<PAGE>

         [CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS
    AGREEMENT HAVE BEEN REDACTED AND SEPARATELY FILED WITH THE COMMISSION]

                                                                   EXHIBIT 10.17

                               LICENSE AGREEMENT
                               -----------------

         This Agreement made this 13th day of June, 1985 between the Ohio
University, a body politic incorporated under the laws of the State of Ohio
having its principal office at Athens, Ohio 45701 (hereinafter "Licensor"), and
Embryogen, Inc., a corporation under the laws of the State of Ohio having its
principal office at One President Street, Athens, Ohio 45701 (hereinafter
"licensee").

         WHEREAS, Licensor and Licensee have entered into a License Agreement
dated November 1, 1984, which granted a nonexclusive license to Licensee for the
purpose of developing and commercializing the technology embodied in a patent
application, U.S. Serial No. 273.239, filed June 12, 1981, entitled Genetic
Transformation of Zygotes, and more specifically described as embryonic nuclear
insertion gene transfer technology (hereinafter referred to as the "Invention");

         WHEREAS, Licensor and Licensee intend to terminate the November 1,
1984 License Agreement and enter into this Agreement in lieu thereof;

         WHEREAS, Licensor desires to grant an exclusive license to Licensee,
subject to a certain limited license heretofore granted to Genetic Engineering
(hereinafter referred to as the "Genetic Engineering License"), and subject to
certain terms and conditions set forth below, for the purpose of developing the
technology claimed in the patent application for commercial purposes; and

         WHEREAS, Licensee desires to obtain an exclusive license from
Licensor, excluding the rights granted under the Genetic

<PAGE>

Engineering License and subject to the terms and conditions set forth below.

     NOW, THEREFORE, in consideration of the representations, warranties and
covenants herein contained and the sum of $10.00 paid by Licensee to Licensor,
the receipt of which is hereby acknowledged, the parties hereto agree as
follows:

     A.   LICENSOR'S AND LICENSEE'S RIGHTS.

     1.   License. The Licensor grants to the Licensee the exclusive,
          -------
nontransferable right and license to manufacture, use, market, sell, and
otherwise commercialize the Invention and its improvements throughout the world.
Such license includes the right to grant sublicenses upon terms consistent with
this Agreement. The exclusive right and license herein granted shall apply to
all inventions, improvements, patent applications, letters patent, trade
secrets, know-how or proprietary information which the Licensor now owns or
controls, or hereafter shall own or control, relating to the Invention,
including the patent application, U.S. Serial No. 273.239, filed June 12, 1981,
entitled Genetic Transformation of Zygotes.

     2.   Exclusion. The exclusivity of this license is subject to the rights
          ---------
granted in the Genetic Engineering License, a copy of which is available for
inspection at the offices of Licensor. This exclusion shall apply to only such
rights as are granted therein and Licensee shall have all other rights for its
exclusive use and employment.

     3.   Improvements. Should Licensor make any improvements in the Invention
          ------------
or the manner of using the same, it is hereby agreed that Licensee shall be
entitled to use the same with all
<PAGE>

rights which are hereby granted with respect to the Invention. The term,
"improvements", shall mean all modifications, enhancements and changes in or
with respect to the Invention, including the manufacture, use and the
application of the Invention.

     4.   Royalties.
          ---------

          (a)  Licensee shall pay to Licensor the following royalty payments:

               (i)  A royalty equivalent to * * * of the net sales made, if any,
by Licensee on any product produced from Licensee's use of the Invention
referred to above for the term of this Agreement; and

               (ii) A royalty equivalent to * * * of the royalties, rents, fixed
payments or other payments actually received, if any, by Licensee, under
licenses, sublicenses, and distribution, marketing, or exploitation agreements
with others regarding the Invention and any products produced therefrom.

          (b)  "Net Sales" shall refer to the invoice price and dollars charged
by Licensee for all products sold using the information contained in the
Invention which is the subject matter of this Agreement, excluding the
following:

               (i)   Any common carrier charge for transportation of said
product, to the extent included in such invoice price as a separately stated
charge;

               (ii)  Credit given or allowances made by Licensee on account of
returns, replacement, defects or renegotiation of the invoice price of the
product sold hereunder;

               (iii) Any sales, excise, use or ad valorem taxes

* * *  CONFIDENTIAL TREATMENT REQUESTED
<PAGE>

and any direct governmental charges assessed on the manufacture, sales or
delivery of said product and included in such invoice price as a separately
stated charge;

          (iv) Any price paid by any subsidiary or affiliate controlled by
Licensee, if said subsidiary or affiliate purchased the product; and

          (v)  Any insurance, packing charges, rate discounts, normal and
customary trade, cash, and quantity discounts actually allowed, or commissions
to local or foreign agents to the extent that they are separately stated on the
invoice.

      (c) "Payments actually received" shall mean cash received or funds
deposited to the account of Licensee in which Licensee has an unrestricted right
of access and right to use the funds so paid.

      (d) Royalties shall be due and payable annually on or before April 30
for the previous fiscal year (December 31) and Licensee agrees to render with
each royalty payment a written statement setting forth the total net sales and
payments actually received that are subject to the aforesaid royalty.

      (e) Licensee shall keep, and cause to be kept, detailed accurate
records and books of accounts showing the information necessary for accurate
determination of royalties to be paid under this Agreement. Licensee agrees to
allow Licensor and its representatives to make reasonable inspections and
examinations of Licensee's operation, books and records as they relate to this
particular license, but no more than once per year.
<PAGE>

          5. Disclosure. Promptly upon request by Licensee, Licensor shall fully
             ----------
disclose to Licensee all available information concerning the practice of the
Invention.

          B. PATENT APPLICATION AND USE OF THE LICENSE

          1. Patent Prosecution. Licensor agrees to prosecute domestic and
             ------------------
foreign patent applications at its expense concerning the Invention and any
improvements hereto licensed to Licensee by Licensor pursuant to this Agreement.

          2. Right to Sublicense. Licensee shall have the right to sublicense
             -------------------
any of its rights granted hereunder to any person, firm or corporation
wheresoever situated.

          3. Marketing Disclosure. From time to time, Licensee agrees to consult
             --------------------
with Licensor concerning the plans relating to the proposed marketing of the
subject matter of the Invention and to inform Licensor as to the progress being
made in the development for the ultimate commercial exploitation of the
Invention.

          4. Assignment. The Licensee shall not have the right to assign this
             ----------
Agreement without the prior written consent of the Licensor, unless such
assignment shall be to an entity in which Licensee owns a controlling interest.

          C. LICENSOR'S RESERVED RIGHTS.

          Licensor reserves the right to continue research and development of
the Invention, including assigning research rights and engaging in other funded
research regarding the Invention and the subject matter of the Invention.
Licensor shall not commercialize, sell, assign or otherwise transfer any right
or information regarding the Invention for the purpose of commercial

                                      -5-
<PAGE>

practice of the Invention without the prior written consent of Licensee, which
consent may be withheld for any reason whatsoever. Licensor shall prevent the
disclosure of trade secrets and other proprietary information regarding the
Invention and it shall require any person, firm or corporation to whom it shall
make an authorized disclosure to enter into a confidentiality agreement in form
satisfactory to Licensee.

     D.   TERM

     1.   Events of Termination. This Agreement shall continue until the
          ---------------------
expiration of the last patent on the Invention and its improvements, subject to
the following:

     (a)  The Invention shall enter the public domain due to any reason
whatsoever;

     (b)  In the event of default or the breach of any term or condition of this
Agreement by the Licensee, the Licensor may terminate this Agreement on 90 days
written notice provided that the Licensee shall have a period of 90 days from
the date of receipt of such notice within which to cure any default or breach.
In the event such default or breach is cured, the termination shall be withdrawn
by the Licensor;

     (c)  In the event of default or breach by Licensor, the same provisions
shall apply as for the Licensee in the foregoing subparagraph.

     2.   Termination Procedure. Upon termination of this Agreement for any
          ---------------------
cause, the Licensee shall duly account to the Licensor and shall transfer to
Licensor all rights which it may possess and sublicenses, letters patents,
inventions, trade names, and trademarks relating to the Invention and
improvements
<PAGE>

thereto.

     3.   Effects of Termination. In the event of termination of this Agreement,
          ----------------------
the following shall occur:

          (a)  Unless otherwise prohibited by law, upon the termination of this
Agreement, Licensee shall have the right to complete any and all contracts for
the sales of products containing the Invention or improvements that it may have
upon its book or that it has become obligated for, and Licensee shall pay the
royalties as herein provided; provided that all contracts and sales are
completed within six (6) months after the termination of this Agreement;

          (b)  Licensee shall provide in any sublicense of the rights granted in
this Agreement that, upon the request of Licensor, Licensee shall have the right
and power to assign, and shall forthwith assign to Licensor all rights, title
and interest in, to and under the sublicense agreement between Licensee and its
sublicensees and that after any such assignment Licensor shall be entitled to
the royalties and other compensation payable by the sublicensees pursuant to the
terms of the sublicense and Licensor shall be subrogated to the rights and
liabilities of Licensee. In the event such sublicense grants rights to other
inventions and improvements owned or controlled by other persons, firms or
corporations in addition to the rights to the Inventions and improvements
granted hereunder, Licensor shall only be assigned a share of the compensation
payable under such sublicense. Such share shall be in proportion to the ratio of
the royalty amount Licensor would have received under this Agreement to the
total amount payable by Licensee to all
<PAGE>

licensors, including Licensor, as a result of Licensee's sublicense;

     (c)  Subject to the foregoing requirements regarding the completion of
contracts, upon the termination of this Agreement for whatever reason, Licensee
shall return any and all information in its possession regarding the Invention
or improvements;

     (d)  Due to the unique nature of the Invention and improvements and the
irreparable harm to the Licensor should Licensee continue to propagation of the
Invention or improvements embodied in the Licensee's products, Licensor is
authorized and entitled to obtain from any court of competent jurisdiction
restraining orders and preliminary and permanent injunctive relief, as well as
an equitable accounting of all profits and benefits arising out of any such
occurrence, prohibiting Licensee from thereafter using, raising, selling,
propagating or otherwise disseminating the Invention or improvements. The
restraining orders and injunctive relief shall allow Licensee to complete
certain of its sales contracts as provided heretofore and to require Licensee
and its sublicensees to immediately sell, if possible without further
propagation or use, all products containing the Invention or improvements or
otherwise assure Licensor that there will be no further use or propagation of
the Invention or improvements;

     (e)  At the option of Licensee, and in lieu of the foregoing equitable
remedy prohibiting the use and propagation of the Invention or improvements,
Licensee may elect to pay liquidated damages in the amount of two and one half
(2.5) times
<PAGE>

the present value of the stream of royalty income Paid to Licensor over a 5 year
period and amortized at a ten percent (10%) discount rate. The yearly royalty
payment for the stream of income shall be the highest yearly royalty for any one
calendar year during the preceding three (3) years. In such event, Licensee
shall continue to receive the rights and benefits granted under this Agreement.

          E. INFRINGEMENT.

          1. Licensee to Defend. The Licensee shall defend infringement suits
             ------------------
that may be brought against Licensee or Licensor on account of the manufacture,
use, or sale of-the-Invention and improvements thereto and when information is
brought to its attention indicating that others, without license, are unlawfully
infringing on the rights granted in this Agreement, Licensee shall prosecute
diligently the infringer.

          2. Cooperation. Licensor shall cooperate and assist Licensee at the
             -----------
request of Licensee in the defense of any infringement or the prosecution of any
unlawful infringer.

          3. Expenses. Licensor shall, to the extent of the royalties to be
             --------
received hereunder, indemnify Licensee for all expenses incurred for the defense
of any infringement suits that may be brought against Licensee or Licensor on
account of the manufacture, use, or sale of the Invention. Licensee shall pay
all expenses incurred with respect to prosecuting unlawful infringers of the
Invention.

          F. NOTICE.

          Any notice or payment required under this Agreement shall be addressed
as follows:

                                      -9-
<PAGE>

     If to Licensor:

         The Edison Animal Biotechnology Center
         The Ohio University
         Attention: Director of the Center
         Athens, Ohio 45701

     If to Licensee:

         Embryogen, Inc.
         Attention: President
         One President Street
         Athens, Ohio 45701

     G.  MISCELLANEOUS

     1.  Benefit.  This Agreement shall be binding upon the parties, their
         -------
successors and assigns, where permitted.

     2.  Waiver.  Waiver of any breach of this Agreement by either party
         ------
hereto shall in no event constitute a waiver as to any future breach, whether or
not similar in nature.

     3.  Covenant of Further Assurances. Each of the parties hereto, forthwith
         ------------------------------
upon request from the other, shall execute and deliver such documents and take
such actions as may be reasonably requested in order to carry out the intent and
purposes of this Agreement.

     4.  Construction and Governing Law. This Agreement shall be construed
         ------------------------------
and interpreted in accordance with the laws of the State of Ohio.

     5.  Arbitration. Any dispute under this Agreement shall be settled in
         -----------
Athens, Ohio, by arbitration pursuant to the rules then obtaining of the
American Arbitration Association.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officer on the date and year first above
written.


                                     -10-
<PAGE>

                                        THE OHIO UNIVERSITY


                                        By /s/ James L. Bruning
                                           ------------------------
                                           James L. Bruning, Provost


                                        EMBRYOGEN, INC



                                        By /s/ Wilfred R. Konneker
                                           -----------------------------
                                           Wilfred R. Konneker, President


                                     -11-
<PAGE>

                        AMENDMENT TO LICENSE AGREEMENT
                       DATED THE 13TH DAY OF JUNE, 1985

     Licensee shall prosecute all continuation and improvements in the patent No
4,873,191, Genetic Transformation of Zygotes, covered by this License Agreement
at its expense; and to report of any major developments with such prosecution to
the Licensor and provide a yearly written report of developments along with the
fourth-quarter royalty report.

     Dated and effective this 1st day of July 1991.


          LICENSEE                                      LICENSOR


  /s/ Steven Holtzman                           /s/ James L. Bruning
  ----------------------------                  --------------------------
      Steven Holtzman                               James L. Bruning
  Vice President, D.N.X., Inc.                  Provost of Ohio University