<PAGE>
                                                                   Exhibit 10.16
                                                                  EXECUTION COPY

                         DEVELOPMENT, COMMERCIALIZATION

                             AND MARKETING AGREEMENT

                                     BETWEEN

                              ALTUS BIOLOGICS INC.

                                       AND

                              DR. FALK PHARMA GMBH

                                DECEMBER 23, 2002

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

             DEVELOPMENT, COMMERCIALIZATION AND MARKETING AGREEMENT

      This Development, Commercialization and Marketing Agreement ("Agreement")
dated as of December 23, 2002, by and between Altus Biologics Inc., a Delaware
corporation, with its principal office at 625 Putnam Avenue, Cambridge, MA 02139
("ALTUS"), and Dr. Falk Pharma GmbH, a German corporation, with its principal
office at Leinenweberstra(beta)e 5, 79041 Freiburg Germany ("FALK"). ALTUS and
FALK are sometimes referred to herein individually as a "Party" and collectively
as the "Parties."

                                    RECITALS

      1. ALTUS has developed a certain pharmaceutical compound known as
TheraCLEC(TM)-Total (defined below) and has certain intellectual property rights
and development capabilities related thereto.

      2. FALK has development, marketing, distribution and sales capabilities in
many countries in the Territory (defined below).

      3. ALTUS and FALK wish to use their respective capabilities to conduct
development of TheraCLEC-Total in a collaborative fashion so that the resources
and expertise of each is put to good use.

      4. By combining the development experience and expertise of both FALK and
ALTUS, the Parties wish to expedite the regulatory approval of TheraCLEC-Total
as a significant new therapeutic in the Territory.

      5. ALTUS wishes to grant to FALK, and FALK wishes to obtain, a license
under ALTUS' intellectual property rights with respect to TheraCLEC-Total to
permit FALK to participate in collaborative TheraCLEC-Total product development
and market TheraCLEC-Total in the Field in the Territory under the terms and
conditions set forth below.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Parties,
intending to be legally bound hereby, do hereby agree as follows:

                                   ARTICLE 1.
                                   DEFINITIONS

      The following capitalized terms, whether used in the singular or the
plural, shall have the following meanings as used in this Agreement unless
otherwise specifically indicated:

      1.1 "AFFILIATE" shall mean any corporation, firm, limited liability
company, partnership or other entity, which directly or indirectly controls or
is controlled by or is under common control with a Party to this Agreement. For
the purposes of this Section 1.1, "control" means ownership, directly or through
one or more Affiliates, of fifty percent (50%) or more of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
fifty percent (50%) or more of the equity interests in the entity, in the case
of any other type of legal entity, status as a general partner in any
partnership, or any other arrangement whereby a party controls or has the right
to control the direction of the management or policies of an entity, whether
through the ownership of voting securities, by contract or

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

otherwise. For the avoidance of doubt, the Parties agree that a company is
deemed to be under "common control with" another company if the two companies
are owned or controlled by the same group of individuals.

      1.2 "ALTUS BACKGROUND TECHNOLOGY" shall mean any inventions (whether
patentable or not) and Know-How owned or controlled by ALTUS prior to the
Effective Date.

      1.3 "ALTUS DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit
C to this Agreement.

      1.4 "BASE PATENTS" shall have the meaning set forth in Section 1.29.

      1.5 "CGMP" shall mean the regulatory requirements for current good
manufacturing practices promulgated (1) under the Common Technical Document for
the Registration of Pharmaceuticals for Human Use (ICH CTD) Guidelines and the
ICH Good Manufacturing Practice Guide, as the same may be amended from time to
time, and (2) by the United States Food and Drug Administration ("FDA") under
the U.S. Food, Drug and Cosmetic Act ("FD&C Act") and the regulations
promulgated thereunder, particularly 21 C.F.R. Section 210 et seq., and 21
C.F.R. Section 211 at seq., respectively, and related guidance documents, as the
same may be amended from time to time.

      1.6 "CLINICAL SUPPLIES" shall mean supplies of the Licensed Product,
manufactured, packaged and labeled in such form and strength as agreed by the
Parties, and ready to be used for the conduct of human clinical trials of the
Licensed Product in the Field by the Parties.

      1.7 "COMBINED PHASE III CLINICAL TRIAL" shall mean an international Phase
III clinical trial as set forth in 21 C.F.R. Section 312.21 et seq. which is
performed consistent with the ICH Guidelines and the guidelines of the United
States Food and Drug Administration ("FDA") and the EMEA.

      1.8 "COMMERCIALLY REASONABLE AND DILIGENT EFFORTS" shall mean with respect
to development and commercialization, a Party's use of commercially reasonable
efforts and resources for a company of its size consistent with (i) the exercise
of prudent scientific and business judgment for a lead product of its type and
(ii) such Party's efforts with respect to other lead products in its product
pipeline, and in each case taking into consideration the impact of such efforts
and resources on the development and commercialization of the Licensed Product
in the Territory as a whole.

      1.9 "CONTROLLED" with respect to the Licensed Product Patents or the
Licensed Product Know-how shall mean the ability of a Party to grant a license
or sublicense to such Licensed Product Patents or Licensed Product Know-how as
provided for herein without violating the terms of any agreement or other
arrangement with any Third Party existing and in effect at the time such Party
would be required hereunder to grant the other Party such license or sublicense.

      1.10 "COVER" (including variations such as "Covered", "Covering" and the
like) shall mean that the manufacture, use, sale, offer for sale, or importation
of a particular product would infringe an issued or pending claim of a patent or
patent application (if that claim were to issue in a patent) in the absence of
rights under such patent, as determined on a country-by-country basis.

      1.11 "DISTRIBUTOR" shall mean a Third Party that purchases the Licensed
Product from FALK or its Affiliates at a price that is - on a
country-by-country-basis - less than or equal to [****] of the IMS-Price in the
country in which the Licensed Product shall be sold to end-user customers.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      1.12 "DRUG APPROVAL APPLICATION" shall mean an application for Regulatory
Approval required for commercial sale or use of the Licensed Product as a drug
in the Field in the Territory.

      1.13 "EFFECTIVE DATE" shall mean the date first written above.

      1.14 "EMEA" means the European Medicines Evaluation Agency.

      1.15 "EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN" shall mean the plan
for development and commercialization of the Licensed Product as set forth in
Section 2.2, as may be amended from time to time.

      1.16 "FALK BACKGROUND TECHNOLOGY" shall mean any inventions (whether
patentable or not) and Know-How owned or controlled by FALK prior to the
Effective Date.

      1.17 "FALK DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit
C to this Agreement.

      1.18 "FALK MARKETING COSTS" shall have the meaning set forth in Exhibit C
to this Agreement.

      1.19 "FIELD" shall mean the treatment of symptoms (e.g. malabsorption or
pain) directly caused by exocrine pancreatic insufficiency.

      1.20 "FIRST COMMERCIAL SALE" shall mean the first sale of the Licensed
Product in any particular country in the Territory by FALK for use by the
general public after all required marketing and pricing approval has been
granted by the governing authorities of that country or, if no such approval is
required, the date of first commercial sale of the Licensed Product in such
country.

      1.21 "GERMAN EX-FACTORY PRICE" shall mean the [****] sales price
(ex-factory in Germany) at which the Licensed Product is sold by FALK or its
Affiliates to any non-Affiliated Third Party in Germany.

      1.22 "ICH GUIDELINES" means the finalized published guidelines of the
International Conference on Harmonization of Technical Requirements for the
Registration of Pharmaceuticals for Human Use.

      1.23 "IMS PRICE" shall mean the price - [************************] - at
which the Licensed Product is sold to wholesalers in a country in the Territory
as evidenced in the Intercontinental Medical Statistics ("IMS") for such
country.

      1.24 "INVENTION" shall mean any invention (whether or not patentable) or
Know-how made after the Effective Date during the course of, in furtherance of,
and as a direct result of the activities of the Parties hereunder. An
"Invention" may be made by employees of ALTUS solely or jointly with a Third
Party, by employees of FALK solely or jointly with a Third Party, or jointly by
employees of ALTUS and FALK with or without a Third Party.

      1.25 "KNOW-HOW" shall mean all proprietary information, trade secrets,
techniques, data (including Confidential Information as defined in Article 10
below), discoveries, formulae, materials, practices, methods, knowledge,
know-how, processes, experience, test data (including pharmacological,

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

toxicological and clinical information and test data), analytical and quality
control data, marketing, pricing, distribution, cost and sales data or
descriptions.

      1.26 "THIRD PARTY LICENSED II" shall mean any patents; know-how and other
intellectual property licensed to ALTUS by a Third Party as of the Effective
Date, the practice of which is necessary to make, use or sell Licensed Product
in the Field in the Territory, including the intellectual property licensed to
ALTUS by [*********************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
*******************************************************************************
******************************], in connection with the development of certain
enzyme materials and the manufacturing of pharmaceutical products known as
TheraCLECTotal(TM) (as defined below).

      1.27 "LICENSED PRODUCT" shall mean any pharmaceutical form, dosage,
strength, or formulation of TheraCLEC-Total purchased from ALTUS.

      1.28 "LICENSED PRODUCT KNOW-HOW" shall mean Know-how which: (a) is
Controlled by ALTUS as of the Effective Date or hereafter during the Term of
this Agreement, and (b) is necessary to manufacture, commercialize, market, sell
and distribute the Licensed Product in the Territory.

      1.29 "LICENSED PRODUCT PATENTS" shall mean any and all patents and patent
applications, together with any extensions (including supplementary protection
certificates), registrations, reissues, continuations, divisions,
continuations-in-part, re-examinations, substitutions or renewals thereof, and
any patent issuing for any of the foregoing, owned or Controlled by ALTUS as of
the Effective Date or at any time during the Term of the Agreement that contain
one or more claims Covering a Licensed Product in the Field in the Territory.
The Licensed Product Patents as of the Effective Date (hereinafter, the "Base
Patents") are set forth on Exhibit A attached hereto and incorporated herein.

      1.30 "MAJOR EUROPEAN COUNTRIES" shall mean [*****************************
*******************************************************************].

      1.31 "NET SALES" means the amount of gross invoiced sales of [************
********************************************************************************
*****************************************], less the following amounts to the
extent included as part of the gross invoiced sales of the Licensed Product
 sold by FALK or its Affiliates (regardless of whether separately stated on the
sales invoice):

            (a) any value added taxes ("VAT") charged to the purchaser and
[*****************************************************************];

            (b) bad debt [*****************] by FALK with respect to uncollected
and uncollectable invoiced amounts that have been written off by FALK in
accordance with its general accounting policies and German Generally Accepted
Accounting Principles ("GAAP") consistently applied; provided that such amounts
shall not be deducted to the extent they exceed [**************] of the gross
invoiced sales of the Licensed Product in the Field in the Territory in the
aggregate on a quarterly basis;

            (c) trade, quantity, cash and any government-mandated discounts
[**************] and taken, including without limitation, those granted on
account of billing errors, rejected and damaged goods and recall returns, and
ordinary and customary bona fide customer rebates to the extent such

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

discounts and rebates are consistent with industry practice, but not to the
extent such discounts and rebates could reasonably be attributable to marketing
expenses;

            (d) [*******************] for returns (including allowances actually
given for spoiled, damaged, out-dated, rejected, or returned product sold,
withdrawals and recalls); and

            (e) charges for shipping charges, insurance, freight, and other
transportation costs [************************] of the Licensed Product.

In determining the amounts to be deducted under (e) above, FALK shall be
entitled to deduct up to [******************] of its gross invoiced sales of
Licensed Product for each quarter during the first three calendar quarters of a
given year as a reasonable approximation of the amounts to be deducted under (e)
above; provided that at the end of the fourth calendar quarter FALK shall be
required to make up any difference or short-fall between the amounts actually
deducted by FALK under (e) above during the first three calendar quarters, and
the amount actually allowed to be deducted for the year, which allowed amount
shall be calculated [**********************************************************
*******************************************************************************
***************************************************]. Any shortfall due and
owing shall be paid by FALK as part of the payment due for the last calendar
quarter each year. With respect to sales of Licensed Products sold by FALK (or
any of its Affiliates) to a FALK Affiliate prior to resale to a non-Affiliated
Third Party, the "Net Sales" attributable to such product shall be determined
by [**************************************************************************
*******************************************************************************
***************].

      1.32 "PARTY" shall mean FALK or ALTUS, and, when used in the plural, shall
mean both of them.

      1.33 "PHASE I CLINICAL TRIAL" shall have the meaning set forth in 21
C.F.R. Section 312.21 et seq.

      1.34 "PHASE II CLINICAL TRIAL" shall have the meaning set forth in 21
C.F.R. Section 312.21 et seq.

      1.35 "PHASE III ENABLING CLINICAL TRIAL" shall mean a Phase I or Phase II
Clinical Trial which has generated sufficient data to commence Combined Phase
III Clinical Trials.

      1.36 "PHASE IV STUDIES" shall mean any post-Regulatory Approval
after-market studies required to be performed by any Regulatory Authority in
connection with the commercialization of the Licensed Product.

      1.37 "REGULATORY APPROVAL" shall mean any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of any
national or international or local regulatory agency, department, bureau or
other governmental entity necessary for the manufacture and sale of the Licensed
Product in the Field in the Territory.

      1.38 "REGULATORY AUTHORITY" shall mean any local, national or
international regulatory agency, department, bureau or other governmental
authority whose approval is required prior to commercializing the Licensed
Product in the Field in the Territory or any individual country therein.

      1.39 "STEERING COMMITTEE" shall mean that body established pursuant to
Section 3.1 below.

      1.40 "TERRITORY" shall mean the countries listed on Appendix 1 hereto.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      1.41 "THERACLEC-TOTAL" shall mean commercial formulations of that product
currently known as TheraCLEC-Total consisting of the
[***************************], as disclosed in IND Application No. [*****] filed
with the United States Food and Drug ("FDA") Administration on May 28, 2002.

      1.42 "THIRD PARTY" shall mean any entity other than ALTUS or FALK.

      1.43 "VALID CLAIM" shall mean an issued claim, or a pending claim that is
being prosecuted in good faith, of any Licensed Product Patent, that has not
been withdrawn, cancelled, disclaimed, abandoned, or held invalid, unpatentable
or unenforceable by a tribunal of competent jurisdiction in a final decision (i)
which is unappealable or (ii) from which all appeals have been exhausted. If a
Valid Claim is the subject of a final decision holding it not invalid,
unpatentable or unenforceable, the scope of the Valid Claim shall be interpreted
so as to reflect the construction placed upon it in the final decision.

                                   ARTICLE 2.
                           SCOPE OF THE COLLABORATION

      2.1 GLOBAL GOALS. The Parties agree, pursuant and subject to the terms of
this Agreement, to further develop the Licensed Product in the Field in the
Territory, with the goal of obtaining Regulatory Approval for the Licensed
Product as soon as reasonably practicable for commercial marketing and sale in
the Field in the Territory.

      2.2 EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN. The overall strategy
for the development, commercialization and marketing of the License Product in
the Field in the Territory shall be set forth in a written plan (hereinafter,
the "European Development and Commercialization Plan"). The European Development
and Commercialization Plan shall include a Development Plan (to be provided by
ALTUS in accordance with Section 4.3 below) and a Commercialization Plan (to be
provided by FALK in accordance with Section 5.3 below). The European Development
and Commercialization Plan will be reviewed periodically by the Steering
Committee and shall be discussed at Steering Committee meetings. Notwithstanding
the foregoing, in the event any provision set forth in the European Development
and Commercialization Plan conflicts with or is inconsistent with a provision of
this Agreement, the provisions of this Agreement shall control.

                                   ARTICLE 3.
                         MANAGEMENT OF THE COLLABORATION

      3.1 ESTABLISHMENT OF STEERING COMMITTEE. The Parties hereby establish a
Steering Committee for coordinating the development, commercialization, and
marketing of the Licensed Product in the Field in the Territory. The Steering
Committee will be composed of [*******] representatives of each Party, who shall
be appointed (and may be replaced at any time) by such Party on written notice
to the other Party in accordance with this Agreement. Such representatives shall
include individuals within the senior management of each Party with expertise
and responsibilities in the areas of clinical development, process sciences,
manufacturing, regulatory affairs or product development and marketing, as
applicable to the stage of development or commercialization of the Licensed
Product. One of the three representatives for each Party shall be designated as
that Party's General Manager. Although the members of the Steering Committee can
and should change as the life cycle of the Licensed Product changes, the Parties
will endeavor to keep the General Managers consistent for each Party throughout
the collaboration to maintain continuity in the collaboration. The initial
Steering Committee members, including the General Manager, from each Party are
listed on Exhibit D attached hereto to the extent identified therein. Any member
of the Steering Committee may designate a substitute to attend and perform the
functions of that member at any meeting of the Steering Committee. The Steering

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Committee will meet at least [****] each year (face-to-face) during the Term of
this Agreement, or at any frequency agreed by the Steering Committee. In any
event, the Steering Committee will meet [************] after the execution of
this Agreement or as soon as practicable as mutually agreed by the Parties. Each
representative on the Steering Committee will have one vote in decisions
submitted to the Steering Committee. Unless otherwise specifically set forth in
this Agreement, all issues to be resolved by the Steering Committee shall be
resolved by the affirmative vote of [**********************] on the Steering
Committee (or such representative's designee). ALTUS shall also notify FALK of
and shall use [************************************] to accommodate requests by
FALK to participate in [*******************************************************
*********************].

