<PAGE>   1
                                                                   EXHIBIT 10.6

**************************** NOTICE OF GRANT AWARD ****************************

SMALL BUSINESS INNOVATION RESEARCH PROG                   Issue Date: 1/05/2000

Department of Health and Human Services
National Institutes of Health

NATIONAL CANCER INSTITUTE

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

Grant Number: 4 R44 CA82038-02
Principal Investigator: ANDERSON, NORMAN L. PHD
Project Title:      PROTEOMIC TECHNOLOGIES FOR CANCER RESEARCH

PRESIDENT AND CEO
LARGE SCALE BIOLOGY CORP.
9620 MEDICAL CENTER DR.
ROCKVILLE, MD. 20850-3338


Budget Period:   01/05/2000 - 12/31/2000
Project Period:  05/01/1999 - 12/31/2001

Dear Business Official:

The National Institutes of Health hereby awards a grant in the amount of
$1,521,192 (see "Award Calculation" in Section I) to LARGE SCALE BIOLOGY
CORPORATION in support of the above referenced project. This award is pursuant
to the authority of 42 USC 241 42 CFR PART 52 15 USC 638 and is subject to
attached terms and conditions.

Acceptance of this award including attached Terms and Conditions is acknowledged
by the grantee when funds are drawn down or otherwise obtained from the grant
payment system.

Award recipients are responsible for reporting inventions derived or reduced to
practice in the performance of work under this grant. Rights to inventions vest
with the grantee organization provided certain requirements are met and there
is acknowledgment of NIH support. In addition, recipients must ensure that
patent and license activities are consistent with their responsibility to make
unique research resources developed under this award available to the
scientific community, in accordance with NIH policy. For additional
information, please visit http://www.iedison.gov.

If you have any questions about this award, please contact the individual(s)
referenced in the attachments.

Sincerely yours,


By: /s/ Crystal Wolfrey
    -------------------------
    Crystal Wolfrey
    Grants Management Officer
    NATIONAL CANCER INSTITUTE

Attachments


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SECTION I - AWARD DATA - 4 R44 CA82038-02

AWARD CALCULATION (U.S. Dollars):

Direct Costs                                                          $890,540
F&A Costs                                                             $534,324
APPROVED BUDGET                                                     $1,424,864
Fee                                                                    $96,328
TOTAL                                                               $1,521,192


Recommended future year total cost support, subject to the availability of funds
and satisfactory progress of the project, is as follows.

03    $1,227,167

FISCAL INFORMATION:
CFDA Number:   93.394
EIN:   1521397232A1
Document Number:    R4CA82038B

IC  /  CAN   /  FY2000  /  FY2001

CA / 8423311 / 1,521,192 / 1,227,167

NIH ADMINISTRATIVE DATA:
PCC: 1AAI3311 / OC:41.4D / Processed:  WOLFREYC 000104 0215

SECTION II - PAYMENT/HOTLINE INFORMATION - 4 R44 CA82038-02

For Payment and HHS Office of Inspector General Hotline Information, see the
NIH Home Page at http://www.nih.gov/grants/policy/awardconditions.htm.

SECTION III - TERMS AND CONDITIONS - 4 R44 CA82038-02

This award is based on the application submitted to, and as approved by, the
NIH on the above-titled project and is subject to the terms and conditions
incorporated either directly or by reference in the following:

a. The grant program legislation and program regulation cited in this Notice of
Grant Award.
b. The restrictions on the expenditure of federal funds in appropriations acts,
to the extent those restrictions are pertinent to the award.
c. 45 CFR Part 74 or 45 CFR Part 92 as applicable.
d. The NIH Grants Policy Statement, including addenda in effect as of the
beginning date of the budget period.
e. This award notice, INCLUDING THE TERMS AND CONDITIONS CITED BELOW.

(see NIH Home Page at http://www.nih.gov/grants/policy/awardconditions.htm for
certain references cited above.)

This grant is included under Expanded Authorities.

This grant is subject to Streamlined Noncompeting Award Procedures (SNAP).

Treatment of Program Income:
Additional Costs

INFORMATION  Advances of Federal funds must be maintained in a Federally insured
and interest bearing account. Questions concerning access to the PHS Payment
Management System should be directed to the PMS Office at (301) 443-1660.

