<PAGE>

                                                                    Exhibit 10.7

                                LICENSE AGREEMENT

      THIS LICENSE AGREEMENT (the "Agreement") is made effective as of February
12, 1998 (the "Effective Date"), by and between VERSICOR INC., a Delaware
corporation ("Versicor") and BIOSEARCH ITALIA S.P.A., a corporation organized
under the laws of Italy ("Biosearch").

                                    RECITALS

      WHEREAS, Biosearch has developed a compound having the Biosearch code
number BI 397 (the "Compound" as defined below) and is the owner of patent
rights and know-how relating to the Compound;

      WHEREAS, Biosearch desires to have Versicor develop and register in
specified countries (the "Territory" as defined below) pharmaceutical products
containing the Compound for any therapeutic use;

      WHEREAS, Versicor desires to develop and commercialize Licensed Products
(as defined below) in the Territory either by itself or with another party with
whom Versicor will collaborate in developing and/or marketing such products and
to receive the right and license under the Licensed Patents and Licensed
Know-How (as defined below) to use, sell, offer for sale and import in the
Territory Licensed Products;

      WHEREAS, Biosearch is willing to grant in the Territory the
above-mentioned rights and license to Versicor under Licensed Patents and
Licensed Know-How relating to the Licensed Products;

      NOW, THEREFORE, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

      The following terms as used in this License Agreement shall have the
meanings set forth in this Article:

      1.1 "Affiliate" shall mean any entity that directly or indirectly Owns, is
Owned by or is under common Ownership with, a party to this Agreement. "Own" or
"Ownership" shall mean direct or indirect possession of at least fifty percent
(50%) of the outstanding voting securities of a corporation or a comparable
equity interest in any other type of entity, or means substantial control of a
corporation.

      1.2 "Compound" shall mean the chemical substance identified by Biosearch's
code number BI 397, formerly identified as MDL 63,397.

      1.3 "Licensed Compounds" shall mean the Compound or any other compound
claimed in the Licensed Patents.


                                       1.
<PAGE>

      1.4 "Licensed Know-How" shall mean all materials, data, techniques,
know-how, practices, methods, inventions and information which, as of the
Effective Date or during the term of the Agreement, (a) is owned by or licensed
(with right to sublicense) to Biosearch, and (b) which is necessary or useful to
the development, use, importation, or sale of the Licensed Products.

      1.5 "Licensed Patents" shall mean (i) U.S. patent application no.
08/640,681, filed July 29, 1992 and Canadian patent application no. 2109601,
filed July 14, 1992, and all divisionals, substitutions, continuations and
continuations-in-part, and (ii) any patents issuing therefrom, and all
extensions, reissues, and renewals of such patents.

      1.6 "Licensed Product" shall mean human therapeutic [or prophylactic]
products containing as an active ingredient the Licensed Compound, in any dosage
and in such formulations and modes of administration as may be determined by
Versicor.

      1.7 "Net Sales" shall mean the gross amount invoiced by Versicor, its
Affiliates, and sublicensees, as the case may be, for sales of a Licensed
Product to non-Affiliated third parties, less (a) discounts, including cash
discounts, quantity discounts, prompt payment discounts, charge-back payments
and rebates granted to managed health care organizations or to federal, state
and local governments, their agencies, and purchasers and reimbursers or to
trade customers, including but not limited to, wholesalers and chain and
pharmacy buying groups, retroactive price reductions or allowances actually
allowed or granted from the billed amount with respect to the licensed Product
in question, (b) credits or allowances actually granted upon claims, damaged
goods, rejections or returns of Licensed Products, including recalls, regardless
of the party requesting such, (c) freight, postage, shipping and insurance
charges actually allowed or paid for Licensed Product, (d) commissions paid to
third parties, (e) allowances for bad debt and (f) taxes, duties or other
governmental charges levied or otherwise imposed on sale of Licensed Products,
including without limitation value-added taxes, or other governmental charges
otherwise measured by the billing amount, when included in billing, as adjusted
for rebates and refunds.

      1.8 "Territory" shall mean the United States and Canada.

                                    ARTICLE 2

                                 GRANT OF RIGHTS

      2.1 Biosearch License Grant. Biosearch hereby grants to Versicor an
exclusive (even as to Biosearch) right and license, (with the right to
sublicense) under the Licensed Patent Rights and Licensed Know-How, to develop,
use, offer for sale, sell and import the Licensed Product(s) in the Territory.

                                    ARTICLE 3

                                   DISCLOSURE

      3.1 Disclosure of Know-How; Assistance of Biosearch Personnel. Promptly
following execution of this Agreement, Biosearch shall, at its expense, (a)
provide Versicor with


                                       2.
<PAGE>

copies of all written Licensed Know-How in its possession or control and (b) use
reasonable efforts to arrange for a complete disclosure and demonstration of all
Licensed Know-How, by personnel of Biosearch or other knowledgeable former
Biosearch personnel accessible to Biosearch, including making Biosearch
personnel available for periodic telephone consultation to Versicor at
reasonable intervals. Biosearch shall grant permission, upon written request and
reasonable notice by Versicor, for former Biosearch personnel and former
Biosearch consultants, as the case may be, to disclose and discuss Biosearch's
proprietary information on the Compound to Versicor or its sublicensees and
corporate partners solely in furtherance of the purposes of this Agreement.