      3.2 RESPONSIBILITIES OF STEERING COMMITTEE. The Steering Committee shall,
subject to the provisions set forth in Article 4 and Article 5 hereinafter and
the dispute resolution procedures of Article 16, be the primary vehicle for
interaction between the Parties with respect to the development,
commercialization, and marketing of the Licensed Product in the Field in the
Territory. In particular, the Steering Committee shall perform the following
functions consistent with its objective of managing an effective and efficient
Combined Phase III Clinical Trial that satisfies the development, regulatory and
commercialization requirements of North America and the Territory and leverages
the clinical development activities in both territories:

                  (i) exchange of information and facilitation of cooperation
and coordination between the Parties as they exercise their respective rights
and meet their respective obligations under this Agreement;

                  (ii) manage, review and monitor execution of the European
Development and Commercialization Plan;

                  (iii) review, prepare and recommend changes to the European
Development and Commercialization Plan;

                  (iv) facilitate coordination of information flow, consistent
with the EU privacy directive, with respect to regulatory approvals from the
appropriate regulatory authorities in the Territory; and ensuring compliance in
all material respects with all applicable laws, regulations, and all other
requirements of applicable good laboratory practices;

                  (v) establish, monitor, review and modify all development time
lines to be adhered to by the Parties for all Phase III and Phase IV clinical
development and Regulatory Approval activities in the Territory;

                  (vi) approve all contracts, agreements, commitments and
undertakings with Third Parties regarding Phase III and Phase IV clinical
development activities in the Territory where the committed expenditures exceed
a threshold amount to be determined by the Steering Committee;

                  (vii) facilitate coordination of information flow with respect
to the Combined Phase III Clinical Trials and Phase IV Studies (if any) between
the EU and North America;

                  (viii) facilitate coordination of supply of Clinical Supplies
for EU activities;

                  (ix) [**********] relating to material business, scientific,
clinical, medical, regulatory or management issues arising out of this Agreement
in accordance with Section 16.1; and

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                  (x) perform such other functions as appropriate to further the
purposes of this Agreement, as determined by the mutual agreement of the
Parties.

      3.3 STEERING COMMITTEE PROCEDURES. The representatives of the Steering
Committee shall designate a Chairperson who will serve as such. The Chairperson
shall send notices (not less than [*************] in advance of such meetings)
and agendas for all regular Steering Committee meetings to all Steering
Committee members. The location of regularly scheduled Steering Committee
meetings shall alternate among the offices of the Parties, unless otherwise
agreed. Meetings may be held telephonically, but each member shall attend at
least *** meeting in person each year. The Party hosting any Steering Committee
meeting shall appoint one person (who need not be a member of the Steering
Committee) to attend the meeting and record the minutes of the meeting. Such
minutes shall be circulated to the Parties promptly following the meeting for
review, comment and distribution.

      3.4 PRODUCTION REQUIREMENTS REPORTS. FALK shall be responsible for
preparing and delivering to the Steering Committee and ALTUS an [**********]
Licensed Product production requirement report, which report shall be updated
[********************]. Such report shall be provided to the Steering Committee
and ALTUS within [*************] of the end of each [***************]
(beginning with the [*************] following the Phase III Enabling Clinical
Trial for the Licensed Product) and shall include the forecasted requirements
for Clinical Supplies, Licensed Product placebo and commercial supplies for the
subsequent [*****************] period.

      3.5 DISPUTE RESOLUTION. Except as hereinafter provided, all issues that
come before the Steering Committee that require action, approval or resolution
and for which the Steering Committee is unable to reach agreement by a vote of a
majority of the representatives of the Steering Committee shall be resolved in
accordance with Article 16.

                                   ARTICLE 4.
                                   DEVELOPMENT

      4.1 DEVELOPMENT EFFORTS. ALTUS shall be responsible for and shall use
Commercially Reasonable and Diligent Efforts to develop the Licensed Product in
the Field in the Territory in accordance with the terms of this Agreement. ALTUS
shall commit such of its resources as may be necessary to perform its
obligations as set forth herein or in the Development Plan (as defined below)
and shall use personnel with such skills and experiences as are designed to
accomplish efficiently and expeditiously the objectives of the development of
the Licensed Product as set forth herein or in the Development Plan and each
update thereof in good scientific manner and in compliance in all material
respects with all applicable laws, regulations, and all other requirements of
applicable good laboratory practices. In connection with the performance by
ALTUS of its obligations hereunder, ALTUS shall maintain and utilize such
scientific staff, laboratories, offices and other facilities as are reasonably
designed for such purposes. FALK shall use Commercially Reasonable and Diligent
Efforts to perform those activities it is obligated to perform with respect to
the clinical development of the Licensed Product as are set forth in this
Agreement or that have been assigned to FALK, with FALK's approval, by the
Steering Committee, and shall commit such of its resources as may be necessary
to perform such obligations and shall use personnel with such skills and
experiences as are designed to efficiently and expeditiously satisfy such
obligations. Each Party shall cooperate with and use Commercially Reasonable and
Diligent Efforts to support the other Party in the conduct of such development
efforts.

      4.2 DEVELOPMENT RESPONSIBILITIES. All decisions regarding the Combined
Phase III Clinical Trial in the Territory in the Field, including but not
limited to formulation of overall development plans, making overall decisions
regarding the design of all clinical trials in the Territory, management of
clinical team activity, and management of regulatory activity shall be made
through the Steering Committee,

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

subject to the dispute resolution mechanism set forth in Section 16.1 below.
Prior to the Combined Phase III Clinical Trial, ALTUS shall keep the Steering
Committee informed of the progress of the clinical development, including
development plans, time lines and process development work, and will discuss
with the Steering Committee developments and decisions that ALTUS anticipates
will have a significant impact on the Combined Phase III Clinical Trial and/or
Regulatory Approvals in the Territory.

      4.3 DEVELOPMENT PLAN. Attached hereto as Exhibit B is a copy of the
development plan (hereinafter the "Development Plan") for the development of
Licensed Product in the Field in the Territory. From time to time, ALTUS shall
submit to the Steering Committee an updated Development Plan as appropriate, but
at least [******]. The Development Plan (and any updates thereto) shall become
part of and be incorporated into the European Development and Commercialized
Plan and shall be reviewed and discussed at the Steering Committee meetings.

      4.4 CLINICAL TRIALS. The Steering Committee shall have responsibility for
and control over management of clinical trials for the Licensed Product in the
Field in the Territory and all decisions regarding such trials shall be made
jointly through the Steering Committee, subject to the dispute resolution
mechanism set forth in Section 16.1 below. The Parties may use one or more Third
Parties to assist in the performance of such clinical trials. All clinical data
and reports related to clinical trials for the Licensed Product shall be jointly
owned by the Parties and each Party shall have access to, and copies of; all
such data and reports related to clinical trials for the Licensed Product in the
Field in the Territory, and each Party may use such data in accordance with the
terms of this Agreement without [********************] to the other Party. Each
Party shall treat such data and reports as Confidential Information of the other
Party, and neither Party shall disclose or use such data or reports for any
purpose other than performing its obligations under this Agreement or as
otherwise expressly authorized in writing by the Steering Committee. All data,
database information and safety reports from such clinical trials shall be
centralized and held at ALTUS or by a Third Party selected by ALTUS and agreed
to by FALK, provided, however, that FALK shall be entitled to obtain and keep
copies of such information and reports. If a Party itself obtains data from a
clinical trial hereunder, it shall promptly transfer all of the clean, final
data for such trial to ALTUS or to such Third Party, as the case may be. The
Steering Committee shall coordinate the transfers of any such data. All Phase I
Clinical Trials, Phase II Clinical Trials, and Combined Phase III Clinical
Trials for the Licensed Product in the Field in the Territory shall be performed
in compliance with and conformity to both FDA and EMEA requirements and to ICH
Guidelines. At the completion of each Phase I Clinical Trial, Phase II Clinical
Trial and Combined Phase III Clinical Trial, ALTUS shall prepare a written
report, substantially in the form reasonably expected to be submitted to the
FDA, the EMEA or other applicable Regulatory Authority, summarizing the results
of such clinical trial, and containing an analysis of the clinical significance
of such results, which reports shall be submitted to FALK and the Steering
Committee as soon as is reasonably practicable after completion of the relevant
clinical trial. Such reports shall be referred to herein as the "Phase I
Report," the "Phase II Report," and the "Phase III Report," respectively.

      4.5 DRUG APPROVAL APPLICATIONS.

            (a) FALK shall be responsible for and shall use Commercially
Reasonable and Diligent Efforts in filing all Drug Approval Applications and
seeking Regulatory Approvals for the Licensed Product in the Territory in the
Field; provided that ALTUS shall assist FALK in preparing and filing such Drug
Approval Applications and seeking such Regulatory Approvals. FALK shall pay [***
******] associated with the preparation, filing, prosecution, meetings,
communications, and review by regulatory agencies of such Drug Approval
Applications and Regulatory Approvals (including the activities set forth in
Section 4.5). The Regulatory Approvals for the Licensed Product in the Territory
shall be prosecuted and obtained in the name of FALK; provided that any such
Regulatory Approvals shall be obtained in the joint name of FALK and ALTUS if
permitted under applicable rules and

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

regulations, and provided further that ALTUS shall be permitted to
cross-reference such Drug Approval Applications and Regulatory Approvals that
are in FALK's name. In the event that the laws or regulations in a country in
the Territory do not allow the Licensed Product to be registered solely in the
name of FALK, FALK shall register the Licensed Product at its discretion (i)
[************************************************ *******] or (ii)
[***************************************************]. Prior to submitting any
Drug Approval Application, FALK shall discuss with the Steering Committee the
scope and general content of such Drug Approval Application. The Steering
Committee may review and comment on all Drug Approval Applications, and such
comments will be [********] by FALK to the [****************]. All Drug Approval
Applications to be filed by or on behalf of FALK for the Licensed Product in the
Territory must be approved by ALTUS in advance in writing. Regulatory documents
or copies thereof for each filing shall be centralized and held at the offices
of ALTUS, provided, however, that FALK shall be entitled to obtain and keep
copies of originals of any such documents but only for the uses specifically set
forth in this Agreement. Each Party will immediately notify the other Party of
any material developments relating to the clinical development of the Licensed
Product, including, without limitation, any material comments or concerns raised
by any Regulatory Authority.

            (b) Each Party agrees to provide to the other Party a copy of any
documents or reports relating to the Licensed Product that are filed with any
regulatory authority in the Territory under this Agreement, including any Drug
Approval Applications. All such documents and reports shall be centralized and
held at ALTUS or by a Third Party selected by ALTUS and agreed to by FALK,
provided however, that FALK shall be entitled to obtain and keep copies of any
such documents and records. The Steering Committee shall coordinate the
transfers of any such documents or reports.

      4.6 REGULATORY MEETINGS AND COMMUNICATIONS. FALK shall be responsible for
conducting all meetings and discussions and routine telephone communications
with the EMEA or other Regulatory Authority, related to clinical studies, Drug
Approval Applications and Regulatory Approvals for the Licensed Product in the
Field in the Territory; provided that FALK shall use Commercially Reasonable and
Diligent Efforts to conduct such meetings and discussions to facilitate the
Regulatory Approval of the Licensed Product in the Field in the Territory. ALTUS
shall assist FALK in these efforts. FALK will keep ALTUS and the Steering
Committee apprised of all material communications with such regulatory
authorities, and ALTUS or its designee shall be entitled to attend all meetings
with Regulatory Authorities. FALK shall [*****************] with respect to the
conduct of any inspections by any Regulatory Authority of FALK's site and
facilities related to the Licensed Product, and each Party shall be given the
opportunity to attend such site inspection and the summary, or wrap up, meeting
related to the Licensed Product with such regulatory authority at the conclusion
of such site inspection. To the extent either Party receives written or material
oral communication from any regulatory authority relating to the Licensed
Product in the Field in the Territory, the Party receiving such communication
shall notify the other Party and provide a copy of any written communication as
soon as reasonably practicable.

      4.7 TRANSFER OF MATERIALS. During the development of the Licensed Product,
each Party may transfer certain of its proprietary materials to the other Party.
Each Party agrees that it will use such materials of the other Party only for
the purposes of this Agreement, and will not transfer such materials to any
non-Affiliated Third Party without the prior written consent of the other Party
hereunder. Except as expressly provided in this Agreement, the transfer of any
such proprietary materials by one Party to another shall not be deemed to be a
[***************] in the proprietary material. All right, title and interest in
and to all such proprietary materials (and any patent rights relating thereto)
shall remain in the Party transferring such materials.

      4.8 DEVELOPMENT COSTS. All ALTUS Development Costs (as defined in Exhibit
C) shall be paid directly by [*****]. ALTUS shall send to FALK a [**********]
for all FALK Development Costs

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

(as defined in Exhibit C) incurred by ALTUS for such month in connection with
development work performed pursuant to this Agreement. FALK shall [********]
ALTUS for all such FALK Development Costs within [*********] of receipt of the
[*******] by FALK; provided, however, that FALK shall be entitled to pay its
share of costs related to clinical trials in the Field in the Territory which
have been contracted directly by FALK directly to the relevant CRO (Contract
Research Organisation). Each Party shall keep complete and accurate books and
records pertaining to the Development Costs, which books and records shall be
retained until [***********] after the end of the period to which such books and
records pertain. Each Party shall have the right, at its expense, to have an
[*********************** **************] the books and records of the other
Party relating to the Development Costs, PROVIDED, HOWEVER, that neither Party
shall conduct more than one such [******************].

      4.9 4.9 Safety Data Base. The Parties will, as soon as practical, organize
a serious adverse event data base (the "SAE Data Base"). ALTUS and FALK shall
jointly own the SAE Data Base and all data contained therein, and the data from
the SAE Data Base shall be made available to both Parties.

                                   ARTICLE 5.
                COMMERCIALIZATION AND MARKETING IN THE TERRITORY

      5.1 COMMERCIALIZATION AND MARKETING EFFORTS. FALK shall use Commercially
Reasonable and Diligent Efforts to commercialize and market the Licensed Product
in the Field in the Territory in accordance with the terms of this Agreement,
and ALTUS shall cooperate with and use Commercially Reasonable and Diligent
Efforts to support FALK in FALK's conduct of such commercialization and
marketing efforts. During the term of this Agreement and with respect to sales
of Licensed Product in Germany, FALK shall
[*******************************************].

      5.2 COMMERCIALIZATION AND MARKETING RESPONSIBILITIES. FALK shall have
responsibility and control over the commercialization and marketing of the
Licensed Product in the Field in the Territory, including but not limited to
designing and implementing all product launch, promotion, marketing and sales
activities, handling the packaging and shipment of all commercial product,
booking sales, handling all returns, handling all aspects of order processing,
invoicing, collection, and receivables, collection of data for purposes of
satisfying applicable regulatory requirements, collection of data of sales to
hospitals and other end users, distribution, inventory, and warehousing. FALK
will discuss with the Steering Committee any [********] commercialization and
marketing issues as may be appropriate. Notwithstanding anything in this
Agreement or the European Development and Commercialization Plan to the
contrary, FALK shall have [****************************************************
******] under this Agreement. In particular, FALK may
[************************************ *********************************] within
the Territory if [**********************] that the commercialization in such
country might [*****************] the commercialization of the Licensed Product
in the Territory as a whole; provided that FALK shall inform the Steering
Committee of any such decision and the reasons therefor.

