach of its obligations, if such failure or delay is due to
      natural disasters or any causes reasonably beyond the control of such
      party.

12.02 Assignment. This Agreement and all rights and obligations granted
      hereunder shall not be assignable by any party without the prior consent
      of the other, except that (a) Pfizer may in connection with a Divestiture
      Transaction assign this Agreement, (b) Pfizer may assign this Agreement,
      and after all amounts due under the Loan Agreement have been paid in full
      and the Loan Agreement has been terminated, Neurocrine may assign this
      Agreement, in each case, in whole or in part, to any Affiliate of such
      party or to any successor to substantially all of such party's business or
      assets; provided, however, in the case of Pfizer and Neurocrine, the
      assigning party shall remain responsible for all obligations hereunder if
      its Affiliate shall fail to perform hereunder.




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12.03 Governing Law. This Agreement shall be governed by the laws of the State
      of New York without regard to its conflict of laws rules.

12.04 Jurisdiction. With respect to any suit, action or proceeding relating to
      this Agreement (each, a "Proceeding"), each party hereto irrevocably (i)
      subject to the final sentence of this Section 12.04, agrees and consents
      to be subject to (A) in the case of any Proceeding commenced by Pfizer,
      the exclusive jurisdiction of the United States District Court for the
      Southern District of California or any California state court sitting in
      San Diego, California, United States of America (any such court, the
      "California Court"), and (B) in the case of any Proceeding commenced by
      Neurocrine, the exclusive jurisdiction of the United States District Court
      for the Southern District of New York or any New York state court sitting
      in New York, New York, United States of America (any such court, the "New
      York Court") and (ii) waives any objection which it may have at any time
      to the laying of venue of any Proceeding brought in any such California
      Court or New York Court (collectively, the "Courts") as provided in this
      Section 12.04, waives any claim that such Proceeding has been brought in
      an inconvenient forum and further waives the right to object, with respect
      to such Proceeding, that such Court does not have any jurisdiction over
      such party. Notwithstanding the foregoing: (a) if the Court adjudicating
      such Proceeding refuses for any reason to exercise jurisdiction over the
      dispute, either party shall be free to bring such Proceeding in any other
      Court in such state as provided above and, in the event such other Courts
      refuse for any reason to exercise jurisdiction over the dispute, either
      party shall be free to bring such Proceeding in any other court, and (b)
      if any party (the "initiating party") commences a Proceeding in any Court,
      the other party (the "defendant party") shall possess and retain the right
      to assert in that same Proceeding all claims and defenses that the
      defendant party may have against the initiating party, including without
      limitation all counterclaims and setoffs, and (c) in the case of any suits
      for specific performance or other injunctive relief, the parties will seek
      to bring such actions in the Courts as provided in the first sentence of
      this Section 12.04, except where the applicable Courts as a result of
      jurisdictional requirements cannot issue the specific performance
      requested in a timely manner.



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12.05 Notices. All notices, instructions and other communications hereunder or
      in connection herewith shall be in writing, shall be sent to the address
      below and shall be: (a) delivered personally; (b) sent by registered or
      certified mail, return receipt requested, postage prepaid; (c) sent via a
      reputable nationwide overnight courier service; or (d) sent by facsimile
      transmission. Any such notice, instruction or communication shall be
      deemed to have been delivered upon receipt if delivered by hand, three (3)
      Business Days after it is sent by registered or certified mail, return
      receipt requested, postage prepaid, one (1) Business Day after it is sent
      via a reputable nationwide overnight courier service, or when transmitted
      with electronic confirmation of receipt, if transmitted by facsimile (if
      such transmission is on a Business Day; otherwise, on the next Business
      Day following such transmission).

If to Pfizer:                                 If to Neurocrine:

PFIZER INC.                                   NEUROCRINE BIOSCIENCES, INC.
235 East 42nd Street                          10555 Science Center Drive
New York, New York  10017-5703                San Diego, California  92121-1102

Fax:  212-808-8652                            Fax: 858-658-7605

Attention: President, Pfizer                  Attention:  President
           Pharmaceuticals Group
                                              CC; General Counsel

With a copy to: Senior Vice President
                and General Counsel

Fax: 212-808-8924

In case any party changes its address at which notice is to be received, notice
of such change shall be given without delay to the other party.

12.06 Entire Agreements; Amendments. This Agreement, together with the
      Collaboration Agreement, sets forth the entire agreement and understanding
      among the parties hereto as to the subject matter hereof and all
      agreements or understandings, verbal or written, made between Neurocrine
      and Pfizer before the date hereof with respect to the subject matter
      hereof. None of the terms or this Agreement shall be amended, supplemented
      or modified except in writing signed by the parties hereto.



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12.07 Severability. If and solely to the extent that any provision of this
      Agreement shall be invalid or unenforceable, or shall render this entire
      Agreement to be unenforceable or invalid, such offending provision shall
      be of no effect and shall not effect the validity of the remainder of this
      Agreement or any of its provisions; provided, however, the parties shall
      use their respective reasonable efforts to renegotiate the offending
      provisions to best accomplish the original intentions of the parties.

12.08 Waivers. Any term or condition of this Agreement may be waived at any time
      by the party that is entitled to the benefit thereof, but no such waiver
      shall be effective unless set forth in a written instrument duly executed
      by or on behalf of the party or parties waiving such term or condition.
      Neither the waiver by any party of any term or condition of this Agreement
      nor the failure on the part of any party, on one or more instances, to
      enforce any of the provisions of this Agreement or to exercise any right
      or privilege, shall be deemed or construed to be a waiver of such term or
      condition for any similar instance in the future or of any subsequent
      breach hereof. All rights, remedies, undertakings, obligations and
      agreements contained in this Agreement shall be cumulative and none of
      them shall be a limitation of any other remedy, right, undertaking,
      obligation or agreement.

12.09 Binding Effect. This Agreement shall be binding upon and inure to the
      benefit of the parties hereto and their respective heirs, successors and
      permitted assigns.

12.10 Further Assurances. Following the date hereof, Neurocrine and Pfizer
      shall, and shall cause each of their respective Affiliates to, from time
      to time, execute and deliver such additional instruments, documents,
      conveyances or assurances and take such other actions as shall be
      necessary or otherwise reasonably requested by Pfizer or Neurocrine, to
      confirm and assure the rights and obligations provided for in this
      Agreement, and render effective the consummation of the transactions
      contemplated thereby provided however that neither party will be required
      under this paragraph 11.09 to deliver instruments, documents, conveyances
      or assurances of any third party.

12.11 Third Party Beneficiaries. None of the provisions of this Agreement shall
      be for the benefit of or enforceable by any third party including, without
      limitation, any creditor of either party hereto. No third party shall
      obtain any right under any provision of this


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      Agreement or shall by reasons of any such provision make any claim in
      respect of any debt, liability or obligation (or otherwise) against either
      party hereto.

12.12 Counterparts. This Agreement may be executed in any two or more
      counterparts, each of which, when executed, shall be deemed to be an
      original and all of which together shall constitute one and the same
      document.

12.13 Headings. Headings in this Agreement are included herein to ease of
      reference only and shall have no legal effect. References to Sections and
      Schedules are to Sections and Schedules of this Agreement unless otherwise
      specified.

12.14 Registration and Filing of the Agreement. To the extent, if any, that a
      party concludes in good faith that it is required under applicable Laws to
      file or register this Agreement or a notification thereof with any
      Governmental Authority, including without limitation the US Securities and
      Exchange Commission, or the US Federal Trade Commission, in accordance
      with applicable Laws, such party may do so and shall provide the other
      party to this Agreement with a written copy of all proposed filings or
      registrations to allow for a reasonably sufficient time for review and
      comment by the other party. The other party shall cooperate in such filing
      or notification and shall execute all documents reasonably required in
      connection therewith. In such situation, the parties will request
      confidential treatment of sensitive provisions of the Agreement, to the
      extent permitted by Law. The parties shall promptly inform each other as
      to the activities or inquiries of any such Governmental Authority relating
      to this Agreement, and shall cooperate to respond to any request for
      further information therefrom.

12.15 Non-Solicitation of Employees. During the term of this Agreement, neither
      party shall, directly or indirectly, recruit, or solicit any employee of
      the other party with whom such party has come into contact or interacted
      for the purposes of performing this Agreement, without the prior consent
      of the other party, except pursuant to general solicitations not targeted
      at such employees.





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      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their duly authorized officers.



                                   NEUROCRINE BIOSCIENCES, INC.


                                   By:  /s/ Gary A. Lyons
                                       -------------------------------
                                   Name:   Gary A. Lyons
                                   Title:  President and Chief Executive
                                           Officer

                                    PFIZER INC.


                                   By:  /s/ Henry A. McKinnell
                                       -------------------------------
                                   Name:   Henry A. McKinnell
                                   Title:  Chairman of the Board and
                                           Chief Executive Officer


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