                                    ARTICLE 4

                     DEVELOPMENT, REGISTRATION AND MARKETING

      4.1 Development Activities. Biosearch will conduct preclinical studies on
the Licensed Compound at its expense, as described in Appendix A. All human
clinical trials required for regulatory approval of a Licensed Product in
Territory, will be conducted by Versicor or its corporate partner, if any, at
the sole expense of Versicor or such partner. Versicor will have the right to
subcontract any part of its development and clinical trial obligations in the
Territory.

      4.2 Access to Consultants. Biosearch shall endeavor to provide access by
Versicor to all consultants who have been involved in the development of the
Compound by Biosearch and whom Versicor desires to retain for the purposes of
this Agreement, to the extent such consultants are available and willing to work
with Versicor. Subject to Section 3.1, all costs and expenses associated with
retaining such consultants shall be borne by Versicor.

      4.3 Access to Preclinical and Clinical Data. At reasonable intervals, each
party shall provide to the other copies of the providing party's preclinical and
clinical data and information solely for the receiving party's (or its
sublicensee's) use in obtaining regulatory approval to market Licensed Products
in the Territory, in the case of Versicor, and outside the Territory, in the
case of Biosearch.

      4.4 Commercialization. Versicor or its sublicensee shall use commercially
reasonable efforts consistent with accepted pharmaceutical business practices
and legal requirements to promote, market, distribute and sell the Licensed
Products with the same level of effort used by Versicor in the marketing of its
own products of similar market potential.

      4.5 Trademarks. The parties agree that the Licensed Products will be
marketed and distributed under one single trademark per indication to the extent
commercially practical and permitted by appropriate regulatory authorities. The
parties shall confer as appropriate during the period in which the Licensed
Products are in development to discuss and develop a trademark strategy or
strategies for the Licensed Products consistent with the parties' objectives for
commercialization of the Licensed Products in the parties' respective
territories.


                                       3.
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                                    ARTICLE 5

                                    PAYMENTS

      5.1 Payments. In consideration of the rights and license granted under
this Agreement, Versicor shall make the following payments to Biosearch:

            (a) License Fee. Subject to Section 5.8 below, Versicor shall pay
Biosearch Two Million Dollars ($2,000,000) in cash upon execution of this
Agreement, of which [ * ] is non-refundable and [ * ] is subject to refund in
accordance with Section 5.8.

            (b) Equity. Subject to Section 5.8, Versicor shall issue to
Biosearch 200,000 shares of the Common Stock of Versicor (the "Shares") on
January 1, 1999, pursuant to a separate Stock Purchase Agreement to be
entered into by the parties.

            (c) Milestone Payments. Versicor will pay Biosearch the following
additional amounts in milestone payments within thirty (30) days of the first
achievement by Versicor or its sublicensee of each of following six
milestones in the Territory as follows:

            [ * ]

"Commencement of a clinical trial shall mean the first date on which a
Licensed Product is shipped to an investigator for the clinical trial.

In no event shall Versicor be obligated to make cash payments to Biosearch
under this Section 5.1 exceeding Twelve Million Five Hundred Thousand Dollars
($12,500,000) in the aggregate under this Agreement.

      5.2 Royalties. Versicor shall pay royalties to Biosearch on a
product-by-product and country-by-country basis, at a rate of [ * ] of Net
Sales of a Licensed Product. The

[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

                                       4.
<PAGE>

obligation to pay royalties to Biosearch, under this Section 5.2 shall be
imposed only once with respect to the same unit of the Licensed Product.

      5.3 Accrual; Reports. No royalties shall accrue on the sales by Versicor
to Versicor's Affiliated Companies or sublicensees of Versicor on any
transactions between such entities. Royalties shall accrue only on sales of the
Licensed Product from Versicor, Affiliated Companies of Versicor or sublicensees
of Versicor to third parties that are not Affiliates of those entities, on a
calendar quarter basis. Versicor shall pay to Biosearch the royalties due
hereunder, including any royalties due from the sales of Licensed Product by
Versicor's Affiliates or sublicensees on a quarterly basis, within two (2)
months following the end of each calendar quarter for which royalties are due
from Versicor. Each royalty payment shall be accompanied by a report summarizing
the Net Sales made and the royalty payable thereon, including a description of
any offsets or credits deducted from such royalty, on a product-by-product and
country-by-country basis during the relevant three-month period.

      5.4 Foreign Exchange. All amounts payable under this Agreement shall be
paid in U.S. dollars. The remittance of royalties payable on Net Sales made
outside the United States will be payable in U.S. dollars to Biosearch at a bank
and to an account designated by Biosearch using the selling rate of exchange for
the currency of the country from which the royalties are payable as published by
the Wall Street Journal, New York, N.Y., USA, for the last business day of the
quarterly period for which the royalties are due.

      5.5 Records. Versicor shall keep accurate books and records setting forth
the gross sales, adjusted gross sales, Net Sales, the amount of royalties
payable to Biosearch as provided for herein, for each country with regard to the
Licensed Product sold by Versicor, Versicor's Affiliated Companies or
sublicensees of Versicor. Such books and records shall be retained by Versicor
at its principal place of business for at least the three (3) years immediately
following the calendar year to which each shall pertain. Such records shall be
open during reasonable business hours for examination, at Biosearch's expense
and not more than once per year, by an independent certified public accountant
or accounting firm appointed by Biosearch and acceptable to Versicor, for the
sole purpose of verifying the correctness of the calculation of payments made
under this Agreement. Versicor shall not unreasonably withhold acceptance of an
independent certified public accountant or accounting firm appointed by
Biosearch. In the event that such audit shall indicate that in any calendar year
the royalties which should have been paid by Versicor are at least ten percent
(10%) greater than those which were actually paid by Versicor, then Versicor
shall pay the cost of such audit. Any records or information received by
Biosearch under this Section shall be Confidential Information for purposes of
Article 9.