      5.3 COMMERCIALIZATION PLAN. Within a reasonable period of time after a
Phase III Enabling Clinical Trial with respect to the Licensed Product in the
Field in the Territory, FALK shall submit to the Steering Committee a detailed
[*********] (the "Commercialization Plan") for the commercialization of the
Licensed Product in the Field in the Territory. The Commercialization Plan shall
include proposed [*****************] arrangements relating to sales of the
Licensed Product. FALK shall submit to the Steering Committee an annual updated
Commercialization Plan on the first anniversary of the First Commercial Sale of
the Licensed Product and each [*********] thereafter. The Commercialization Plan
(and each update thereto) shall become part of and be incorporated into the
European Development and Commercialization Plan and shall be reviewed and
discussed at the Steering Committee meetings. [********************************]
after completion of a Phase III Enabling Clinical Trial for Licensed

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Product in the Field in the Territory, FALK will enter into an agreement with a
Third Party contractor covering the packaging of the Licensed Product. FALK
shall also have identified a second source reasonably capable of packaging the
Licensed Product in the event such Third Party contractor is unable to do so.

      5.4 COMMERCIALIZATION COSTS. Except as otherwise provided herein, all FALK
Marketing Costs shall be paid for [***************], all as more fully provided
in Exhibit C.

      5.5 PRODUCT TRADEMARKS. It is the intent of the Parties that one or more
product trademark(s) other than TheraCLEC, TheraCLEC-Total, or such other
trademark to be used in connection with sales of the Licensed Product in the
United States, shall be developed for use on and in connection with the Licensed
Product in the Territory (each, a "Product Trademark"). FALK shall have the
[**********************] for developing and promoting the Product Trademark(s),
subject to the prior review and written approval of ALTUS and the Steering
Committee, which approval by ALTUS shall [*******************************] and
shall be required solely for the purpose of ensuring that the mark(s) proposed
by FALK for use as the Product Trademark(s) are not confusingly similar to
TheraCLEC, TheraCLEC-Total, or such other trademark as is intended to be used in
connection with sales of the Licensed Product in the United States. If it is
determined that it is not possible to register or otherwise use one or more of
the Product Trademark(s) in any country within the Territory, then the Parties
shall agree on an appropriate trademark to use in each such country. FALK shall
own the Product Trademark(s), and shall be responsible for procurement and
maintenance of trademark registrations for such trademark(s) in connection with
sales of the Licensed Product in the Field in the Territory. If FALK elects not
to procure or maintain a trademark registration for any such trademark(s) in
connection with the Licensed Product in a country of the Territory, it shall so
inform ALTUS in writing in a reasonable time before any action is due thereon.
ALTUS shall then have the right but not the obligation to procure and maintain
such trademark(s) in such country at FALK's expense. The cost of filing,
prosecution and maintenance for the Product Trademark(s) shall be paid by FALK
during the term of this Agreement.

      5.6 MARKETING MATERIALS AND PACKAGING. The Licensed Product marketed and
sold in each country in the Territory pursuant to this Agreement shall be
marketed and sold under the particular Product Trademark applicable to sales of
the Licensed Product in such country, and the packaging used for the Licensed
Product shall identify ALTUS as the licensor of such product using the ALTUS
trademark and logo (collectively, the "ALTUS Mark"). ALTUS shall have
[***************] right to control the use of the ALTUS Mark in connection with
sales of the Licensed Product. FALK's use of the ALTUS Mark shall be in strict
compliance with the uses of the ALTUS Mark set forth in the most recent version
of the ALTUS Style Guide, a copy of which (together with any subsequent
revisions thereto) shall be furnished by ALTUS to FALK. From time to time, as
reasonably requested by ALTUS, FALK shall submit to ALTUS for ALTUS' review
copies of marketing materials, packaging, instruction booklets, printed
materials, advertisements, and any other documents containing the ALTUS Mark,
together with an English language translation thereof, if requested by ALTUS. In
the event ALTUS objects to FALK's use of the ALTUS Mark, ALTUS shall so notify
FALK in writing, and FALK shall cease using the ALTUS Mark or change its use of
the ALTUS Mark to the satisfaction of ALTUS as soon as practicable. FALK agrees
that ALTUS shall be identified as licensor on all packaging and printed
literature and advertisements for Licensed Product sold by FALK or its
distributors, subject to legal and commercial requirements on a
country-by-country basis and in a manner in accordance with such legal and
commercial requirements. The packaging and printed literature and advertisements
for the Licensed Product shall indicate that the Licensed Product is an
innovation of ALTUS and that such product is distributed under a license granted
by ALTUS. The packaging shall also contain the patent numbers of any Licensed
Product Patents where such marking is required or provided for under applicable
law. Such marking shall further conform to the laws and practices of the
jurisdiction in which the Licensed Product is manufactured, sold and/or
delivered. FALK shall make copies of all marketing and promotional

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

materials for the Licensed Product available to ALTUS for filing with the
appropriate regulatory authorities, as required under applicable law.

                                   ARTICLE 6.
                                  FALK PAYMENTS

      6.1 FUNDING SUPPORT FOR DEVELOPMENT COSTS. Subject to the other terms and
conditions of this Agreement, and as consideration for the development work and
the development license rights granted to FALK by ALTUS under this Agreement,
FALK shall pay to ALTUS the following non-refundable, non-cancellable, and
non-creditable amounts upon the first occurrence of such event with respect to
the Licensed Product, which payments shall be required to be paid in order for
FALK to maintain its development license in the Territory:

<TABLE>
<CAPTION>
                           Event                                 Payment
<S>                                                            <C>
(a)       [*************************************].             [*********](1)

(b)       [**************************************              [*********](1)
          **************************************
          **************************************
          *****************].

(c)       [*****************************************           [*********]
          ****************************************].

(d)       [*****************************************           [*********]
          ****************************************].

(e)       [*****************************************           [*********]
          ****************************************].

(f)       [*****************************************           [*********]
          *****************************************
          ************************************].

(g)       [****************************************            [*********]
          *****************************************
          *****************************************
          *****************************************
          *****************************************
          ***********************].

(h)       [****************************************            [*********]
          *****************************************
          *****************************************
          *****************************************
          *****************************************
          ***********************].
</TABLE>

----------
(1)   [************************************************************************
      *************************************************************************
      *************************************************************************
      *************************************************************************
      *************************************************************************
      *************************************************************************
      *************].

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

For purposes of the payments set forth in Section 6.l(c)-(f) above,
[********************************************************************] shall be
deemed to be [**********] when ALTUS has delivered to FALK the
[****************************], or the [*************], respectively, as the
case may be.

      6.2 Subject to the other terms and conditions of this Agreement, and as
consideration for the commercial license rights granted to FALK by ALTUS under
this Agreement, FALK shall pay to ALTUS the following nonrefundable,
non-cancellable, and non-creditable amounts upon the first occurrence of the
Licensed Product to reach such event, which payments shall be required to be
paid in order for FALK to maintain its commercial license in the Territory:

<TABLE>
<S>                                                          <C>
(a)      [****************************************           [*********]
         *****************************************
         *****************************************
         *****************************************
         *****************************************
         ***********************].

(b)      [****************************************           [*********]
         *****************************************
         *****************************************
         *****************************************
         *****************************************
         ***********************].
</TABLE>

      6.3 The payments set forth in Section 6.1(c)-(h) and Section 6.2(a)-(b)
shall be paid by FALK to ALTUS within [**********] days after the applicable
[*****************************]; provided, however that unless otherwise agreed
to by the Parties, any past due amounts shall bear interest at the rate that is
the lesser of (i) the [******************************************************]
as reported by Datastream (or a successor or similar organization) from time to
time, plus, at ALTUS' option, an additional [**************], or (ii) the
highest rate permitted by applicable law, in each case calculated on the number
of days such a payment is overdue.

      6.4 ROYALTIES.

            (a) ROYALTY.

                  (i) As consideration for the license rights granted to FALK by
ALTUS under this Agreement, FALK shall pay to ALTUS a royalty on Net Sales of
the Licensed Product sold by FALK (or its Affiliates) at the following
[********] royalty rate (which rate [********] according to the total amount of
FALK's [************] Deemed Net Sales (defined below) invoiced since the
Effective Date):

<TABLE>
<CAPTION>
[**********] Deemed Net Sales euros
        ("(euro)") (in millions)                    [*********]
<S>                                                 <C>
             [*******]                                [****]
             [*******]                                [****]
             [*******]                                [****]
             [*******]                                [****]
             [*******]                                [****]
             [*******]                                [****]
             [*******]                                [****]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

By way of example, if FALK's [*******] Deemed Net Sales of the Licensed Product
since the Effective Date equal [***********], the total royalty owed by FALK
would equal [*********], as set forth below.

<TABLE>
<CAPTION>
                                   [**********] Deemed Net
 Example:                        Sales of (euro) 499 million
<S>                              <C>
[*******]                        [*******************]
[*******]                        [*******************]
[*******]                        [*******************]
[*******]                        [*******************]
[*******]                        [*******************]
[*******]                          [***************]
</TABLE>

                  (ii) For purposes of this Section 6.4(a), FALK's "[*********]
Deemed Net Sales" as of the end of a particular calendar quarter shall be
determined as follows:

                        (1)   If less than [********************] of FALK's
                              gross invoiced sales for the calendar quarter are
                              attributable to sales to Distributors, FALK's
                              "[********] Deemed Net Sales" as of the end of
                              that calendar quarter shall equal: (a)
                              [************************************************
                              *************************************************]
                              ; and

                        (2)   If [********************] or more of FALK's gross
                              invoiced sales for the calendar quarter are
                              attributable to sales to Distributors (such gross
                              invoiced sales to Distributors in excess of such
                              [*******] hereinafter referred to as "Excess
                              Distributor Sales"), FALK's "[*********] Deemed
                              Net Sales" as of the end of that calendar quarter
                              shall equal: (a) [********************
                              *************************************************
                              *************************************************
                              *************************************************
                              *************************************************
                              *************************************************
                              ***************************************].

                  In the event that during the term of this Agreement there is a
material change in the outline conditions in the Territory as they relate to the
question whether a Third Party should be considered a [*********] for the
purpose of this Agreement, the Parties undertake to renegotiate in good faith
and to adjust the definition in Section 1.11 above in order to reflect such
change in the outline conditions from the situation prevailing at the signing
hereof.

                  (iii) FALK shall pay royalties with respect to sales of the
Licensed Product on a country by country basis until the later of (i) the date
of expiration of the last to expire Valid Claim of a Base Patent Covering the
Licensed Product in such country, and (ii) [*************] from the First
Commercial Sale of the Licensed Product in such country.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            (b) ROYALTY PAYMENT DATES. Royalties paid by FALK pursuant to
Section 6.3(a) shall be paid by FALK within thirty (30) days after the end of
each calendar quarter in which Net Sales are made. All such payments shall be
accompanied by a statement showing the source of such revenues, including the
Net Sales of the Licensed Product in each country, a calculation of the
Cumulative Deemed Net Sales as of the end of that quarter, and a calculation of
the amount of payment due for each such jurisdiction. In the event royalties are
not paid within the time period set forth in this Section 6.3(b), unless
otherwise agreed to by the Parties, such royalties shall bear interest at the
rate that is the lesser of (i) the average one-month European Interbank Offered
Rate ("EURIBOR") as reported by Datastream (or a successor or similar
organization) from time to time, plus, at ALTOS' option, an additional
[**************], or (ii) the highest rate permitted by applicable law, in each
case calculated on the number of days such a payment is overdue.

            (c) ACCOUNTING. All payments due to ALTUS by FALK and royalties owed
to ALTUS shall be paid in euros. Whenever payment for the Licensed Product is
received by FALK in a foreign currency other than euros, for the purpose of
calculating royalties on FALK's Net Sales, conversion from such foreign currency
into euros shall be made on the last day of each calendar quarter at the
applicable rate of conversion on that date as retrieved from the Reuters System
(or any other source agreed upon in writing by the parties) for the applicable
calendar quarter.

            (d) TAXES. All sums due to ALTUS under this Agreement shall be paid
in full, subject to deduction for withholding taxes, charges and other duties
levied on account of such payment that may be imposed in the Territory save
insofar as ALTUS shall be capable of obtaining a credit therefore. The Parties
agree to co-operate in all respects necessary to take advantage of such double
taxation agreements as may be available. It is the understanding of FALK, after
consultation with its tax advisors based on current law, that payments to ALTUS
hereunder can be made, subject to the fulfillment of applicable formal
requirements, without the requirement of taxes to be withheld, although FALK
provides no warranty or assurance of such result. In the event that taxing
authorities assert a contrary result, the parties will cooperate in appropriate
proceedings to challenge such assertion. If FALK is required to deduct or
withhold it will (i) promptly notify ALTUS of such requirement, (ii) pay to the
relevant authorities the full amount 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 ALTUS and (iii) send
proof of payment to ALTUS by transmitting an official receipt (or certified
copy), or other documentation reasonably acceptable to ALTUS and obtainable by
FALK evidencing such payments to such authorities. Any such required tax,
charges and other duties actually paid on ALTUS' behalf shall be deducted from
the sums due to ALTUS under this Agreement.

      6.5 VALUE OF RIGHTS. ALTUS and FALK understand and acknowledge that the
value of each of the rights granted by this Agreement might fluctuate while this
Agreement is in effect. Notwithstanding any such fluctuation, ALTUS and FALK
have agreed to allocate the value of these rights in the manner represented by
the royalties and other payments contemplated hereunder and intend such
allocation to be binding and unchanging.

                                   ARTICLE 7.
                            MANUFACTURING AND SUPPLY

      7.1 SUPPLY OF THE LICENSED PRODUCT.

            (a) CLINICAL SUPPLIES. ALTUS shall provide or cause to be provided
all Clinical Supplies of the Licensed Product for the completion of human
clinical trials for the Licensed Product in the Field in the Territory. ALTUS
may enter into one or more "manufacturing and supply agreement(s)"

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

with Third Party contract manufacturer(s) for such Clinical Supplies. The cost
of Clinical Supplies [*********************************************************
***************************].

            (b) COMMERCIAL SUPPLIES. ALTUS shall be responsible for establishing
and shall use Commercially Reasonable and Diligent Efforts to establish a
commercial manufacturing process for, and making available, commercial supplies
of the Licensed Product at the scale and in the amounts required to
[*************] for the Licensed Product in the Field in the Territory. FALK
shall have the [**************] its requirements for commercial supplies of the
Licensed Product from ALTUS. If FALK takes advantage of such [********], the
purchase price shall be equal to [****] of the German Ex-Factory Price for the
Licensed Product; provided, however, that if ALTUS' aggregate fully-burdened
manufacturing costs for such Licensed Product exceeds [*****] of the German
Ex-Factory Price, [************************************************************
*******************************************************************************
*******************************************************************************
*******]. ALTUS shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of evidencing its fully
burdened manufacturing costs as a basis for the purchase price to be paid by
FALK for Licensed Product. Such books and records shall be kept at ALTUS'
principal place of business. FALK or its authorized independent accountant shall
have the right to [************] of such books and records of ALTUS that are
necessary to report on the purchase price for the commercial supplies of the
Licensed Product for the period or periods requested by FALK and the correctness
of any purchase price payment made by FALK to ALTUS. With regard to further
details of such [*****], the provisions in Section 13.4 hereinafter shall apply
mutatis mutandis. As soon as practicable after completion of a Phase III
Enabling Clinical Trial for the Licensed Product, ALTUS will enter into a
manufacturing and supply agreement with a Third Party contract manufacturer(s)
covering the manufacture, supply and quality control with respect to the
Licensed Product. ALTUS shall also ensure that [****************] for the
manufacture and supply of the Licensed Product. FALK will be responsible for
paying [***********************************************************************
***********************]. The terms of the supply of commercial supplies by
ALTUS, in particular regarding all packaging, handling, shipping, delivery,
insurance, tariffs, taxes and the like pertaining to delivery of the Licensed
Product to FALK, will be governed by a "Supply and Distribution Agreement" to be
negotiated and entered into between the Parties, which agreement shall include
customary indemnification provisions relating to the quality of the manufactured
product and shall have terms consistent with this Agreement.

                                   ARTICLE 8.
                                    LICENSES

      8.1 LICENSE TO FALK. Subject to the terms hereof, ALTUS hereby grants to
FALK a [***********************] (except pursuant to Section 17.1), [********]
license, with the right to [********], under the Licensed Product Patents to
[**************************************** ***************] the Licensed Product
in the Field in the Territory in accordance with the terms of this Agreement.
Subject to the terms hereof, ALTUS hereby grants to FALK a [********************
***********] (except pursuant to Section 17.1), [******************************
********], under the Licensed Product Know-how to [****************************
********************* ***************] the Licensed Product in the Field in the
Territory in accordance with the terms of this Agreement.