INFORMATION  The total fixed fee for your Phase II project is $173,325 and is in
addition to allowable direct and facilities and administrative costs. This fee
is incrementally funded proportionately for each budget period. $96,328 are
allotted for payment of fixed fee for the budget period covered by this Notice
of Grant Award. [Additional funds for the remainder of the total fixed fee are
intended to be allotted by a future Notice(s) of Grant Award. Unless and until
such future Notice(s) of Grant Award is (are) issued, the Government will not be
obligated to reimburse the grantee organization for more than the funds
presently allotted for payment of the fixed fee.] An adjustment of the fee will
be made in the event the grant is terminated or future support is withheld. The
fee allotted under this Notice of Grant Award is to be drawn down from the DHHS
Payment Management System in increments proportionate to the drawdown for costs.

INFORMATION  This award includes funds for 12 months of support. The budget
period start date has been delayed from January 1 to January 5 due to the NCI's
late receipt of other support information; however, the expiration date of
the budget period remains unchanged (12/31/2000). Allowable preaward costs may
be charged to this award, in accordance with the conditions outlined in the NIH
Grants Policy Statement, (October 1998), and with institutional requirements
for prior approval.

INFORMATION  Withdrawal of the commitment(s) as described in the grantee's
Commitment Appendix may be considered sufficient reason by the National Cancer
Institute to suspend and/or terminate this award or to withhold support for the
project.

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REQUIREMENT  This award is subject to the requirements pertaining to the
awardee's financial and business management systems, as set forth in the
document entitled "Requirements for Financial and Business Management Systems
for SBIR/STTR Awardees," which was enclosed in Mr. Leo F. Buscher Jr.'s letter
dated November 15, 1999, to the Organization's Business Official, and which is
hereby incorporated by reference.

Prior to drawing down funds for this award from the payment management system,
the awardee is required to have in place written policies and procedures for
financial and business management systems that comply with the standards set
forth in "Requirements for Financial and Business Management Systems for
SBIR/STTR Awardees," and must follow the policies and procedures for the
duration of this project.

An additional copy of the document, "Requirements for Financial and Business
Management Systems for SBIR/STTR Awardees," can be obtained by contacting the
grants management specialist identified on the award notice.

INFORMATION  Intellectual property rights: Normally the awardee organization
retains the principal worldwide patent rights to any invention developed with
United States Government support. Under Title 37 Code of Federal Regulations
Part 401, the Government receives a royalty-free license for its use, reserves
the right to require the patent holder to license others in certain
circumstances, and requires that anyone exclusively licensed to sell the
invention in the United States must normally manufacture it substantially in
the United States.

Rights and obligations related to inventions created or reduced to practice as a
result of this award are detailed in 35 U.S.C. 205 and 37 CFR Part 401. These
inventions must be reported to the Extramural Invention Reporting and Technology
Resources Branch, OPERA, NIH, 6705 Rockledge Drive, MSC 7980, Bethesda, MD
20892-7080, (301) 435-1986. For additional information, access the NIH link on
the Interagency Edison web site (www.iedison.gov) which includes an electronic
invention reporting system, reference information and the text to 37 CFR 401.

To the extent authorized by 35 U.S.C., Section 205, the Government will not
make public any information disclosing an NIH-supported invention for a 4-year
period to allow the awardee organization a reasonable time to file a patent
application, nor will the Government release any information that is part of
that patent application.

The fixed fee provided as part of this Notice of Grant Award is in addition to
direct and facilities and administrative costs. The fee is to be drawn down
from the DHHS Payment Management System in increments proportionate to the draw
down of costs.

Allowable costs conducted by for-profit organizations will be determined by
apply the cost principles of Contracts with Commercial Organizations set forth
in 48 CFR, Subpart 31.2.

INFORMATION  For administrative and management concerns, contract the Grants
Management Specialist, Crystal Wolfrey, at (310) 496-8634 or via e-mail at
crystal.wolfrey@nih.gov. For progammatic and scientific concerns, contact the
Program Director, Dr. Sudhir Srivastava at (310) 496-3983.

INFORMATION In a continuing effort to provide exceptional customer service, the
NCI Grants Administration Branch has set up a Feedback address on its web site
(http://www.nci.nih.gov/admin/gab/index.htm). General concerns and issues
related to NCI grants policies, procedures, and practices can be sent to the
Customer Liaison using this feature. Specific questions or concerns related to
this grant should be addressed to the Grants Management Specialist listed in
the Terms of Award.

Crystal Wolfrey, Grants Specialist


SPREADSHEET

GRANT NUMBER 4 R44 CA82038-02

P.I.: ANDERSON, NORMAN L

INSTITUTION: LARGE SCALE BIOLOGY CORPORATION

<TABLE>
<CAPTION>
                        YEAR O2             YEAR O3
                      ===========         ===========
<S>                   <C>                 <C>
TOTAL DC                  890,540             718,856

TOTAL F&A                 534,324             431,314

TOTAL COST              1,424,864           1,150,170

FEE                        96,328              76,997
</TABLE>