      5.6 Taxes. Any tax required to be withheld by Versicor under the laws of
any country for the account of Biosearch shall be promptly paid by Versicor for
and on behalf of Biosearch to the appropriate governmental authority, and
Versicor shall furnish Biosearch with proof of payment of such tax. Any such tax
actually paid on Biosearch's behalf shall be deducted from royalty payments due
Biosearch.

      5.7 Duration of Royalty Obligation. Versicor's royalty obligation as to
each Licensed Product shall terminate on a country-by-country basis concurrently
with the later of (a)


                                       5.
<PAGE>

the fifth anniversary of the Effective Date of this Agreement or (b) the
expiration of the last to expire of the Licensed Patents coveting the use or
sale of such Licensed Product in such country.

      5.8 Unsuccessful Preclinical Studies. If the results of the preclinical
studies of the compound are not sufficiently successful to warrant
commencement of human clinical trials, as determined in good faith by
Versicor, (i) Biosearch will refund to Versicor 50% of the cash License Fee
set forth in Section 5.1(a) (i.e., [ * ]); (ii) Versicor shall issue to
Biosearch only One Hundred Thousand (100,000) shares of the Common Stock of
Versicor under Section 5.1(b); and (iii) the Licensed Product will be deemed
a "Biosearch Lead Compound" as defined under and subject to that certain
Collaboration Agreement "Biocor," between Versicor and Biosearch dated as of
the Effective Date (the "Biocor Agreement"), except that no payment under
Section 2.5 of the Biocor Agreement shall be owing on such deemed Biosearch
Lead Compound. The rights set forth above shall be in addition to any rights
Versicor may have under Section 11.3(i).

      5.9 Third Party Licenses. In the event Versicor must obtain a
royalty-bearing license from a third party in order to use or sell a Licensed
Product, then Versicor may credit against the royalty otherwise owing to
Biosearch on Net Sales of such Licensed Product the amount paid as royalty to
such third party based on such Net Sales.

                                    ARTICLE 6

                               SUPPLY OF COMPOUND

      6.1 Biosearch Manufacturing Facility; Rights. The Parties acknowledge that
it is Biosearch's intention to establish a U.S. FDA approved manufacturing
facility for both the bulk as well as finished Licensed Product, at its own
expense. In the event Biosearch establishes such manufacturing facility in the
appropriate time flame, it shall have the right to manufacture all of Versicor's
requirements for preclinical, clinical and commercial quantities. Such right to
manufacture and supply, as it applies to Phase III clinical supplies and
commercial supplies, is contingent upon Biosearch having established such
manufacturing site in the agreed upon time frame and its ability to supply at
the commercial price referenced in Section 6.3. Should Biosearch not be able to
establish such manufacturing facility, or not be able to supply at such price,
Versicor shall have the right to contract with a Third Party for the manufacture
and supply of its requirements of Licensed Product for sale in the Territory and
Biosearch shall transfer to such Third Party all existing manufacturing know-how
for such manufacture at a price equal to two percent (2%) of Versicor's annual
Net Sales of Licensed Products.

      6.2 Clinical Supply. Biosearch shall supply all of Versicor's requirements
of Licensed Product for the conduct of clinical trials at a price equal to
Biosearch's cost to manufacture the Licensed Product on a timely basis.

      6.3 Commercial Supply. Biosearch shall supply all of Versicor's
requirements of Licensed Product for commercial use, distribution, and sale in
the Territory at a price not greater than fifteen percent (15%) of Versicor's
Net Sales of the Licensed Product, but not less than Seven Dollars and Fifty
Cents ($7.50) per gram of finished Licensed Product. The parties shall negotiate
a separate Manufacturing and Supply Agreement consistent with this Article 6.


[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.


                                       6.
<PAGE>

                                    ARTICLE 7

                                 INDEMNIFICATION

      7.1 Products Liability.

            (a) Versicor shall indemnify and hold harmless Biosearch, its
Affiliates, directors, employees and agents against any and all claims, suits,
actions, losses, damages, costs and expenses of any kind, including reasonable
attorneys fees ("Losses"), with respect to death or injury to any person or
damage to any property, resulting from the use, promotion, marketing and sale of
the Compound or any Licensed Products by Versicor, its Affiliates, its
sublicensees, distributors and customers, except to the extent such Losses
result directly from the negligence or intentionally wrongful act or omission of
Biosearch.

            (b) Biosearch shall indemnify and hold harmless Versicor, its
Affiliates, directors, employees and agents against any and all claims, suits,
actions, losses, damages, costs and expenses of any kind, including reasonable
attorneys fees ("Losses"), with respect to death or injury to any person or
damage to any property, resulting from the use, promotion, marketing and sale of
the Compound or any Licensed Products by Biosearch, its Affiliates, its
sublicensees, distributors and customers, except to the extent such Losses
result directly from the negligence or intentionally wrongful act or omission of
Versicor.

      7.2 Procedure. In the event Biosearch is seeking indemnification under
Article 7 it shall inform the Versicor of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the Versicor to
assume direction and control of the defense of the claim (including the right to
settle the claim solely for monetary consideration), and shall cooperate as
requested in the defense of the claim; however, Versicor party shall not settle
or compromise any claim in a manner that imposes any restrictions or obligations
on Biosearch or grants any rights to the Licensed Products or the Licensed
Technology without the prior written consent of Biosearch, which consent shall
not be unreasonably withheld.

                                    ARTICLE 8

                              INTELLECTUAL PROPERTY

      8.1 Ownership of Intellectual Property Resulting from Development
Activities.

            (a) Versicor Results. Versicor shall own all inventions, proprietary
information, and know-how resulting from Versicor's development, program for the
Licensed Product (the "Versicor Results"), and any patents issuing therefrom.
During the term of this Agreement, Biosearch may use, on a royalty-free basis,
the Versicor Results solely for (i) the manufacture of Licensed Products, or
(ii) the development, use, sale or importation of Licensed Products outside the
Territory.

            (b) Biosearch Results. Biosearch shall own all processes,
inventions, formulations, proprietary information and know-how resulting from
Biosearch's preclinical work (the "Biosearch Results") and any patents issuing
therefrom. Such patents shall be deemed incorporated in the Licensed Patents and
shall be subject to the provisions of this Agreement to


                                       7.
<PAGE>

the extent the inventions claimed therein are necessary or useful to the
development, use, sale or importation of Licensed Products in the Territory.

      8.2 Maintenance of Patents. Biosearch agrees to prosecute and maintain, at
its own cost and expense, all of the patents and patent applications included in
the Licensed Patents. At Biosearch's request, Versicor shall cooperate, in all
reasonable ways in connection with the prosecution of all patent applications
included within the Licensed Patents. Biosearch shall advise Versicor promptly
of any significant developments in the prosecution of any Licensed Patent in the
Territory, in particular of the issuance of or rejection of or of opposition to
or of protest of any patent or application within the Licensed Patents. Should
Biosearch decide that it is no longer interested in maintaining or prosecuting
any Licensed Patent or part thereof, it shall promptly advise Versicor thereof
and, at the request of Versicor, Biosearch shall assign free of charge such
Licensed Patent or part thereof to Versicor. Upon assignment of such Licensed
Patent or part thereof, Versicor will thereafter prosecute and maintain such
Licensed Patent at its own cost to the extent that Versicor desires to do so.

      8.3 Infringement by Third Parties. Each party will notify the other
promptly upon its becoming aware of any third party infringement of a Licensed
Patent. The notice shall set forth the facts of such infringement in reasonable
detail. Versicor shall have the primary right, but not the obligation, to
initiate legal action with respect to such infringement at its own expense and
deduct up to fifty percent (50%) of its reasonable litigation expenses from
furore royalties or milestone payments due to Biosearch, provided that such
deduction does not reduce the royalties or milestone payments payable in any
quarter below fifty percent (50%) of the royalties or milestone payments
otherwise due in such quarter. Upon receiving a recovery or award from such
suit, such recovery and award shall be used first to reimburse Versicor for its
reasonable litigation expenses actually incurred, then to reimburse Biosearch
for the amounts of any unpaid royalties or milestone payments, and any remainder
of the recovery and award shall be retained by Versicor for its own benefit and
use. In any such infringement suit Biosearch shall, at the request of Versicor,
render all reasonable assistance in the prosecution of such suit.

      8.4 Defense and Settlement of Third Party Claims. If a third party asserts
that a patent or other right owned by it is infringed by the development, use,
marketing, distribution, importation, offer for sale or sale of any Licensed
Product, and such claim arises out of Versicor's use of a Licensed Patent or
Licensed Know-How licensed hereunder, Versicor shall be responsible for
defending such claim and all costs and expenses, including all damages and
settlement amounts, incurred in such defense shall be credited against royalties
payable by Versicor under Article 5.

                                    ARTICLE 9

                            CONFIDENTIAL INFORMATION

      9.1 Versicor shall keep the Biosearch Know-How in strict confidence and
shall not use Biosearch Know-How except for the purposes of this Agreement. Any
information disclosed pursuant to the Confidentiality Agreement between the
parties dated May 16, 1997 (the "Initial CDA") shall be considered Biosearch
Know-How and shall governed by the terms of this


                                       8.
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Agreement, and the Initial CDA shall terminate concurrently with the execution
of and shall be superceded by this Agreement.

      9.2 Both Versicor and Biosearch agree to keep in strict confidence all
other know-how as well as other information and data of confidential nature
received from the other party under this Agreement and not to make any use
thereof other than provided under this Agreement.

      9.3 The confidentiality obligations as per this Article 10 shall not apply
to the extent that the Biosearch Know-How or other know-how or information and
data are required by appropriate authorities to be submitted for purposes of
registration of the Licensed Product; provided, however, that to the extent
possible Such submissions shall be made on a confidential basis. The
confidentiality and non-use obligations under this Article 10 shall extend for
the term of this Agreement and five (5) years thereafter.

      9.4 The obligation of confidentiality and non-use as set forth in this
Article 10 shall not apply:

            (a) to information and data which, at the time of disclosure, was
known by the recipient party or an affiliate, or which after disclosure was
independently developed by the recipient party or an affiliate without use of
such information and data, and which can be so demonstrated by the records of
the recipient party or an affiliate, as the case may be; and/or

            (b) are public knowledge at the date of disclosure to the recipient
party; and/or

            (c) become public knowledge at a later date without any fault of the
recipient party or an affiliate; and/or

            (d) are disclosed to the recipient party or an affiliate by a third-
party having the right to do so.

      9.5 Nothing in this Article 9 or this Agreement shall be construed to
prevent either party from disclosing to its affiliates information and data
obtained from the other party during this Agreement, provided that such
information is used in a manner consistent with this Agreement, and further
provided that said affiliates are bound by a like confidentiality obligation
with respect to such information.

                                   ARTICLE 10

                         REPRESENTATIONS AND WARRANTIES

      10.1 Mutual Representations and Warranties. Each Party hereby represents
and warrants as follows:

            (a) such Party is duly organized and validly existing under the laws
of the state or government of its incorporation and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;


                                       9.
<PAGE>

            (b) such Party is duly authorized to execute and deliver this
Agreement and to perform its obligations hereunder; and

            (c) this Agreement is a legal and valid obligation binding upon such
Party and enforceable in accordance with its terms. The execution, delivery, and
performance of the Agreement by such Party does not conflict with any agreement,
instrument, or understanding, oral or written, to which it is a Party or by
which it is bound, nor violate any law or regulation of any court, governmental
body, or administrative agency having jurisdiction over it.

      10.2 Biosearch Representations and Warranties. Biosearch hereby represents
and warrants to Versicor that:

            (a) it has not granted any right to any Third Party with would
conflict with the rights granted to Versicor hereunder relating to the patent
applications, information, know-how, or data, which are the subject or this
Agreement;

            (b) as of the Effective Date, it owns or controls under valid
licenses and on an exclusive basis, all of the right, title, and interest in and
to the Licensed Patents and the information and materials required to be
disclosed to Versicor by it under Article 3 hereunder;

            (c) the manufacture, use, or sale of the Licensed Compound does not,
and will not to the best of Biosearch's knowledge, hereunder infringe the
intellectual property or other rights of any third party;

            (d) none of the Licensed Patents hereunder is invalid as of the
Effective Date and Biosearch will inform Versicor immediately if it makes any
determination to the contrary; and

            (e) as of the Effective Date the Licensed Patents have not been
involved in any reissue, reexamination, interference, opposition, or equivalent
proceeding.

      10.3 Disclaimer of Warranties. BIOSEARCH HEREBY DISCLAIMS ANY WARRANTIES,
WHETHER EXPRESS OR IMPLIED, OF ANY KIND, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, WITH RESPECT
TO ANY COMPOUND OR OTHER MATERIALS IN WHATEVER FORM PROVIDED TO VERSICOR
HEREUNDER.

                                   ARTICLE 11

                              TERM AND TERMINATION

      11.1 Term. This Agreement shall commence as of the Effective Date and,
unless earlier terminated as provided herein, shall expire on the later of (i)
the date on which Biosearch is no longer entitled to receive a royalty on a
Licensed Product or (ii) the expiration of the last to expire of the licensed
patents. Upon expiration of all royalties payable hereunder, Versicor shall
retain a non-exclusive fully-paid and royalty-free licensed under the Licensed
Know-How to manufacture, use, import, sell and offer for sale Licensed Products
in the Territory.


                                      10.
<PAGE>

      11.2 Termination for Breach.

            (a) Breach by Versicor. If Versicor materially breaches this
Agreement at any time, and has not cured such breach within ninety (90) days
after written notice thereof from Biosearch, or, if such breach is not curable
within such ninety (90) day period, Versicor fails to use commercially
reasonable efforts to cure such breach, then Biosearch may terminate this
Agreement. Upon such termination, the licenses granted hereunder shall
terminate, without prejudice to the application of Section 11.5 hereunder.

            (b) Breach by Biosearch. If Biosearch materially breaches this
Agreement at any time, and has not cured such breach within ninety (90) days
after written notice thereof from Versicor, or, if such breach is not curable
within such ninety (90) day period, Biosearch fails to use commercially
reasonable efforts to cure such breach, then Versicor's remaining payment
obligations under this Agreement will be reduced by fifty percent (50%),
including any remaining and unpaid License Fees and Milestones, and Versicor's
royalty obligation hereunder shall be reduced to 5% of Net Sales of Licensed
Products. If there is any bona fide dispute between the parties regarding the
right of termination based on failure by Versicor to make a milestone or royalty
payment when due, the disputed milestone or royalty payment, as the case may be,
shall be paid into an interest bearing account by Versicor where it shall remain
during the pendency of the dispute, and upon resolution of the dispute, paid,
with accumulated interest, to the prevailing party.

      11.3 Early Termination by Versicor. If Versicor determines that in its
reasonable business judgment based on scientific, medical, economic or other
valid business reasons, it is not commercially reasonable to carry out further
development or marketing of the Licensed Products, Versicor may terminate the
Agreement, with sixty (60) days prior written notice, after any of the following
events:

            (i) the determination by Versicor that the results of the
pre-clinical studies are not sufficiently successful to warrant human clinical
trials, as discussed pursuant to Section 5.8;

            (ii) the conclusion of Phase I clinical trials of the Licensed
Product and receipt by Versicor of data sufficient to evaluate such trials;

            (iii) the conclusion of Phase II clinical trials of the Licensed
Product;

            (iv) the conclusion of Phase III clinical trial's of the Licensed
Product; Termination hereunder shall be effective sixty (60) days after receipt
by Biosearch of written notice from Versicor, provided, however that Versicor
may terminate any trial or development activity effective immediately on notice
to Biosearch if an applicable law or regulatory decree requires such
termination. In the event of any termination under this Section 11.3, the
licenses granted hereunder by Biosearch shall revert to Biosearch.

      11.4 Survival of Sublicenses. In the event of termination of the licenses
to Versicor under Section 11.2(a), any licenses granted to a Versicor
sublicensee or partner (collectively, "Versicor Partner") shall survive and this
Agreement may be assumed by the Versicor Partner


                                      11.
<PAGE>

for the Versicor Partner's portion of the Territory, subject to adequate
assurances to Biosearch of such Versicor partner's ability to perform Versicor's
obligations hereunder.

      11.5 Surviving Rights and Obligations. Termination or expiration of this
Agreement for any reason shall be without prejudice to any rights, which may
have accrued to the benefit of either party prior to such termination or
expiration. The obligations and rights of the Parties under Sections 4.3 and
5.5, and Articles 7, 8, 9, 10, 11 and 12 shall survive termination or expiration
of this Agreement.

                                   ARTICLE 12

                                  MISCELLANEOUS

      12.1 Assignment. Neither party shall assign or delegate the rights,
duties, and obligations of this Agreement, except as expressly provided herein,
without prior written consent of the other party. Either party may assign its
rights or delegate its duties hereunder to its affiliates, or in connection with
an acquisition, merger, sale of assets, or change of control of all or
substantially all of the business unit to which this Agreement relates.

      12.2 Entire Agreement; Amendments. This Agreement contains the entire
understanding between the parties relating to the subject matter hereof and
supersedes any and all prior agreements, understandings and arrangements,
whether written or oral, between the parties. No amendments, changes,
modifications or alterations of the terms and conditions of this Agreement shall
be binding upon either party hereto unless in writing and signed by both
parties.

      12.3 Publicity. Any public disclosure of this Agreement or of the
activities or rights hereunder, including but not limited to press releases,
shall be reviewed and consented to by each party prior to such disclosure;
provided, however, that the foregoing shall not apply to such disclosures (a) as
may be required by law (including securities laws), provided that the party
subject to such law shall seek confidential treatment of key commercial and
scientific terms to the extent such treatment is available under law; (b) made
in connection with an assertion of its rights under this Agreement; (c) made
under a binder of confidentiality to any person or entity who may be interested
in investing in or acquiring all or substantially all of the assets or
securities of such party, or (d) made to its financial advisors provided that
such party has used its best efforts in good faith to obtain a binder of
confidentiality. Any consent required hereunder shall not be untimely or
unreasonably withheld by either party.

      12.4 Waiver. Any delay in enforcing a party's rights under this Agreement
or any waiver as to a particular default or other matter shall not constitute a
waiver of such party's rights to the future enforcement of its rights under this
Agreement, excepting only as to an express written and signed waiver as to a
particular matter for a particular period of time

      12.5 Force Majeure. Neither of the undersigned parties shall be liable for
loss, damage, or failure to perform its obligations under this Agreement, where
such loss, damage, or failure was occasioned by contingencies beyond its
control, including without limitation, strikes or work stoppages, lock-outs,
riots, wars, delay of carriers, Acts of God, fire, floods, storms, and
earthquakes, acts or failures to act by government or governmental agencies or
instrumentalities,


                                      12.
<PAGE>

or any other cause, beyond the reasonable control of the Parties, if and only
if, the Party affected shall have used commercially reasonable efforts to avoid
such occurrence. Each party will notify the other immediately, should any such
contingencies occur. Nothing herein shall relieve a party from the obligation to
pay promptly all payments that may be due under this Agreement.

      12.6 Notices. Any notice required to be given hereunder shall be
considered properly given if sent in English by registered air-mail, facsimile,
telecopier, telex or by personal courier delivery to the respective address of
each party as follows:

      for Biosearch:    Biosearch Italia S.P.A.
                        via R. Lepetit 34
                        21040 Gerenzano (Varese)

                        Attention: President, Francesco Parenti, Ph.D.

                        Facsimile: +39-2-96474.400

      With a copy to:   Pavia Ansaldo
                        Studio Legale
                        Via della Annunciata, 7
                        20121 Milan ITALY

                        Attention: Avv A. Migone De Amicis

                        Facsimile: +39.2.6570203

      For Versicor:     Versicor Inc.
                        34790 Ardentech Court
                        Fremont, California 94555

                        Attention: Chief Executive Officer

                        Facsimile: (510) 739-3003

      With a copy to:   Cooley Godward LLP
                        5 Palo Alto Square
                        3000 E1 Camino Real
                        Palo Alto, California 94306

                        Attention: Barbara Kosacz, Esq.

                        Facsimile: (650) 857-0663

or to such other address as a party may designate in a notice given in
accordance with this Section.


                                      13.
<PAGE>

      12.7 Governing Law. This Agreement shall be governed by the laws of
England and Wales, without regard for the choice of law provisions of that
jurisdiction or any other jurisdiction.

      12.8 Dispute Resolution. In the event of any controversy or claim arising
out of or relating to any provision of this Agreement or the breach thereof, the
parties shall first submit such dispute to the parties' respective executive
officers designated below or their successors, for attempted resolution by good
faith negotiations within fourteen (14) days after such notice is received. Such
designated officers are as follows:

For Versicor:  George Horner, III

               Chief Executive Officer

For Biosearch: Francesco Parenti, Ph.D.

               President

If such dispute is not resolved between the parties within thirty (30) days of
notice of such dispute as set forth above, either party may commence
international arbitration as provided in this Section 12.8. Such dispute shall
be referred to and finally resolved by arbitration under the London Court of
International Arbitration Rules, which Rules are deemed to be incorporated by
reference into this Section 12.8. The number of arbitrators shall be three, one
of whom shall be a solicitor of at least fifteen (15) years standing. The place
of arbitration shall be London, England. The language to be used in the arbitral
proceedings shall be English.

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

      12.10 Severability. If any one or more of the provisions of this Agreement
is held to be invalid or unenforceable by any court of competent jurisdiction
from which no appeal can be or is taken, the provision shall be considered
severed from this Agreement and shall not serve to invalidate any remaining
provisions hereof. The parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by the parties when entering this Agreement may be
realized.

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


                                      14.
<PAGE>

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


VERSICOR INC.                                  BIOSEARCH ITALIA S.P.A.



/s/ George F. Horner, III                      /s/ Francesco Parenti, Phd.
------------------------------                 ---------------------------------
George F. Horner, III                          Francesco Parenti, Phd
CEO                                            President

Date:_________________________                 Date:____________________________


                                      15.
<PAGE>

                                   APPENDIX A

                         Development Plan Up to Phase I


                                      16.
<PAGE>

                                            Colleretto Giacosa, December 9, 1997
                                                                      0425/97mkt

Dr. Malabarba
BIOSEARCH Italia S.p.A.
Via R. Lepetit, 34
21040 Gerenzano (VA)

      Dear Dr. Malabarba,

      As for your request we are sending you the study programme for the
development of your product BI 397, up to Phase I.

TOXICOLOGY

1)    Acute Toxicity studies in rodents

      Animal species: S.D. rats and CD1 mice
      Administration routes: 2 (oral and intravenous)
      Type of study: LD50 determination
      Start of the study: beginning of January 1998
      Draft report: March 1998

2)    Dose Range Finding (DRF) Study in Sprague Dawley rats

      Treatment period: 2 weeks
      No animals/group: 12 (6M + 6F)
      Groups: 4 (control + 3 dose levels)
      No total animals: 48
      Administration route: intravenous
      Clinical signs: daily
      Body weight and food consumption: weekly
      Hematology, hematochemistry, urinalysis: 4th week
      Organ weights and Gross pathology; all animals
      Histopathology: target organs, all animals
      Start of the study: second half of January 1998
      Draft report: April 1998

<PAGE>

3)    4-Week Toxicity Study in Sprague Dawley rats; followed by recovery period

      Animal species: S.D. rats
      Administration route: intravenous
      Animals/group: 20 (10F + 10M)
      No groups: 4 (control + 3 dose levels)
      Additional animals for recovery: 40 (10 M + 10F in control and high dose
      groups)
      Recovery period: 4 weeks
      Total animals: 120
      Formulate analysis (*): 1st and 4th week
      Clinical signs: daily
      Body weight and food consumption: weekly
      Ophthalmoscopy: pre-study, 4th week and after recovery period
      Hematology, hematochemistry and urinalysis: on 10 animals/sex/group, at
      the end of the study and after recovery period
      Organ weights and Gross pathology: all animals
      Histopathology (**); control and high dose groups (C- D3)

      Toxicokinetics

      Sampling time: 5 times to be defined after the first and the last
      administration
      No. blood samplings/animal: 1
      N. animal/sampling time: 4 (2M + 2F)
      No. total unknown samples: 120
      Plasma levels of active ingredient by a HPLC analytical method in
      biological fluids supplied by the Sponsor. The method will be set-up and
      re-validated (short validation) for rat plasma.
      PK analysis and statistics
      Start of the study: half February 1998
      Draft report: June 1998

4)    Dose Range Finding (DRF) Study in Beagle dogs

      No animals/group: 2 (1M + 1F)
      Groups: 1, ascending doses up to the Maximum Tolerated Doses that will be
      maintained for 1 week
      Administration route: intravenous
      Body weight and food consumption: weekly
      Hematology, ematochemistry, urinalysis: pre-study and at the end of the
      study
      Organ weights and Gross pathology: all animals
      Histopathology: target organs, all animals
      Start of the study: second half of January 1998
      Draft report: April 1998

<PAGE>

3)    4-Week Toxicity Study in Beagle dogs; followed by recovery period

      Administration route: intravenous
      Animals/group: 6 (3 F+ 3M)
      No. groups: 4 (control + 3 dose levels)
      Additional animals for recovery: 8 (2M + 2F in control and high dose
      groups)
      Recovery period: 4 weeks
      Total animals: 32
      Formulate analysis (*): 1st and 4th week
      Clinical signs: daily
      Body weight and food consumption: weekly
      Ophthalmoscopy: pre-study, 4th week, and after recovery period
      Hematology, hematochemistry and urinalysis: pre-study,, at the end of the
      study and after recovery period
      Organ weights and Gross pathology: all animals
      Histopathology (**); control and high dose groups (C- D3)

      Toxicokinetics

      Sampling time: pre-dose + 5 times to be defined after the first and the
      last administration
      No. blood samplings/animal: 2
      N. animal/sampling time: 2 (1M + 1F)
      No. total unknown samples: 72
      Plasma levels of active ingredient by a HPLC analytical method in
      biological fluids supplied by the Sponsor. The method will be set-up and
      re-validated (short validation) for dog plasma.
      PK analysis and statistics
      Start of the study: half February 1998
      Draft report: June 1998

GENETIC TOXICOLOGY

6)    Gene mutation test in mammalial cells (V79)
      Two independent assays, in presence and absence of metabolic activation
      Start of the study: January 1998
      Draft report: March 1998

7)    Chromosome aberration test in human lymphocytes
      with and without metabolic activation
      two independent assays, two harvest times
      Start of the study: February 1998
      Draft report: May 1998

<PAGE>

PHARMACOKINETICS

8)    Pharmacokinetic study in dogs

      Animal species: dog
      Administration route: intravenous
      Dosage levels: 1
      No of animals: 6 (3M + 3F)
      Sampling times: 10-12 in 24-48 hours
      Analysis plasma levels of the active principle by a validated analytical
      method
      supplied by the Sponsor
      Start of the study: February 1998
      Draft report: May 1998

SAFETY PHARMACOLOGY

The studies hereunder detailed will be carried out by specialized Laboratory
which signed a cooperation agreement with RBM.
RBM itself will take care of the coordination and the monitoring of the studies.

A)    CNS - Irwin test (modified)

      Animal species: mouse
      Method: IRWIN neurobehavioural observation assessment test
      Effects sought: - pyschotropic, neurovegetative or neurobehavioural
                        effects
                      - neurotoxicity

B)    Bleeding time

      Animal species: rat
      Method: determination of the duration of bleeding following transection
      of the tip of the tail in anaesthetised animals
      N. animals/group: 8
      N. groups: 5 (vehicle, method-control, 3 test article dosage levels)
      Duration of the experimental period: 3 weeks
      Results by fax: 3 weeks after the end of the experimental period
      Draft report: 6 weeks after the end of the experimental period


<PAGE>

C)    Platelet aggregation

      Animal species: rabbit
      Method: the test is undertaken ex vivo on a platelet-rich plasma obtained
      from rabbit's blood. Kinetics of aggregation is measured ex vivo by
      turbidimetric method using and aggregometer.
      Effects sought: anti-aggregant effect
      Aggregating agents: arachidonic acid, collagen
      N. animals/group: 6
      For each aggregating agent, groups will be as follows:
      Group 1: vehicle
      Group 2: method-control group
      Group 3: test substance at a high concentration (often 10-4M)
      Note: If an effect is seen at a concentration of 10-4M, a second step will
      be undertaken with aiming to determine IC50 (concentration which inhibits
      50% of the aggregation induced by the aggregating agent)
      Other aggregating agents can be used (ie PAF acether, A23187, ADP)
      Duration of the experimental period: 4 weeks
      Results by fax: 3 weeks after the end of the experimental period
      Draft report: 6 weeks after the end of the experimental period

D)    Cardiovascular and respiratory effects in anaesthetized dogs

      Animal species: dog, Beagle
      N. animals: 5
      Method: spontaneously breathing animals anaesthetised with pentobarbital
      Parameters measured:
      - Air flow rate (by means of a pheumotacograph)
      - Tidal volume
      - Transpulmonary pressure
      - Airway resistance and dynamic compliance respiratory rate
      - Arterial blood gases (pO2, pCO2), arterial pH and HCO3-
      - Systolic, diastolic and mean blood pressure
      - Heart rate
      - ECG (lead U), cardiac conduction times; PR, QRS, QT and QTe intervals
      The vehicle and then the test substance will be tested on 5 animals at 3
      or 4 increasing doses administered at 30 min regular intervals
      Duration of the experimental period: 4 weeks
      Results by fax: 4 weeks after the end of the experimental period
      Draft report: 8 weeks after the end of the experimental period

<PAGE>

E     Effects on the autonomic nervous system

      Animal species: rat
      N. animals/group: 8
      N. groups: 5 (vehicle, method-control, 3 test article dosage levels)
      Test method:
      - measurement of arterial pressure and heart rate in conscious and
        catheterised freely-moving rats
      - measurement of the baroflex sensitivity using the steady-state method
      Effects sought:
      - effect on the baroflex, sensitivity
      - sympatholytic or parasympatholytic effect
      - sympathomimetic or parasympathomimetic effect
      - ganglioplecgic effect
      - anatagonism of serotonin
      Duration of the experimental period: 5 weeks
      Results by fax: 4 weeks after the end of the experimental period
      Draft report: 8 weeks after the end of the experimental period

PHASE I

The indicative proposal for a Single Ascending Dose and Repeated Dose studies in
healthy volunteers will be sent you within this week. The clinical phase of the
studies can be performed in our Clinical Pharmacology Unit at Bourn Hall Clinic,
Bourn - Cambridgeshire, UK.
The analytical phase of the studies will be carried out at RBM.

ADDITIONAL COSTS

Formulate analysis (*):
According to GLP requirements the test article formulates used in Repeated Dose
Toxicity studies must be checked for stability, homogeneity and concentration
prior to and during the study (at planned intervals).
These determinations may be performed either by RBM or by the Sponsor itself. In
both cases, Standard Operating Procedures must be followed.
Analysis performed by RBM: the additional cost will be quoted on the basis of
the analytical method available

Histopathology (in rodents) (**):
If deemed necessary by the Study Director, histological analysis of target
organs will be extended to the intermediate dose groups. Additional cost will be
charged.
Testicular staging assessment for the evaluation of possible effects on
spermatogenesys can be done as additional investigation.

<PAGE>

Hemodynamic parameters (in Dogs)
Blood Pressure (BP), Heart Rate (HR) and BCG recordings could be included in the
study design of repeated dose toxicity studies in dogs.

ANALYTICS

Prior to perform pharmacokinetic and toxicokinetic studies, we will proceed t
the transfer, check of performance and short validation of the analytical method
supplied by the Sponsor in rat and dog plasma. Furthermore, a complete
validation in human plasms will also be performed in order to have the method
ready-to-use for Clinical Pharmacokinetics (Phase I studies).

Please do not hesitate to contact us for any further information you may need.
Best regards,

                                                /s/ Fabio Pizzocheri
                                                Fabio Pizzocheri
                                                Marketing Manager)