      8.2 THIRD PARTY LICENSED IP. In respect of the Third Party Licensed LP
licensed from [********] to ALTUS, ALTUS shall obtain for FALK an acknowledgment
in writing from [*******] to the rights of FALK under this Agreement whereby the
rights and licenses granted hereunder to the Third Party Licensed IP shall
continue (free of any payment) notwithstanding any termination of the rights of
ALTUS in respect of the Third Party Licensed IP, substantially in the form of
the document contained in

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Schedule 8.2. In respect of any further Third Party Licensed IP licensed to
ALTUS, ALTUS shall use Commercially Reasonable and Diligent Efforts to obtain
for FALK license rights to such Third Party Licensed IP as is necessary for FALK
to undertake the actions contemplated hereby on terms and conditions similar to
those enjoyed by ALTUS; provided that under no circumstances shall ALTUS be
required to incur any additional financial or other obligations in order to
assist FALK in obtaining such a license, and FALK shall be responsible for
[**************************************] with respect to such license. Without
limiting the foregoing, in connection kith the negotiation of a commercial
supply agreement with [*******], if any, ALTUS shall use Commercially Reasonable
Efforts to obtain for FALK without any additional obligation of FALK such
license rights from [*********] as may be necessary for FALK to undertake the
actions contemplated hereby.

      8.3 RETENTION OF RIGHTS. Notwithstanding the license granted to FALK in
Section 8.1, ALTUS shall retain the right within the Territory (i) to
[*************************] relating to the Licensed Product, (ii) to use at its
own cost the Licensed Product Patents and Licensed Product Know-how for its own
internal use and for non-commercial purposes, and (iii) to perform all other
activities contemplated by this Agreement.

      8.4 EXCLUSIVITY. During the full Term of this Agreement (as defined in
Section 14.1) ALTUS agrees and obligates itself, and for five years from the
date hereof, FALK agrees and obligates itself not to [**********************]
any other products that consist of [*******************************************
**********] in the Territory in the Field outside this collaboration.

                                   ARTICLE 9.
                                   TRADEMARKS

      9.1 PRODUCT TRADEMARK. All of the Licensed Product shall be sold in the
Territory under the applicable Product Trademark and the ALTUS Mark as described
in Section 5.7.

      9.2 GRANT OF LICENSE. ALTUS grants to FALK, subject to compliance with the
other terms and conditions of this Agreement, a non-exclusive, royalty-free,
non-transferable license, with the right to sublicense, to use the ALTUS Mark
solely within the Territory and solely in connection with the sale of the
Licensed Product in the Field.

      9.3 QUALITY CONTROL. FALK shall apply the Product Trademark and the ALTUS
Mark only to the Licensed Product and only in accordance with the terms of this
Agreement. ALTUS shall have the right, at any time during regular business hours
but no more than one time per calendar year, to conduct an examination of the
Licensed Product to determine the quality of the Licensed Product. If at any
time, the Licensed Product shall, in the reasonable opinion of ALTUS, fail to
conform with the appropriate standards of quality as required under this
Agreement, ALTUS or its authorized representatives shall notify FALK. Upon such
notification, the Parties shall discuss and implement actions to meet standards
of quality to the complete satisfaction of ALTUS.

      9.4 ACKNOWLEDGMENT OF OWNERSHIP RIGHTS.

            (a) FALK acknowledges and agrees that ALTUS is the exclusive owner
of all right, title, and interest in and to the ALTUS Mark, and that all use of
the ALTUS Mark by FALK will inure to the exclusive benefit of ALTUS. FALK
undertakes to make use of the ALTUS Mark only in such a way that the rights of
ALTUS in said mark will not be diminished in any way. FALK shall not use the
ALTUS Mark as all or part of any corporate name, trade name, trademark, service
mark, certification mark, collective membership mark, domain name, or any other
designation confusingly similar to the ALTUS Mark.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            (b) ALTUS acknowledges and agrees that FALK is the exclusive owner
of all right, title, and interest in and to the "Dr. FALK" trademark and logo
(collectively, the "FALK Mark"), and that all use of the FALK Mark by ALTUS will
inure to the exclusive benefit of FALK. ALTUS undertakes to make use of the FALK
Mark only in such a way that the rights of FALK in said mark will not be
diminished in any way. ALTOS shall not use the FALK Mark as all or part of any
corporate name, trade name, trademark, service mark, certification mark,
collective membership mark, domain name, or any other designation confusingly
similar to the FALK Mark.

      9.5 USE OF TRADEMARK DESIGNATIONS. FALK shall use the TM designation in
conjunction with any use of the ALTUS Mark within the Territory pursuant to this
Agreement until such time as the foreign registrations issue, unless otherwise
required by local trademark law. Once the foreign registrations issue, FALK
shall use the (R) designation with all uses of the ALTUS Mark and any other
similar designation, unless otherwise required by local trademark law.

      9.6 ACTIONS FOR INFRINGEMENT. Each Party shall notify the other promptly
upon learning of any actual, alleged, or threatened infringement of the Product
Trademark(s) or the ALTUS Mark applicable to the Licensed Product in the Field
in the Territory or of any unfair trade practices, trade dress imitation,
passing off of counterfeit goods, or like offenses in the Territory. Upon
learning of such offense from a Party, the Parties shall confer regarding the
defense of the Product Trademark(s) or the ALTUS Mark. FALK shall have the first
right to respond to and defend any such infringement or offense with respect to
the Product Trademark(s). FALK will keep ALTUS reasonably informed at all times
as to the status of the infringement or offense. In the event that FALK elects,
within ninety (90) days, not to respond to or defend any such infringement or
offense or abandons such defense, then, in such event, ALTUS shall have the
option to do so, provided that FALK shall cooperate with and provide reasonable
assistance to ALTUS. ALTUS shall have the sole right to respond to and defend
any such infringement or offense with respect to the ALTUS Mark.

      9.7 COSTS OF DEFENSE OF TRADEMARKS. The Party bringing the action shall
bring such action or proceeding at its own cost and expense. Any damages or
other monetary awards recovered from settlement or judgment from such an action
shall be allocated first to reimburse the costs and expenses of the Party
bringing the action, then to reimburse the costs and expenses, if any, of the
other Party (except for costs associated with the other Party being represented
by counsel of its own choice). Any amounts remaining shall be paid to the Party
bringing such action.

                                  ARTICLE 10.
                                CONFIDENTIALITY

      10.1 CONFIDENTIALITY. Except to the extent expressly authorized by this
Agreement, the Parties agree that, for the Term of this Agreement and
thereafter, the receiving Party shall keep confidential and shall not publish or
otherwise disclose or use for any purpose other than as permitted under this
Agreement any proprietary information or materials furnished to it by the other
Party pursuant to this Agreement, including but not limited to any Know-how,
business plans, marketing plans, customer information, financial information or
patent applications (unless and until such applications are published pursuant
to applicable law) (collectively, "Confidential Information"), except to the
extent that it can be established by the receiving Party that such Confidential
Information:

            (a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other Party as
demonstrated by pre-existing written records;

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

            (b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the receiving Party;

            (c) became generally available to the public or otherwise part of
the public domain after its disclosure to the receiving Party other than through
any act or omission (i) of the receiving Party in breach of this Agreement, or
(ii) of any Third Party without authority to make such disclosure;

            (d) was disclosed to the receiving Party, other than under an
obligation of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others; or

            (e) was subsequently developed by the receiving Party without use of
the Confidential Information as demonstrated by pre-existing written records.

      10.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential
Information hereunder to the extent such disclosure is required to comply with
applicable laws or governmental regulations or to conduct pre-clinical or
clinical trials or to the extent ordered by a court of competent jurisdiction
(subject to entry of an appropriate protective order); provided, however, that
if a Party is required by law or regulation to make any such disclosure of the
other Party's Confidential Information, or such disclosure is required to
conduct pre-clinical or clinical trials, the disclosing Party will give, to the
extent practicable, reasonable advance notice to the other Party of such
disclosure requirement and will use its reasonable best efforts to secure
confidential treatment of such Confidential Information required to be
disclosed. In addition, each Party shall be entitled to disclose, under a binder
of confidentiality containing provisions substantially as protective as those of
this Article 10, Confidential Information to its consultants, clinical
investigators and contract manufacturer, if any, but only for any purposes
provided for in this Agreement and only to the extent required for the Parties
to perform their respective obligations under this Agreement.

      10.3 SURVIVAL. This Article 10 shall perpetually survive the termination
or expiration of this Agreement.

      10.4 PUBLICATIONS. Except as required by law, FALK agrees that it shall
not publish or present the results of studies or clinical trials carried out by
either Party as part of the collaboration without the prior written consent of
the Steering Committee.

                                  ARTICLE 11.
              OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

      11.1 OWNERSHIP OF INVENTIONS. Any Inventions that relate to ALTUS
Background Technology or to the Licensed Product, its manufacture or its use,
including but not limited to any and all improvements, modifications, and
enhancements thereof in any form or formulation (hereinafter, "ALTUS
Inventions") shall be [***********************]. Any Inventions, excluding ALTUS
Inventions, that relate to FALK Background Technology shall be
[************************]. FALK will promptly disclose to ALTUS all ALTUS
Inventions conceived or reduced to practice by FALK, alone or together with
ALTUS or Third Parties. FALK shall assign all ALTUS Inventions to ALTUS and
shall cooperate in the filing and prosecution of any patent applications
relating to ALTUS Inventions. ALTUS will promptly disclose to FALK all FALK
Inventions conceived or reduced to practice by ALTUS, alone or together with
FALK or Third Parties. ALTUS shall assign [***] FALK Inventions to FALK and
shall cooperate in the filing and prosecution of any patent applications
relating to FALK Inventions. For purposes of this Section 11.1, inventorship
shall be determined in accordance with

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

principles of U.S. patent law. In the event that there is a dispute between the
Parties as to ownership of Inventions, the Steering Committee shall establish a
procedure to resolve such dispute, which may include engaging a Third Party
patent attorney jointly selected by the parties who is completely unaffiliated
and independent of the Parties, as an expert to resolve such dispute. If the
Steering Committee is unable to establish a procedure to resolve such disputes,
either Party may seek to resolve such dispute in accordance with Article 16
hereof.

      11.2 THIRD PARTY PATENTS. Each Party agrees to bring to the attention of
the other Party in a timely manner any Third Party patent or patent application
that has been brought to its attention by such Third Party, or of which it
otherwise becomes aware, that it believes would have a material affect on the
operations to be conducted by or on behalf of the Parties under this Agreement.

      11.3 PATENT FILINGS.

            (a) With respect to the patents and patent applications constituting
Base Patents that have been filed in the Field in the Territory, ALTUS shall (i)
be responsible for obtaining, prosecuting and maintaining such Base Patents;
(ii) keep FALK apprised of the status of such patents and patent applications,
and (iii) share with FALK all material information (including correspondence
with the various patent offices) relating thereto promptly after receipt of such
information. ALTUS shall be responsible for [*] costs incurred in connection
with the preparation, filing, prosecution, and maintenance of any patents and
patent applications constituting Base Patents that have been filed in the
Territory.

            (b) At its sole discretion, ALTUS shall have the right to file,
prosecute, and maintain patent applications and patents for any and all ALTUS
Inventions in such countries worldwide as it may determine. All such patent
applications and patents Covering the Licensed Product for use in the Field that
are filed in the Territory shall be deemed to be Licensed Product Patents. FALK
shall be responsible for all costs and expenses relating to the filing,
prosecution, and maintenance of the Licensed Product Patents on the ALTUS
Inventions in the Territory, if the ALTUS Inventions Cover the Licensed Product
or are, in FALK's scientific judgment, necessary or useful for the
commercialization and exploitation of the Licensed Product in the Territory. If
ALTUS elects not to file, prosecute or maintain any Licensed Product Patent on
the ALTUS Inventions in any Major European Country, ALTUS shall so inform FALK
immediately. In each such case, FALK may then file, prosecute and maintain any
such patents on an ALTUS Invention in such Major European Country as it may
determine at its own expense and discretion. The Party which is responsible
(pursuant to this Section 11.3(b)) for filing a patent application for such an
ALTUS Invention will be referred to herein as the "filing Party." For the Major
European Countries, the filing Party shall keep the other Party apprised of the
status of each such patent application and patent and shall seek the advice of
the other Party with respect to patent strategy and draft patent applications
and shall give reasonable consideration to any suggestions or recommendations
promptly provided by the other Party concerning the preparation, filing,
prosecution, and maintenance thereof. The Parties shall cooperate reasonably in
the prosecution of all such patent applications and patents on an ALTUS
Invention and shall share all material information relating thereto promptly
after receipt of such information. If, during the Term of this Agreement, the
filing Party intends to allow any patent or patent application for an ALTUS
Invention in any country of the world to lapse or become abandoned without
having first filed a substitute, the filing Party shall make reasonable efforts
to notify the other Party of such intention at least sixty (60) days prior to
the date upon which such patent application or patent shall lapse or become
abandoned, and the other Party shall thereupon have the right, but not the
obligation, to assume responsibility for the prosecution and maintenance
thereof.

      11.4 INITIAL FILINGS IF MADE OUTSIDE OF THE U.S. The Parties agree to use
reasonable efforts to ensure that any patent filed outside of the U.S. prior to
a U.S. filing will be in a form sufficient to establish the date of original
filing as a priority date for the purposes of a subsequent U.S. filing.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      11.5 ENFORCEMENT RIGHTS.

            (a) NOTIFICATION OF INFRINGEMENT. If FALK learns of any infringement
or threatened infringement by a Third Party of a Licensed Product Patent in any
country in the Territory, FALK shall promptly notify ALTUS in writing and shall
provide ALTUS with all available evidence in FALK's possession of such
infringement.

            (b) ENFORCEMENT. ALTUS shall have the right, but not the obligation,
to institute, prosecute and control (collectively, "bring") any action or
proceeding with respect to infringement in the Field in the Territory of any
Licensed Product Patent by counsel of its own choice, and FALK shall have the
right, at its own expense, to be represented in any such action by counsel of
its own choice. FALK shall be responsible for paying [****] of the reasonable
costs and expenses, including attorneys fees, relating to any such action if the
infringement is likely to have an adverse effect on the sale and distribution of
the Licensed Product in the Territory and shall inform ALTUS of its intention to
pay such costs and expenses prior to initiating the lawsuit. If ALTUS chooses
not to bring such an action or proceeding within sixty (60) days of being
notified of such infringement, then FALK shall have the right (but not the
obligation) to bring such action. The Party not bringing such action or
proceeding agrees to be joined as a party plaintiff if necessary to prosecute
the action or proceeding and to give reasonable assistance and authority to file
and prosecute the action or proceeding. Any damages or other monetary awards or
amounts recovered from settlement or judgment from such an action or proceeding
shall be allocated first to reimburse the Part(ies) for the reasonable costs and
expenses of the action or proceeding (which amount shall be allocated pro rata
if insufficient to cover the totality of costs and expenses), with the remainder
to be paid to the party paying for the costs and expenses of the litigation;
provided that for purposes of determining the royalty amount payable to ALTUS
pursuant to Section 6.3, any amounts received by FALK as damages that are
attributable to gross revenues of the infringer for infringing sales shall be
added to the Net Sales amount for the calendar quarter in which such damages,
awards or amounts are recovered.

            (c) SETTLEMENT WITH A THIRD PARTY. The Party that brings suit to
enforce a given Licensed Product Patent in the Field in the Territory shall also
have the right to control settlement of such claim; provided, however, that if
one Party controls, no settlement shall be entered into without the express
written consent of the other Party. If there is no agreement between the Parties
regarding such settlement, then the dispute will be resolved pursuant to Article
16 below. If the dispute is not resolved pursuant to Article 16, then the case
may not be settled.

            (d) In the event that a non-Affiliated Third Party institutes a
patent, trade secret or other infringement suit against FALK or its Affiliates,
alleging that the manufacturing, use or sale of the Licensed Product in the
Territory infringes one or more Patents or other intellectual property rights
held by such Third Party (an "Action"), FALK shall promptly notify ALTUS thereof
in writing and discuss with ALTUS the best way to respond. [*******] shall have
the [*******************************************] (subject to the last sentence
of this subparagraph (d)) [****************************************************
************************************************************************] not to
[******] such [*******************************************] of such [**********
*****] shall have [*****************************************] (subject to the
last sentence of this subparagraph (d)) [**************************************]
on such [***************************************************], PROVIDED,
HOWEVER, that [****************************************************************
*******************************] not to be [******************************]. In
connection with any such [*****************************************************
*******************************************************************************
******************************] for any such [*********************************
*******************************************************************************

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

******************]; provided that in no event [*******************************
***********************] to this [*********************************************
*******************************************************************************
****************************************************************].

The foregoing shall not affect any liability of ALTUS under Article 12, arising
out of or in connection with any Action.

