EXHIBIT 10.3

                       Collaboration and Licence Agreement

                                     Between

                           Arrow Therapeutics Limited
                                       and
                         Triangle Pharmaceuticals, Inc.
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THIS AGREEMENT, made as of this 15th day of July, 2000, BETWEEN Arrow
Therapeutics Limited a UK company with its principal place of business at
Woodmansterne Road, Carshalton, Surrey, SM5 4DS England ("ARROW") and Triangle
Pharmaceuticals Inc. a company incorporated in the State of Delaware with
offices at 4 University Place, 4611 University Drive, Durham. N.C. 27707 USA
("TRIANGLE").

WHEREAS,

ARROW and TRIANGLE wish to collaborate on the discovery and development of
Hepatitis C inhibitors which act through the viral replicase enzyme.

ARROW has rights in relation to a replicase enzyme assay (the "HCV Replicase
Assay") and has selected, and has access to, what it believes is a suitable
library of compounds to screen in the HCV Replicase Assay.

TRIANGLE has received certain confidential information about the project over
the course of several months commencing 22 September 1999, for evaluation and as
a result now wishes to collaborate with ARROW to identify a suitable compound or
compounds for development for world-wide sale for the treatment of Hepatitis C.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties agree as follows:

ARTICLE 1. DEFINITIONS AND INTERPRETATION

For purposes of this AGREEMENT, the following definitions shall apply:

1.1 "ACQUISITION COST" shall mean the actual invoiced price paid by a party to
any non-AFFILIATE third party for acquiring any item (e.g., ARROW-SELECTED
COMPOUNDS, or TRIANGLE-SELECTED COMPOUNDS), including but not limited to,
shipping and handling costs and customs duties incurred and paid by such party
in
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connection with the acquisition of such item but excluding all value-added tax,
excise and other sales and use taxes.

1.2 "AGREEMENT" or "LICENSE AGREEMENT" shall mean this AGREEMENT, including all
Schedules attached to this AGREEMENT.

1.3 "AFFILIATE" shall mean any corporation or non-corporate business entity
which controls, is controlled by, or is under common control with a party to
this AGREEMENT. A corporation or non-corporate business entity shall be regarded
as in control of another corporation if it owns, or directly or indirectly
controls, at least fifty (50%) percent of the voting stock of the other
corporation, or (a) in the absence of the ownership of at least fifty (50%)
percent of the voting stock of a corporation or (b) in the case of a
non-corporate business entity, or non-profit corporation, if (x) it possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or non-corporate business entity, as
applicable or (y) for financial accounting and reporting purposes, a party
consolidates the financial results of such corporation or non-corporate business
entity with the financial results of such party.

1.4 "ARROW KNOW-HOW" shall mean, all inventions, data, information, results,
know-how including, but not limited to, all manufacturing know-how of ARROW, and
improvements, whether patented or not, relating to the SELECTED COMPOUNDS, the
TRIANGLE-SOURCED COMPOUNDS and the PRODUCTS which are useful for the
development, registration, manufacture, use or sale of the PRODUCTS and which
are (a) owned by, rightfully held by and now in the possession of, or are
licensed to, ARROW or (b) are developed or acquired by ARROW (other than from
TRIANGLE or its AFFILIATES or SUB-LICENSEES) under this AGREEMENT during the
period beginning on the EFFECTIVE DATE and ending upon termination or expiration
of this AGREEMENT pursuant to Article 13, and (c) are not JOINT KNOW-HOW or a
JOINT INVENTION.

1.5 "ARROW PATENTS" shall mean all patents and patent applications (whether
filed or to be filed in the future), owned or controlled by ARROW or under which
ARROW
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has a right to practice with the right to extend such right to practice to
TRIANGLE, which contain claims relevant to the manufacture, use or sale of the
PRODUCTS which are filed prior to or during the term of this AGREEMENT in the
United States or any foreign jurisdiction, including any addition, continuation,
continuation-in-part or division thereof or any substitute application therefor;
any patent issued with respect to such patent application, any reissue,
extension or patent term extension of any such patent, and any confirmation
patent or registration patent or patent of addition based on any such patent,
and any other United States and foreign patent or inventor's certificate with
regard thereto. A complete list of ARROW PATENTS, as of the EFFECTIVE DATE, if
any, is attached hereto as Schedule I. Schedule I shall be updated from time to
time during the term hereof by ARROW promptly upon request by TRIANGLE.

1.6 "ARROW SELECTED COMPOUNDS" shall mean a SELECTED COMPOUND which is an
ARROW-SOURCED COMPOUND.

1.7 "ARROW-SOURCED COMPOUNDS" shall mean the library of compounds identified by
ARROW for further evaluation and outlined in Schedule II, attached hereto and
made a part hereof.

1.8 "DATE OF LAUNCH" shall mean the date of first commercial sale of a given
PRODUCT in a given country .

1.9 "DEVELOPMENT PROGRAMME" shall mean the development programme conducted by or
on behalf of TRIANGLE as further described in Article 7 hereof.

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

1.11 "FDA" shall mean the United States Food and Drug Association or its
successor entity.

1.12 "INFORMATION" shall mean all data and information supplied by one party to
the other or otherwise acquired by one party from the other party under this
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AGREEMENT in accordance with the provisions of Article 9 hereof including but
not limited to ARROW KNOW-HOW, ARROW-SOURCED COMPOUNDS, TRIANGLE-SOURCED
COMPOUNDS, TRIANGLE KNOW-HOW AND JOINT KNOW-HOW as the context suggests.

1.13 "IND" shall mean authorisation from the FDA granting the right to undertake
clinical trials with the PRODUCT or similar authorisation from any corresponding
national health/regulatory authority anywhere in the world.

1.14 "JOINT INVENTION" shall mean any invention related to the SELECTED
COMPOUNDS, the TRIANGLE-SOURCED COMPOUNDS or a PRODUCT whether patented or not,
which are jointly made during the period beginning on the EFFECTIVE DATE and
ending *** of this AGREEMENT pursuant to Article 13 by at least one (1) ARROW
employee or person contractually or by law required to assign or license patent
rights covering such inventions to ARROW and at least one (1) TRIANGLE employee
or person contractually or by law required to assign or license patent rights
covering such inventions to TRIANGLE.

1.15 "JOINT KNOW-HOW" shall mean all inventions, data, information, results,
know-how and improvements, whether patented or not, relating to the SELECTED
COMPOUNDS, the TRIANGLE-SOURCED COMPOUNDS or a PRODUCT which are useful for the
development, registration, manufacture, use or sale of the PRODUCTS, and which
are developed jointly by at least one (1) ARROW employee or person contractually
required to assign or license such inventions, data, information, results,
know-how and improvements to ARROW and at least one (1) TRIANGLE employee or
person contractually required to assign or license such inventions, data,
information, results, know-how and improvements to TRIANGLE, during the period
beginning on the EFFECTIVE DATE and ending *** of this AGREEMENT pursuant to
Article 13.

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1.16 "JOINT STEERING COMMITTEE" shall mean the committee and any subgroups
thereof, set up to oversee the RESEARCH PROGRAMME and the DEVELOPMENT PROGRAMME,
whose terms of reference are detailed in Article 8 hereof.

1.17 "MAJOR MARKET COUNTRY" shall mean the *** .

1.18 "MANUFACTURING COST" in respect of a particular item (e.g., ARROW SELECTED
COMPOUNDS, or TRIANGLE SELECTED COMPOUNDS), shall mean the ***

1.19 "NDA" shall mean a marketing authorisation granted by the FDA or similar
national health/regulatory authority anywhere in the world.

1.20 "NET SALES" of a PRODUCT which contain as its active ingredient only a
SELECTED COMPOUND, shall mean the gross sales of such PRODUCT invoiced by
TRIANGLE or its AFFILIATES or SUB-LICENSEES to third party customers, less *** .

1.21 "NET SALES" of a PRODUCT which contain as its active ingredients one or
more SELECTED COMPOUNDS in combination with other active ingredients (a
"Combination Product") shall mean the gross sales of such Combination Product
invoiced by TRIANGLE, its AFFILIATES or SUB-LICENSEES to third party customers,
      ***        , as applicable, for all active ingredients contained in such
PRODUCT, all determined in accordance with U.S. GAAP

1.22 "PHASE III", in respect of a clinical trial, shall mean well-controlled,
pivotal studies in respect of a PRODUCT, the objective of which is to provide
formal, statistically significant evidence of efficacy and safety in a large
patient population performed in accordance with FDA requirements which are
intended to form the basis of an NDA submission. "PHASE III COMMENCEMENT DATE"
shall mean the date on which the

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first patient is administered a PRODUCT in a PHASE III clinical trial.

1.23 "PRODUCT" shall mean a pharmaceutical product containing a SELECTED
COMPOUND selected for development by the JOINT STEERING COMMITTEE, alone or in
combination with other active ingredients.

1.24 "REGISTRATION" shall mean, in relation to any PRODUCT, such approvals by
the regulatory authorities in a given country (including pricing approvals) as
may be legally required before such PRODUCT may be commercialised or sold in
such country.

1.25 RESEARCH PROGRAMME" shall mean the research conducted by or on behalf of
ARROW as described in Schedule III hereto.

1.26 "SELECTED COMPOUND" shall mean one or more compounds selected by the JOINT
STEERING COMMITTEE from the ARROW-SOURCED COMPOUNDS and/or TRIANGLE-SOURCED
COMPOUNDS.

1.27 "SUB-LICENSEE" shall mean a third party licensed by TRIANGLE to undertake
development, manufacture and/or sale of SELECTED COMPOUND or PRODUCT on
TRIANGLE's behalf and who agrees to assume the same responsibilities and
obligations to ARROW as TRIANGLE.

1.28  "TERRITORY" shall mean the entire world.

1.29 "TRIANGLE SELECTED COMPOUNDS" shall mean a SELECTED COMPOUND which is a
TRIANGLE-SOURCED COMPOUND.

1.30 "TRIANGLE-SOURCED COMPOUNDS" shall mean compounds supplied by TRIANGLE to
ARROW for the purpose of screening by ARROW pursuant to the RESEARCH PROGRAMME
in the HCV Replicase Assay.

1.31 "TRIANGLE KNOW-HOW" shall mean, all inventions, data, information, results,
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know-how, including but not limited to all manufacturing know-how of TRIANGLE,
and improvements, whether patented or not, relating to the SELECTED COMPOUNDS
and/or the TRIANGLE-SOURCED COMPOUNDS and the PRODUCTS which are useful for the
development, registration, manufacture, use or sale of the PRODUCTS and which
are (a) owned by, rightfully held by and now in the possession of, or are
licensed to TRIANGLE; or (b) are developed or acquired by TRIANGLE (other than
from ARROW and its AFFILIATES) during the period beginning on the EFFECTIVE DATE
and ending upon termination expiration of this AGREEMENT pursuant to Article 13
and (c) are not JOINT KNOW-HOW or a JOINT INVENTION.

1.32 "TRIANGLE PATENTS" shall mean all patents and patent applications owned or
controlled by TRIANGLE or under which TRIANGLE has a right to practice with the
right to extend such right to practice to ARROW which contain claims the right
to which are necessary for the development, registration, manufacture, use or
sale of the SELECTED COMPOUNDS, the TRIANGLE-SOURCED COMPOUNDS or the PRODUCTS,
including any addition, continuation, continuation-in-part or division thereof
or any substitute application therefor; any patent issued with respect to such
patent application, any reissue, extension or patent term extension of any such
patent, and any confirmation patent or registration patent or patent of addition
based on any such patent; and any other United States or foreign patent or
inventor's certificate with regard thereto.

1.33 "VALID CLAIM" shall mean a claim of an issued and unexpired patent included
within (a) in respect of TRIANGLE's royalty obligations to ARROW, the ARROW
PATENTS, or a patent arising from a JOINT INVENTION and (b) in the case of
ARROW's royalty obligations to TRIANGLE, the TRIANGLE PATENTS or a patent
arising from a JOINT INVENTION, which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency of
competent jurisdiction unappealable or unappealed within the time allowed for
appeal, and which has not been admitted to be invalid or unenforceable through
reissue or disclaimer or otherwise.

Where appropriate, words in the singular shall include in their meaning the
plural and vice versa.
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Schedules annexed to this AGREEMENT comprise an integral part thereof.

ARTICLE 2. RESEARCH PROGRAMME

2.1 Following signature of this AGREEMENT and payment to ARROW by TRIANGLE of
the sum set out in Section 6.1 hereof,

      2.1.1 ARROW shall initiate the screening campaign as set out in the
      RESEARCH PROGRAMME. ARROW shall use its best efforts to identify one or
      more lead candidates for evaluation by TRIANGLE but the final selection
      and prioritisation of SELECTED COMPOUNDS to be screened in the HCV
      Replicase Assay will be made by the JOINT STEERING COMMITTEE. For purposes
      of this AGREEMENT, "best efforts" shall mean that ARROW shall use efforts
      which are consistent with those used by it in its other research projects
      deemed to have comparable commercial potential.

      2.1.2 ARROW and TRIANGLE shall set up a JOINT STEERING COMMITTEE with
      representatives from both companies, the function and terms of reference
      of which are set out in Article 8 hereof.

      2.1.3 ARROW and TRIANGLE shall collaborate through the auspices of the
      JOINT STEERING COMMITTEE to agree protocols for the pre-clinical (ADME
      studies) and the clinical studies in good time prior to their intended
      commencement dates.

2.2 For the duration of the RESEARCH PROGRAMME as defined in Section 2.3 hereof,
TRIANGLE shall have the right to submit up to *** compounds to be screened by
ARROW at *** cost to TRIANGLE and the prioritisation of the TRIANGLE-SOURCED
COMPOUNDS to be screened in the HCV Replicase Assay will

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be made by the JOINT STEERING COMMITTEE.

2.3 The RESEARCH PROGRAMME shall continue for an *** from EFFECTIVE DATE hereof
extendable for up to a *** at TRIANGLE'S request subject to agreement by both
parties of the terms of such extension including the costs therefor.

2.4 A SELECTED COMPOUND, will be removed by ARROW from the library of
ARROW-SOURCED COMPOUNDS for all further screening purposes immediately following
selection thereof. ARROW agrees not to use the library of ARROW-SOURCED
COMPOUNDS in any screening programme for any HCV activity for the duration of
the RESEARCH PROGRAMME.

2.5 Upon TRIANGLE's request, ARROW will promptly provide TRIANGLE with such
information in ARROW's possession as may be reasonably useful to assist the
JOINT STEERING COMMITTEE in its efforts to make a selection from the
ARROW-SOURCED COMPOUNDS.

ARTICLE 3. GRANT OF LICENCE

3.1 ARROW hereby grants to TRIANGLE, and TRIANGLE hereby accepts, an exclusive
licence, under the ARROW PATENTS and under ARROW KNOW-HOW, to make, have made,
use, import, offer to sell, sell and have sold PRODUCTS in the TERRITORY during
the term of this AGREEMENT. ARROW also grants TRIANGLE the right to sublicense
subject to the SUB-LICENSEE's agreement to be bound by the obligations under
this Agreement.

3.2 In the event TRIANGLE's license granted under Section 3.1 is terminated in a
given country of the TERRITORY (other than by expiration or by TRIANGLE pursuant
to Section 13.1 or 13.2 of this AGREEMENT), TRIANGLE hereby grants ARROW a
non-exclusive right and license to practice the TRIANGLE PATENTS and TRIANGLE
KNOW-HOW to make, have made, use, import, offer for sale, sell and have sold
PRODUCTS

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(which contain ARROW-SELECTED COMPOUNDS as their active ingredients), with a
right to sublicense in such country from and after the date of termination only
to the extent such license has been terminated. The license granted pursuant to
this Section 3.2 shall be subject to the payment of royalties and other amounts
by ARROW to TRIANGLE. Such royalties and other amounts shall: (a) be agreed
between the parties at the time based on the nature of the claims within the
TRIANGLE PATENTS; (b) be paid in the same manner as prescribed in Article 6
hereof; and (c) be subject to the same adjustments, extensions and other
conditions prescribed in Articles 6 and 17 of this AGREEMENT, mutatis mutandis.
At ARROW's request, TRIANGLE will commence discussions regarding the conversion
of this grant of rights to an exclusive license on terms to be agreed.

3.3 With respect to any PRODUCT containing TRIANGLE SELECTED COMPOUNDS as their
active ingredients (a "TRIANGLE PRODUCT"), ARROW acknowledges and agrees that
its sole rights thereto in respect of TRIANGLE KNOW HOW and TRIANGLE PATENTS
relating to a TRIANGLE PRODUCT are set forth in this Section 3.3. In the event
that TRIANGLE (a) has filed an IND for a given TRIANGLE PRODUCT, (b) has
determined to discontinue the development of such TRIANGLE PRODUCT for all
indications, (c) does not intend to seek a licensee with respect to such
TRIANGLE PRODUCT within *** after discontinuation of development and (d) is not
contractually prohibited from granting a license in respect thereof, then and
only in such event, TRIANGLE shall notify ARROW and, upon ARROW's request given
at any time within ninety (90) days of such notice, TRIANGLE agrees to commence
good faith negotiations with ARROW in an effort to reach agreement on the terms
of an exclusive license under the TRIANGLE KNOW HOW and TRIANGLE PATENTS
relating to such TRIANGLE PRODUCT. ARROW agrees that this is a right of
discussion only and that TRIANGLE shall not be under any liability to ARROW in
the event that the parties fail to reach agreement regarding the terms of such
exclusive license.

ARTICLE 4. INTELLECTUAL PROPERTY RIGHTS

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4.1 ARROW shall have and retain sole title to all ARROW KNOW-HOW, ARROW PATENTS
and ARROW-SOURCED COMPOUNDS. TRIANGLE shall have and retain sole title to all
TRIANGLE KNOW-HOW, TRIANGLE PATENTS and TRIANGLE-SOURCED COMPOUNDS.

4.2 All JOINT KNOW-HOW shall be owned jointly by the parties hereto. TRIANGLE
shall have the exclusive right to use such JOINT KNOW-HOW for the
commercialisation of PRODUCTS, unless the license granted pursuant to Section
3.1 is terminated in a given country or countries of the TERRITORY by ARROW
pursuant to Section 7.3, 13.1 or 13.2 or by TRIANGLE pursuant to Section 13.3,
in which case, ARROW shall have an exclusive right to use the JOINT KNOW-HOW in
such country or countries for the commercialisation of a PRODUCT for which
termination has occurred containing ARROW SELECTED COMPOUNDS as the active
ingredients. The parties hereto shall have a co-exclusive right to use the JOINT
KNOW-HOW for their respective research purposes. With respect to any JOINT
KNOW-HOW that has application other than in respect of the PRODUCTS, the parties
agree to negotiate in good faith their respective rights to exploit such JOINT
KNOW-HOW for the above-described applications.

4.3 (a) All JOINT INVENTIONS shall be owned jointly by the parties hereto.
TRIANGLE shall have the exclusive right to use such JOINT INVENTIONS for the
commercialisation of the PRODUCTS, unless the license granted pursuant to
Section 3.1 is terminated in a given country or countries of the TERRITORY by
ARROW pursuant to Section 7.3, 13.1 or 13.2 or by TRIANGLE pursuant to Section
13.3, in which case, ARROW shall have an exclusive right to use the JOINT
INVENTIONS in such country or countries for the commercialisation of a PRODUCT
for which termination has occurred containing ARROW SELECTED COMPOUNDS as the
active ingredients. The parties hereto shall have a co-exclusive right to use
the JOINT INVENTIONS for their respective research purposes. With respect to any
JOINT INVENTIONS that have application other than in respect of the PRODUCTS,
the parties agree to negotiate in good faith their respective rights to exploit
such JOINT INVENTIONS for the above-described applications.
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      (b) Each party agrees to consult with the other party and to give due and
reasonable consideration to the other party's position in determining the
territorial scope of patent filings within the TERRITORY and the prosecution and
maintenance in force of resulting patent rights based on JOINT INVENTIONS.
TRIANGLE shall have the initial responsibility to file any patent application
and prosecute and maintain any resulting patent rights on JOINT INVENTIONS, in
which event ARROW shall, at TRIANGLE's request, provide all reasonable
assistance and TRIANGLE shall be entitled to deduct from milestones or royalties
payable to ARROW under Article 6     ***     percent (     ***     %) of the out
of pocket expenses so incurred to TRIANGLE.

4.4 ARROW shall, *** , prepare, file, prosecute and maintain all patent
applications relating to ARROW PATENTS and in good faith consistent with its
customary patent policy and its reasonable business judgement, and shall
consider in good faith the interests of TRIANGLE in doing so. ARROW shall not
abandon any ARROW PATENTS in any country without first serving at least *** days
notice in writing upon TRIANGLE of its intention to do so and, in the event of
such abandonment and in addition to TRIANGLE's rights set forth in Section 4.6,
ARROW shall, at TRIANGLE's request, then assign ARROW PATENTS to TRIANGLE for a
consideration to be mutually agreed to in writing. Likewise, TRIANGLE shall not
abandon any TRIANGLE PATENTS relating to the ARROW SELECTED COMPOUNDS in any
country without first serving at least *** days notice in writing upon ARROW of
its intention to do so and, in the event of such abandonment and in addition to
ARROW's rights under Section 4.6, TRIANGLE shall, at ARROW's request, then
assign such TRIANGLE PATENTS to ARROW for a consideration to be mutually agreed
in writing. In the event that agreement is not reached then the matter will be
resolved by arbitration in accordance with Article 19 hereof.

4.5 Each party shall make available to the other party or its authorised
attorneys,

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agents or representatives, employees, agents or consultants information
necessary or appropriate to enable it to file, prosecute and maintain the ARROW
PATENTS or the TRIANGLE PATENTS, as the case may be, and further agrees to
assist in connection with any application relating thereto in any country and to
cooperate reasonably as either party's legal advisers may advise as reasonably
necessary or desirable in connection with any such assignments, licenses or
assistance including the provision of laboratory notebooks.

4.6 In the event that either party declines or otherwise fails to prepare, file,
prosecute or maintain ARROW PATENTS or, to the extent they relate to the ARROW
SELECTED COMPOUNDS, TRIANGLE PATENTS for any invention which is or may be
licensed to the other party under the terms of this AGREEMENT the other party
shall be entitled to apply for and obtain any such protection in any
jurisdiction at its own cost and expense and the other party shall lend its name
and provide at reasonable cost all information and all assistance reasonably
necessary to enable such protection to be obtained; provided, however, that
TRIANGLE shall be entitled to credit the *** .

4.7 ARROW reserves the right at any stage during the term of this AGREEMENT to
request the assignment of any and all of the ARROW PATENTS in any and all
countries to TRIANGLE, at no cost to TRIANGLE. Thereafter, TRIANGLE shall be
entitled to credit the *** .

4.8 (a) Except as otherwise provided in Article 17, each party's
responsibilities for patent prosecution activities pursuant to this Article 4
shall also include all ex parte and inter partes activities defending such
party's relevant patent applications and patents, including all interference,
opposition defense and observation defense proceedings before any patent offices
and litigation to determine the validity, enforceability, allowability or
subsistence of such patent applications and patents. Each party agrees to give
due consideration to the other party's position with respect to any such patent
prosecution activities (which term, as used herein, shall include without
limitation, any inter partes activities of the type described in the first
sentence of this Section 4.8). In the event a party fails to initiate or pursue
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responsible, or having commenced such patent prosecution activities, declines to
pursue such patent prosecution activities, the other party may initiate, pursue
or assume such patent prosecution activities, at its sole expense.

      (b) Each party shall have the independent right to challenge third party
patents or patent applications which may, in such party's sole discretion,
affect the ability to commercialise PRODUCTS. The party choosing to challenge
such third party patents or patent applications shall advise the other party of
the challenge in writing at least *** days prior to initiating the challenge.

4.9 Each party to this AGREEMENT shall promptly notify the other party to this
AGREEMENT, in writing, whenever it acquires knowledge that there exists an
infringement any of the ARROW PATENTS or patents which relate to JOINT
INVENTIONS. ARROW shall have the right, but not the obligation, using qualified
counsel of its choice and at its own expense, to institute, prosecute and
control any action or proceeding with respect to infringement of the ARROW
PATENTS, including any declaratory judgement action arising from such
infringement. In the event that ARROW does not commence a proceeding against, or
otherwise stop, an alleged infringer or misappropriate within a reasonable
period of time (not to exceed *** days) after notice thereof or if ARROW
notifies TRIANGLE that it does not plan to terminate the infringement of the
ARROW PATENTS or to institute such action, TRIANGLE shall have the option to
commence such a proceeding on its own behalf, in which case, (a) ARROW shall
provide TRIANGLE with reasonable cooperation in initiating or carrying on such a
proceeding, including being joined as a party to such action, if necessary; and
(b) TRIANGLE shall be responsible for the control of such proceeding and shall
pay all expenses incurred in connection therewith. Any monetary recovery
obtained by ARROW as a result of any action or proceeding instituted by it,
after first reimbursing ARROW for its costs of litigation, shall be divided ***
percent ( *** %) to ARROW and *** percent ( *** %) to TRIANGLE. Any

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monetary recovery obtained by TRIANGLE as a result of any action or proceeding
instituted by it, after first reimbursing TRIANGLE for its costs of litigation,
shall be divided *** percent ( *** %) to TRIANGLE and *** percent ( *** %) to
ARROW. Each party having an obligation under this clause shall keep the other
reasonably informed of all relevant matters and shall account promptly to the
other for sums to which the other is entitled.

ARTICLE 5.  MARKETING

5.1 TRIANGLE and its AFFILIATES and SUB LICENSEES shall be solely responsible
for the promotion and distribution of the PRODUCTS. All costs associated
therewith will be borne by TRIANGLE and such AFFILIATES and SUB LICENSEES.

5.2 TRIANGLE agrees that it will comply, and will procure that its AFFILIATES
and SUB LICENSEES comply, with all applicable laws and regulations in marketing
the PRODUCTS.

ARTICLE 6. LICENSE FEE, ROYALTIES AND MILESTONE PAYMENTS

6.1 In partial consideration of the grant of the license hereinbefore described
and ARROW entering into this AGREEMENT with TRIANGLE, TRIANGLE agrees to pay
ARROW within *** days after the EFFECTIVE DATE hereof an upfront, non refundable
license fee of $ *** .

6.2 In consideration of ARROW's timely performance of its obligations under the
RESEARCH PROGRAMME, TRIANGLE agrees to pay the costs of the RESEARCH PROGRAMME
as set out in Schedule III hereto. The annual costs for each year of the
RESEARCH PROGRAMME shall be paid in *** instalments in advance commencing with
the first payment which is due *** days from the EFFECTIVE DATE hereof.

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6.3 Except in the cases where Section 6.4 applies, TRIANGLE shall pay to ARROW a
milestone payment on a PRODUCT by PRODUCT basis but, for each PRODUCT, only for
the initial PRODUCT containing a given ARROW SELECTED COMPOUND ("Milestone
Payment") in the amount specified below no later than     ***     days after the
occurrence of the corresponding event designated below, unless TRIANGLE has
given ARROW notice of termination of this Agreement in the entire TERRITORY for
such PRODUCT prior to such due date, in which case, no Milestone Payments shall
thereafter be payable:

      (a) ***

      (b) ***

      (c) ***

      (d) ***

6.4 TRIANGLE shall pay to ARROW a milestone payment on a PRODUCT by PRODUCT
basis but, for each PRODUCT, only for the initial PRODUCT containing a given
TRIANGLE SELECTED COMPOUND where the effective date of the *** occurs within ***
years after termination of the RESEARCH PROGRAMME ("Milestone Payment") in the
amount specified below no later than *** days after the occurrence of the
corresponding event designated below,:

      (a) ***

      (b) ***

6.5 In addition and as further consideration for the licence hereby granted to
TRIANGLE in respect of ARROW KNOW HOW and ARROW PATENTS, TRIANGLE shall pay
ARROW a royalty on the NET SALES of PRODUCTS by TRIANGLE and its

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AFFILIATES and SUB LICENSEES in the TERRITORY. Said royalty shall be payable
starting on the DATE OF LAUNCH of the PRODUCT in any country and shall continue
until the later to expire in such country of (a)     ***     years from DATE OF
LAUNCH in said country or (b) the expiry of the last VALID CLAIM in said
country. The amount of said royalty with respect to a given PRODUCT in each
country shall be as follows:

      6.5.1 in respect of a PRODUCT containing ARROW SELECTED COMPOUND alone or
      in combination with other active ingredients (as opposed to PRODUCTS
      containing only TRIANGLE SELECTED COMPOUNDS as active ingredients, in
      which case, only Section 6.5.2 will apply). TRIANGLE shall pay royalties
      on NET SALES of such PRODUCT at the percentage rate specified below:

            (a) *** % as long as the manufacture, use or sale of such PRODUCT in
      such country would infringe a VALID CLAIM in such country or

            (b) *** % if the manufacture, use or sale of such PRODUCT in such
      country would not infringe a VALID CLAIM in such country

      6.5.2 in the case of PRODUCT containing TRIANGLE SELECTED COMPOUNDS as
      active ingredients, TRIANGLE shall pay royalties on NET SALES of such
      PRODUCT at the percentage rate of *** % for *** years from DATE OF LAUNCH
      of such PRODUCT in a given country said obligations to pay only applying
      in respect of a given PRODUCT where the effective date of the *** occurs
      within *** years from the termination of the RESEARCH PROGRAMME.

6.6 In the event that, following *** calendar year following the year during
which the U.S. REGISTRATION for the initial PRODUCT to which Section 6.5.1(a) is
applicable or any calendar year thereafter for as long as royalty obligations
exist in the

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<PAGE>

U.S. for such PRODUCT, TRIANGLE's total annual royalty payments to ARROW
pursuant to Section 6.5.1(a) above are less than the annual minimum amount set
forth opposite such year below (the "Annual Minimum"), TRIANGLE shall make a
payment to ARROW together with the royalty report for the fourth quarter of such
year required in Section 6.8 of this AGREEMENT equal to the difference between
such Annual Minimum and the royalties paid to ARROW for such year pursuant to
Section 6.5.1(a) above:

            Calendar Year                       Annual Minimum
            -------------                       --------------

            ***                                 ***
            ***                                 ***
            ***                                 ***

6.7 Commencing with the DATE OF LAUNCH of a PRODUCT, royalty payments (whether
royalties on NET SALES or minimum royalties as set out in Section 6.6), shall be
paid by TRIANGLE to ARROW, within *** days after the end of each quarter in
accordance with its usual business practices.

6.8 Each royalty payment shall be accompanied by a written report, in the
English language, showing (a) the gross sales and any value added or similar tax
adjustments and the NET SALES of all PRODUCTS sold by TRIANGLE and its
AFFILIATES and SUB LICENSEES during the relevant period; (b) the royalties,
payable in U.S. Dollars which shall have accrued hereunder in respect of such
sales; (c) withholding taxes, if any, required by law to be deducted in
respective such sales; and (d) the exchange rates used in calculating the
royalties payable. With respect to sales of the PRODUCTS invoiced in a currency
other than U.S. dollars, the gross sales, NET SALES and royalties payable shall
be expressed in the domestic currency of the party making the sale together with
the U.S. dollar equivalent of the royalty payable, calculated using the simple
average of the exchange rates published in the Wall Street Journal on the last
day of each month during the reporting period. If any TRIANGLE AFFILIATE or
SUB LICENSEE makes any sales invoiced in a currency other than its domestic
currency, the gross sales and NET SALES shall be converted to its domestic
currency in accordance

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with the AFFILIATE's or SUB LICENSEE's normal accounting practices. TRIANGLE or
its AFFILIATE or SUB LICENSEE making any royalty payment shall furnish to ARROW
appropriate evidence of payment of any tax or other amount deducted from any
royalty payment.

6.9 [This Section 6.9 is intentionally left blank].

6.10 No royalties shall be payable (a) on sales of PRODUCTS among TRIANGLE and
its AFFILIATES and SUB LICENSEES, but royalties shall be payable on subsequent
sales by TRIANGLE or its AFFILIATES and SUB LICENSEES to a third party or (b) on
any PRODUCTS sold or used for tests or development purposes, or distributed as
samples. No multiple royalty shall be payable because the manufacture, use,
offer for sale, sale or import of a PRODUCT is covered by more than one VALID
CLAIM or at least one VALID CLAIM and ARROW KNOW HOW.

6.11 If TRIANGLE or its AFFILIATES or SUB LICENSEES determine after consultation
with ARROW, but at TRIANGLE'S sole discretion, that it or they are required to
pay royalties and other amounts to any third party ("Third Party Royalties")
because the manufacture, use, offer for sale, or importation, or sale of
PRODUCTS infringe any patent or patent which may issue from a patent application
in one or more countries. TRIANGLE and its AFFILIATES and SUB LICENSEES may
deduct from the sums owed to ARROW an equivalent percentage up to a maximum of
*** percent ( *** %) of that of the Third Party Royalties from earned royalties
thereafter due to ARROW on the NET SALES of such PRODUCTS in such country and
any Milestone Payments thereafter due to ARROW. In no event shall the royalties
due on such NET SALES of such PRODUCTS in such country and any Milestone Payment
on account of any reduction pursuant to this Article be thereby reduced by more
than *** percent ( *** %) of the amount which would have been otherwise payable
to ARROW. This Section 6.11 shall only be applicable to royalties which TRIANGLE
and

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its AFFILIATES and SUB LICENSEES are paying in respect of PRODUCTS covered by
Subsection 6.5.1(a).

6.12 Should a compulsory license be granted to any third party in any country of
the TERRITORY to make, have made, use, import, offer for sale or sell PRODUCTS,
the royalty rate payable hereunder for sales of the PRODUCTS by TRIANGLE in such
country shall be adjusted to match any lower royalty rate granted to the third
party for such country.

6.13 In the event that applicable claims of all patents or patent applications
included within the ARROW PATENTS under which TRIANGLE is selling or actively
developing a PRODUCT shall be held invalid or not infringed by the PRODUCTS by a
court of competent jurisdiction in a given country of the TERRITORY, whether or
not there is a conflicting decision by another court of competent jurisdiction
in such country, TRIANGLE may reduce all royalty payments on its, its
AFFILIATES' or its SUB LICENSEES' sales of such PRODUCT covered by such claims
by *** percent ( *** %) until such judgement is finally reversed by an
unappealed or unappealable decision of a court of competent jurisdiction of
higher dignity in such country or is otherwise unappealable or is unappealed
within the time allowed therefor. If such judgement is finally reversed by an
unappealable decree of a court of competent jurisdiction of higher dignity in
such country, or is deemed reversed as provided herein, the former royalty rates
shall be restored and the royalty payments not theretofore made, together with
the interest that TRIANGLE might reasonably have earned (based on immediately
available deposits) on the payments withheld, shall become due and payable to
ARROW. If such judgement is not reversed, deemed reversed, is unappealed or
becomes unappealable, as aforesaid, TRIANGLE shall be entitled to all of the
royalty reductions pursuant to this Section 6.13. This Section 6.13 shall only
be applicable to royalties which TRIANGLE and its AFFILIATES and SUB LICENSEES
are paying in respect of PRODUCTS covered by Subsection 6.5.1(a).

6.14 ARROW shall have the right, upon prior notice to TRIANGLE, not more than
once in each TRIANGLE fiscal year nor more than once in respect of any fiscal
year, through

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<PAGE>

an independent certified public accountant selected by ARROW and acceptable to
TRIANGLE, which acceptance shall not be unreasonably refused, to have access
during normal business hours to those records of TRIANGLE as may be reasonably
necessary to verify the accuracy of the royalty reports required to be furnished
by TRIANGLE pursuant to this Article 6. TRIANGLE shall include in any
sublicenses granted pursuant to this AGREEMENT a provision requiring the
SUB-LICENSEE to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by ARROW's independent certified
public accountant. If such independent certified public accountant's report
shows any underpayment of royalties by TRIANGLE or its AFFILIATES or
SUB-LICENSEES, within thirty (30) days after TRIANGLE'S receipt of such report,
TRIANGLE shall remit or cause its SUB-LICENSEES to remit to ARROW the amount of
such underpayment together with interest, compounded quarterly, calculated on
the amount underpaid at the rate of *** % per month; and if such underpayment
exceeds *** percent ( *** %) of the total royalties owed for the fiscal year
then being reviewed, the reasonably necessary fees and expenses of such
independent certified public accounting performing the audit. Otherwise, ARROW's
accountant's fees and expenses shall be borne by ARROW. Any overpayment of
royalties shall be fully creditable against future royalties payable in any
subsequent royalty periods. Upon the expiration of *** months following the end
of any fiscal year, the calculation of royalties payable with respect to such
fiscal year shall be binding and conclusive on ARROW and TRIANGLE, unless an
audit for such fiscal year is initiated before expiration of such *** months.

6.15 All information subject to review under this Article 6 shall be
confidential. Except where provided by law, ARROW and its accountant shall
retain such information in confidence.

6.16 Except as hereinafter provided in this Section 6.16, all Milestone Payments
and royalties shall be paid in U.S. Dollars and shall be paid to ARROW's bank
account as notified by ARROW to TRIANGLE by wire transfer. If, at any time,
legal restrictions

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prevent the prompt remittance of part of or all royalties with respect to any
country in the TERRITORY where PRODUCTS are sold, TRIANGLE or its AFFILIATES or
SUB-LICENSEES shall have the right and option to make such payments by
depositing the amount thereof in local currency to ARROW's accounts in a bank or
depository in such country.

6.17 In the event any payment due hereunder is not made when due, the payments
shall accrue interest (beginning on the date such payment is due) calculated at
the rate of *** percent ( *** %) per month and such payment when made shall be
accompanied by all interest so accrued.

ARTICLE 7. DEVELOPMENT PROGRAMME

7.1 Subject to ARROW'S timely performance of its obligations hereunder, and in
complete fulfilment of TRIANGLE'S development obligations hereunder and any such
obligations implied by law, TRIANGLE will undertake, or will cause its
AFFILIATES or SUB-LICENSEES to undertake, the development activities described
in this Article 7. TRIANGLE shall, *** , use its best efforts to conduct a
development program (the "DEVELOPMENT PROGRAMME") in the U.S. relating to the
use of at least one PRODUCT containing a given ARROW SELECTED COMPOUND and to
seek REGISTRATION for such PRODUCT in at least one MAJOR MARKET COUNTRY. The
DEVELOPMENT PROGRAMME shall be mutually discussed by the parties hereto and
shall take into consideration studies and experiments carried out, or to be
carried out by, ARROW, but the activities comprising the DEVELOPMENT PROGRAMME
shall be determined at TRIANGLE'S sole discretion. Anything in this AGREEMENT to
the contrary notwithstanding, TRIANGLE shall be entitled to exercise prudent and
justifiable business judgement in meeting its best efforts obligations
hereunder. For purposes of this Article 7, "best efforts" shall mean that
TRIANGLE shall use reasonable efforts consistent with those used by it in its
development projects with other compounds in its development portfolio deemed to
have comparable commercial potential.

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<PAGE>

7.2 Subject to the foregoing provisions of this Article 7, TRIANGLE'S best
efforts obligations set forth in this Article 7 shall be deemed to have been
satisfied if TRIANGLE:

      (a) files an IND in a MAJOR MARKET COUNTRY for the first PRODUCT
containing a given ARROW SELECTED COMPOUND within *** months after the date on
which such ARROW SELECTED COMPOUND has been selected as a candidate for the
DEVELOPMENT PROGRAMME by the JOINT STEERING COMMITTEE.

      (b) files in at least one MAJOR MARKET COUNTRY what it reasonably believes
to be a complete NDA for such PRODUCT with the appropriate regulatory agency
within *** months after the ARROW SELECTED COMPOUND contained in such PRODUCT is
selected for the DEVELOPMENT PROGRAMME by the JOINT STEERING COMMITTEE.

The time periods set forth in clauses (a) and (b) shall each be subject to up to
*** extensions of *** each at TRIANGLE'S election by payment to ARROW of a sum
of *** Dollars ($ *** ) for each such *** extension.

7.3 (a) In the event TRIANGLE fails to meet any diligence requirements set forth
in Section 7.2(a) or 7.2(b) with respect to a given PRODUCT, and does not
demonstrate to ARROW's reasonable satisfaction that, despite TRIANGLE'S efforts,
the failure to meet the diligence requirements was delayed due to reasons beyond
TRIANGLE'S reasonable control, ARROW shall have the option, at its sole and
exclusive remedy, to terminate the AGREEMENT in the entire TERRITORY with
respect only to such PRODUCT.

      (b) Prior to exercising any rights under this Section 7.3, ARROW shall
give

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<PAGE>

TRIANGLE *** notice and shall meet with TRIANGLE in London, at TRIANGLE'S
request, during such *** period, to discuss any disagreements about whether
TRIANGLE has complied with the applicable diligence requirements of this Article
7. Upon expiration of such *** period, ARROW shall have the right in its sole
discretion to proceed with the exercise of all rights and remedies provided for
herein unless the applicable diligence requirement is fulfilled during such ***
period.

      (c) Upon termination by ARROW of this AGREEMENT pursuant to this Section
7.3, the provisions of Article 14.2 shall apply in respect of such PRODUCT.

ARTICLE 8. JOINT STEERING COMMITTEE

8.1 Prior to the EFFECTIVE DATE, ARROW and TRIANGLE have each appointed an
authorized representative (a "Coordinator"). In the case of ARROW, the
Coordinator is Jeremy Stables and in the case of TRIANGLE, the Coordinator is
Merrick Almond. Each Coordinator shall be responsible for communications, other
than legal notices, between the parties with respect to the subject matter of
this AGREEMENT. Each party may replace its Coordinator at any time for any or no
reason by providing written notice to the other party.

8.2 The Coordinators shall establish the JOINT STEERING COMMITTEE consisting of
equal numbers of representatives of TRIANGLE and ARROW. The JOINT STEERING
COMMITTEE will consist of at least three (3) persons from each of TRIANGLE and
ARROW, such persons having significant responsibility for the development and/or
marketing of the PRODUCTS. The JOINT STEERING COMMITTEE will meet from time to
time at mutually agreeable times via teleconference or in-person, but no less
than quarterly during the term of the AGREEMENT. The Coordinators shall set the
agenda for each meeting, and each Coordinator shall determine which regular
members of the JOINT STEERING COMMITTEE and other representatives of such
Coordinator's party shall attend in light of the agenda. Each party shall bear
its own costs incurred in

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connection with participation in the JOINT STEERING COMMITTEE.

8.3 The primary objective of the JOINT STEERING COMMITTEE will be to facilitate
the expeditious development and REGISTRATION of PRODUCTS by, inter alia:

      (a) facilitating the exchange of data and study results between the
parties;

      (b) providing a forum for protocol and development plan review;

      (c) coordinating the developmental efforts of the parties so as to avoid
duplication and inconsistency of such efforts;

      (d) coordinating the manufacturing of, and controls relating to, all
PRODUCTS during the DEVELOPMENT PROGRAMME; and

      (e) reviewing the regulatory plans and timelines relating to the PRODUCTS.

      Each party agrees to give due consideration to any input received from the
other party at such JOINT STEERING COMMITTEE meetings; provided, however, that,
in the event of disagreement, all final decisions relating to (x) the research
of the ARROW- SOURCED COMPOUNDS will be made by ARROW, and (y) the research and
development of SELECTED COMPOUNDS and/or TRIANGLE-SOURCED COMPOUNDS and the
PRODUCTS in the TERRITORY will be made by TRIANGLE.

8.4 Each party shall submit a report detailing the results of each study or test
which it performs to the other party within forty-five (45) days after
completion of the final statistical analyses of the results of such study. In
addition, each party will provide the other party with semi-annual progress
reports summarizing its activities in respect of the development of PRODUCTS
during the relevant semi-annual period. Such reports shall cover the semi-annual
periods ending each June 30 and December 31 and shall be due on or before July
15 and January 15 of each year, respectively.
<PAGE>

8.5 Each party reserves the right to publish or publicly present the results of
its own development activities in respect of the PRODUCTS (the "Results"). The
party proposing to publish or publicly present the Results (the "publishing
party") will, however, submit a draft of any proposed manuscript, abstract,
speech, transparencies, presentation materials and press releases to the other
party (the "non-publishing party") for comments at least: (a) twenty (20) days
prior to submission for publication or oral presentation in the case of full
manuscripts; (b) five (5) days prior to submission for publication or oral
presentation in the case of abstracts; and (c) two (2) days prior to publication
in the case of press releases, except, in the case of press releases, where
applicable law, in the reasonable opinion of the publishing party, requires such
press release to be issued within time constraints which would make such review
impractical. The non-publishing party shall notify the publishing party in
writing within the applicable time period set forth above after receipt of such
draft whether such draft contains Information (as hereinafter defined) of the
non-publishing party which it considers to be confidential under the provisions
of Article 9 hereof, or information that if published would have an adverse
effect on a patent application for which the non-publishing party has initial
patent prosecution responsibility pursuant to Article 4 of this Agreement. In
the latter case, the non-publishing party shall have the right to request a
delay and the publishing party shall delay such publication for a period not
exceeding sixty (60) days. In any such notification, the non-publishing party
shall indicate with specificity its suggestions regarding the manner and degree
to which the publishing party may disclose such information. The publishing
party shall have the final authority to determine the scope and content of any
publication, provided that such authority shall be exercised with reasonable
regard for the interests of the non-publishing party, except that no publication
will contain any Information disclosed by the non-publishing party to the
publishing party without the non-publishing party's prior written permission.
Each party shall cause its Affiliates, licensees or sublicensees, as the case
may be, to comply with the requirements of this Section 8.5 with respect to any
of their proposed publications.

ARTICLE 9. CONFIDENTIALITY
<PAGE>

9.1 During the term of this AGREEMENT and for a period of *** years thereafter:

      9.1.1 TRIANGLE, its AFFILIATES and SUB-LICENSEES will retain in confidence
      and use only for purposes of this AGREEMENT any INFORMATION supplied by
      ARROW or on behalf of ARROW to TRIANGLE under this AGREEMENT; and

      9.1.2 ARROW will retain in confidence and use only for purposes of this
      AGREEMENT, INFORMATION supplied by TRIANGLE or on behalf of TRIANGLE to
      ARROW under this AGREEMENT.

9.2 To the extent it is reasonably necessary or appropriate to fulfill its
obligations or exercise its rights under this AGREEMENT, a party may disclose
INFORMATION received from the other party to its AFFILIATES and/or sub-licensees
(prospective or actual), consultants, outside contractors and clinical
investigators on condition that such entities or persons agree (i) to keep the
INFORMATION confidential for at least *** years from the date of disclosure and
to the same extent as such party is required to keep the INFORMATION
confidential and (ii) to use the INFORMATION only for such purposes as such
party is entitled to use the INFORMATION. TRIANGLE or its AFFILIATES and
SUB-LICENSEES and ARROW may disclose such INFORMATION to government or other
regulatory authorities to the extent that such disclosure is reasonably
necessary to obtain patents or authorisations to conduct clinical trials with
and to commercially market the PRODUCT. In the case of government or other
regulatory authorities the Recipient shall wherever possible provide the
Disclosing Party with reasonable notice of such disclosures and to whom such
disclosures are being made.

9.3 The foregoing obligations in respect of confidentiality and use shall not
apply to

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any part of INFORMATION disclosed by one party (the "Disclosing Party") to
another (the "Recipient") which:

      (a) is in the public domain at the time of disclosure or thereafter
becomes part of the public domain through no fault of the Recipient or of a
person to whom the Recipient made a disclosure in accordance with Section 9.2;

      (b) is in the possession of the Recipient at the time of disclosure and
was not acquired on a confidential basis from the Disclosing Party;

      (c) is received by the Recipient from a third party having the right to
disclose the same;

      (d) is developed by the Recipient totally independent from any disclosures
hereunder;

      (e) the Disclosing Party agrees may be disclosed to third parties under
secrecy agreement containing the same restrictions as in this AGREEMENT; or

      (f) the Recipient is required to disclose to a court or governmental
agency or pursuant to subpoena or other compulsory process.

9.4 In the event that a party is required by a court or governmental agency or
pursuant to subpoena or other compulsory process (excluding disclosures made to
patent office) to disclose the Disclosing Party's INFORMATION other than as
authorised herein, it shall use reasonable efforts to obtain a protective order
or otherwise protect the confidentiality of such INFORMATION. In no event,
however, shall such party's disclosure of such INFORMATION to a court,
governmental agency, or other non-authorised party pursuant to a subpoena or
other compulsory process, be regarded as making such INFORMATION publicly known,
available by publication or in the public domain or otherwise permit any further
or subsequent disclosure of such INFORMATION by such party. For purposes of this
Section 9.4 "third party" shall mean any party other
<PAGE>

than TRIANGLE and ARROW.

9.5 Except to the extent otherwise required by applicable law or regulation or
the terms of this AGREEMENT or mutually agreed upon in good faith by the parties
hereto, each party shall treat as confidential the financial terms and
conditions contained in this AGREEMENT; provided, however, that each party may
disclose the terms of this Agreement in confidence to its consultants,
financial, legal and other advisors and prospective investors and sublicensees.

ARTICLE 10. WARRANTIES AND INDEMNITIES

10.1 ARROW hereby warrants to TRIANGLE that it (a) has disclosed to TRIANGLE all
potential patent rights in the control of third parties known to ARROW which may
be needed to commercialise any PRODUCT; and (b) has the right to grant the
licenses and rights set forth herein. ARROW further represents and warrants that
it has not granted any right, title or interest in any ARROW PATENTS identified
in Schedule I.

10.2 Each party hereto represents to the other that it is free to enter into
this AGREEMENT and to carry out all of the provisions hereof.

10.3 NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL DAMAGES ARISING OUT OF OR RELATED TO THE SUBJECT MATTER OF THIS
AGREEMENT.

10.4 (a) Subject to compliance with the provisions of Section 10.5, TRIANGLE
agrees to indemnify and hold ARROW, its employees and agents ("ARROW
Indemnitees") harmless from and against any claims, damages or liability
(including reasonable attorneys' fees and costs and other expenses of
litigation) (collectively "Liabilities") which the ARROW Indemnitees may suffer,
pay, or incur as a result of or in connection with any personal injury arising
out of the DEVELOPMENT PROGRAMME or TRIANGLE's, its AFFILIATES' or
SUB-LICENSEES' sale of the PRODUCTS, excluding any liabilities arising from the
negligence or wilful misconduct by ARROW or any breach
<PAGE>

by ARROW of its representations, warranties and covenants under this AGREEMENT.
TRIANGLE'S obligation under this Article 10 shall survive expiration or
termination of this AGREEMENT for any reason.

      (b) Subject to compliance with the provisions of Section 10.5, ARROW shall
indemnify and hold TRIANGLE, its employees and agents ("TRIANGLE Indemnitees";
the ARROW Indemnitees and TRIANGLE Indemnitees being hereinafter referred to as
the "Indemnitees") harmless from and against any and all Liabilities which the
TRIANGLE Indemnitees may suffer, pay or incur as a result of or in connection
with ARROW's performance of the RESEARCH PROGRAMME or the breach by ARROW of its
representations, warranties and covenants under this Agreement. ARROW's
obligation under this Article 10 shall survive expiration or termination of this
AGREEMENT for any reason.

10.5 Any Indemnitee which intends to claim indemnification under this Article 10
shall promptly notify the other party (the "Indemnitor") in writing of any
matter in respect of which the Indemnitee or any of its employees intend to
claim such indemnification. The Indemnitee shall permit and shall cause its
employees to permit the Indemnitor, at its discretion, to settle any such matter
and agrees to the complete control of such defence or settlement by the
Indemnitor, provided, however that such settlement does not adversely affect the
Indemnitee's rights hereunder or impose any material obligations on the
Indemnitee in addition to those set forth herein in order for it to exercise
such rights. No such matter shall be settled without the prior written consent
of the Indemnitor and the Indemnitor shall not be responsible for any legal fees
or other costs incurred other than as provided herein. The Indemnitee and its
employees shall cooperate fully with the Indemnitor and its legal
representatives in the investigation and defence of any matter covered by the
applicable indemnification. The Indemnitee shall the right, but not the
obligation, to be represented by counsel of its own selection and expense.

10.6 ARROW hereby certifies that it has not been debarred under the provisions
of the Generic Drug Enforcement Act of 1992, 21 U.S.C. ss. 335a (a) and (b). In
the event that during the term of this AGREEMENT, ARROW becomes debarred or
receives notice of
<PAGE>

an action or threat of an action with respect to its debarment, ARROW shall
notify TRIANGLE immediately. ARROW hereby certifies that it has not and will not
knowingly use in any capacity the services of any individual, corporation,
partnership or association which has been debarred under 21 U.S.C. ss. 335a (a)
and (b) in connection with the performance of services hereunder. In the event
that ARROW becomes aware of the debarment or threatened debarment of any
individual, corporation, partnership or association (the "Debarred Entity")
providing services to ARROW which directly or indirectly relate to activities
under this AGREEMENT. ARROW shall notify TRIANGLE immediately. Upon TRIANGLE'S
request, ARROW agrees to cease using the services of the Debarred Entity.

10.7 TRIANGLE hereby accepts that the payments due to ARROW under Article 6
hereof are TRIANGLE'S responsibility and become payable by TRIANGLE whether or
not TRIANGLE is selling PRODUCT directly or through an AFFILIATE or
SUB-LICENSEE.

ARTICLE 11. ASSIGNMENT

Neither party shall assign this AGREEMENT or any part thereof without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed. Each party may, however, without such consent, assign or
sell its rights under this Agreement (a) in connection with the sale or transfer
of all or substantially all of its pharmaceutical business to a third party; (b)
in the event of a merger or consolidation with a third party; or (c) to an
AFFILIATE. No assignment shall relieve any party of responsibility for the
performance of any accrued obligation which such party has under this Agreement.
Any assignment shall be contingent upon the assignee assuming in writing all of
the obligations of its assignor under this AGREEMENT.

ARTICLE 12. DURATION

This AGREEMENT shall become effective as of the EFFECTIVE DATE and unless
otherwise terminated as provided herein, shall remain in full force and effect
until the
<PAGE>

expiration of TRIANGLE's royalty obligations hereunder.

ARTICLE 13. TERMINATION

13.1 In the event that either party is deemed bankrupt or insolvent and, or any
proceeding is commenced by either party seeking relief under any bankruptcy or
insolvency law, or either party admits in writing its inability to pay its debts
as they become due; or either party makes an assignment for the benefit of
creditors, then, in any such case, such party shall be deemed in default
hereunder and the other party shall have the right, upon thirty (30) days' prior
notice to such party, to terminate this AGREEMENT unless such default has been
cured within such thirty (30) day period.

13.2 In the event that either party breaches any material provision set forth in
this AGREEMENT, the other party may, at its option, terminate this AGREEMENT by
giving written notice to the defaulting party specifying said breach and its
intention to terminate. Unless said breach shall be rectified by the defaulting
party within sixty (60) days after said notice is given, this AGREEMENT shall
terminate sixty (60) days after said notice is given, without any further notice
and without any compensation or indemnity Notice of a material breach must be
served, on the defaulting party, within sixty (60) days from the date knowledge
of the breach is ascertained by the non-defaulting party.

13.3 TRIANGLE shall have the right to terminate this AGREEMENT by giving ARROW
sixty (60) days' prior written notice thereof. Such termination may be made with
respect to one or more PRODUCTS or one of more countries without affecting this
AGREEMENT with respect to other PRODUCTS or other countries, as the case may be
and will be subject to TRIANGLE meeting all of its accrued financial obligations
to ARROW under Article 6 and its obligations under Section 3.3 hereof.

ARTICLE 14. CONSEQUENCES OF EXPIRATION AND TERMINATION

14.1 Upon expiration or termination of this AGREEMENT the rights, licences and
obligations of the parties shall cease, except as follows:
<PAGE>

      14.1.1 upon expiration of TRIANGLE's royalty obligations under this
      AGREEMENT in a given country for a given PRODUCT, TRIANGLE shall have a
      perpetual, fully paid-up, non-exclusive license to use the ARROW KNOW-HOW
      in such country for such PRODUCT;

      14.1.2 expiration or termination of this AGREEMENT shall not relieve the
      parties of any obligation accruing prior to such expiration or
      termination, nor their obligations set forth in Articles 9 and 10
      hereunder.

      14.1.3 termination or expiration of this AGREEMENT for any reason shall
      have no effect on their respective rights in JOINT KNOW-HOW set forth in
      Section 4.2 or JOINT INVENTIONS set forth in Section 4.3;

      14.1.4 termination of this Agreement by ARROW pursuant to Section 7.3,
      13.1 or 13.2 or by TRIANGLE pursuant to Section 13.3, shall have no effect
      on the rights and obligations of the parties under Section 14.2; and

      14.1.5 the parties shall retain any other remedies for breach of this
      AGREEMENT they may otherwise have.

14.2 If this AGREEMENT is terminated as a result of TRIANGLE's breach pursuant
to Section 13.2, or is terminated by ARROW in accordance with Section 7.3 or
13.1 or by TRIANGLE in accordance with Section 13.3, then, in the case of
termination in the entire TERRITORY, TRIANGLE shall use, and shall cause its
AFFILIATES and SUB-LICENSEES to use, its and their best efforts to return
(properly organised), or at ARROW's direction, destroy all data, writings and
other documents and tangible materials supplied to TRIANGLE by ARROW; and (b)
with respect to those countries and those PRODUCTS containing any ARROW SELECTED
COMPOUND with respect to which termination occurs, TRIANGLE shall provide ARROW
with full and complete copies of all toxicity, efficacy, and other data
generated by TRIANGLE or TRIANGLE's AFFILIATE, and SUB-LICENSEES, in the course
of TRIANGLE's efforts to develop such
<PAGE>

PRODUCTS containing any ARROW SELECTED COMPOUND or to obtain governmental
approval for the sale of such PRODUCTS containing any ARROW SELECTED COMPOUND in
such countries, including but not limited to any regulatory filings with any
government agency in such countries. With respect to such PRODUCTS containing
any ARROW SELECTED COMPOUND in such countries, ARROW shall be authorised to
cross-reference any such regulatory filings made by TRIANGLE, its AFFILIATES and
SUB-LICENSEES in the countries in which termination occurs where permitted by
law. ARROW shall be entitled to provide information pertaining to the TRIANGLE
PATENTS, TRIANGLE KNOW-HOW, JOINT KNOW-HOW and JOINT INVENTIONS to any third
party with a bona fide interest in licensing such technology in the countries
and with respect to those PRODUCTS containing any ARROW SELECTED COMPOUND in
which termination occurs. Such data shall be provided on a confidential basis;
provided, however, that if such third party concludes a license with ARROW, such
third party shall be free to use such data for all purposes in respect of such
PRODUCT, including to obtain government approvals to sell such PRODUCT
containing any ARROW SELECTED COMPOUND in such countries, subject to ARROW's
obligations to TRIANGLE in respect thereof. In the event of such termination,
and only in respect of PRODUCTS containing ARROW SELECTED COMPOUNDS and in those
countries in which termination has occurred, ARROW or its potential licensees
shall be entitled to a license under any TRIANGLE PATENTS and TRIANGLE KNOW- HOW
on terms to be agreed and shall be granted automatically any necessary consents
to licence the JOINT INVENTIONS for no payment to TRIANGLE to make, have made,
use, import, offer to sell or to sell such PRODUCTS in such countries.

14.3 Upon termination of this AGREEMENT in its entirety on (a) account of
TRIANGLE's breach pursuant to Section 13.2, (b) by ARROW pursuant to Section 7.3
or 13.1 or (c) by TRIANGLE pursuant to Section 13.3, TRIANGLE shall provide
ARROW with a written inventory of all the PRODUCTS containing any ARROW SELECTED
COMPOUND (in the form of raw material, work-in-progress and finished goods) in
its and its AFFILIATES and SUB-LICENSEES possession and shall have the privilege
of disposing of such PRODUCT within six (6) months thereafter, subject to
fulfilment of its royalty obligations relating thereto or, upon mutual agreement
by TRIANGLE and
<PAGE>

ARROW, to supply said PRODUCT to ARROW at TRIANGLE's or ARROW's designee at
TRIANGLE's MANUFACTURING COST or ACQUISITION COST therefor, as applicable.

ARTICLE 15. TRANSFER OF KNOW-HOW; TECHNICAL ASSISTANCE

15.1 Within sixty (60) days following the EFFECTIVE DATE and as far as it has
not previously done so, ARROW shall supply TRIANGLE with all ARROW KNOW-HOW
relating solely to SELECTED COMPOUNDS to the extent it is available to ARROW.
With respect to any ARROW KNOW-HOW relating solely to SELECTED COMPOUNDS or
PRODUCTS or TRIANGLE-SOURCED COMPOUNDS developed by ARROW during the term of
this AGREEMENT, such disclosure will be made at least on a quarterly basis or
sooner, if practicable.

15.2 (a) In addition to the specific obligations of ARROW set forth in Article
2, ARROW shall, upon request by and at the cost of TRIANGLE, provide TRIANGLE
with reasonable co-operation and assistance, consistent with the other
provisions hereof, in connection with the development, use or manufacture of the
PRODUCTS. Such assistance may include, but is not limited to, development of the
formulations of the PRODUCTS; procurement of supplies and raw materials; initial
developmental and production batch manufacturing runs; process, specification
and analytical methodology design and improvement. In this regard, ARROW agrees
to make appropriate employees of ARROW reasonably available to assist TRIANGLE,
and ARROW agrees to provide appropriate TRIANGLE personnel with access during
normal business hours to the appropriate personnel and operations of ARROW for
such periods of time as may be reasonable in order to familiarise TRIANGLE
personnel with the ARROW KNOW-HOW relating solely to SELECTED COMPOUNDS,
PRODUCTS or TRIANGLE-SOURCED COMPOUNDS as applied by ARROW.

      (b) During the period prior to the second anniversary after expiration of
the RESEARCH PROGRAMME, (i) ARROW shall provide up to a total of *** man-

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<PAGE>

days of such technical assistance at ARROW's sole expense and (ii) subsequent to
such *** man-days of technical assistance, ARROW shall provide such additional
technical assistance as may be reasonably requested by TRIANGLE, provided, that
all reasonable out-of-pocket travel costs and expenses incurred by ARROW in
rendering technical assistance pursuant to this Section 15.2 shall be reimbursed
to ARROW by TRIANGLE. In addition, TRIANGLE will pay ARROW a consultancy fee in
an amount to be negotiated by the parties hereto in good faith (but not to
exceed the consultancy fee, if any, then being charged by ARROW to third parties
for equivalent services) for each consultancy day in excess of *** man-days
spent by personnel of ARROW in rendering technical assistance to TRIANGLE.
Technical assistance furnished pursuant to this Section 15.2 shall continue only
until the second anniversary after expiration of the RESEARCH PROGRAMME.

ARTICLE 16. REGISTRATION OF LICENSE

TRIANGLE at its expense, may register the license granted under this AGREEMENT
in any country of the TERRITORY where the use, sale or manufacture of a LICENSED
PRODUCT in such country would be covered by a VALID CLAIM. Upon request by
TRIANGLE, ARROW agrees to promptly to execute any reasonable `short form'
licenses submitted to it by TRIANGLE in order to effect the foregoing
registration in such country.

ARTICLE 17. NOTIFICATION AND AUTHORIZATION UNDER DRUG PRICE COMPETITION AND
PATENT TERM RESTORATION ACT

17.1 ARROW shall use its best efforts to notify TRIANGLE of (a) the issuance of
each U.S. patent included among the ARROW PATENTS, giving the date of issue and
patent number for each such patent; and (b) each notice pertaining to any patent
included among the ARROW PATENTS which ARROW receives as patent owner pursuant
to the Drug Price Competition and Patent Term Restoration Act of 1984
(hereinafter the "Act"), including but not necessarily limited to notices
pursuant to ss.ss.101 and 103 of the Act from persons who have filed an
abbreviated NDA ("ANDA") or a 'paper' NDA. Such notices shall be given promptly,
but in any event within ten (10) days of ARROW'S notice of each

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<PAGE>

such patent's date of issuance or receipt of each such notice pursuant to the
Act, whichever is applicable.

17.2 ARROW hereby authorises TRIANGLE (a) to include in any NDA for a PRODUCT,
as TRIANGLE may deem appropriate under the Act, a list of patents included among
the ARROW PATENTS that relate to such PRODUCT and such other information as
TRIANGLE in its reasonable discretion believes is appropriate to be filed
pursuant to the Act; (b) to commence suit for any infringement of the ARROW
PATENTS under ss. 271(e)(2) of Title 35 of the United States code occasioned by
the submission of a third party of an IND or a paper NDA for a PRODUCT pursuant
to ss.ss. 101 or 103 of the Act; and (c) subject to ARROW'S consent (which
consent shall not be unreasonably withheld or delayed), to exercise any rights
that may be exercisable by ARROW as patent owner under the Act to apply for an
extension of the term of any patent included among the ARROW PATENTS. In the
event that applicable law in any other country of the TERRITORY hereafter
provides for the extension of the term of any patent included among the ARROW
PATENTS in such country, upon request by either party (the requesting party),
the other party shall use its best efforts to obtain such extension or in lieu
thereof, shall authorise the requesting party, or if requested by the requesting
party, the requesting party's sub-licensees to apply for such extension. Each
party and its sub-licensees agree to cooperate with the other party and its
sub-licensees, as applicable, in the exercise of the authorisation granted
herein or which may be granted pursuant to this Section 17.2 and will execute
such documents and take such additional action as such other party or its
sub-licensees may reasonably request in connection therewith, including, if
necessary, permitting itself to be joined as a proper party in any suit for
infringement brought by such other party or its sub-licensees under Article 4
above.

ARTICLE 18. NOTICES

Any notice required or permitted to be given hereunder shall be in writing and
shall be deemed to have been properly given if delivered in person, or if mailed
by registered airmail, or by facsimile (receipt acknowledged), to the addresses
given below or such
<PAGE>

other addresses as may be designated in writing by the parties from time to time
during the term of this AGREEMENT. Any notice sent by registered airmail as
aforesaid shall be deemed to have been given on the fifth (5th) day after the
date of dispatch, it being understood that "date of dispatch" shall mean the
date the registered airmail letter is stamped by the post office of the country
of residence of the party giving such notice.

In the case of ARROW to:

Kenneth Powell at
Arrow Therapeutics Limited
Woodmansterne Road,
Carshalton,
Surrey,
SM5 4DS
England

In the case of TRIANGLE to:

George R. Painter, PhD
Executive Vice President
Research and Development
TRIANGLE Pharmaceuticals, Inc.
4 University Place
4611 University Drive
Durham, NC 27707

With a copy to: General Counsel

ARTICLE 19. APPLICABLE LAW AND DISPUTE RESOLUTION AND ARBITRATION

19.1 This AGREEMENT shall be construed and the rights of the parties hereto
shall be governed and construed in accordance (a) with respect to any disputes
or disagreement for which ARROW demands arbitration, the State of North
Carolina, exclusive of its choice of law rules and (b) with respect to any
dispute or disagreement for which TRIANGLE demands arbitration, England,
exclusive of its choice of law rules.

19.2 All disputes or disagreements arising in connection with the present
AGREEMENT shall be referred in the first instance to the chief executives of the
parties. If the dispute or disagreement cannot be resolved to the mutual
satisfaction of the parties
<PAGE>

within a reasonable period of time (three (3) months) then such dispute or
disagreement shall in such event be finally settled under the Rules of
Conciliation and Arbitration of the International Chamber of Commerce by one or
more arbitrators appointed in accordance with said rules. Arbitration will take
place in London, England (if demanded by TRIANGLE) and Durham, North Carolina
(if demanded by ARROW) and will be conducted in the English language.

ARTICLE 20. MISCELLANEOUS

20.1 ARROW acknowledges that TRIANGLE is subject to United States laws and
regulations controlling the export of technical data, biological materials,
chemical compositions and other commodities and that TRIANGLE'S obligations
under this AGREEMENT are contingent upon compliance with applicable United
States Export laws and regulations. The transfer of technical data, biological
materials, chemical compositions and commodities may require a license from the
cognisant agency of the United States government or written assurances by ARROW
that ARROW shall not export data or commodities to certain foreign countries
without the prior approval of certain United States agencies, or as otherwise
prescribed by applicable law or regulation. TRIANGLE neither represents that an
export license shall not be required nor that, if required, such export license
shall issue.

20.2 Each party shall comply with all laws and regulations relating to the
performance of its obligations or the exercise of its rights hereunder.

20.3 It is understood and agreed that the parties hereto are independent
contractors and are engaged in the operation of their own respective businesses,
and neither party thereto is to be considered the agent of the other party for
any purpose whatsoever. Neither party shall have any authority to enter into any
contracts or assume any obligations for the other party nor make any warranties
or representations on behalf of that other party.

20.4 This AGREEMENT sets forth the entire agreement and final understanding
between the parties hereto as to the subject matter hereof, and neither of the
parties
<PAGE>

shall be bound by any conditions, definitions, warranties, understandings or
representations with respect to such subject matter other than as expressly
provided herein or as duly set forth subsequent to the date hereof in writing
signed by a proper and duly authorised officer or representative of the relevant
party.

20.5 Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this AGREEMENT for failure or delay
in fulfilling or performing any provision of this AGREEMENT, when such failure
or delay is caused by or results from fire, floods, embargoes, government
regulations (including regulatory holds), prohibitions or interventions, war,
acts of war (whether war is declared or not), insurrections, riots, civil
commotions, strikes, acts of God, or any other cause beyond the reasonable
control of the affected party.

20.6 Each party agrees to give the other party prompt written notice of the
occurrence of any such condition set forth in Section 20.5 above, the nature
thereof, and the extent to which the affected party will be unable fully 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 prompt written notice when it is again fully able to perform such
obligations.

If, as a result of conditions set forth in Section 20.5 above, either party is
unable fully to perform its obligations hereunder for any consecutive period of
three hundred and sixty-five (365) days, the other party shall have the right to
terminate this AGREEMENT upon written notice.

20.7 Both parties hereby expressly agree and contract that it is the intention
of neither party to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries; that if any
word, sentence, paragraph, clause or combination thereof of this AGREEMENT is
found, by a court or executive body with judicial powers having jurisdiction
over this AGREEMENT or any of the parties hereto, in a final unappealed order,
to be in violation of any such provisions in any country or
<PAGE>

community or association of countries, such words, sentences, paragraphs,
clauses or combination shall be inoperative in such country or community or
association of countries and the remainder of this AGREEMENT shall remain
binding upon the parties hereto.

20.8 The failure of a party to enforce at any time for any period any of the
provisions hereof shall not be construed as a waiver of such provisions or of
the rights of such party thereafter to enforce each such provision.

20.9 The parties agree to issue mutual press releases concerning their entry
into this Agreement, with the content of such releases to be approved (which
consent shall not be unreasonably withheld or delayed) in advance by the
parties. In all other respects, except as required by law, neither party shall
use the name of the other party in any publicity release without the prior
written permission of such other party, which shall not be unreasonably
withheld. The other party shall have a reasonable opportunity to review and
comment on any such proposed publicity release. Except as required by law,
neither party shall publicly disclose the terms of this Agreement or issue any
publicity release with regard thereto unless expressly authorised to do so by
the other party which authorisation shall be agreed upon.

20.10 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

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<PAGE>

IN WITNESS WHEREOF, the parties have caused this AGREEMENT to be executed by
their officers hereunto duly authorised as of the date first above written.

ARROW THERAPEUTICS LIMITED

Signature: /s/ Ken Powell
           ----------------------------

Name (in print): Ken Powell
                 ----------------------

Title: Chief Executive Officer
       --------------------------------


TRIANGLE PHARMACEUTICALS INC.

Signature: /s/ Chris A. Rallis
           ----------------------------

Name (in print): Chris A. Rallis
                 ----------------------

Title: President and COO
       --------------------------------


                       [SIGNATURE PAGE OF ARROW / TRIANGLE
                      COLLABORATION AND LICENSE AGREEMENT]
<PAGE>

                                   SCHEDULE I

                                  ARROW PATENTS

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<PAGE>

                                   Schedule II

                                THE ARROW LIBRARY

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<PAGE>

                                  Schedule III

                             THE RESEARCH PROGRAMME

                  Triangle Pharmaceutical & Arrow Therapeutics
                        Agreement on Hepatitis C Project

The research programme has been broken down into its 11 component parts. A
project plan is attached showing the time lines for development of the project.

***

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