                                  ARTICLE 12.
                         REPRESENTATIONS AND WARRANTIES

      12.1 REPRESENTATIONS AND WARRANTIES OF ALTUS. As a material inducement to
FALK to enter into this Agreement and to consummate the transactions
contemplated herein, ALTUS hereby represents and warrants to FALK as follows:

            (a) ORGANIZATION. ALTUS is a corporation duly incorporated, validly
existing and in good corporate standing under the Laws of the State of Delaware.
ALTUS has full corporate power and authority to own and lease its properties and
carry on its business and is duly qualified, registered or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the character of its operations
makes such qualification, registration or licensing necessary except where the
failure to be so qualified, registered or licensed would not have a material
adverse effect on the business of ALTUS.

            (b) AUTHORITY. ALTUS has the corporate right, power and authority to
carry on its business and to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action on the part of the ALTUS and no other corporate proceedings on
the part of ALTUS are necessary to authorize this Agreement or the consummation
of the transactions contemplated by this Agreement. This Agreement has been duly
and validly executed by ALTUS and constitutes a legal, valid and binding
obligation of ALTOS, enforceable against ALTUS except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors' rights.

            (c) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate, be in conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate or excuse the performance required by any person
of any of its obligations under, cause the acceleration of the maturity of any
material amount of debt or material obligation pursuant to or result in the
creation or imposition of any material encumbrance upon any property of ALTUS
under, any material contract to which ALTUS is a party or by which any of its
property is bound or subject such that any such occurrence will have a material
adverse effect on ALTUS.

            (d) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES; INDEBTEDNESS.

                  (i) (i) ALTUS has provided to FALK copies of the audited
balance sheet of ALTUS for the year ended December 31, 2001 and the related
audited statements of operations, statements of stockholder's equity and
statements of cash flows, together with any related notes thereto, for the year
ended December 31, 2001 and (ii) the unaudited balance sheet of

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

ALTUS for the nine months ended September 30, 2002 (collectively, the "Financial
Statements"). Each of the Financial Statements fairly present in all material
respects, as the case may be, the financial condition, assets and liabilities of
ALTUS as of date thereof, or ALTUS' results of operations and changes in ALTUS'
financial position for the period set forth therein. Each of the Financial
Statements was prepared in accordance with U.S. GAAP consistently applied during
the relevant period, except as otherwise set forth in the notes thereto and
subject, in the case of the unaudited Financial Statements, to normal and
recurring year-end adjustments and the omission of footnotes.

                  (ii) As of the date hereof, ALTUS has not incurred any
material liabilities or material obligations of any nature, whether or not
accrued, absolute, contingent or otherwise, other than liabilities adequately
provided or reserved for in the Financial Statements or disclosed in any related
notes thereto.

                  (iii) Since September 30, 2002, there has been no material
adverse change in the business of ALTUS, or any damage or impairment to, or
destruction or loss, sale, assignment, transfer, lapse or encumbrance of any
Licensed Product Patents or Licensed Product Know-How (whether or not covered by
insurance) that could reasonably be expected to have a material adverse effect
on the Agreement or the activities contemplated thereby.

            (e) LITIGATION. There is no litigation, arbitration, claim, action,
suit, governmental or other proceeding (formal or informal) to which ALTUS is a
party or to the knowledge of ALTUS, investigation pending or, threatened against
or affecting ALTUS, its business or the Licensed Product Patents or Licensed
Product Know-How that could be expected to have an adverse effect on this
Agreement or the activities contemplated hereby or that could be expected to
affect in an adverse manner the ability of ALTUS to comply in all material
respects with its obligations under this Agreement.

            (f) INTELLECTUAL PROPERTY.

                  (i) TRADEMARKS. Schedule 12.1(f) sets forth as of the date
hereof an accurate, correct and complete list of all United States trademarks,
trademark applications, trademark registrations, brand names, and trade names
owned or licensed by ALTUS that relate to the Licensed Product (the "ALTUS
Trademarks") and no other Person has been granted by ALTUS (or to the best
knowledge of ALTUS, has been granted by any other Person) any rights, or has any
interest, in such. ALTUS owns and possesses all right, title and interest, or
holds a valid license, in and to the ALTUS Trademarks. Except as set forth in
Schedule 12.1(f), no claim has been asserted or, threatened by any Person
regarding the use or licensing by ALTUS of the ALTUS Trademarks. To the best
knowledge of ALTUS, its use of the Trademarks does not violate or infringe, and
has not in the past violated or infringed, in each case in any material manner
the rights of any Person and no material claims have been asserted by ALTUS
against any other Person claiming infringement of its Trademarks.

                  (ii) BASE PATENTS. Exhibit A sets forth as of the Effective
Date an accurate, correct and complete list of patents and patent applications
owned or licensed by ALTUS that constitute Base Patents. To the knowledge of
ALTUS, the Base Patents that are issued are valid and enforceable ALTUS owns and
possesses all right, title and interest, or holds a valid license, in and to the
Base Patents, free of any lien, charge or encumbrance and no other Person has
been granted by ALTUS any rights in such with respect to the Licensed Product in
the Territory. No claim has been asserted threatened by any person regarding the
use or licensing by ALTUS of the Base Patents. To the knowledge of ALTUS, its
use of the Base Patents does not violate or infringe, and has not in the past
violated or infringed the rights of any Third Party, and no claims have been
asserted by ALTUS against any other person claiming infringement of the Base
Patents. As of the Effective Date, ALTUS has no knowledge of any Third Party
patent or patent application that would be expected to have a material adverse
effect on the business and operations to be conducted by either Party as
contemplated by this Agreement; ALTUS is not aware of any Patents or Patent
applications that would prevent the development, use and sale of the Licensed

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Product as contemplated by this Agreement. Additionally, as of the Effective
Date, ALTUS has not received written notice from any Third Party that
TheraCLEC-Total infringes on any patent or patent application owned by such
Third Party that would have an adverse effect on the operations to be conducted
in the Field in the Territory by the Parties under this Agreement.

                  (iii) ADEQUACY OF RIGHTS. The rights and licenses to the
Licensed Product Patents and Licensed Product Know How that are necessary for
the commercialization of the Licensed Product in the Field in the Territory
pursuant to the terms of this Agreement have been licensed to FALK pursuant to
Sections 8.1 and 9.2 hereunder and the Licensed Patents and the Licensed Product
Know-How include all intellectual property, know how and confidential
information in the possession of ALTUS which is necessary for the
commercialization of the Licensed Product by FALK under this Agreement. ALTUS
has not previously granted, and will not grant during the term of this
Agreement, any right, license or interest that is in conflict with the rights
and licenses granted to FALK under this Agreement. There is no action or
proceeding nor, so far as ALTUS is aware (due inquiry having been made), any
threat of an action or proceeding that would materially and adversely affect the
rights granted to FALK herein in respect of the Licensed Product.

                  (iv) THIRD PARTY LICENSED IP. All of the patents listed on
Exhibit A that have been licensed to ALTUS have been licensed upon terms
permitting the sublicense to FALK under the terms of this Agreement and none of
such licenses are capable of termination by either party thereto at any time
during the term of this Agreement. [******************************************
***************************] in accordance with the [**************************
*******************************************************************************
********************************************] under the terms of [*************
********************************].

            (g) SUBSIDIARIES. Attached on Schedule 12.1(g) is a complete list of
all subsidiaries of ALTUS. Each of the ALTUS Subsidiaries is in good standing
and is qualified to do business in all jurisdictions in which it conducts its
business.

            (h) ASSETS. To ALTUS' knowledge, ALTUS owns or has a valid right to
use all material property that is used by ALTUS to conduct its business as
presently conducted except where the failure to own or have a valid right to use
would not have a material adverse effect on the business of ALTUS.

      12.2 REPRESENTATIONS AND WARRANTIES OF FALK. As a material inducement to
ALTUS to enter into this Agreement and to consummate the transactions
contemplated herein, FALK hereby represents and warrants to ALTUS as follows:

            (a) ORGANIZATION. FALK is a corporation duly incorporated, validly
existing and in good corporate standing under the applicable laws of Germany.
FALK has full corporate power and authority to own and lease its properties and
carry on its business and is duly qualified, registered or licensed as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the ownership or leasing of its properties or the character of its operations
makes such qualification, registration or licensing necessary except where the
failure to be so qualified, registered or licensed would not have a material
adverse effect on the business of FALK.

            (b) AUTHORITY. FALK has the corporate right, power and authority to
carry on its business and to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly and validly authorized by all necessary
corporate action

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

on the part of the FALK and no other corporate proceedings on the part of FALK
are necessary to authorize this Agreement or the consummation of the
transactions contemplated by this Agreement. This Agreement has been duly and
validly executed by FALK and constitutes a legal, valid and binding obligation
of FALK, enforceable against FALK except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights.

            (c) NO CONFLICT. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate, be in conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, result in
the termination of, accelerate or excuse the performance required by any person
of any of its obligations under, cause the acceleration of the maturity of any
material amount of debt or material obligation pursuant to or result in the
creation or imposition of any material encumbrance upon any property of FALK
under, any material contract to which FALK is a party or by which any of its
property is bound or subject such that any such occurrence will have a material
adverse effect on FALK.

            (d) FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES; INDEBTEDNESS.

                  (i) FALK has provided to ALTUS financial information relating
to FALK's sales, net profit and EBITDA for the periods specified therein (the
"Financial Information"). The Financial Information was prepared in accordance
with German GAAP and is true and accurate in all material respects.

                  (ii) As of the date hereof, FALK has not incurred any material
liabilities or material obligations of any nature, whether or not accrued,
absolute, contingent or otherwise, other than liabilities adequately provided or
reserved for in the Financial Statements or disclosed in any related notes
thereto, and FALK has sufficient cash or cash equivalents on hand to reasonably
be expected to be able to meet all of its financial obligations under this
Agreement.

                  (iii) Since September 30, 2002, there has been no material
adverse change in the business of FALK, or any damage or impairment to, or
destruction or loss, sale, assignment, transfer, lapse or encumbrance of any
intellectual property of FALK (whether or not covered by insurance) that could
reasonably be expected to have a material adverse effect on the Agreement or the
activities contemplated thereby.

            (e) LITIGATION. There is no litigation, arbitration, claim, action,
suit, governmental or other proceeding (formal or informal) to which FALK is a
party or investigation pending or, to the knowledge of FALK, threatened against
or affecting FALK, its business or its intellectual property that could
reasonably be expected to have a material adverse effect on this Agreement or
the activities contemplated hereby or that could reasonably be expected to
affect in a material adverse manner the ability of FALK to comply in all
material respects with its obligations under this Agreement.

            (f) INTELLECTUAL PROPERTY; TRADEMARKS. Schedule 12.2(f) sets forth
as of the date hereof an accurate, correct and complete list of all trademarks,
trademark applications, trademark registrations, brand names, and trade names
owned or licensed by FALK that relate to the FALK Mark (the "FALK Trademarks")
and no other Person has been granted by FALK (or to the knowledge of FALK, has
been granted by any other Person) any rights, or has any interest, in such FALK
Trademarks. FALK owns and possesses all right, title and interest, or holds a
valid license, in and to the FALK Trademarks. Except as set forth in Schedule
12.2(f), no claim has been asserted or, to the knowledge of FALK, threatened by
any person regarding the use or licensing by FALK of the FALK Trademarks. To the
knowledge of FALK, its use of the FALK Trademarks does not violate or infringe,
and has not in the past violated or infringed, in each case in any material
manner the rights of any person and no material

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

claims have been asserted by FALK against any other person claiming infringement
of its FALK Trademarks

            (g) SUBSIDIARIES. Attached on Schedule 12.2(g) is a complete list of
all subsidiaries of FALK. Each of the FALK Subsidiaries is in good standing and
is qualified to do business in all jurisdictions in which it conducts its
business.

            (h) ASSETS. To FALK's knowledge, FALK owns or has a valid right to
use all material property that is used by FALK to conduct its business as
presently conducted except where the failure to own or have a valid right to use
would not have a material adverse effect on the business of FALK.

            (i) DISTRIBUTION CHANNELS. As of the Effective Date of this
Agreement, FALK employs direct sales personnel in [******************].

      12.3 For purposes of the representations and warranties set forth in
Sections 12.1 and 12.2 above, the knowledge of ALTUS shall mean the knowledge of
the Chief Executive Officer, the Chief Financial Officer and the Director of
Commercial Development of ALTUS, and the knowledge of FALK shall mean the
knowledge of the Chief Executive Officer, Development Director, and the Chief
Financial Officer of FALK.

      12.4 THE EXPRESS REPRESENTATIONS AND WARRANTIES STATED IN THIS AGREEMENT
ARE IN LIEU OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT.

      12.5 DISCLAIMER. EXCEPT WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES
RELATING TO INTELLECTUAL PROPERTY SET FORTH IN SECTION 12.1(f)(ii), (iii) and
(iv) ABOVE, NEITHER ALTUS NOR FALK BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL,
OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST PROFITS, ARISING OUT
OF THIS AGREEMENT BASED ON CONTRACT, TORT OR ANY OTHER LEGAL THEORY.

                                  ARTICLE 13.
                            INFORMATION AND REPORTS

      13.1 INFORMATION. FALK and ALTUS will disclose and make available to each
other in a timely manner all pre-clinical, clinical, regulatory, marketing and
other information concerning the Licensed Product for use in the Field in the
Territory known by FALK or ALTUS at any time during the Term of this Agreement.
Each Party will use Commercially Reasonable and Diligent Efforts to disclose to
the other Party all significant information directly related to the Licensed
Product promptly after it is learned and its significance is appreciated. ALTUS
shall maintain a database of adverse drug experience information for the
commercial Licensed Product and shall be the owner of such database. As soon as
reasonably practicable after the execution of this Agreement, the Parties will
enter into one or more separate safety and adverse event reporting agreements
that will govern the reporting and other procedures related to adverse drug
experiences under this collaboration between ALTUS and FALK.

      13.2 PRODUCT COMPLAINTS. Each Party will maintain a record of all
non-medical and medical Licensed Product-related complaints and will notify the
other Party of any complaint in a sufficient time to allow the other Party to
comply with any regulatory requirements it may have with respect to such
complaint.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      13.3 ADVERSE DRUG EVENTS. The Parties recognize that as the holder of a
Drug Approval Application, ALTUS will be required to submit information and file
reports to various governmental agencies on compounds under clinical
investigation, compounds proposed for marketing, or marketed drugs. Information
must be submitted at the time of initial filing for investigational use in
humans and at the time of a request for market approval of a new drug. In
addition, supplemental information must be provided on compounds at periodic
intervals and adverse drug experiences must be reported at more frequent
intervals depending on the severity of the experience. The specific obligations
of each Party with respect to adverse drug experiences will be governed by the
safety and adverse event reporting agreement(s) described in Section 13.1 above.

      13.4 RECORDS OF NET SALES. FALK and its Affiliates shall keep full, true
and accurate books of account containing all particulars that may be necessary
for the purpose of calculating all royalties payable to ALTUS. Such books of
accounts shall be kept at their principal place of business. ALTUS or its
authorized independent public accountant shall have the right to perform an
audit, conducted in accordance with German GAAP, of such books and records of
FALK and its Affiliates that are necessary to report on Net Sales of the
Licensed Product for the period or periods requested by ALTUS and the
correctness of any report or payments made under this Agreement.

      Upon timely request and at least [*****************] prior written notice
from ALTUS, such audit shall be conducted during FALK's regular business hours
in such a manner as to not unnecessarily interfere with FALK's normal business
activities, and shall be limited to results in the [*******************] prior
to audit notification. Such audit shall not be performed more frequently than
[********************] nor more frequently than [***] with respect to records
covering any specific period of time. All information, data documents and
abstracts herein referred to shall be used only for the purpose of verifying
royalty statements or compliance with this Agreement, shall be treated as FALK
Confidential Information subject to the obligations of this Agreement and need
neither be retained more than [************] after completion of an audit
hereof, if an audit has been requested; nor more than [*********] from the end
of the calendar year to which each shall pertain; nor more than [***********]
after the date of expiration or termination of this Agreement. If the audit
reveals an underpayment, FALK shall promptly make up such underpayment with
interest, to the extent permitted by applicable law, with such interest payment
calculated for each month during the delinquent period at the Prime rate
applicable on the last day of such month as reported in the Wall Street Journal
from time to time, plus, at ALTUS' option, an additional [*********], calculated
on the number of days such underpayment amount is overdue. If the audit reveals
that the royalties owed by FALK to ALTUS for the countries specifically
requested and for any calendar year in total have been understated by more than
[*************], FALK shall, in addition, pay the reasonable costs of such audit
work. The failure of ALTUS to request verification of any royalty calculation
within the period during which corresponding records must be maintained will be
deemed to be acceptance of the royalty reporting.

      13.5 CONTRIBUTION OF INFORMATION. It is the intention of the Parties that
each will disclose to the other Party such information in its possession that is
useful to the development and commercialization of the Licensed Product in the
Field in the Territory.

      13.6 PUBLICITY REVIEW.

            (a) PRIOR TO FIRST COMMERCIAL SALE. Each of the Parties agree that
prior to the First Commercial Sale of the Licensed Product, neither Party will
issue any announcements, releases, statements or reports, or confirm any
statements made by Third Parties, pertaining to this Agreement or the
transactions contemplated hereby, unless agreed to in writing by the other
party, except as may be required by law or otherwise permitted herein. ALTUS and
FALK will jointly discuss and must first agree in writing before making any
statement to the public regarding this Agreement and the results of

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

clinical studies conducted hereunder. When a Party elects to make any such
statement it will give the other Party at least five (5) business day's notice,
unless disclosure is required by law in a shorter period of time, and allow the
other Party to review and comment on such statement. The Parties acknowledge the
importance of supporting each other's efforts to publicly disclose results and
significant developments regarding the Licensed Product. The principles to be
observed by ALTUS and FALK in such public disclosures will be: accuracy, the
requirements for confidentiality under Article 10, the advantage a competitor of
ALTUS or FALK may gain from any public statements under this Section 13.6, and
the standards and customs in the biotechnology and pharmaceutical industries for
such disclosures by companies comparable to ALTUS and FALK. The terms of this
Agreement may also be disclosed to (a) government agencies where required by
law, including filings required to be made by law with the Securities and
Exchange Commission, or any national securities exchange or quotation system,
(b) Third Parties with the prior written consent of the other Party, which
consent shall not be unreasonably withheld, and (c) investors and potential
investors, lenders and potential lenders, and any other sources of potential
financing for either Party; provided, however, that in the case of (b) and (c)
above, such disclosure is made under a binder of confidentiality at least as
restrictive as the confidentiality provisions in Section 10.1 above (in the case
of Third Parties), so long as highly sensitive terms and conditions such as
financial terms are extracted from the Agreement or not disclosed upon the
request of the other Party and the disclosing Party gives reasonable advance
notice of the disclosure under the circumstances requiring the disclosure.

            (b) AFTER FIRST COMMERCIAL SALE. After the First Commercial Sale of
the Licensed Product, each Party agrees to provide the other Party with at least
48 hours (or sooner if required to comply with applicable law) prior written
notice of any proposed public announcement or press release regarding the
Licensed Product or this Agreement.

                                   ARTICLE 14.
                              TERM AND TERMINATION

      14.1 TERM. This Agreement shall commence as of the Effective Date. The
Parties have specifically provided elsewhere in this Agreement the term during
which certain rights and obligations hereunder shall apply. Unless sooner
terminated as provided in this Article 14, the remaining provisions of this
Agreement relating to activities in the Field in the Territory shall continue in
effect until the date on which ALTUS is no longer entitled to receive a royalty
on the Licensed Product (the "Term"). Upon expiration of this Agreement (other
than by termination by either party), the licenses set forth in Section 8.1
shall be deemed to be [******************] and FALK shall thereafter be
[***************************] the Licensed Product, either by itself or through
its Affiliates or sublicensees, under the Licensed Product Patents and Licensed
Product Know-how in the Territory [****************] to ALTUS.

      14.2 TERMINATION FOR MATERIAL BREACH (OTHER THAN NON-PAYMENT). In the
event there shall have occurred a material adverse breach of this Agreement or a
material adverse default in the observance or performance of any provision of
this Agreement (other than for non-payment of monies due) by a Party (the
"Defaulting Party"), the Party claiming the same (the "Non Defaulting Party")
shall promptly provide detailed notice thereof to the Defaulting Party. The
Defaulting Party shall have sixty (60) days from the date of receipt of such
notice to cure the material adverse breach or material adverse default detailed
in such notice and, if the same is timely cured within such sixty (60) day
period the provisions of this Agreement shall remain in full force and effect.
In the event that the material adverse breach or material adverse default
detailed in such notice (other than on account of nonpayment of monies owed)
cannot with due diligence be cured within such sixty (60) day period and the
Defaulting Party promptly notifies the Non Defaulting Party of the period (not
exceeding 120 days) in which it anticipates that it can be cured, the time to
cure such material adverse breach or material adverse default shall be

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>
extended for such period (up to a maximum of 120 days) as may be necessary to
cure the same with all due diligence. This Agreement may be terminated forthwith
by service of notice in writing by the Non Defaulting Party in the event that
the Defaulting Party shall fail to cure such material adverse breach or material
adverse default within such initial or extended period. Upon such termination,
the Parties shall have no further rights or obligations under this Agreement
except as set forth in this Article 14 or as otherwise specifically provided in
this Agreement.

      14.3 TERMINATION FOR NON-PAYMENT. If FALK fails to make any of the
payments required under Section 6.1 (other than those set forth in Sections
6.1(a) and (b)) and Section 6.2 within thirty (30) days after such payment
becomes payable, or if FALK fails to reimburse ALTUS for the FALK Development
Costs when due and such failure is not remedied within sixty (60) days after
FALK's receipt of written notice from ALTUS of such breach, or if FALK fails to
make the payments set forth in either Section 6.1(a) or Section 6.1(b) when due,
then ALTUS shall have the right to terminate this Agreement; provided however
that ALTUS shall not be entitled to terminate the Agreement for FALK's failure
to make any payments (other than those set forth in Sections 6.1(a) and (b)) if
(i) the Parties have a bona fide disagreement as to any event that would trigger
such payment to be made to ALTUS, (ii) either FALK or ALTUS has initiated the
dispute resolution procedures set forth in Sections 16.1 and 16.2 in order to
resolve such disagreement, and (iii) FALK has made payment of all such disputed
amounts into an escrow account pending resolution of such disagreement. If FALK
fails to make royalty payments required under Section 6.4, then such failure
shall only be grounds for termination if it relates to at least
[*************************] and such failure is not cured within thirty (30)
days of FALK's receipt of written notice of such breach. In no event shall ALTUS
be entitled to terminate this Agreement for a failure of FALK to make royalty
payments if the Parties are in disagreement as to the exact amount of royalties
owed by FALK to ALTUS, provided that FALK shall in this event pay the undisputed
amount of royalties to ALTUS and the disputed part shall be paid by FALK into an
escrow account pending and subject to the dispute resolution process set forth
in Sections 16.1 and 16.2. For purposes of further clarification, it is hereby
further expressly stated that in the case of underpayment that has been revealed
by performing an audit pursuant to Section 13.4, then ALTUS shall only be
entitled to the rights provided under Section 13.4 and such underpayments shall
not be grounds for termination. The right of a Party to terminate this Agreement
under this Section 14.3, shall not be affected in any way by its waiver or
failure to take action with respect to any prior breach or default and shall be
without prejudice to any other rights of the Non Defaulting Party in connection
with any such material adverse breach or material adverse default.

      14.4 [RESERVED]

      14.5 FALK TERMINATION.

            (a) Upon receipt by FALK from ALTUS of the Phase I Report, the Phase
II Report, or the Phase III Report, and for thirty (30) days after receipt of
the same, FALK shall have the right to terminate this Agreement on ninety (90)
days prior written notice.

            (b) In the event the manufacture, use, or sale of the Licensed
Product in the Field in the Territory is found to infringe a valid Third Party
patent and is enjoined by a court or tribunal of competent jurisdiction and
neither FALK nor ALTUS is able to design around such infringement or negotiate a
license to such patent on commercially reasonable terms after using good faith
efforts to do so, FALK shall have the right to terminate this Agreement
immediately. In order to terminate this Agreement under this Section 14.5, FALK
shall be required to satisfy all of the requirements set forth in Sections
14.6(a) and 14.6(c)(i)-(v) below upon such termination, which requirements shall
survive termination of this Agreement.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      14.6 EFFECT OF TERMINATION.

            (a) Termination pursuant to Section 14.2, 14.3, 14.5 or 14.7 shall
not relieve either party of the performance of any obligations incurred or
payments due prior to the effective date of termination which is uncancellable.

            (b) Notwithstanding the foregoing and save as provided otherwise in
Section 14.6(d) hereinunder, if this Agreement is terminated pursuant to
Sections 14.2 or 14.3, the following shall apply:

                  (i) FALK shall use its [*************] to effect a smooth and
orderly transition of any already on-going clinical studies, Regulatory Approval
or pre-marketing efforts to ALTUS (including all data and reports in the
possession of FALK);

                  (ii) FALK shall make its personnel and other resources
reasonably available to ALTUS as necessary to effect an orderly transition of
any development responsibilities, with the reasonable cost of such personnel and
resources to be borne by the defaulting Party after the effective date of
termination;

                  (iii) all rights and licenses granted herein to FALK shall
revert to ALTUS, for no additional consideration, and immediately terminate, and
FALK shall assign all right, title and interest in and to the Product
Trademark(s) (worldwide) to ALTUS; and

                  (iv) FALK shall provide and assign over to ALTUS, at the
defaulting Party's expense, all clinical data, Drug Approval Applications,
Regulatory Approvals and all other regulatory documentation specifically
relating to the Licensed Product that FALK may have developed in its activities
under this Agreement.

            (c) FALK shall have the [************************] this Agreement at
any time upon [*************] written notice to ALTUS if there has been a
[********] imposed by a regulatory authority in Germany, United Kingdom or
France for at least [************]; provided, however, that FALK complies with
the provisions of Section 14.6(b)(i)-(iv) above.

            (d) In the event that ALTUS materially breaches its development
obligations under Section 4.1 hereinabove by making insignificant efforts to
satisfy such obligations and FALK terminates the Agreement pursuant to Section
14.2 above, the following shall apply:

                  (i) FALK shall be automatically granted by ALTUS a license to
the Licensed Product Patents and the Licensed Product Know-how to enable FALK to
manufacture, develop, commercialize, market, sell and distribute the Licensed
Product in the Territory; provided, however, the royalty payable by FALK to
ALTUS pursuant to Section 6.4 shall be [*******************************] and
FALK shall have [***********************] pursuant to Sections 6.1 or 6.2 for
events achieved after the date of termination; and

                  (ii) FALK shall be entitled to continue to use, [***********],
all data and reports which have been generated in the course of the development
and all such data and reports shall be made available by ALTUS to FALK.

      14.7 BANKRUPTCY. Either Party may, in addition to any other remedies
available to it by law or in equity, terminate this Agreement, in whole or in
part as the terminating Party may determine, by written notice to the other
Party in the event the other Party shall have become bankrupt, or shall have

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

made an assignment for the benefit of its creditors or there shall have been
appointed a trustee or receiver of the other 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 other 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 ninety (90)
days undismissed, unbonded and undischarged. All rights and licenses granted
under to this Agreement by one Party to the other Party are, and shall otherwise
be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses
of rights to "intellectual property" as defined under Section 101 (56) of the
Bankruptcy Code. The Parties agree that the licensing Party under this Agreement
shall retain and may fully exercise all of its rights and elections under the
Bankruptcy Code in the event of a bankruptcy by the other Party. The Parties
further agree that in the event of the commencement of a bankruptcy proceeding
by or against one Party under the Bankruptcy Code, the licensee shall be
entitled to complete access to any such intellectual property pertaining to the
rights granted in the licenses hereunder of the Party by or against whom a
bankruptcy proceeding has been commenced and all embodiments of such
intellectual property.

      14.8 SURVIVING RIGHTS. Except as modified in this Article 14, the
obligations and rights of the Parties under Articles 10, 14, 15 and 16, and
Sections 11.1(a), 11.2, 13.4, 13.6 (but only regarding disclosures required by
law), 17.4, 17.5, 17.7, 17.8, 17.9, 17.10 and 17.14 of this Agreement will
survive any termination or expiration of this Agreement.

      14.9 ACCRUED RIGHTS, SURVIVING OBLIGATIONS. Except as specifically
provided in this Agreement, termination, relinquishment or expiration of the
Agreement for any reason shall be without prejudice to any rights which shall
have accrued to the benefit of either Party prior to such termination,
relinquishment or expiration, including damages arising from any breach
hereunder. Except as specifically provided, such termination, relinquishment or
expiration shall not relieve either Party from obligations which are expressly
indicated to survive termination or expiration of the Agreement.

                                   ARTICLE 15.
                                 INDEMNIFICATION

      15.1 INDEMNIFICATION BY FALK. FALK hereby agrees to. save, defend and hold
ALTUS and its agents and employees harmless from and against any and all losses,
damages, liabilities, settlements, penalties, fines, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Losses") resulting or alleged to result from (i) any breach by
FALK of any of the representations or warranties set forth in Section 12.2
above, or (ii) any actual or asserted violation of applicable law or regulation
by FALK, its Affiliates and/or distributors by virtue of which the Licensed
Product advertised, marketed, handled, stored, distributed or sold by FALK, its
Affiliates and/or distributors shall be alleged or determined to be adulterated,
mislabeled or otherwise not in compliance, in either case except to the extent
such Losses result from the [******************************] of ALTUS or its
employees or agents. This indemnification provision shall include any reasonable
attorney's fees incurred by ALTUS in connection with enforcing this
indemnification.

      15.2 INDEMNIFICATION BY ALTUS. ALTUS hereby agrees to save, defend and
hold FALK and its agents and employees harmless from and against any and all
Losses resulting or alleged to result from (i) any breach by ALTUS of any of the
representations or warranties set forth in Section 12.1 above, or (ii) any
actual or asserted violation of applicable law or regulation by ALTUS or its
Affiliates by virtue of which the Licensed Product manufactured, handled,
stored, distributed or sold by ALTUS or its Affiliates shall be alleged or
determined to be adulterated, mislabeled or otherwise not in compliance, in
either case except to the extent such Losses result from the
[*******************************] of

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

FALK or its employees or agents. This indemnification provision shall include
any reasonable attorney's fees incurred by FALK in connection with enforcing
this indemnification.

      15.3 INDEMNIFICATION CONDITIONS. In the event that a Party is seeking
indemnification under Section 15.1 or 15.2 above, it shall inform the
indemnifying Party of a claim as soon as reasonably practicable after it
receives notice of the claim, shall permit the indemnifying Party to assume
direction and control of the defense of the claim (including the right to settle
the claim solely for monetary consideration), shall cooperate as requested (at
the expense of the indemnifying Party) in the defense of the claim, and shall
not settle or compromise the claim without the express written consent of the
indemnifying Party.

      15.4 INSURANCE. Each Party agrees to maintain [*******] insurance coverage
with respect to all occurrences arising out of human clinical trials with
respect to the Licensed Product and all occurrences arising out of the sale of
the Licensed Product pursuant to this Agreement. Each Party shall furnish the
other Party with a copy of such insurance policies.

                                   ARTICLE 16.
                               DISPUTE RESOLUTION

      16.1 DISPUTES. The Parties recognize that disputes as to certain matters
may from time to time arise during the Term of this Agreement which relate to
either Party's rights and/or obligations hereunder. It is the objective of the
Parties to establish procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to litigation. To accomplish this objective, the Parties agree to follow
the procedures set forth in this Article 16 if and when a dispute arises under
this Agreement.

      Unless otherwise specifically recited in this Agreement, disputes among
the Parties relating to material business, scientific or management issues
arising out of this Agreement (other than issues for which either Party has sole
and exclusive responsibility and control under this Agreement) shall first be
presented to the [*****************] for resolution. If a majority of the
members of the [*******************] cannot agree on a resolution to the issue
within [****************] of being requested by a Party to resolve a dispute,
such dispute shall be presented to the [*************] of FALK and of ALTUS, or
their respective designee, for resolution. In the event that the chief executive
officer of FALK and ALTUS, or their respective designees, cannot resolve the
dispute within [*****************] of being requested by a Party to resolve a
dispute then the following shall apply: In the event the dispute directly or
indirectly relates to the clinical development of the Licensed Product, ALTUS
shall have [*************************] with respect to such clinical
development issues, notwithstanding anything in this Agreement to the contrary;
provided, however, any such decisions shall be based on [*********************]
that such decision is consistent with the objective of managing an effective and
efficient Combined Phase III Clinical Trial that satisfies the development,
regulatory and commercialization requirements of North America and the Territory
and leverages the clinical development activities in both territories. If the
dispute does not relate to the clinical development of the Licensed Product,
either Party may, by written notice to the other, invoke the provisions of
Section 16.2 hereinafter.

      16.2 ARBITRATION. The Parties agree that any dispute, controversy or claim
arising out of or relating to this Agreement, or the breach, termination,
performance or invalidity thereof, other than disputes relating to the clinical
development of the Licensed Product, that cannot be resolved pursuant to Section
16.1 above shall be resolved through binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
except as modified herein. Each such arbitration shall be conducted before a
penal of three independent experts with relevant business, financial, scientific
or other experience based on the subject matter of the dispute. Each Party shall
select

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

one arbitrator and the arbitrators so elected shall appoint the third
arbitrator. In the event the arbitrators elected by the Parties cannot agree on
the third arbitrator, an arbitrator with the aforementioned qualifications shall
be selected by the AAA in accordance with the procedures set forth by the
Commercial Arbitration Rules of the AAA. A reasoned arbitration decision shall
be rendered in writing within thirty (30) days of the conclusion of the
arbitration hearing and shall be binding and not be appealable to any court in
any jurisdiction. The prevailing Party may enter such decision in any court
having competent jurisdiction. Each Party must bear its own attorney's fees and
associated costs and expenses. The arbitrators shall have the authority to grant
specific performance and shall allocate costs between the Parties (excluding
attorney's fees). Any such arbitration shall be held in Boston, Massachusetts.
Nothing in this Article 16.2 shall be construed to limit or preclude a Party
from bringing an action in any court of competent jurisdiction for injunctive or
other equitable relief including an action for specific Performance to compel
the other Party to perform its obligations under this Agreement.

                                   ARTICLE 17.
                                  MISCELLANEOUS

      17.1 ASSIGNMENT. This Agreement may not be assigned by either Party
without the consent of the other, except that each Party may, without such
consent, assign this Agreement and the rights, obligations and interests of such
Party, in whole or in part, to any of its Affiliates, wholly-owned subsidiaries,
to any [***************************************************] to which this
Agreement pertains, or of all of its [************], or to any
[******************] resulting from any [******************] of such Party with
or into such corporation (collectively a [***********]) where such [***********]
to a Party could reasonably be expected to satisfy that Party's obligations
hereunder, provided, however, that in the case of an assignment to an Affiliate
or a subsidiary, the assigning Party shall remain fully responsible for all of
its obligations hereunder. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties. Any attempt to
assign any portion of this Agreement in violation of this Section 17.1 shall be
void. Subject to the foregoing, any references to ALTUS and FALK hereunder shall
be deemed to include the successors and permitted assigns thereof.

      17.2 LEGAL COMPLIANCE. Each Party shall comply in all material respects
with all laws, rules and regulations applicable to the conduct of its business
pursuant to this Agreement.

      17.3 FORCE MAJEURE. Neither Party shall lose any rights hereunder or be
liable to the other Party for damages or losses on account of failure of
performance by the defaulting Party if the failure is occasioned by government
action, war, terrorism, fire, explosion, flood, strike, lockout, embargo, act of
God, or any other cause beyond the control and without the fault or negligence
of the defaulting Party, provided that the Party claiming force majeure has
exerted all reasonable efforts to avoid or remedy such force majeure; provided,
however, that in no event shall a Party be required to settle any labor dispute
or disturbance. Such excuse shall continue as long as the condition preventing
the performance continues. Upon cessation of such condition, the affected Party
shall promptly resume performance hereunder. Each Party agrees to give the other
Party prompt written notice of the occurrence of any such condition, the nature
thereof, and the extent to which the affected Party will be unable to perform
its obligations hereunder. Each Party further agrees to use all reasonable
efforts to correct the condition as quickly as possible and to give the other
Party prompt written notice when it is again fully able to perform its
obligations.

      17.4 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      17.5 NO RIGHT TO USE NAMES. Except as otherwise provided herein, no right,
express or implied, is granted by either Party to the other to use in any manner
the name "ALTUS," "FALK," "TheraCLEC," "ThereCLEC-Total," the "ALTUS" logo, the
"Dr. FALK" logo, or any other trade name or trademark of ALTUS, FALK or their
Affiliates in connection with the performance of the Agreement.

      17.6 Notices. All notices hereunder shall. be in writing and shall be
deemed given if delivered personally or by registered or certified mail (return
receipt requested), postage prepaid, or sent by express courier service with
tracking service, to the Parties at the following addresses (or at such other
address for a Party as shall be specified by like notice; provided, that notices
of a change of address shall be effective only upon receipt thereof).

IF TO ALTUS TO:              ALTUS BIOLOGICS INC.
                             625 Putnam Avenue
                             Cambridge, MA. 02139
                             Attention: Richard Forrest, Esq.
                                        Corporate Counsel
                             Telecopy:  617-299-2999

WITH A COPY TO:              MINTZ LEVIN COHN FERRIS GLOVSKY AND POPEO, P.C.
                             666 Third Avenue New York, NY 10017
                             Attention: Richard G. Gervase, Esq.
                             Telecopy:  212-983-3115

IF TO FALK TO:               DR. FALK PHARMA GMBH
                             Leinenweberstrafie 5
                             Postfach 6529
                             79041 Freiburg
                             Germany
                             Attention: Ursula Falk, Managing Director
                             Telecopy:  + 49-761-1514-356

WITH A COPY TO:              HENNERKES, KIRCHDORFER & LORZ
                             (Attorneys at Law) Jahnstrale 43
                             D - 70597 Stuttgart
                             Attention: Dr. Rainer Lorz
                             Telecopy:  + 49-711-72 57 920

      17.7 WAIVER. Except as specifically provided for herein, the waiver from
time to time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party's rights or remedies provided in this
Agreement.

      17.8 SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any Party or circumstance shall, to any extent, be
held to be invalid or unenforceable, then (a) the remainder of this Agreement,
or the application of such term, covenant or condition to Parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent permitted by law;
and (b) the Parties hereto covenant and agree to renegotiate any such term,
covenant or application thereof in good faith in order to provide a reasonably
acceptable alternative to the term, covenant or condition of this Agreement or
the application thereof that is invalid or

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.

      17.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

      17.10 AMBIGUITIES. Ambiguities, if any, in this Agreement shall not be
construed against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.

      17.11 HEADINGS. All headings are for reference purposes only and shall not
in any way affect the meaning or interpretation of this Agreement.

      17.12 COUNTERPARTS. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

      17.13 ENTIRE AGREEMENT. This Agreement, including all Exhibits attached
hereto, which are hereby incorporated herein by reference, sets forth all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof and supersedes and terminates all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties with respect to the subject matter hereof other than as set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties hereto unless reduced to writing and
signed by the respective authorized officers of the Parties.

      17.14 NO THIRD PARTY BENEFICIARY. Except as expressly provided herein,
this Agreement shall not confer any rights or remedies upon any Third Party
other than the Parties and their respective successors and permitted assigns.

                    [This space is intentionally left blank.]

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the date and year first above written.

ALTUS BIOLOGICS, INC.                   DR. FALK PHAMA GMBH

By: /s/ Peter Lanciano                  By: /s/ Ursula Falk
    -------------------------               -------------------------

Name: Peter Lanciano                    Name: Ursula Falk

Title: President & CEO                  Title: General director

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    EXHIBIT A
                            LICENSED PRODUCT PATENTS

APPENDIX 1

<TABLE>
<CAPTION>
COUNTY         SERIAL NO.     FILING DATE     STATUS     PATENT NO.   EXPIRES        ASSIGNEE
------         ----------     -----------     ------     ----------   -------        --------
<S>            <C>            <C>             <C>        <C>          <C>            <C>
[***]            [***]           [***]         [***]           --        --            [***]
[***]                                                                                  [***]
                                                                                       [***]
                                                                                       [***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***]            [***]           [***]         [***]           --        --            [***]
[***]                                                                                  [***]
[***]                                                                                  [***]
                                                                                       [***]

[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
COUNTY         SERIAL NO.     FILING DATE     STATUS     PATENT NO.   EXPIRES        ASSIGNEE
------         ----------     -----------     ------     ----------   -------        --------
<S>            <C>            <C>             <C>        <C>          <C>            <C>
[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]
[***]

[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<CAPTION>
COUNTY         SERIAL NO.     FILING DATE     STATUS     PATENT NO.   EXPIRES        ASSIGNEE
------         ----------     -----------     ------     ----------   -------        --------
<S>            <C>            <C>             <C>        <C>          <C>            <C>
[***]
[***]            [***]           [***]         [***]           --         --           [***]

[***]
[***]
[***]
[***]

[***]            [***]           [***]         [***]           --         --           [***]
[***]

[***]
[***]
[***]
[***]
[***]
[***]

[***]            [***]           [***]         [***]        [***]      [***]           [***]
                                                                                       [***]
                                                                                       [***]
                                                                                       [***]

[***]            [***]           [***]         [***]           --         --           [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    Exhibit B
                                Development Plan

      The purpose of this Development Plan (Plan) is to provide guidance on how
to define, organize and execute an effective path by which Altus and Falk will
effectively achieve the development and commercialization of the
TheraCLEC(TM)-Total Product. This Plan will be used to understand the role of
Falk and Altus' management systems and to begin to discuss the format and
contents of the Program along with the roles and responsibilities of both
parties. The central themes of the Plan will include those elements that are
critical to effective decision making and maximizing the long-term value of
TheraCLEC(TM)-Total in the European Union.

      The Plan should be used by both Falk and Altus as a mechanism for
effective communication and creating a clear understanding of each parties
responsibilities. The Plan will capture, in a single place, timely information
currently found across many independent documents. The contents, style and
format of the Plan will evolve through the Steering Committee meetings. The
current estimated clinical timelines, non-clinical costs, formulation costs, and
Phase la and lb study synopsis and process development plans are outlined in
Appendix 2. Updates to the Plan are expected to be coordinated with major
milestones (e.g., Phase I, Phase II, Phase III clinical studies completion,
etc.). Additional updates may also be synchronized with the cycle of the
Steering Committee Team meetings. The Plan should have sections to present the
essential elements of each major functional area's implementation strategy. The
Plan should not be considered to be complete currently, but instead serve as a
template for effective communication and planning.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Phase I -

Falk Responsibilities -

Falk shall be responsible for providing input into the development of the Phase
II clinical study protocol to ensure that the study design and regulatory
aspects will be consistent with the European regulatory needs. Falk shall
cooperate in good faith with Altus' request to support the regulatory process
[***].

Altus Responsibilities -

Altus will be responsible for managing [***] the Phase I clinical trials. Altus
will have responsibility for control and development including but not limited
to formulating overall development plans, managing pre-clinical and non-clinical
activities, making overall decisions regarding the priority and design of all
clinical studies, managing the clinical team activities, management of
regulatory activity, determination of priority with respect to seeking
regulatory approvals. Altus will ensure that the clinical studies and data
conform to the International Committee on Harmonization (ICH) Guidelines to
enable the data to be transferable to a European Dossier submission. Altus will
also be responsible for all non-clinical product development aspects required by
the US Food and Drug Administration (FDA) and to ensure that these aspects will
be applicable to the European Dossier. Altus shall be responsible for the scale
up and manufacturing of the finished product for the clinical trials, and shall
provide Falk with the current product profile and a Target Product Profile.

Altus shall be responsible for managing formulation development and market
research for both the solid and liquid dosage forms and will seek input from the
Steering Committee on development issues that pertain to formulation
development, as appropriate. Altus shall be responsible for data collection of
non-clinical studies, and shall provide all relevant data to Falk. Altus shall
be responsible for filing the Orphan Drug Application and coordinating the
approval process with the EMEA Committee for Orphan Medicinal Products. Altus
shall be responsible for conducting all meetings, discussions, and routine
telephone communications, with the FDA, the EMEA, or other regulatory authority
related to clinical studies for all indications for TheraCLEC(TM)-Total. Altus
will look to involve Falk in such communication and both parties will keep the
Steering Committee Team apprised of all material communications with regulatory
authorities.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Post - Phase I -

Mutual Responsibilities -

Through the Steering Committee both companies will identify an integration
process for the clinical and regulatory programs. Falk and Altus will use all
resources to identify potential study investigators and thought leaders, for
their participation in development meetings. Altus will begin the process for
collaboration between Altus, Falk and the European Agency for the Evaluation of
Medicinal Products. Altus and Falk will work together to identify a publication
plan strategy. Altus will be responsible for all submission of data to
regulatory authorities and peer-reviewed journals but will work with Falk to
identify key participants for each Territory. Altus and Falk will work to
evaluate and understand TheraCLEC(TM)-Total's key product audience, current and
future competitors, and the promotional environment. These activities will
assist in and provide the necessary information for [***] This analysis should
include an evaluation of [***]. Both companies will collaborate to develop and
share through the Steering Committee an effective Marketing/Business plan for
their respective Territories, that will include: a [***].

Falk Responsibilities --

Falk shall work to identify potential clinical trial investigators and also to
develop a plan for [***]. Falk shall work through the Steering Committee
meetings to produce a Target Product Profile (to include a technical profile,
clinical profile and items related to pharmaceutical form). Since [***] for the
success of the clinical studies, [***] - Falk shall manage the [***] program
process to [***]clinical development and market acceptance.

Altus Responsibilities --

Altus will be responsible for managing [***] the Phase II clinical trials. Altus
will coordinate, as necessary, collaborative meetings between Altus, Falk and
the EMEA Committee for Orphan Medicinal Products. Altus shall provide Falk with
a list of key thoughts leaders from North America with whom it is coordinating
the clinical development program. Altus shall use best efforts to make all
necessary individuals available for program updates. Altus will continue
development work on [***]for both the Phase III clinical studies and
commercialization. Altus will be responsible for designing, managing [***] Phase
II dose ranging studies for both the solid and liquid formulations. These Phase
II studies will be compliant with the relevant ICH guidelines.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Phase II -

Mutual Responsibilities -

Falk will work with Altus to identify the necessary Contract Research
Organization (s) (CRO's) that will be used to conduct the Phase III clinical
studies. Falk will be responsible for collection, management and execution of EU
regulatory documentation and work closely with Altus in the control and
execution of such documentation. Falk will work with Altus to identify [***].
Falk and Altus shall work to develop a [***].

Falk Responsibilities  -

Falk shall continue to identify target clinical sites and primary investigators
for the Phase III clinical study. Falk shall also provide the necessary
regulatory, medical, clinical, patient and logistical support for the
advancement of the program into Phase III study leading to a successful European
Dossier. Falk shall propose its initial recommended [***] strategy.

Altus Responsibilities -

Altus will be responsible for designing, coordinating [***] Phase III studies
for [***]. Altus will continue development work on [***] for both the Phase III
clinical studies and commercialization. These Phase III studies will be
compliant with the relevant ICH guidelines. Altus shall [***].

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Post - Phase II -

Mutual Responsibilities -

Altus and Falk shall use their best efforts to update each other on all market
research, relevant marketing plans, training programs and promotional efforts
during Steering Committee meetings. Using the data generated during the previous
phase, both companies will update the Target Product Profile. Both companies
will plan to develop an integrated market research and thought leader
development program. To more effectively plan a targeted clinical program Falk
and Altus shall provide an assessment of [***] for each of the respective
Territories and discuss their findings with the Steering Committee to enable the
design of a targeted [***] clinical program. Altus will work with Falk (and
outside investigators) to design [***] Phase III clinical protocol, which [***].
Altus will ultimately be responsible to ensure that this protocol will be
compliant with ICH guidelines. Both companies shall look to identify [***]. Both
companies shall provide updates for [***] and strategy for post-Phase III. Falk
and Altus will work to identify companies with potential packaging capabilities
for the European Union. Falk and Altus will also work to develop a clinical
trial materials forecast for the Phase III/IIIb trial. Falk and Altus shall
identify a shipping mechanism for clinical sites in the European Union. Both
parties shall develop an effective planning mechanism to best manage [***] Phase
III clinical studies. The mechanism shall incorporate a relevant and timely
centralized procedure for accumulating necessary clinical and regulatory
information.

Falk Responsibilities -

Falk shall work to integrate all regulatory issues concerning clinical studies
and packaging vendors into the overall regulatory plan. Falk shall update the
marketing plan and [***]. Falk will update the thought leader development plan
as needed. [***] using the results of the investigation should be made for the
clinical and commercial phases of TheraCLEC(TM)-Total. Falk shall be responsible
for recruitment of participating investigators, sites and patients.

Altus Responsibilities -

Altus shall update Falk during Steering Committee meetings on all relevant
clinical, non-clinical and marketing activities and data. Altus will plan [***]
to help develop the necessary information for the clinical and commercial
programs. Altus will conduct an ICH compliant Phase III trial in North America
and develop material supply to ensure that sufficient material can be provided
for the Phase III study. Altus shall establish market research as it relates to
[***]. Altus shall submit to the appropriate [***]. Altus will continue
development work on the solid and liquid dosage forms for both the Phase III
clinical studies and commercialization.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Phase III -

Mutual Responsibilities

Falk and Altus will be responsible for coordinating and managing activities of
the CROs and clinical sites. Altus and Falk shall use their best efforts to
provide updates on all market research, relevant marketing plans, training
programs and promotional efforts during Steering Committee meetings. Falk and
Altus will work to more effectively define a Phase IIIb clinical study. Altus
and Falk will work to identify and carry out a strategy for regulatory meetings
to facilitate the EMEA approval process. Falk and Altus shall work to coordinate
an [***] as it becomes necessary. Both companies shall update their marketing
plans and coordinate logistics for an effective [***]. Altus and Falk shall
provide updates on the marketing plans to the Steering Committees for review.
Altus and Falk shall manage the Phase III regulatory documentation and provide
updates as available on the progress of the study. Falk and Altus will work to
begin the writing and submission planning of the European Dossier.

Falk Responsibilities -

Falk should complete the selection of a [***] so that all necessary regulatory
requirements can be addressed and they may enter into an agreement with a [***]
at this time. Falk shall provide updated forecasts on clinical material
requirements. Falk shall continue to update the thought leader base. Falk shall
submit a detailed annual plan for the commercialization of TheraCLEC(TM)-Total
to the Steering Committee. Based on [***] and trademark filings, Falk shall
obtain trademark approval for the Product trademark.

Falk shall be responsible for [***] of the Phase III study through the Phase III
program committee. Falk's support of the studies shall include, but not be
limited to CRO [***].

Altus Responsibilities -

Altus shall update Falk during Steering Committee meetings on all non-clinical
protocols and activities. Altus shall be responsible for establishing a
commercial manufacturing process for - and supply of - TheraCLEC(TM)-Total. The
manufacturing process shall be [***] required to meet the [***]
TheraCLEC(TM)-Total in [***]. Altus may choose to establish [***]. Altus shall
be responsible for managing the European portion of the Phase III study through
a Phase III Program Committee to be established by the Steering Committee. Altus
responsibilities shall include, but not limited to protocol and CRO management,
physician and patient reimbursement, physician and patient care, data
collection, statistical support, coordination of clinical team activity and
coordination of regulatory activities. Altus shall be responsible for the
manufacture and testing of clinical material supply compliant with ICH
Guidelines.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Post - Phase III --

Mutual Responsibilities -

Falk will work with Altus to complete the writing and submission of the European
Dossier. Altus and Falk shall use their best efforts to provide updates on all
market research, relevant marketing plans, training programs and promotional
efforts during Steering Committee meetings. Using the data generated during the
previous phase, both companies should update the Target Product Profile. Altus
and Falk shall provide each other 3 copies of each marketing, promotional and
training piece, and shall establish a mechanism by which a [***] is established
that can serve as an effective mechanism for promotional material efforts. Falk
will work with Altus to determine the [***]. Both companies shall determine how
[***]. Falk and Altus shall provide the Steering Committee a pre-launch and
launch plan so that both companies can integrate data and resources.

Falk Responsibilities -

Falk shall complete and enter into an agreement with a [***]. Falk shall
finalize [***] that it plans on seeking through the regulatory authorities. Falk
shall coordinate country-to-country regulatory, distribution and [***]
requirements. Near, mid and long term forecasts for the commercial phase of
TheraCLEC(TM)-Total shall be made using the results of the Phase III
investigation. A [***] should be provided that is updated on a [***] basis. Falk
will maintain a record of all non-medical and medical related complaints and
will notify Altus of any complaint in a sufficient time to allow Altus to comply
with any regulatory requirements it may have with respect to such complaints.
Falk shall have responsibility for the commercialization and marketing of
TheraCLEC(TM)-Total in Europe. The responsibilities include but not limited to
handling, packaging and shipment of commercial product, designing and
implementing all product launch, promotion, marketing and sales activities,
booking sales, handling all returns, handling all aspects of order processing,
[***] receivables, providing customer medical information, collection of data of
sales to hospitals and other end users, distribution, inventory, and
warehousing. Consistent with regulatory requirements Falk will be responsible
for paying all packaging, distribution, sales and marketing, and collection
costs for TheraCLEC(TM)-Total. Falk may be asked to perform [***] post-marketing
commitments necessary for approval. Falk shall keep books of accounts containing
all particulars that may be necessary for the purpose of calculating royalties
payable to Altus. For the first [***] months after launch Falk shall provide
[***] sales updates.

Altus Responsibilities -

Altus shall make all data available to Falk for reference and launch preparation
activities in the Territory. Altus shall update Falk during Steering Committee
meetings on all clinical, non-clinical and marketing activities. Altus will
maintain a record of all non-medical and medical related complaints and will
notify Falk of any relevant complaint in a sufficient time to allow Falk to
comply with any regulatory requirements. Altus will plan [***] to help develop
necessary information for the clinical and commercial programs. Altus shall be
required to develop a [***]. Based on regulatory requirements Altus may be asked
to perform [***] commitments necessary for approval. As soon as practicable
after completion of the Phase III clinical study, Altus will enter into a [***]
of commercial supplies of TheraCLEC(TM)-Total for use in the Field in the
Territory. Altus shall also ensure that a second source exists for the
manufacture and supply of TheraCLEC.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.
<PAGE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

APPENDIX 2 -- ESTIMATED DEVELOPMENT PLAN

      A.    ESTIMATED CLINICAL TIMELINE (OCTOBER 25, 2002)

<TABLE>
<CAPTION>
                                     START        FINISH
                                     -----        ------
<S>                                  <C>          <C>
PHASE 1a TESTING
         [***]                       [***]        [***]
         [***]                       [***]        [***]
PHASE 1b STUDY
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
PHASE II STUDY -CAPSULE TESTING
         [***]                       [***]        [***]
         [***]                       [***]        [***]
PHASE II STUDY - LIQUID
         [***]                       [***]        [***]
         [***]                       [***]        [***]
PHASE III STUDY -TABLET              [***]        [***]
PHASE IV STUDY - TABLET              [***]        [***]
PHASE III STUDY - LIQUID             [***]        [***]
PHASE III STUDY - LIQUID             [***]        [***]
REGULATORY
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
         [***]                       [***]        [***]
</TABLE>

      B.    NON-CLINICAL STUDY COST ESTIMATES (OCTOBER 25, 2002)

<TABLE>
<S>                                  <C>          <C>        <C>
NONCLINICAL STUDIES
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
         [***]                       [***]        [***]      [***]
TOTAL NONCLINICAL STUDIES                                    [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      C.    ESTIMATED FORMULATION DEVELOPMENT / CLINICAL TRIAL MATERIAL
            DEVELOPMENT COSTS (OCTOBER 25, 2002)

<TABLE>
<S>                                                      <C>
FORMULATION DEVELOPMENT/CLINICAL TRIAL MATERIAL
[***]                                                    $    [***]

[***]                                                    $    [***]

[***]                                                    $    [***]

[***]                                                    $    [***]

[***]                                                    $    [***]

[***]                                                    $    [***]

TOTAL FORMULATION DEVELOPMENT/CLINICAL TRIAL MATERIAL    $    [***]
                                                         ----------
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      D.    PROTOCOL SYNOPSIS PHASE 1a


<TABLE>
<S>                                <C>          <C>   <C>    <C>    <C>   <C>
TITLE                              open-label safety and tolerability study of
                                   oral TheraCLEC(TM)-total in health volunteers
PHASE                              1
INDICATION                         [***]
OBJECTIVE                          [***]
STUDY DESIGN                       [***]
NUMBER AND DESCRIPTION OF SUBJECTS [***]
SUBJECT CRITERIA                   [***]
EXCLUSION CRITERIA                 [***]
LENGTH OF STUDY                    [***]
INVESTIGATIONAL                    -    [***]  [***]  [***]  [***]  [***] [***]
PRODUCT                                        [***]  [***]  [***]  [***] [***]
Medication Strength                            [***]  [***]  [***]  [***] [***]

Route

Dose Levels

Regimen
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

<TABLE>
<S>                        <C>  <C>       <C>      <C>
EVALUATIONS                               -        [***]
SCREENING
                                          -        [***]
                                          -        [***]
                                          -        [***]
                                          -        [***]
                                          -        [***]
                                          -        [***]
BASELINE ([***])                          -        [***]
ENROLLMENT ([***])                        -        [***]
TREATMENT PHASE                           -        [***]
                                ([***])   -        [***]
                                          [***]
                                          [***]
                           [***]([***])   [***]
                                 [***]    -        [***]
                                ([***])
STATISTICAL EVALUATIONS
                                  SAFETY  [***]
</TABLE>

      E.    PROTOCOL SYNOPSIS PHASE 1b

<TABLE>
<S>                                      <C>      <C>
TITLE                                    [***]
INDICATION                               [***]
OBJECTIVES                               PRIMARY:
                                         -        [***]
                                         SECONDARY:
                                         -        [***]
                                         -        [***]
                                         -        [***]
                                         -        [***]
STUDY DESIGN                             [***]
DRUG DOSAGE                              [***]
                                         [***]
                                         [***]
                                         [***]
                                         [***]
SAMPLE SIZE                              [***]
SUBJECT SELECTION                        [***]
OUTCOMES                                 [***]
                                         [***]
</TABLE>

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      F.    ESTIMATED YEARLY CLINICAL DEVELOPMENT COSTS (OCTOBER 25, 2002)

<TABLE>
<CAPTION>
                           2002       2003        2004       2005      2006      2007
                           ----       ----        ----       ----      ----      ----
<S>                        <C>        <C>         <C>        <C>       <C>       <C>
PHASE 1a STUDY             [***]
PHASE 1b STUDY             [***]      [***]
PHASE II STUDY-CAPSULE                [***]       [***]
PHASE H STUDY- LIQUID                 [***]       [***]
PHASE III STUDY- TABLET                           [***]      [***]     [***]
PHASE IV STUDY- TABLET                                                 [***]     [***]
PHASE III STUDY- LIQUID                           [***]      [***]     [***]
PHASE IV STUDY- LIQUID                                                 [***]     [***]
TOTAL                      [***]      [***]       [***]      [***]     [***]     [***]
</TABLE>

      G.    PROCESS DEVELOPMENT PLAN (OCTOBER 25, 2002)

                                    [***]

    [***]           [***]           [***]                    [***]
                                                 [***]

  [***]       [***]        [***]       [***]                 [***]

                                  DOCUMENTATION

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    EXHIBIT C
                   DEVELOPMENT COSTS AND PRODUCT LAUNCH COSTS

C.1   FALK DEVELOPMENT COSTS.

      FALK shall be responsible for paying all FALK Development Costs. "FALK
Development Costs" shall mean all Direct Costs (as defined below), and [***] of
all Indirect Costs (as defined below), incurred after the Effective Date of the
Agreement through the date of expiration or termination hereof. For the purposes
hereof, "Direct Costs" shall mean [***] costs, fees and expenses incurred by
ALTUS or FALK that are primarily related to (x) the portion [***] Direct Costs
include, but are not limited to, the costs, fees and expenses associated with
[***] [***] "Indirect Costs"shall mean [***] costs, fees and expenses (including
the European and non-European Portion of such costs, fees and expenses) by ALTUS
or FALK (other than Direct Costs) related to [***] Indirect Costs [***]
Notwithstanding the foregoing, the Parties agree that Direct Costs and Indirect
Costs shall [***] The Steering Committee shall have the authority to determine
whether particular costs, fees and expenses are to be considered Direct Costs or
Indirect Costs for the purposes of this Agreement. The Clinical Supplies
supplied by ALTUS to FALK for use in the development of the Licensed Product,
shall be charged [***] Notwithstanding the foregoing, to the extent that more
than [***] of the participants enrolled in a [***] are European participants
(the number of European participants in [***]being hereafter referred to as the
[***] shall be responsible for [***] to the extent such [***] would not have
been [***] Direct Costs but for the fact that such [***] were included in the
[***] Notwithstanding the foregoing, to the extent that more than [***] of the
participants enrolled in a [***] are participants in the non-European portion of
[***] (the number of non-European participants in [***] being hereafter referred
to as the [***] shall be responsible for [***] to the extent such [***] would
have been included in [***] but for the fact that such [***] Direct Costs were
included in the [***]

C.2   FALK MARKETING COSTS.

      FALK shall be responsible for paying all FALK Marketing Costs. "FALK
Marketing Costs" shall mean all direct and indirect costs [***].

      In addition, FALK, through the Falk Foundation e.V., shall organize [***].

C.3   ALTUS DEVELOPMENT COSTS.

      ALTUS shall be responsible for paying all ALTUS Development Costs. "ALTUS
Development Costs" shall mean all direct and indirect costs attributable to the
following activities with respect to the Licensed Product in the Field in the
Territory incurred after the Effective Date of the Agreement but before the date
of expiration or termination of the Agreement:

      (i)      [***];

      (ii)     [***];

      (iii)    [***];

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

      (iv)     [***];

      (v)      [***];

      (vi)     [***];

      (vii)    [***]; and

      (vii)    [***].

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    EXHIBIT D
               INITIAL STEERING COMMITTEE MEMBERS/GENERAL MANAGERS

ALTUS

1.  [***]
2.  [***]
3.  [***]

FALK

1. (General Manager)
2.
3.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

APPENDIX 1

TERRITORY

1. EUROPE                                      2. EUROPE (CONTINUED)
Andorra
Albania                                        Russia (including CIS countries)
Austria                                                     Armenia
Belgium                                                     Aserbaidschan
Bosnia-Herzegovina                                          Belarus
Bulgaria                                                    Georgia
Croatia                                                     Kazakhstan
Cyprus                                                      Kirgisistan
Czech Republic                                              Moldova
Denmark                                                     Russian Federation
Estonia                                                     Tadschikistan
Finland                                                     Turkmenistan
France                                                      Ukraina
Germany                                                     Uzbekistan
Gibraltar                                      Slovak Republic
Greece                                         Slovenia
Hungary                                        Spain
Ireland                                        Sweden
Iceland                                        Switzerland
Italy                                          Turkey
Latvia                                         United Kingdom
Liechtenstein                                  Republic of Yugoslavia
Lithuania
Luzembourg
Republic of Macedonia
Malta
Monaco                                         2. MIDDLE EAST
Netherlands                                    Egypt
North Ireland                                  Israel
Norway
Poland
Portugal
Romania

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                  Schedule 8.2

                       Vertex Pharmaceuticals Incorporated
                               130 Waverly Street
                               Cambridge, MA 02139

                                                              December ___, 2002

Dr. Falk Pharma GmbH
Leinenweberstra(beta)e 5
79041 Freiburg Germany

Ladies and Gentlemen:

      Reference is made to that certain Development, Commercialization and
Marketing Agreement between Altus Biologics Inc., a Delaware corporation
("Altus"), and Dr. Falk Pharma GmbH a German corporation ("Falk"), of even date
herewith, a copy of which is attached hereto as Exhibit A (the
"Commercialization Agreement"), and to that certain Technology License Agreement
between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation
("Vertex"), and Altus, dated as of February 1, 1999 (the "License Agreement").
The Commercialization Agreement as referenced in this letter shall refer to the
terms of the agreement set forth on Exhibit A, and not to any other terms
contained in any future alterations or amendments of that Agreement.

      Vertex hereby agrees [***].

      This Agreement shall be interpreted under the laws of the Commonwealth of
Massachusetts applicable to contracts performed therein. This Agreement sets
forth the entire understanding between the parties and supersedes any prior
agreements or understandings, whether written or oral, and may not be modified
except in writing, signed by both Vertex and Falk.

                                    Sincerely yours,

                                    VERTEX PHARMACEUTICALS
                                    INCORPORATED, a Massachusetts corporation

                                    By:___________________________________

                                    Its:__________________________________

                                    Agreed and Accepted,

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                    FALK:

                                    DR. FALK PHARMA GMBH, a German corporation

                                    By:____________________________________

                                    Its:___________________________________

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

Exhibit A

Development, Commercialization and Marketing Agreement

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.

<PAGE>

                                Schedule 12.1(f)
                   Trademarks Relating to the Licensed Product

ALTUS
ALTUS BIOLOGICS
CLEC
THERACLEC
THERACLEC-TOTAL

                              Trademark Litigation

ALTUS has filed a lawsuit against a company named "Altus Medical, Inc." ("AMI")
for trademark infringement of ALTUS' trademarks. A Settlement Agreement was
signed on December 18, 2002, pursuant to which [***].

                                Schedule 12.1(g)

                                  Subsidiaries

Altus Biocatalysis Inc.

PORTIONS OF THIS EXHIBIT WERE OMITTED AND HAVE BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE COMMISSION PURSUANT TO THE COMPANY'S APPLICATION REQUESTING
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT.