<PAGE>

                                                              Exhibit 10.206

                        [CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

-------------------------------------------------------------------------------









                                   AGREEMENT


                                    between


                              CHIRON CORPORATION


                                      and


                                CEPHALON, INC.






                                January 7, 1994









------------------------------------------------------------------------------

<PAGE>


 
                              TABLE OF CONTENTS

                                                                      PAGE NO.
                                                                      --------

                             PART I - DEFINITIONS

                            ARTICLE 1 - DEFINITIONS

Affiliate.................................................................   2
Allowable Expense.........................................................   2
Alternate Facility........................................................   2
bFGF......................................................................   2
Calendar Quarter..........................................................   2
Cardioxane................................................................   2
CCP.......................................................................   2
Cephalon..................................................................   2
Cephalon Agreements.......................................................   2
Cephalon Facility.........................................................   2
Cephalon Technology.......................................................   3
Chiron....................................................................   3
Chiron Agreements.........................................................   3
Chiron Facility...........................................................   3
Chiron Product............................................................   3
Chiron Technology.........................................................   3
CIBA......................................................................   3
CIBA Agreement............................................................   3
Collaboration.............................................................   3
Commercialization Date....................................................   4
Compound..................................................................   4
Continuing Licensee.......................................................   4
Cost......................................................................   4
Development Committee.....................................................   4
Development Plan..........................................................   4
Effective Date............................................................   4
Field.....................................................................   4
GMP Grade.................................................................   4
IND.......................................................................   4
JV........................................................................   5
Joint Technology..........................................................   5
JV Technology.............................................................   5
Major Market..............................................................   5
Management Committee......................................................   5
Manufacturing Information.................................................   5
Marketing Committee.......................................................   5
Market Exclusivity........................................................   5
Marketing Plan............................................................   5
NDA.......................................................................   5
Net Sales.................................................................   6
Operating Losses..........................................................   6
Operating Profits.........................................................   6
Pricing Approval..........................................................   7
Product...................................................................   7


                                      -i-



<PAGE>


Regulatory Approval.......................................................   7
Regulatory Standards......................................................   7
Royalty Territory.........................................................   7
SIBIA Rights..............................................................   7
SOD.......................................................................   7
Specifications............................................................   7
Technical Information.....................................................   7
Territory.................................................................   8
Third Party Royalties.....................................................   8
Trademark.................................................................   8





                     PART II - ACTIVITIES IN MAJOR MARKETS

          ARTICLE 2 - PURPOSE, MANAGEMENT, ETC. OF THE COLLABORATION

SECTION 2.1        Purpose of Collaboration...............................   8
SECTION 2.2        Structure..............................................   8
SECTION 2.3        Management Committee...................................   8
SECTION 2.4        Development Committee..................................   9
SECTION 2.5        Membership; Duties of Members and Alternate Members....   9
SECTION 2.6        Authorized Actions.....................................  10
SECTION 2.7        Meetings...............................................  10
SECTION 2.8        Locations of Meetings..................................  10
SECTION 2.9        Conduct of Meetings....................................  10
SECTION 2.10       Additional Committees..................................  11
SECTION 2.11       Exclusion from Allowable Expenses......................  11
SECTION 2.12       Cooperation of Collaborators...........................  11
SECTION 2.13       Duties of Collaborators................................  11

                   ARTICLE 3 - RESEARCH AND DEVELOPMENT ACTIVITIES

SECTION 3.1        Priorities; Plans; Budgets.............................  11
SECTION 3.2        Clinical Supplies of Products..........................  13
SECTION 3.3        Regulatory Approvals...................................  14
SECTION 3.4        Balancing of Development Costs.........................  15

           ARTICLE 4 - COMMERCIALIZATION ACTIVITIES IN MAJOR MARKETS

SECTION 4.1        Marketing Strategy in Major Markets....................  16
SECTION 4.2        Responsibilities of the Parties........................  17
SECTION 4.3        Commercialization of Products..........................  18
SECTION 4.4        Labelling..............................................  18
SECTION 4.5        Manufacture of Commercial Supplies of Products.........  18
SECTION 4.6        Activities of Chiron Outside the Field.................  21

                             ARTICLE 5 - LICENSES

SECTION 5.1        Cross-Licenses Prior to Formation of JV................  23
SECTION 5.2        Licenses to JV.........................................  24
SECTION 5.3        Licenses from JV to Collaborators in the Major Markets.  24


                                     -ii-


<PAGE>


SECTION 5.4        License from JV to Chiron in the Royalty Territory.....  24
SECTION 5.5        Optional Rights........................................  24
SECTION 5.6        Retained Rights........................................  26
SECTION 5.7        Prior Rights...........................................  26
SECTION 5.8        Inventions.............................................  26
SECTION 5.9        New Technologies.......................................  26
SECTION 5.10       Maintenance of Technology..............................  27
SECTION 5.11       Sublicensing of Technology.............................  27
SECTION 5.12       Disclosure of Technology...............................  27

                   ARTICLE 6 - COMPENSATION IN MAJOR MARKETS

SECTION 6.1        Equal Sharing of Operating Profits and Losses..........  28
SECTION 6.2        Special Allocations....................................  28
SECTION 6.3        Off-Label Sales in the Major Markets...................  29
SECTION 6.4        Royalties to Chiron on Sales of Chiron Products........  29
SECTION 6.5        Calculation of Operating Profits.......................  31

                  PART III - ACTIVITIES IN ROYALTY TERRITORY

          ARTICLE 7 - DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES IN
                               ROYALTY TERRITORY

SECTION 7.1        Development and Commercialization Responsibilities.....  32
SECTION 7.2        Coordination with Collaboration........................  32
SECTION 7.3        Diligence in Commercialization of Products.............  33
SECTION 7.4        Ownership of Data......................................  33
SECTION 7.5        No Allowable Expenses..................................  33
SECTION 7.6        Assistance by the JV...................................  33
SECTION 7.7        Contingent Cephalon Marketing Rights...................  33

                    ARTICLE 8 - ROYALTIES AND REPORTS, ETC.

SECTION 8.1        Royalties..............................................  34
SECTION 8.2        Royalty Rate Adjustments...............................  34
SECTION 8.3        Allocation of Net Sales in the Royalty Territory.......  36
SECTION 8.4        Third Party Royalties..................................  36
SECTION 8.5        Payment of Royalties...................................  37
SECTION 8.6        Reports................................................  37
SECTION 8.7        Currency Restrictions..................................  37
SECTION 8.8        Taxes..................................................  37


                                     -iii-


<PAGE>


                         PART IV - GENERAL PROVISIONS

                   ARTICLE 9 - INTELLECTUAL PROPERTY MATTERS


SECTION 9.1        Intellectual Property Protections......................  38
SECTION 9.2        Defense of Infringement Claims.........................  38
SECTION 9.3        Prosecution of Third Party Infringements...............  39
SECTION 9.4        Joinder................................................  40
SECTION 9.5        Settlement of Claims...................................  40
SECTION 9.6        Cooperation............................................  40
SECTION 9.7        Trademark Matters......................................  41

                       ARTICLE 10 - PAYMENTS AND RECORDS

SECTION 10.1       Payments...............................................  42
SECTION 10.2       Books and Records; Accounting..........................  42

                   ARTICLE 11 - CERTAIN REGULATORY MATTERS

SECTION 11.1       Governmental Inspections and Inquiries.................  43
SECTION 11.2       Adverse Reactions......................................  43
SECTION 11.3       Recalls and Market Withdrawals.........................  43

                      ARTICLE 12 - CONFIDENTIALITY, ETC.


SECTION 12.1       Confidentiality........................................  44
SECTION 12.2       Injunctive Relief......................................  45
SECTION 12.3       Publicity..............................................  45

        ARTICLE 13 - CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

SECTION 13.1       Corporate Status and Authority.........................  46
SECTION 13.2       No Inconsistent Agreements.............................  47

            ARTICLE 14 - DISCLAIMER, INDEMNIFICATION AND INSURANCE

SECTION 14.1       No Warranty............................................  47
SECTION 14.2       Defense of Claims in Territory.........................  47
SECTION 14.3       Costs and Expenses.....................................  47
SECTION 14.4       Indemnity for Excluded Liabilities.....................  48
SECTION 14.5       Procedures for Indemnification.........................  48
SECTION 14.6       Settlements, etc.......................................  48
SECTION 14.7       Limitation of Liability................................  48
SECTION 14.8       Insurance..............................................  49

                        ARTICLE 15 - DISPUTE RESOLUTION

SECTION 15.1       Dispute Resolution.....................................  49
SECTION 15.2       Arbitration............................................  49


                                     -iv-


<PAGE>


                       ARTICLE 16 - TERM AND TERMINATION

SECTION 16.1       Term...................................................  50
SECTION 16.2       Termination of Agreement in Full.......................  50
SECTION 16.3       Action upon Change of Control..........................  50
SECTION 16.4       Partial Termination in Royalty Territory...............  51
SECTION 16.5       Rights and Obligations on Termination..................  51
SECTION 16.6       Termination upon CCP Transfer..........................  54
SECTION 16.7       Effective Date of Termination..........................  54
SECTION 16.8       Survival...............................................  54
SECTION 16.9       Remedies not Exclusive.................................  54

                          ARTICLE 17 - MISCELLANEOUS

SECTION 17.1       Entire Agreement; Amendment............................  54
SECTION 17.2       References to CIBA.....................................  55
SECTION 17.3       Force Majeure..........................................  55
SECTION 17.4       No Interference with Existing Businesses...............  55
SECTION 17.5       Compliance with Law....................................  55
SECTION 17.6       Waiver.................................................  55
SECTION 17.7       No Assignment..........................................  55
SECTION 17.8       Severability...........................................  56
SECTION 17.9       Notices................................................  56
SECTION 17.10      Pronouns...............................................  57
SECTION 17.11      Further Instruments....................................  57
SECTION 17.12      Governing Law..........................................  57
SECTION 17.13      Counterparts...........................................  57


SCHEDULE I          - Third Party Agreements

SCHEDULE II         - Field Exclusion

SCHEDULE III        - SOD Technology

SCHEDULE IV         - Third Party Royalties

SCHEDULE V          - Development Expenses for Transition Period

SCHEDULE VI         - Allowable Expenses and Accounting Principles

SCHEDULE VII        - Preferred Indications of Chiron

SCHEDULE VIII       - Cephalon Nonfield Indications


EXHIBIT A           - Specifications


                                      -v- 

<PAGE>


                                   AGREEMENT

    This AGREEMENT, dated as of January 7, 1994, is made by and between CHIRON
CORPORATION, a Delaware corporation ("Chiron"), and CEPHALON, INC., a Delaware
corporation ("Cephalon").  Chiron and Cephalon are sometimes referred to 
herein as "Collaborators" and individually as a "Collaborator".

                                  BACKGROUND

    A.   Cephalon possesses certain intellectual property rights (including a 
license from Cephalon Clinical Partners, L.P. ("CCP")) relating to uses of 
insulin-like growth factor 1 ("IGF-1") for certain neurological diseases, 
disorders and conditions (such as amyotrophic lateral sclerosis ("ALS") and 
peripheral neuropathies) and its production and use as a therapeutic agent in 
man.  Cephalon has an ongoing clinical development program relating to IGF-1 
as a therapeutic agent for ALS and certain peripheral neuropathies.  Cephalon 
wishes to have the benefit of Chiron's expertise in the development and 
production of IGF-1 for neurological disorders.

    B.   Chiron possesses certain intellectual property rights (including a 
license from Ciba-Geigy Ltd. ("CIBA")) relating to uses of IGF-1 for certain 
neurological diseases, disorders and conditions (such as diabetic 
neuropathy), and its production and use as a therapeutic agent in man.  
Chiron wishes to have the benefit of Cephalon's expertise in the development 
of therapeutic compounds in the neurological field.

    C.   Chiron and Cephalon have substantial development programs relating 
to their respective uses of IGF-1.

    D.  Chiron possesses certain intellectual property rights and is 
otherwise developing other compounds and methodologies that offer promise of 
therapeutic application in neurological applications, together with and 
independent of IGF-1.

    E.   Cephalon intends to develop a sales and marketing expertise focusing 
principally on the neurology market.

    F.   Cephalon and Chiron believe that a joint development program that 
optimizes the contributions of each of Cephalon and Chiron will accelerate 
the beneficial application of IGF-1 and other compounds to address important 
unmet needs for therapeutic products applicable to neurological diseases, 
disorders and conditions and will be in their mutual and individual best 
interests.

     NOW, THEREFORE, in consideration of the mutual covenants contained 
herein, and intending to be legally bound hereby, the parties agree as 
follows:



<PAGE>

                             PART I - DEFINITIONS

                           ARTICLE 1 - DEFINITIONS

     As used in this Agreement, the following terms shall have the 
corresponding meanings set forth below:

     (a) "AFFILIATE" means any individual or entity directly or indirectly 
controlling, controlled by or under common control with, a party to this 
Agreement.  Without limiting the foregoing, the direct or indirect ownership 
of over 50% of the outstanding voting securities of an entity, or the right 
to receive over 50% of the profits or earnings of an entity, shall be deemed 
to constitute control.

    (b)  "ALLOWABLE EXPENSE" means the Costs incurred by the JV or a 
Collaborator under this Agreement pursuant to a budget approved by the 
Management Committee (including a budget contained in a Development Plan) or 
that are otherwise approved by the Management Committee as an Allowable 
Expense.  The term "Allowable Expense" also shall include the Costs incurred 
by a party in a Major Market pursuant to Sections 9.2(c), 9.3(b), 9.3(e) and 
9.6 (patent defense and prosecution), Section 11.3 (recalls and withdrawals) 
or Section 14.3 (joint liability claims) to the extent such Costs are 
determined by the Management Committee to be reasonable.

    (c)  "ALTERNATE FACILITY" has the meaning specified in Section 4.5(a) 
hereof.

    (d)  "bFGF" means basic Fibroblast Growth Factor.

    (e)  "CALENDAR QUARTER" means each three-month period beginning on 
January 1, April 1, July 1 and October 1 of each year.

    (f)  "CARDIOXANE-TRADEMARK-" means the substance known by the chemical 
name of dexrazoxane, and any analogues or derivatives thereof.

    (g)  "CCP" means Cephalon Clinical Partners, L.P.

    (h)  "CEPHALON" means Cephalon, Inc. and any Affiliate thereof.

    (i)  "CEPHALON AGREEMENTS" means the agreements specified on Schedule I 
hereto pursuant to Section 13.1 hereof.

    (j)  "CEPHALON FACILITY" means the facility of Cephalon located at 9000 
Virginia Manor Road, Suite 290, Beltsville, Maryland 20705, or any other 
facility of Cephalon approved by the Management Committee for use in the 
manufacture of Products under this Agreement.


                                      -2-

<PAGE>


    (k)  "CEPHALON TECHNOLOGY" means any existing or future (i) patent 
application or issued patent owned or possessed (by license or otherwise) by 
Cephalon containing a claim that would be infringed by the manufacture, use 
or sale of a Product in the Territory, including any addition, continuation, 
continuation-in-part, division, extension or renewal thereof, (ii) Technical 
Information owned or possessed (by license or otherwise) by Cephalon, (iii) 
the rights of Cephalon in and to any Trademark and (iv) all rights of Cephalon
in and to Joint Technology related to a Product; in each case, to the extent
Cephalon has the right to license or sublicense any such right.  The term 
"Cephalon Technology" shall not include the SIBIA Rights, unless otherwise 
agreed in writing by Cephalon and either Chiron or the JV pursuant to Section 
5.5 hereof.

    (l)  "CHIRON" means Chiron Corporation and any Affiliate thereof.

    (m)  "CHIRON AGREEMENTS" means the agreements specified on Schedule I 
hereto pursuant to Section 13.1 hereof.

    (n)  "CHIRON FACILITY" means the facility or facilities of Chiron 
approved by the Management Committee for use in the manufacture of Products 
under this Agreement.

    (o)  "CHIRON PRODUCT" means any Product of Chiron or the Collaboration in 
the field that contains SOD, Cardioxane or bFGF, whether alone or in 
combination with an active ingredient other than IGF-1.

    (p)  "CHIRON TECHNOLOGY" means any existing or future (i) patent 
application or issued patent owned or possessed (by license or otherwise) by 
Chiron containing a claim that would be infringed by the manufacture, use or 
sale of a Product in the Territory, including any addition, continuation, 
continuation-in-part, division, extension or renewal thereof, (ii) Technical 
Information owned or possessed (by license or otherwise) by Chiron, (iii) the 
rights of Chiron in and to any Trademark, and (iv) all rights of Chiron in 
and to Joint Technology related to a Product; in each case, to the extent 
Chiron has the right to license or sublicense any such right.

    (q)  "CIBA" means Ciba-Geigy Ltd.

    (r)  "CIBA AGREEMENT" means the Agreement and License between Chiron and 
CIBA dated as of December 31, 1993.

    (s)  "COLLABORATION" means the business of developing and commercializing 
Products within the Territory, whether conducted directly by Cephalon and 
Chiron or through the JV.


                                      -3-

<PAGE>


    (t)  "COMMERCIALIZATION DATE" means the date of the first commercial sale 
of a Product in a Major Market following Regulatory Approval.

    (u)  "COMPOUND" means each of IGF-1, SOD, Cardioxane and bFGF and any 
composition or product added by the parties to the Collaboration in 
accordance with Section 5.9(b) hereof.

    (v)  "CONTINUING LICENSEE" has the meaning specified in Article 16.5 
hereof.

    (w)  "COST" means the fully burdened, fairly allocated internal costs of 
a party, on a consolidated basis, including reasonable and customary 
allocations of indirect and overhead expense and charges in the nature of 
depreciation and amortization of capitalized cost, and out-of-pocket 
expenses, to the extent any of the foregoing were incurred in accordance with 
the accounting methodology authorized pursuant to Section 2.3(c) hereof.  The 
term "Cost" also shall include an interest charge for working capital made 
available by a Collaborator for inventory and receivables related to the 
Products, upon terms to be approved by the Management Committee.  A 
Collaborator shall not be required to make working capital available for such 
purposes.  

    (x)  "DEVELOPMENT COMMITTEE" means the committee established pursuant to 
Section 2.4 hereof.

    (y)  "DEVELOPMENT PLAN" has the meaning specified in Section 3.1 hereof.

    (z)  "EFFECTIVE DATE" means the first date when both Cephalon and Chiron 
have executed this Agreement.

    (aa) "FIELD" means the prophylactic and/or therapeutic treatment of 
neurological diseases and disorders in humans including, without limitation, 
ALS and peripheral neuropathies such as post-polio syndrome, 
chemotherapy-induced peripheral neuropathy, diabetic neuropathy and 
Charcot-Marie-Tooth syndrome.  The "Field" does not include the uses defined 
in SCHEDULE II hereto.

    (ab) "GMP GRADE" means production of a Product in accordance with the 
Regulatory Standards and the process and procedures described in the 
Manufacturing Information.

    (ac) "IND" means an application for an Investigational Exemption for a 
New Drug filed with the FDA with respect to a Product, or any comparable 
filing made with a regulatory authority outside the United States.


                                      -4-

<PAGE>


    (ad) "JV" means the joint venture to be established by Cephalon and 
Chiron in accordance with Section 2.2 hereof.

    (ae) "JOINT TECHNOLOGY" means any invention or discovery, whether or not 
patentable and whether or not in the Field (i) that is made solely or jointly 
by a JV employee, or (ii) as to which Cephalon and Chiron would be deemed 
joint inventors in accordance with U.S. patent laws.

    (af) "JV TECHNOLOGY" has the meaning specified in Section 5.2(c) hereof.

    (ag) "MAJOR MARKET" means (i) each of the United States, Canada, Mexico, 
Austria, Finland, Norway, Sweden and Switzerland and each member country of 
the European Economic Community ("EEC") as constituted on the Effective Date, 
whether or not any such country remains a member of the EEC during the term 
of this Agreement; and (ii) any country which joins the EEC after the 
Effective Date.  If any of the specified countries dissolves or otherwise 
converts into constituent parts, any country or countries resulting from such 
dissolution shall automatically be included in the definition of "Major 
Market".

    (ah) "MANAGEMENT COMMITTEE" means the committee established pursuant to 
Section 2.3 hereof.

    (ai) "MANUFACTURING INFORMATION" means all chemistry, formulation, 
manufacturing, quality control and other information required to be included 
in as IND or NDA for a Product.

    (aj) "MARKETING COMMITTEE" means the committee to be established pursuant 
to Section 4.1 hereof.


    (ak) "MARKET EXCLUSIVITY" means, with respect to a Product, any of the 
following: (i) sale of the Product in the country in question would infringe 
a claim of an issued patent owned or possessed (by license or otherwise) in 
whole or in part by a Collaborator or the JV that has not expired or been 
held invalid or unenforceable by a court of competent jurisdiction in a final 
and nonappealable or non-appealed judgment, or (ii) the Product or the 
indication for the Product enjoys market exclusivity by reason of any statute,
regulation, rule or order of a governmental authority in the country.

    (al) "MARKETING PLAN" has the meaning specified in Section 4.1 hereof.

    (am) "NDA" means a New Drug Application or a Product License Application 
filed with the FDA with respect to a Product, or any comparable filing made 
with a regulatory authority outside the United States.


                                      -5-


<PAGE>


    (an) "NET SALES" means the invoiced price of a Product charged to an 
unaffiliated end user in the Territory (i.e., a third party whose use is 
intended to result in the consumption or destruction of the Product), net of 
returns and rejections, and after deducting, (i) sales or similar taxes, 
packaging charges, freight and insurance, to the extent charged to the 
purchaser or directly attributable to the specific sale, (ii) cash, trade and 
quantity discounts actually allowed and taken, and (iii) allowances, rebates 
and commissions actually taken or paid.  With respect to sales of a Product 
in the Royalty Territory, if a Product is sold with a single invoiced price 
in combination with another therapeutically active component or components or 
as a combination with diagnostic products where one or more components or 
products are not Products, Net Sales under such circumstances shall be 
calculated by multiplying Net Sales of the combination by the fraction A/(A 
B), in which A is the invoiced price of the Products, if sold separately, and 
B is the total invoiced price of any other active components or components in 
combination, if sold separately.  If the Product and/or the active components 
or components in the combination are not sold separately, the values of the 
individual components shall be reasonably determined by the Management 
Committee.  The value of the components of the combination will be based on, 
but not limited to, the cost of manufacturing, the value of comparable 
components marketed by others and the potential value based on the current 
cost of diagnosing and treating the disease.  In the case of a combination 
product marketed by the Collaboration in the Major Markets, the Management 
Committee shall determine the portion of the invoiced price of such product 
that is to be treated as Net Sales under this Agreement.

    (ao) "OPERATING LOSSES" means any negative number which results from the 
calculation of Operating Profits.

    (ap) "OPERATING PROFITS" means for the applicable accounting period, the 
sum of: [CONFIDENTIAL TREATMENT REQUESTED]; LESS [CONFIDENTIAL TREATMENT 
REQUESTED] for the applicable accounting period.


                                      -6-

<PAGE>


    (aq) "PRICING APPROVAL" means any pricing or third party reimbursement 
approval required for the marketing of a Product.

    (ar) "PRODUCT" or "PRODUCTS" means any product consisting of or 
containing a Compound, whether alone or in combination with another active 
ingredient, to the extent that it is being developed for a use or is used, or 
has received Regulatory Approval for a use, in the Field. The term "Products" 
excludes any product containing a Compound to the extent it is being 
developed for a use or is used, or has received Regulatory Approval for a 
use, outside the Field, except to the extent provided under Sections 6.2, 6.3 
and 8.3 hereof. The term "Products" also excludes any composition of Chiron 
or Cephalon that does not contain a Compound, even if such composition is 
used within the Field.

    (as) "REGULATORY APPROVAL" means any marketing authorization (including 
authorizations approving an NDA) required for a Product, exclusive of Pricing 
Approvals.

    (at) "REGULATORY STANDARDS" means (i) the facility license requirements 
and the current Good Manufacturing Practice regulations of the FDA applicable 
to the manufacturing facility for, or the production, storage or handling of 
Products, and (ii) any standards of any governmental authority, whether 
within or outside the United States (including, without limitation, the 
Environmental Protection Agency, OSHA and state and local authorities), that 
apply to the manufacturing facility for, or the production, storage or 
handling of, Products.

    (au) "ROYALTY TERRITORY" means the portion of the Territory other than 
the Major Markets.

    (av) "SIBIA RIGHTS" means the patent rights, know-how and other 
intellectual property rights licensed by Cephalon from The Salk Institute of 
Biotechnology/Industrial Associates, Inc. pursuant to the License Agreement 
dated March 5, 1992.

    (aw) "SOD" means superoxide dismutase compounds and related technology 
described on SCHEDULE III hereto.

    (ax) "SPECIFICATIONS" means the manufacturing, quality control, 
packaging, labelling, shipping and storage specifications for each Product, 
to be agreed to by the parties in writing after the Effective Date and made a 
part of this Agreement as EXHIBIT A hereto. All Products shall be supplied 
under this Agreement in final, finished and vialed form suitable for end use.

    (ay) "TECHNICAL INFORMATION" means know-how, trade secrets, technical 
information, formulae, processes and data


                                      -7-


<PAGE>


owned or possessed (by license or otherwise) by a Collaborator which relate 
to the composition, manufacture or use of a Product, including, without 
limitation, preclinical or clinical results.

    (az) "TERRITORY" means the world excluding Japan.

    (ba) "THIRD PARTY ROYALTIES" means the royalties payable to third party 
licensors in the Major Markets under the agreements specified on SCHEDULE IV 
hereto and any additional royalties payable in the Major Markets by the JV in 
accordance with Section 5.9(a) hereof.

    (bb) "TRADEMARK" means any trademark, tradename or trade dress designated 
in writing by the Collaboration for use with a Product in the Territory, 
whether pending, allowed or registered.

                     PART II - ACTIVITIES IN MAJOR MARKETS

         ARTICLE 2 - PURPOSE, MANAGEMENT, ETC. OF THE COLLABORATION

    SECTION 2.1  PURPOSE OF COLLABORATION.  The purpose of the Collaboration 
is to conduct research, product development and clinical activities and seek 
Regulatory Approvals related to Products in the Territory and to 
commercialize Products in the Territory. The parties will collaborate 
exclusively with each other with respect to the development and 
commercialization of the Products in the Territory and the Field. The parties 
intend to share equally in certain costs of developing Products in the Major 
Markets and in any ultimate Operating Profits or Losses.

    SECTION 2.2  STRUCTURE.  Chiron and Cephalon will conduct the 
Collaboration pursuant to this Agreement until they establish a separate 
legal entity for such purpose (the "JV"). The JV shall be formed no later 
than the filing of the first application for Regulatory Approval of a 
Product in the Territory. The JV, whether a partnership or a corporation 
(the "JV"), shall be established in a written amendment or supplement to this 
Agreement signed by Cephalon and Chiron.

    SECTION 2.3  MANAGEMENT COMMITTEE.

         (a)  ESTABLISHMENT.  The Collaboration, whether conducted directly 
by Cephalon and Chiron or through the JV, will be managed by a Management 
Committee, which is hereby established to carry out the business of the 
Collaboration and implement the provisions of this Agreement.

         (b)  AUTHORITY.  The Management Committee shall exercise such powers 
as it deems necessary or desirable to further the purposes of the 
Collaboration in the mutual best


                                      -8-


<PAGE>


interests of the Collaborators, except to the extent that such powers are 
reserved to the Collaborators by this Agreement. In particular, the 
Management Committee shall be responsible for (i) approving an annual 
development plan and budget for the Collaboration, (ii) reviewing the 
performance (including the cost-effectiveness) of each Collaborator's and the 
JV's activities, (iii) establishing the accounting methodologies for Costs, 
Allowable Expenses and the calculation of Operating Profits in accordance 
with paragraph (c) below, and (iv) approving acquisitions of technology from 
third parties or the Collaborators pursuant to Section 5.9 hereof.

         (c)  ACCOUNTING METHODOLOGY.  Initially, each Collaborator shall 
apply its internal cost accounting principles and methodology in determining 
Costs incurred with respect to the Collaboration, which shall be consistent 
with generally accepted accounting principles and with the principles and 
methodology applied by the Collaborator to its other projects and reasonably 
acceptable to the Management Committee. The Management Committee shall review 
the internal cost accounting principles and methodology of the Collaborators 
and as soon as practicable, but in no event later than receipt of the first 
Regulatory Approval of a Product in a Major Market, shall establish a 
statement of cost accounting principles and methodology, consistent with 
generally accepted accounting principles, to be used by each Collaborator and 
the JV in recording and reporting Costs as Allowable Expenses and calculating 
Operating Profits under this Agreement. The approved statement shall be 
attached to this Agreement as SCHEDULE VI. Any disagreement with respect to 
the development of the principles and methodologies to be set forth in 
SCHEDULE VI shall be resolved by a reputable firm of independent public 
accountants selected by the Collaborators.

    SECTION 2.4  DEVELOPMENT COMMITTEE.  A Development Committee is hereby 
established under the supervision of the Management Committee to monitor all 
research and development activities of the Collaboration, to carry out all 
other obligations assigned to it under this Agreement or by the Management 
Committee, and to make recommendations to the Management Committee with 
respect to its activities. In particular, the Development Committee shall be 
responsible for (i) preparing a preliminary annual development plan 
containing project plans, schedules and annual budgets for approval by the 
Management Committee, (ii) approving regulatory efforts of the Collaboration, 
including the design of clinical trials to be conducted for each Product in 
the Major Markets to the extent provided in Section 3.1, the identification of 
clinical trial sites and the preparation and approval of clinical trial 
protocols, and (iii) monitoring the progress of clinical activities.

    SECTION 2.5  MEMBERSHIP, DUTIES OF MEMBERS AND ALTERNATE MEMBERS.  Each 
Collaborator shall appoint 50% of the members of


                                      -9-



<PAGE>


the Management Committee and Development Committee.  The Collaborators shall 
designate the initial members promptly after the Effective Date.  The 
Management Committee members shall be members of the senior management of the 
designating Collaborator.  Each Collaborator may remove and replace its 
representatives on the Management Committee and the Development Committee at 
any time, without cause, upon written notice to the other Collaborator.  An 
alternate member designated by a Collaborator shall be entitled to vote only 
in the absence of a regular member designated by such Collaborator.  All 
references to "members" in this Agreement refers to the regular members and 
any alternate member acting in the place of a regular member.

    SECTION 2.6  AUTHORIZED ACTIONS.  Any action or decision by the 
Management Committee or Development Committee must be authorized by the 
approval of a majority of each party's designated members on the Committee, 
unless otherwise specified in this Agreement.  If the Development Committee 
can not agree on a particular matter, the matter shall be submitted for 
resolution to the Management Committee.  If the Management Committee can not 
agree on a particular matter, the matter shall be submitted for resolution in 
accordance with Article 15 hereof.

    SECTION 2.7  MEETINGS.

    (a)  FREQUENCY.  The regular meetings of the Management Committee and 
Development Committee shall be scheduled by a consensus of a majority of the 
members.  Any meetings of the two Committees may be combined into a joint 
meeting.  In no event, however, shall the Management Committee meet less 
frequently than twice each year or the Development Committee meet less 
frequently than quarterly.  A special meeting of the Management Committee or 
the Development Committee also may be called by any two members of the 
applicable Committee.

    (b)  NOTICE.  Notice of the date, time and place of every regular or 
special meeting and a proposed agenda for the meeting shall be provided to 
the members, no later than fifteen (15) days prior to the scheduled date of 
the meeting (unless notice is waived in writing by the member).

    SECTION 2.8  LOCATIONS OF MEETINGS.  The regular and special meetings of 
the Management Committee and the Development Committee shall alternate 
between the principal business offices of each Collaborator, unless otherwise 
agreed by a majority of the members of the applicable Committee.

    SECTION 2.9  CONDUCT OF MEETINGS.  Any regular or special meeting of the 
Management Committee or the Development Committee may be conducted in person 
or by conference telephone.  The Management Committee and the Development 
Committee may act without a meeting if a written consent to the action is 
signed by


                                     -10-


<PAGE>


a majority of each party's designated members of the applicable Committee.  
Minutes reflecting actions taken at meetings shall be maintained with the 
books and records of the Collaboration and shall be distributed to the 
Collaborators upon request.

    SECTION 2.10  ADDITIONAL COMMITTEES.  The Management Committee may, from 
time to time, delegate specific powers to special-purpose committees of the 
Management Committee, other than the Development Committee.  Any additional 
committees, including the Marketing Committee to be established under Section 
4.1 shall be constituted and shall operate in accordance with the procedures 
of this Article 2.

    SECTION 2.11  EXCLUSION FROM ALLOWABLE EXPENSES.  All costs and expenses 
incurred by a Collaborator in attending Management Committee, Development 
Committee or other committee meetings and in otherwise conducting 
negotiations and relations with the other Collaborator shall by borne by the 
party incurring the expense and shall not be treated as an Allowable Expense, 
unless specified in SCHEDULE VI or authorized by the Management Committee.

    SECTION 2.12  COOPERATION OF COLLABORATORS.  Each Collaborator shall 
furnish to the Management Committee or other applicable committee, subject to 
the confidentiality obligations specified in Article 12 hereof, all 
information that is reasonably required for purposes of this Agreement.

    SECTION 2.13  DUTIES OF COLLABORATORS.  Each Collaborator shall perform 
its functions under this Agreement in a manner it believes in good faith to 
be consistent with the intention of the parties in entering into this 
Agreement. Nothing in this Agreement is intended to create a fiduciary duty of
one Collaborator to the other, nor shall it be deemed to require either 
Collaborator to expend funds or commit resources in excess of those approved 
by the Management Committee.

                 ARTICLE 3 - RESEARCH AND DEVELOPMENT ACTIVITIES

    SECTION 3.1  PRIORITIES; PLANS; BUDGETS.

    (a)  PRIORITIES.  The Development Committee, subject to the approval of 
the Management Committee, shall establish the research, development and 
regulatory strategies related to the Products in the Field.  The initial 
priority of the Collaboration shall be assigned to the development of IGF-1 
for use in treating ALS and peripheral neuropathies.

    (b)  ANNUAL PLAN AND BUDGET.  Attached as Schedule V hereto is the 
initial development budget for each Collaborator's research and development 
activities (including third party


                                     -11-


<PAGE>


subcontractors) related to Products in the Major Markets for the period from 
October 1, 1993 through December 31, 1993.  For each calendar year beginning 
January 1, 1994, the Development Committee shall prepare and submit to the 
Management Committee for approval an annual development plan and budget for 
Products in the Major Markets.  The plans and budgets included in SCHEDULE V 
and each subsequent development plan and budget approved by the Management 
Committee are referred to in this Agreement as the "Development Plans".


    (c)  IMPLEMENTATION.  The Development Plans will set forth the 
responsibilities of each Collaborator.  The parties anticipate that the 
regulatory strategies specified in the Development Plan will be implemented 
by Cephalon, who will be responsible for, among other things, the conduct of  
all clinical trials of Products in the Major Markets (including 
post-approval, quality of life, cost-benefit and any other studies necessary 
for Regulatory or Pricing Approvals in the Major Markets), the recruitment of 
investigators, the monitoring of clinical trials and the performance of any 
other activities required to obtain Regulatory Approvals and Pricing 
Approvals in the Major Markets.  Each party will make available its clinical 
and regulatory assets to the extent specified in the applicable Development 
Plan.  The design of the clinical trials for IGF-1 that were initiated by 
Cephalon prior to the Effective Date are hereby deemed to be approved.  The 
Development Committee will prepare for submission to the Management Committee 
the design of the clinical trials that are to be initiated for Products after 
the Effective Date.

    (d)  ASSISTANCE BY EUROCETUS.  If determined to be cost-effective by the 
Management Committee, Cephalon may contract separately with EuroCetus, B.V., 
a subsidiary of Chiron, for assistance in the clinical development of SOD 
bFGF and Cardioxane in the Major Markets outside North America.  Cephalon 
will reimburse EuroCetus directly for the costs of providing such service, 
with the reimbursement treated as an Allowable Expense of Cephalon.

    (e)  CLINICAL DATA.  All clinical data obtained from any studies 
conducted pursuant to the Development Plans shall be jointly owned by 
Cephalon and Chiron and may be used by either Collaborator inside the Field 
and inside the Territory, subject to the JV's right to use all such data for 
purposes of the Collaboration in the Territory.  All clinical data related to 
a Product that is developed pursuant to the Development Plans may be used by 
either Collaborator or its licensees or joint development partners outside 
the Field or outside the Territory only to the extent required by applicable 
law (such as to report adverse experiences) and, in the case of data related 
to a Product containing a Compound other than IGF-1, may be used for any 
other purpose by a Collaborator or its licensees or joint development 
partners outside the Field or outside the Territory


                                     -12-


<PAGE>


upon commercially reasonable terms. In addition to the permitted uses 
described above, all clinical data related to a Product containing IGF-1 (i)
may be used by CCP, inside or outside the Field, to the extent required under 
the applicable Cephalon Agreement, and (ii) may be used by Kyowa Hakko Kogyo in
Japan to the extent required by law (such as to report adverse experiences) 
or for any other purpose upon commercially reasonable terms if Cephalon is 
obligated to provide Kyowa with exclusive use of such data in Japan; and 
(iii) may be used by Chiron and Cephalon outside the Field and inside the 
Territory upon commercially reasonable terms. If Cephalon is not obligated to
provide Kyowa Hakko Kogyo with the exclusive use of such data, Chiron may 
use the clinical data in Japan upon commercially reasonable terms. The grant 
of rights to use clinical data as specified in this paragraph (e) shall not 
be deemed to grant any express or implied rights or license in or to any other 
intellectual property of a Collaborator.

         (f)  REPORTS.  Each Collaborator shall report to the Development 
Committee, upon reasonable request (but not less than every three months), 
the status of its activities under the applicable Development Plan. The report
may be in writing or, at the option of the Collaborator, in an oral 
presentation made at the Development Committee meeting.

     SECTION 3.2  CLINICAL SUPPLIES OF PRODUCTS.

         (a)  GENERAL.  For Products other than IGF-1, the parties agree that 
Chiron shall manufacture the Collaboration's requirements of all finished 
Products to be used for clinical trials and other development activities 
under this Agreement, unless otherwise determined by the Management Committee.

         (b)  CLINICAL SUPPLIES OF IGF-1.  The Management Committee shall 
determine the appropriate time for Chiron to begin supplying IGF-1 for 
clinical purposes. Until that time, Cephalon will continue to use supplies of 
IGF-1 produced at the Cephalon Facility for clinical trials of IGF-1, 
including supplies needed to complete the U.S and European clinical trials of 
IGF-1 in treating ALS and the pilot trials of IGF-1 in treating peripheral 
neuropathies.

         (c)  SCALE-UP OF CHIRON FACILITY.  Chiron will use the Chiron 
Facility at Vacaville, California (the "Vacaville Facility") to manufacture 
the Collaboration's requirements of IGF-1 for clinical purposes in accordance 
with the Development Plans. Chiron will make reasonable efforts, including 
making capital investments, to scale-up and expand the applicable Chiron 
Facility as needed to allow sufficient GMP Grade Product to be made in 
accordance with the quantity, schedule and other requirements of the 
applicable Development Plan. Without limiting the foregoing, Chiron will 
proceed to install [CONFIDENTIAL TREATMENT REQUESTED]


                                      -13-


<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED] at its Vacaville facility. The capital costs
incurred by Chiron for the scale-up activities shall not be an Allowable Expense
(except to the extent depreciation charges are included as a Cost). Chiron shall
take such other steps as may be commercially reasonable so that the Product 
produced at the Chiron Facility is acceptable for purposes of obtaining 
Regulatory Approvals in the Major Markets in accordance with the Development 
Plans.

         (d)  CEPHALON FACILITY.  Chiron and Cephalon will use the Cephalon 
Facility to supply IGF-1 for clinical supplies, as described in paragraph 
(b), and may use the Cephalon Facility as the Alternate Facility pursuant to 
Section 4.5 hereof. Chiron and Cephalon also will discuss using the Cephalon 
Facility to manufacture products of Chiron (other than Products) or, to the 
extent determined by the Management Committee to be cost-effective, other 
Products, provided that neither party is obligated to enter into an agreement 
to use the Cephalon Facility for any such purposes.

     SECTION 3.3  REGULATORY APPROVALS.

         (a)  ESTABLISHMENT LICENSES.  A Collaborator who supplies a Product 
to the Collaboration will be responsible for complying with all establishment 
registration requirements and obtaining all other applicable approvals 
required for the production of Products at the applicable manufacturing 
facility (collectively, "ELAs").

         (b)  REGULATORY AND PRICING APPROVALS.  It is intended that all 
Regulatory Approvals and Pricing Approvals relating to Products in the Field 
within the Major Markets will be owned by the Collaboration and will be 
registered in the name of the JV, unless otherwise required by law, and the 
JV shall be organized to permit such ownership. INDs and other pre-market 
clearances related to a Product shall be owned by the party conducting the 
clinical trials of the Product in the Field, unless otherwise required by 
law. To the extent that any INDs or other premarketing clearances or 
approvals related to any of the Products in the Field within the Major Markets 
are registered in the name of either Collaborator, such Collaborator will take 
such actions permitted by law as maybe necessary to transfer such clearances 
and approvals to the JV and otherwise will exercise its rights under all such 
clearances and approvals in a manner consistent with this Agreement.

         (c)  DILIGENCE.  Each Collaborator shall use all commercially 
reasonable efforts, commensurate with those efforts used for its other 
products of similar potential and consistent with its obligations under the 
Development Plans, to diligently obtain the approvals it is responsible for 
under the Development


                                     -14-


<PAGE>

Plans. Notwithstanding the foregoing, each Collaborator acknowledges that 
there can be no assurance that any ELA, Regulatory Approval or Pricing 
Approval will be obtained for a Product in any Major Market.

     SECTION 3.4  BALANCING OF DEVELOPMENT COSTS.

         (a)  BALANCING.  The parties deem their initial contribution of 
technology to the Collaboration with respect to IGF-1 to be of equal value. 
The parties intend that the Allowable Expenses funded by each of them to 
manufacture and develop Products in the Major Markets during the period 
between October 1, 1993 and the Commercialization Date will be equal as of 
the Commercialization Date.

         (i)  Each party shall fund its own Allowable Expenses under the 
    Development Plans through December 31, 1994 or, if later, the date when a 
    Collaborator has incurred an aggregate of $20 million in Allowable Expenses
    under the Development Plans; provided, however, that prior to that date 
    either Collaborator may, but shall not be required to, reimburse the other 
    Collaborator for any deficiency in the equal funding of Allowable Expenses,
    bearing interest at the per annum rate equal to the greater of the Prime 
    Rate as reported in the BLOOMBERG FINANCIAL MARKETS, COMMODITIES & NEWS (or
    any mutually acceptable successor thereto) or the rate of interest imputed 
    for the purposes of Federal income taxes (as such, the "Balancing Rate") on
    the amount of such deficiency as calculated as of the end of each Calendar 
    Quarter; but in no event shall the Balancing Rate exceed the maximum 
    interest rate allowed by applicable law.

          (ii) From and after the later of December 31, 1994 or the date when 
    one of the Collaborators has funded an aggregate of $20 million in Allowable
    Expenses under the Development Plans, the other party shall reimburse such 
    party for 100% of the Allowable Expenses funded thereafter by such party, 
    plus interest at the Balancing Rate on the amount of such deficiency as 
    calculated as of the end of each Calendar Quarter for the period of the 
    deficiency, until the aggregate Allowable Expenses (excluding interest) 
    funded by both parties since October 1, 1993 are shared equally (i.e., 
    balanced). Once the aggregate Allowable Expenses have been balanced, each
    party shall be responsible for funding 50% of the aggregate Allowable 
    Expenses incurred thereafter by the parties. The adjustments for Allowable
    Expenses shall be made on a quarterly basis under Section 6.5(b) hereof.

         (iii) If the Commercialization Date occurs before the Allowable 
    Expenses incurred under the Development Plans are balanced in full, the 
    balancing shall continue under


                                     -15-
<PAGE>


    clause (ii) for such expenses in addition to any balancing required under 
    Section 6.2(a) hereof.

              (iv) Notwithstanding anything to the contrary in this Section 
    3.4, if the Agreement is terminated for any reason before the Allowable 
    Expenses are balanced in full under clauses (i) or (ii) or Section 6.2(a), 
    then there shall be no balancing required except as may occur under Section 
    16.5(a).

          ARTICLE 4 - COMMERCIALIZATION ACTIVITIES IN MAJOR MARKETS

    SECTION 4.1  MARKETING STRATEGY IN MAJOR MARKETS.  The Management 
Committee shall establish a Marketing Committee which shall be responsible 
for developing a marketing strategy for each Product on a country-by-country 
basis within the Major Markets. The marketing strategy for each year shall be 
included in a marketing plan that is approved by the Management Committee (as 
so approved, a "Marketing Plan"). Each Collaborator shall appoint 50% of the 
permanent and alternate members of the Marketing Committee. Any action or 
decision by the Marketing Committee must be authorized by the approval of a 
majority of each party's designated members on the committee, unless 
otherwise specified in this Agreement. If the Marketing Committee can not 
agree on a particular matter, the matter shall be submitted for resolution to 
the Management Committee. If the Management Committee can not agree on a 
particular matter, the matter shall be submitted for resolution in accordance 
with Article 15 hereof.

    Without limiting the Marketing Committee's functions, the Marketing 
Committee shall, subject to the Management Committee's approval of the 
Marketing Plan and subject to Section 4.6:

              (i)  select the Trademark and the form of label, package insert 
    and packaging for each Product in each Major Market, subject to Section 9.7 
    hereof;

              (ii)  determine the pricing and reimbursement strategy for each 
    Product in each Major Market;

              (iii)  coordinate pre-launch activities for Products in the 
    Major Markets, including symposia and other marketing efforts;

              (iv)  establish the schedule for Product launch in each Major 
    Market;

              (v)  establish anticipated sales targets for each Product in 
    each Major Market;


                                     -16-


<PAGE>


              (vi)  identify the estimated capacity of Chiron and Cephalon 
(if applicable), to be used for the production of Products containing IGF-1 
pursuant to Section 4.5(b).

    SECTION 4.2  RESPONSIBILITIES OF THE PARTIES.

         (a)  ALLOCATION OF RESPONSIBILITIES.  The Marketing Plan shall 
identify the responsibilities of each Collaborator (or its third party 
subcontractors) in the promotion, marketing and distribution of Products in 
the Major Markets. In determining the appropriate allocation of 
responsibilities, the objective of the Marketing Committee is to maximize the 
efficiency and effectiveness of the commercialization of the Products in the 
Major Markets. Except as provided in this Article 4 or as otherwise 
determined by the Management Committee, Chiron will be responsible for 
marketing the Products in the Major Markets consistent with the Marketing 
Plan and will perform all distribution functions related to the Products, 
including, without limitation, distributor and wholesaler contracts, 
warehousing, order taking and processing, delivery, invoicing, collections and 
returns. However, the parties understand that (i) pursuant to the CIBA 
Agreement, CIBA has a right of first refusal under certain circumstances to 
sell or promote (including copromotion of) Products containing IGF-1 in the 
Territory, and (ii) Cephalon has the exclusive right to detail Products 
directly to neurologists in the Major Markets. The Management Committee shall 
determine whether a third party marketing arrangement is appropriate in any 
country or countries in the Major Markets and its approval shall be required 
with respect to the terms of any selling or promotion arrangement with CIBA 
on behalf of the JV, which arrangement shall be consistent with the terms of 
this Agreement; the Management Committee's approval shall not be withheld 
except on the grounds that the agreement is commercially unreasonable.

         (b)  DILIGENCE.  To the extent a Collaborator is responsible for any 
of the promotion, marketing or distribution of Products in the Major Markets, 
it shall perform such activities using commercially reasonable efforts, 
commensurate with those efforts used for its other products of similar 
potential and consistent with its obligations under the applicable Marketing 
Plans.

         (c)  EXPANSION OF RIGHTS.

              (i)  Cephalon shall have the right (but not the obligation) to 
detail Products directly to all purchasers in a country in the Major Markets 
if at any time during the term of this Agreement (A) Chiron, directly or 
indirectly, participates in the marketing or sale of any product (other than 
a product containing a Compound) that is approved for the same indication as 
a Product marketed or sold in that country by Chiron on behalf


                                     -17-


<PAGE>


of the Collaboration, and (B) Chiron has failed to diligently market the 
Product under Section 4.2(b) above in that country. The election by Cephalon 
to expand its rights to detail Products shall not affect Chiron's rights 
under the terms of this Agreement.

              (ii)  Chiron shall have the right (but not the obligation) to 
sell Products directly to neurologists in a country in the Major Markets if 
at any time during the term of this Agreement (A) Cephalon, directly or 
indirectly, participates in the marketing or sale of any product (other than 
a product containing a Compound) that is approved for the same indication as 
a Product detailed in that country by Cephalon on behalf of the 
Collaboration, and (B) Cephalon has failed to diligently detail the Product 
under Section 4.2(b) above in that country. The election by Chiron to expand 
its rights to market Products shall not affect Cephalon's rights under the 
terms of this Agreement.

         (d)  ALLOWABLE EXPENSES.  In no event shall the Allowable Expenses 
related to a detailing, selling or marketing activity exceed the Costs of the 
most cost-effective alternative for the Product, as determined by the 
Management Committee. The difference, if any, between the Costs of a 
Collaborator permitted as an Allowable Expense and its actual costs shall be 
the responsibility of that Collaborator.

    SECTION 4.3  COMMERCIALIZATION OF PRODUCTS.  The parties will explore and 
implement, to the extent feasible, an arrangement that will permit each 
Collaborator to report an approximately equal amount of Net Sales of Products 
in the Major Markets for each accounting period, in accordance with generally 
accepted accounting principles. Such arrangement, for example, could involve 
dividing the sales markets for Products on a geographic basis.

    SECTION 4.4  LABELLING.  Subject to Section 4.6, the label, package 
insert, packaging, advertising and promotional materials for each Product 
shall be approved by the Management Committee. All such materials shall 
identify the names of both Collaborators, unless prohibited by applicable 
law.

    SECTION 4.5  MANUFACTURE OF COMMERCIAL SUPPLIES OF PRODUCTS.

         (a)  GENERAL.  Except as otherwise provided in this Section 4.5, the 
Collaboration shall obtain all of its requirements for Products from Chiron. 
It is expected that Chiron will manufacture the commercial supplies of 
Products containing Compounds other than IGF-1. It is expected that Chiron 
will use its Vacaville Facility and Cephalon will use the Cephalon Facility 
for the production of commercial supplies of Products containing IGF-1 to the 
extent contemplated under paragraph (b) below. Each of the Collaborators, to 
the extent that it is manufacturing Products for the Collaboration, shall


                                     -18-


<PAGE>


use commercially reasonable efforts to manufacture and supply the finished 
Products for commercial purposes of the Collaboration in a cost-effective 
manner and in accordance with the terms of this Agreement and a supplemental 
manufacturing agreement to be entered into by the parties consistent with the 
terms of this Section 4.5.

    (b)  ALLOCATION OF CAPACITY FOR PRODUCTS CONTAINING IGF-1.  Chiron will 
use commercially reasonable efforts, including the making of capital 
investments, to scale-up and expand the Vacaville Facility to up to 
[CONFIDENTIAL TREATMENT REQUESTED] capacity to produce GMP Grade IGF-1 in 
quantities sufficient for the Collaboration's commercial purposes as specified 
in the Marketing Plans. At the time of the initial determination by the 
Management Committee that the [CONFIDENTIAL TREATMENT REQUESTED] capacity of 
the Vacaville Facility is not adequate to meet the forseeable requirements of 
the Collaboration, Cephalon may elect to use the Cephalon Facility as an 
Alternate Facility to provide the additional increments of capacity, not to 
exceed [CONFIDENTIAL TREATMENT REQUESTED] of capacity in the aggregate.  Any 
such election must be made promptly by Cephalon, but no later than thirty (30) 
days after the Management Committee's determination is made.  In such event, 
Cephalon will use commercially reasonable efforts, including the making of 
capital investments, to scale-up and expand its manufacturing facility in 
Beltsville, Maryland to provide GMP Grade IGF-1 for such purpose. In the event
that the IGF-1 Product requirements of the Collaboration exceed the allocated 
manufacturing capacity at the Chiron Facility and the Cephalon Facility, then 
Chiron shall use commercially reasonable efforts to expand its Vacaville 
Facility or another Chiron facility to produce quantities of Products 
sufficient for the Collaboration's commercial purposes as specified in the 
Marketing Plans.  The schedule for meeting commercial scale capacity for the 
Chiron Facility and the Cephalon Facility will be determined by the Management 
Committee, taking into account the quantities of IGF-1 required by the 
Collaboration, the anticipated regulatory schedule and the time and resources 
required to complete additional capital improvements. Each Collaborator shall 
take such other steps as may be commercially reasonable so that the Product 
produced at its facility or facilities meets the projected shipment schedules 
under the applicable Marketing Plan.

    (c)  EXCESS MANUFACTURING CAPACITY.  If the dedicated manufacturing 
capacity for the Products at the Chiron Facility and the manufacturing 
capacity at the Cephalon Facility as approved in the Marketing Plan is 
greater than the actual demand from the Products, then the supply requirements 
for the Products shall be allocated between the Chiron Facility and the 
Cephalon Facility as determined by the Management Committee.


                                     -19-


<PAGE>


    (d)  SUPPLY SHORTAGES AND INTERRUPTIONS.  If the manufacturing capacity 
at the Chiron Facility and the Cephalon Facility which is allocated to the 
manufacture of the Products under the applicable Marketing Plan is not 
adequate to meet the market demand for a Product, each Collaborator will 
allocate its other manufacturing capacity, if any, which is used to 
manufacture the Compound contained in such Product for the production of such 
Product in order to supply such Product in an amount equal to the lesser of 
(i) the Product quantities allocated to such Collaborator as set forth in the 
applicable Marketing Plan or (ii) such Collaborator's percentage of the 
Product supply as set forth in the Marketing Plan multiplied by the actual 
market demand for such Product.  If a force majeure event under Section 17.3 
affects the supply of a Product from the capacity allocated to a Collaborator 
under a Marketing Plan, the Collaborator may allocate such capacity ratably  
between the Collaboration's requirements and any supply obligations of the 
Collaborator to a third party.  If the Collaborators cannot satisfy their 
obligations to make a Product under this Agreement for a period of sixty (60) 
consecutive days, including any failure caused by a force majeure event under 
Section 17.3 hereof, the Management Committee shall designate a manufacturer 
(which may be a Collaborator) to make the Product until the Collaborators 
are able to resume supply of the Products under the terms of this Agreement.

    (e)  COST-EFFECTIVENESS.  The Management Committee will be responsible 
for reviewing the cost-effectiveness of the supply of each Product and to 
determine the amount of the manufacturing costs of each Collaborator that 
will be permitted as an Allowable Expense. [CONFIDENTIAL TREATMENT REQUESTED]
In reviewing the cost-effectiveness of the supply of each Product, the 
Management Committee may compare the Costs of manufacturing a Product at the
Chiron Facility and at the Cephalon Facility.  If the per unit cost of 
manufacturing a Product is higher at one of these facilities, the Management
Committee shall review the cost-effectiveness of such manufacturing and shall
determine the amount of the manufacturing costs that will be permitted as an 
Allowable Expense; provided, however, that in considering the cost-
effectiveness of the manufacturing and the Costs permitted as Allowable 
Expenses, the Management Committee shall recognize that a reasonable difference
in the costs of manufacturing at the Chiron Facility and the Cephalon Facility 
is to be expected in relation to the costs and benefits of maintaining an 
Alternative Facility, and is permitted as an Allowable Expense.

    (f)  PRODUCT QUALITY.  Each Collaborator agrees that each shipment of the 
Products manufactured by it will conform to the applicable Specifications and 
will be made, stored, packaged, 


                                     -20-


<PAGE>


labeled and controlled by it in accordance with the process and procedures 
contained in the applicable Regulatory Standards.  Neither Collaborator will 
modify any process or procedure used in the manufacture of a Product without 
notifying the Management Committee and allowing the Management Committee time 
to file any required notices with the applicable regulatory authorities and 
obtain any regulatory approvals required in connection with the modification. 
EXCEPT AS EXPRESSLY SET FORTH IN THE PRECEDING SENTENCE, NEITHER 
COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, 
CONCERNING THE PRODUCTS.  SPECIFICALLY, BUT WITHOUT LIMITING THE FOREGOING, 
NEITHER COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTY OF 
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, QUALITY OR 
USEFULNESS OF THE PRODUCTS.


    (g)  FACILITY AUDIT AND INSPECTIONS.  A Collaborator manufacturing 
Products shall, upon reasonable advance notice, permit the other Collaborator 
or any other authorized representative of the Collaboration to audit the 
supplying Collaborator's manufacturing process and the manufacturing, 
production and control records for the Products.  Any such inspection shall be 
conducted subject to the confidentiality obligations under this Agreement.  
The supplying Collaborator shall take appropriate actions to adopt reasonable 
suggestions of the other Collaborator to correct any deficiencies identified 
by such inspection or audit.  To supplement this provision, the other 
Collaborator also may make arrangements, at its cost and expense (which 
shall not be an Allowable Expense), to have one of its employees located on 
the premises of the Chiron Facility or the Alternate Facility, as the case 
may be, to participate in the monitoring of Product manufacture.

    (h)  DEPOSIT OF BIOLOGICAL MATERIALS.  Each Collaborator shall deposit 
with a mutually agreeable depository (such as the ATCC), upon terms customary 
in the industry, all biological materials used in its manufacturing process, 
and shall provide all manufacturing information required to enable a third 
party to assume the manufacturing of Products under paragraph (e) above or 
Section 16.5 hereof.

    SECTION 4.6  ACTIVITIES OF CHIRON OUTSIDE THE FIELD.

    (a)  Cephalon recognizes that Chiron has development programs, and in the 
future may initiate development programs, with respect to the Compounds for 
indications outside the Field (a "Chiron Indication Product").  Nothing in 
this Agreement shall be construed to limit such rights as Chiron may 
otherwise have to develop or commercialize a Chiron Indication Product.  
Except as provided in this Article 4.6, all aspects of development and 
commercialization for Chiron Indication Products including, without 
limitation, clinical development, regulatory strategy and filings, marketing 
strategy and tactics, including pricing, may


                                     -21-


<PAGE>


be determined solely by Chiron. Without limiting the generality of the 
foregoing, for example, Chiron may determine the contents of labelling and 
package inserts for any Chiron Indication Product and may determine the 
prices at which any such product will be sold, even if the Chiron Indication 
Product is identical to a Product (other than with respect to labelling and 
package inserts). Chiron may make such determinations in its discretion 
notwithstanding that such determinations may effect the corresponding aspect 
of the Collaboration's development and commercialization of any Product that 
is based upon the same Compound in a manner that may or may not be in the 
best interest of the Collaboration.

         (b)  Notwithstanding (a) above, Chiron agrees to meet and confer in 
good faith with Cephalon and consider any recommendation Cephalon may make 
with respect to any action by Chiron with respect to Chiron Indication 
Products that Cephalon reasonably believes may have any material effects upon 
the development or commercialization of Products. Further, to the extent that 
any aspect of the development or commercialization of a Chiron Indication 
Product is related solely to the corresponding aspect of a Product approved 
for sale in the Field based upon the same Compound, Chiron shall take 
reasonable steps to conform such aspect of the Chiron Indication Product to 
the decisions of the Management Committee regarding the corresponding aspect 
of such Product. If a Collaborator is developing a product containing a 
Compound for commercialization outside the Field, the Collaborators will use 
commercially reasonable efforts to design the Collaboration's Product so that 
it would be differentiated from such product.

              To the extent that a Chiron Indication Product and a Product 
based upon the same Compound are differentiated such that a decision by 
Chiron with respect to an aspect of the Chiron Indication Product does not 
determine a corresponding aspect of the Product, Chiron shall take reasonable 
steps to preserve the differentiating aspect of the Chiron Indication Product 
so as to facilitate the implementation of decisions of the Management 
Committee regarding the corresponding aspect of the Product.

         (c)  Any Chiron Indication Product may be marketed under a 
tradename, tradedress and trademark chosen by, owned by and registered by 
Chiron. If Chiron elects to use the tradename, tradedress and trademark owned 
by or registered to the JV for a product that is both a Product and a Chiron 
Indication Product, the JV shall thereupon hold the trademark, tradedress 
and/or tradename for the benefit of both Chiron and the Collaboration and 
any goodwill related to the use thereof by the Parties within the Field shall 
accrue to the JV and any goodwill related to the use thereof by Chiron 
outside the Field shall accrue to the benefit of Chiron. Conversely, if the 
JV elects to use a tradename, tradedress and/or trademark owned and 
registered by


                                     -22-


<PAGE>


Chiron with respect to such product, Chiron shall hold the trademark, 
tradedress and/or tradename for the benefit of both Chiron and the 
Collaboration and any goodwill related to the use thereof by the Parties 
within the Field shall accrue to the JV and by Chiron outside the Field shall 
accrue to the benefit of Chiron.

              If a Chiron Indication Product has received Regulatory Approval 
in the Territory prior to the receipt by the Collaboration of Regulatory 
Approval of a Product containing the same Compound and Chiron reasonably 
determines after consultation with the Management Committee that the Product 
is not substantially differentiated from a Chiron Indication Product, Chiron 
may elect to require the Collaboration to market such Product under the same 
tradename, tradedress or trademark as is used in connection with such Chiron 
Indication Product. If a Product has received Regulatory Approval in the 
Territory prior to the receipt by Chiron of Regulatory Approval of a Chiron 
Indication Product containing the same Compound, the Collaboration may 
continue to use the tradename, tradedress or trademark approved by the 
Management Committee notwithstanding the subsequent approval of such Chiron 
Indication Product.

                             ARTICLE 5 - LICENSES

    SECTION 5.1  CROSS-LICENSES PRIOR TO FORMATION OF JV.

         (a)  PATENT RIGHTS.  Cephalon hereby grants to Chiron a 
royalty-free, nonexclusive license or sublicense in and to the patent rights 
included in the Cephalon Technology for use in the Field to develop and use 
Products in the Territory in accordance with the Development Plans. Chiron 
hereby grants to Cephalon a royalty-free, nonexclusive license or sublicense 
in and to the patent rights included in the Chiron Technology for use in the 
Field to develop and use Products in the Territory in accordance with the 
Development Plans. The cross-licenses in this clause (a) shall terminate 
upon the effectiveness of the licenses in Sections 5.2 and 5.3.

         (b)  PERPETUAL KNOW-HOW LICENSES.  Subject to the restrictions on the 
use of clinical data set forth in Section 3.1(e), Cephalon hereby grants to 
Chiron a perpetual, nonexclusive, royalty-free license (except for the 
royalty payable to the JV under Section 8.1 hereof) to all Technical 
Information included in the Cephalon Technology in the Territory, for any use 
by Chiron, whether inside or outside the Field. Subject to Section 3.1(e) and 
7.4, Chiron hereby grants to Cephalon a perpetual, nonexclusive, royalty-free 
license or sublicense (except for the royalty payable to the Chiron under 
Section 6.4 hereof) to all Technical Information that is included


                                     -23-


<PAGE>


in the Chiron Technology in the Territory, for any use by Cephalon, whether 
inside or outside the Field.

    SECTION 5.2  LICENSES TO JV.

         (a)  CEPHALON.  Upon the formation of the JV, Cephalon will grant to 
the JV an exclusive license in and to the Cephalon Technology for use in the 
Field to develop, make, have made, use and sell Products in the Territory, 
subject to the perpetual cross-licenses under Section 5.1(b).

         (b)  CHIRON.  Upon the formation of the JV, Chiron will grant to the 
JV an exclusive license in and to the Chiron Technology for use in the Field 
to develop, make, have made, use and sell Products in the Territory, subject 
to the perpetual cross-licenses under Section 5.1(b).

         (c)  JV TECHNOLOGY.  All rights licensed to the JV by the 
Collaborators pursuant to this Article 5, together with any invention or 
discovery, whether or not patentable, made solely or jointly by a JV employee 
after the Effective Date, are collectively referred to herein as the "JV 
Technology".

    SECTION 5.3  LICENSES FROM JV TO COLLABORATORS IN THE MAJOR MARKETS.  
Effective upon the formation of the JV, the JV hereby grants to each of 
Cephalon and Chiron a nonexclusive, royalty-free license, with no right to 
sublicense, in and to the JV Technology, to the extent required for each 
party to conduct its responsibilities in the Major Markets under this 
Agreement or any Development Plan or Marketing Plan.

    SECTION 5.4  LICENSE FROM JV TO CHIRON IN THE ROYALTY TERRITORY.  
Effective upon the formation of the JV, the JV hereby grants to Chiron an 
exclusive, worldwide right and license in and to the JV Technology to make, 
have made, use and sell Products in the Royalty Territory, subject to the 
royalty obligation and other terms and conditions of Article 8 hereof.

    SECTION 5.5  OPTIONAL RIGHTS.

         (a)  SIBIA RIGHTS.  Cephalon hereby grants to Chiron and the JV a 
nonexclusive option to include in the license under Sections 5.1 or 5.2, as 
applicable, the SIBIA Rights of Cephalon inside the Field. If Chiron or the 
JV elects in writing to exercise the option inside the Field for purposes of 
the Collaboration, the SIBIA Rights shall automatically become part of the 
Cephalon Technology and any third party royalties payable as a result of the 
use by the JV of the SIBIA Rights in the Major Markets shall be deemed a 
Third Party Royalty to be paid by the JV. [CONFIDENTIAL TREATMENT REQUESTED]

                                     -24-





<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED] If at any time prior to Chiron's exercise 
of its option Cephalon proposes to transfer or terminate any of the SIBIA 
Rights, Cephalon shall provide Chiron with notice thereof, sufficiently in 
advance to allow Chiron to exercise its option or otherwise obtain such rights
directly from SIBIA. If Chiron exercises its option, Cephalon shall maintain 
the SIBIA Rights in accordance with the provisions of Section 5.10.

         (b)  CEPHALON IGF-1 TECHNOLOGY OUTSIDE THE FIELD.
Except as provided in this Section 5.5; Cephalon shall not develop or 
commercialize with any third party, or license intellectual property rights 
from any third party related to the development or commercialization of a 
product containing IGF-1 for an indication outside the Field using Cephalon 
Technology or any proprietary technology that it developed pursuant to the 
Development Plans, without the prior written consent of Chiron. Cephalon 
currently owns or has license rights to certain technology relating to the 
use of IGF-1 for indications outside the Field ("Nonfield Indications"). All 
of these Nonfield Indications and the related technology rights are 
identified on Schedule VIII hereto. In addition, Cephalon may develop, in the 
course of performing activities pursuant to the Development Plans or 
otherwise, data which indicates that IGF-1 may have utility for an indication 
outside the Field (the "Additional Nonfield Indications"). Cephalon shall 
notify Chiron in writing if it develops any such data with respect to an 
Additional Nonfield Indication, and such notice shall contain a summary of such
data in reasonable detail to enable Chiron to analyze the merits of the 
possible utility. Cephalon hereby grants to Chiron the right to obtain from 
Cephalon, exclusive rights to the technology and related Technical Information
for any of the Nonfield Indications and Additional Nonfield Indications for use
outside the Field. Chiron shall notify Cephalon if it wishes to negotiate a
transaction with respect to a Nonfield Indication or Additional Nonfield 
Indication. If Chiron and Cephalon, after good faith negotiations, have failed
to reach agreement within 90 days as to the appropriate terms and fair market 
compensation for such indication, the parties will submit the determination of 
fair market compensation to arbitration pursuant to Section 15.2 hereof. 
Notwithstanding the foregoing, Chiron may elect to have the Collaboration 
obtain such rights to the Nonfield Indication or Additional Nonfield 
Indication on terms mutually acceptable to Chiron and Cephalon. The parties 
intend that such terms shall reflect a profit participation for Cephalon that 
represents the economic equivalent of a commercially reasonable royalty and the
equal sharing by Chiron and Cephalon of future development costs


                                     -25-


<PAGE>


with respect to such indication. The rights of Chiron under this Section 5.5(b) 
are subject to any approvals of the CCP Board of Directors or partners 
required under the applicable Cephalon Agreements. Cephalon shall use its best 
efforts to obtain such approvals, if required.

     SECTION 5.6  RETAINED RIGHTS.  Each of Chiron and Cephalon reserves the 
right to use, respectively, the Chiron Technology and the Cephalon 
Technology, for any purpose whatsoever outside the Field and/or outside the 
Territory, without liability to the other party or to the JV, except as may 
be otherwise specified in Sections 5.5(b), and 6.2(b) and 6.3 hereof.

     SECTION 5.7  PRIOR RIGHTS.  The rights granted or to be granted by 
Cephalon to Chiron and the JV under this Agreement are subject in all 
respects to the prior rights of third parties under the Cephalon Agreements. 
The rights granted or to be granted by Chiron to Cephalon and the JV under 
this Agreement are subject in all respects to the prior rights of third 
parties under the Chiron Agreements.

     SECTION 5.8  INVENTIONS.  All inventions and discoveries resulting from 
the Collaboration, whether or not patentable, shall be owned by the 
Collaborator making the invention or discovery. All Joint Technology shall be 
owned by the JV or, in the absence of the JV, by the Collaborators jointly.

     SECTION 5.9  NEW TECHNOLOGIES.  

         (a)  THIRD-PARTY RIGHTS.  The Management Committee may acquire from 
third parties, if commercially reasonable, such rights to new technology in 
the Field as are necessary or desirable for the JV, directly or indirectly, 
to make, use and sell Products. The JV (and not the Collaborators 
individually) shall be responsible for any payments or royalties for such 
rights attributable to the sale of Products in the Major Markets owing to a 
third party under an agreement approved by the Management Committee.

         (b)  ADDITIONAL TECHNOLOGY OF COLLABORATORS.  The parties 
contemplate that Chiron's biologically-active small molecules and its 
proprietary molecular diversity technology and other proprietary Chiron 
compounds other than the Chiron Products may be added to the Collaboration, 
upon terms to be mutually agreed to by the Collaborators. Similarly, Cephalon 
and Chiron may from time to time agree in writing to include within the scope 
of this Agreement any other composition, product or technology of a 
Collaborator, upon terms to be mutually agreed to by the Collaborators. Unless
and until an agreement is executed providing for the addition of technology to
the Collaboration, the Collaborator shall be free to develop or dispose of such
technology in any manner it sees fit.


                                     -26-


<PAGE>


     SECTION 5.10  MAINTENANCE OF TECHNOLOGY.  In addition to its 
obligations under Section 9.1, Cephalon and Chiron shall notify the other 
Collaborator before allowing any intellectual property right included in the 
Cephalon Technology or the Chiron Technology, as applicable, the loss of 
which would have a material adverse effect on the business of the 
Collaboration to lapse, expire or terminate before its stated expiration or 
termination date, sufficiently in advance to allow the other Collaborator to 
seek to obtain the rights to such technology. Each Collaborator shall use 
all commercially reasonable efforts to maintain in full force and effect any 
license or other agreement pursuant to which it derives rights included in 
the Cephalon Technology or the Chiron Technology, as the case may be, the 
loss of which would have a material adverse effect on the business of the 
Collaboration and shall promptly notify the other if it receives notice or 
otherwise becomes aware of any default under any such agreement. Without 
limiting the foregoing, neither Collaborator shall amend or modify any such 
third-party agreement in a manner that would limit the benefits or expand the 
obligations of the Collaboration with respect to any such rights without the 
prior consent of the other Collaborator, which consent shall not be unreasonably
withheld. Neither Collaborator shall transfer or assign to an unaffiliated party
any such third party agreement or any other intellectual property right that is
licensed to the other Collaborator or the JV under this Agreement, without the 
prior approval of the Management Committee.

     SECTION 5.11  SUBLICENSING OF TECHNOLOGY.  Cephalon may sublicense its 
rights under Section 5.1(b) to its licensees or sublicensees to the extent 
required by the corresponding Cephalon Agreement, and Chiron may sublicense 
its rights to its licensees or sublicensees. The JV may sublicense all or 
part of the JV Technology to one or more third parties, subject to the 
execution by the third party of a sublicense agreement satisfactory to the 
Management Committee.

     SECTION 5.12  DISCLOSURE OF TECHNOLOGY.  Promptly after the Effective 
Date and from time to time thereafter during the term of this Agreement, each 
Collaborator shall promptly disclose to the other the Technical Information 
which becomes known to it to the extent licensed to the other Collaborator or 
the JV under this Article 5. In addition, each Collaborator shall promptly
disclose to the other Collaborator, in writing, any invention 
or discovery included in its license to the other Collaborator of the 
Cephalon Technology or Chiron Technology, as the case may be, under Article 5.


                                     -27-


<PAGE>


                  ARTICLE 6 - COMPENSATION IN MAJOR MARKETS

    SECTION 6.1  EQUAL SHARING OF OPERATING PROFITS AND LOSSES.  The 
Operating Profits and Operating Losses shall be shared equally by Cephalon 
and Chiron, except for the special allocation described in Section 6.2(a) 
hereof.

    SECTION 6.2  SPECIAL ALLOCATIONS.

         (a)  BALANCING OF COSTS AFTER COMMERCIALIZATION DATE.  To the extent 
the Allowable Expenses of the Collaborators are not equally funded as of the 
Commercialization Date, the Collaborator who funded the greater share of 
Allowable Expenses shall be entitled to receive from sales of Products in the 
Major Markets, prior to the allocation of Operating Profits under Section 
6.1, a special allocation equal to [CONFIDENTIAL TREATMENT REQUESTED] plus 
[CONFIDENTIAL TREATMENT REQUESTED]. These credits shall be applied until
the Collaborator has received 100% of its excess Allowable Expenses as of the 
Commercialization Date, plus interest at the Balancing Rate (as defined in 
Section 3.4) on the amount of such excess for the period of the excess amount.

         (b)  SALES FOR DIABETES.  The parties acknowledge that sales of a 
Product containing IGF-1 for diabetic neuropathy may overlap with sales of a 
product containing IGF-1 for diabetes. The parties therefore agree that if an
IGF-1 Product of the JV receives Regulatory Approval for the treatment of
diabetic neuropathy or a Collaborator receives Regulatory Approval in the 
Territory of another product containing IGF-1 for the treatment of diabetes,
the Collaborators will [CONFIDENTIAL TREATMENT REQUESTED] The allocation 
established by the parties shall apply regardless of which indication is 
approved first, and shall apply in lieu of any provisions of Section 6.3 
that might otherwise be applicable.


                                     -28-


<PAGE>


    SECTION 6.3  OFF-LABEL SALES IN THE MAJOR MARKETS.

         (a)  If a Product of the Collaboration receives Regulatory Approval 
in the Field in a country in the Major Markets prior to the receipt by Chiron 
(or its licensee or joint development partner) of Regulatory Approval in such 
country of a product containing the same Compound for an indication outside 
the Field then all sales of such Product used for an indication (whether 
inside or outside the Field) in that country shall be included in the Net 
Sales used to calculate Operating Profits and, if applicable, any royalty 
payable to Chiron pursuant to Section 6.4 with respect to such country; 
provided that all costs and expenses associated with such Net Sales shall be 
included as an Allowable Expense. Notwithstanding the foregoing, [CONFIDENTIAL
TREATMENT REQUESTED] shall be excluded from the Net Sales used to calculate 
Operating Profits and, if applicable, any royalty payable to Chiron pursuant 
to Section 6.4 and in lieu thereof Chiron shall pay to the JV a royalty equal to
[CONFIDENTIAL TREATMENT REQUESTED]; provided that all costs and expenses 
associated with such excluded Net Sales shall not be included as an Allowable 
Expense. [CONFIDENTIAL TREATMENT REQUESTED]

         (b)  Upon the receipt by Chiron (or its licensee or joint 
development partner) of Regulatory Approval of a product outside the Field 
containing the same Compound as a Product, in a country in the Major Markets, 
all sales thereafter of the Product for use in any indication outside the 
Field in such country (according to market reports accepted in the industry) 
shall not be counted for purposes of calculating, with respect to such 
country (i) Operating Profits, (ii) any royalty payable to the JV under 
Section 6.3(a) above, or (iii) any royalty payable to Chiron pursuant to 
Section 6.4. All Costs associated with such sales shall not be permitted as 
Allowable Expenses for any purpose.

    SECTION 6.4  ROYALTIES TO CHIRON ON SALES OF CHIRON PRODUCTS.

         (a)  BASE ROYALTY.  The JV shall pay to Chiron a reasonable royalty 
on Net Sales of Chiron Products in the Major Markets. The royalty rate for 
each Chiron Product shall be negotiated by Cephalon and Chiron in good faith 
no later than the time an application for a Regulatory Approval is submitted 
in a Major Market for the corresponding Chiron Product. The royalty rate 
shall be the amount a third party would be willing to pay,


                                     -29-


<PAGE>


taking into consideration all relevant factors, including the value of the 
technology contributed by Chiron, the market opportunity for the Chiron 
Product, the availability of patent protection, the necessity of paying 
royalties to third parties, and the Costs and risks incurred or to be 
incurred by the Collaborators for development of the Chiron Product. The 
royalty rate for Net Sales of Products in the Major Markets shall not be less 
than [CONFIDENTIAL TREATMENT REQUESTED] nor more than [CONFIDENTIAL TREATMENT 
REQUESTED] for a Chiron Product having Market Exclusivity (but which maximum 
rate shall not be more than [CONFIDENTIAL TREATMENT REQUESTED] in the case of a
Chiron Product if the preclinical and Phase I clinical data that is provided by
Chiron is substantially sufficient to permit clinical testing of the 
corresponding Product in the Field), and shall not be less than [CONFIDENTIAL
TREATMENT REQUESTED] nor more than [CONFIDENTIAL TREATMENT REQUESTED] for other 
Chiron Products.

         (b)  ADJUSTMENTS TO ROYALTY

              (i)  The royalty payable under Section 6.4(a) for a Chiron 
Product with Market Exclusivity in a particular country in the Major Markets 
shall be reduced by an equitable amount to be determined by the Management 
Committee with respect to Net Sales of such Chiron Product in the country if 
a product containing the same Compound either (A) is being sold by a third 
party (other than third parties having rights through a Collaborator) in that 
country for the same indication, or (B) is approved for an indication in that 
country covered by the patent used to establish Market Exclusivity for the 
indication in the same country and there is no other basis for establishing 
Market Exclusivity as to the Chiron Product indication in that country.

              (ii)  The royalty payable under Section 6.4(a) for a Chiron 
Product without Market Exclusivity in a particular country in the Major 
Markets shall be increased to the rate used in a country where the Chiron 
Product has Market Exclusivity, if Chiron can reasonably demonstrate that 
even without Market Exclusivity, there is no significant competition for the 
Chiron Product with respect to the indication for which the Chiron Product 
received Regulatory Approval in the country. For purposes of this provision, 
"significant competition" means sales of a product by a third party or third 
parties (other than third parties having rights through a Collaborator) 
constitute more [CONFIDENTIAL TREATMENT REQUESTED]

              (iii)  If a royalty rate determined pursuant to Section 6.4(a) 
is such that the JV's profit percentage from sales of Chiron Products in the 
Major Markets is greater than or less than the percentage anticipated by the 
parties as of the Effective Date, Cephalon and Chiron shall meet and confer 
as to whether the royalty rates should be increased or decreased to


                                     -30-


<PAGE>


provide the JV and Chiron with a fair allocation of the economic benefits in 
the Major Markets.  Any such adjustment may be made on a country-by-country 
and Product-by-Product basis.

    SECTION 6.5  CALCULATION OF OPERATING PROFITS.

    (a)  PRIOR TO FORMATION OF JV.

         (i)  REPORTING.  Within twenty-one (21) days after the end of each 
month after the Effective Date until the formation of the JV, Cephalon shall 
submit to Chiron a report detailing all Allowable Expenses funded by Cephalon 
for the applicable month.  Within thirty (30) business days after the end of 
a Calendar Quarter, Cephalon shall also submit to Chiron a final report 
detailing all Allowable Expenses funded by Cephalon for the applicable 
quarter.  


         (ii)  STATEMENT OF ALLOWABLE EXPENSES.  Based on the reports of 
Cephalon, Chiron shall prepare a pro forma statement of its Allowable 
Expenses, combined Allowable Expenses and an inception-to-date report of each 
Collaborator's Allowable Expenses which it shall send to Cephalon no later 
than forty (40) days after the end of the applicable month.  In addition, 
based on the quarterly reports of Cephalon, Chiron shall prepare a final pro 
forma statement of combined Allowable Expenses and a final inception-to-date 
report of each Collaborator's Allowable Expenses for the Cephalon Quarter, 
which it shall send to Cephalon no later than sixty (60) days after the end 
of the Calendar Quarter.  Within fifteen (15) days after receiving the 
monthly report, the Collaborators shall make any payments, if required, to 
accomplish balancing under Section 3.4 (a) (ii) hereof.

         (iii)  CONFIRMATION.  Each Collaborator's chief financial officer 
shall confirm on an annual basis that the quarterly reports furnished during 
the year were prepared in accordance with the accounting principles and 
methodology authorized pursuant to Section 2.3 (c) hereof.

    (b)  JV REPORTING.  Prior to the formation of the JV, the Management 
Committee will determine the appropriate reporting requirements and 
procedures, including the timing and method of calculating the preliminary 
and the final Operating Profits of the JV, the reporting of Net Sales in the 
Royalty Territory and the manner in which payments or refunds of overpayments 
will be made, but in no event shall such payments be made less frequently 
than sixty (60) days after each Calendar Quarter.  The reporting requirements 
and procedures of the JV will be based on the approved Marketing Plans.  The 
Management Committee shall review the reporting requirements and procedures 
of the JV when appropriate in light of changes to the Marketing Plans, 
changes in or financial statement reporting requirements.  Notwithstanding 
the foregoing, the Collaborators agree that Chiron will be responsible for 
compiling the financial statements


                                     -31-


<PAGE>


of the JV and, if the JV is organized as a partnership, shall be the Tax 
Partner for federal income tax purposes.

                 PART III - ACTIVITIES IN ROYALTY TERRITORY

    ARTICLE 7 - DEVELOPMENT AND COMMERCIALIZATION ACTIVITIES IN 
                ROYALTY TERRITORY

    SECTION 7.1  DEVELOPMENT AND COMMERCIALIZATION RESPONSIBILITIES.  Chiron 
shall be responsible for conducting, at its own cost and expense, all 
activities relating to the development, manufacture and marketing of the 
Products in the Royalty Territory including, without limitation the 
establishment of a sales force or distribution network and the promotion and 
sale of Products.  All Regulatory Approvals and Pricing Approvals in the 
Royalty Territory shall be in the name of Chiron.

    SECTION 7.2  COORDINATION WITH COLLABORATION.

    (a)  Chiron shall consult with the Development and Marketing Committees 
with respect to the following activities:

         (i)  the preparation of its development and marketing plans for the 
              Products in the Royalty Territory;

         (ii)  the preparation of Product labelling and promotional materials 
               to be used with Products in the Royalty Territory; 

         (iii)  the designation of Trademarks for the Products in the Royalty 
                Territory; and 

         (iv)  the choice of supplier of the Products to be developed or sold 
               in the Royalty Territory.

Subject to Section 4.6, the plans for these activities will be submitted to 
the Management Committee for review and approval reasonably in advance of the 
specified activity, which approval shall not be withheld except on the 
grounds that the proposal is commercially unreasonable.  The members of the 
Management Committee in reviewing and approving the proposed activities of 
Chiron shall act in the interests of the Collaboration and not with regard to 
the individual interests of Chiron or Cephalon.  Chiron shall keep the 
Management Committee informed of its progress under its development and 
marketing plans in the Royalty Territory.

    (b)  Chiron shall not sublicense or enter into any comarketing, 
copromotion or similar arrangement in the Royalty Territory without the prior 
approval of the Management Committee

                                     -32-


<PAGE>


(which consent shall not be unreasonably withheld), excluding wholesaling, 
distribution and consignment arrangements, where the third party does not 
market or promote the Products. Nothwithstanding the foregoing, CIBA is 
hereby approved for purposes of marketing Products in the Royalty Territory, 
upon terms to be approved by the Management Committee (which approval shall 
not be withheld except on the grounds that the terms are commercially 
unreasonable).

    SECTION 7.3 DILIGENCE IN COMMERCIALIZATION OF PRODUCTS. Chiron shall use 
commercially reasonable efforts, commensurate with those efforts used for its 
other products of similar potential and consistent with its obligations under 
the development and marketing plans approved under Section 7.2 hereof, to 
commercialize the products in the Royalty Territory and to obtain all 
Regulatory Approvals and Pricing Approvals needed in the Royalty Territory 
for such purposes.


    SECTION 7.4 OWNERSHIP OF DATA. All clinical data developed by Chiron for 
purposes of Regulatory Approvals in the Royalty Territory shall be owned by 
Chiron, but may be used in the Field and Territory by Chiron, Cephalon and 
the JV pursuant to the licenses granted under Article 5 hereof and may be 
used by Chiron outside the Field and outside the Territory without limitation.

    SECTION 7.5 NO ALLOWABLE EXPENSES. None of the costs and expenses 
incurred by Chiron in connection with the Royalty Territory shall be an 
Allowable Expense hereunder unless expressly approved as such by the 
Management Committee.

    SECTION 7.6 ASSISTANCE BY THE JV. Chiron may request the assistance of the 
JV or Cephalon in the development and commercialization activities related to 
the Product. Any such assistance shall be provided upon mutually acceptable 
terms.

    SECTION 7.7 CONTINGENT CEPHALON MARKETING RIGHTS.

         (a) EVENTS. Cephalon shall have the right (but not the obligation) to 
detail Products in a country within the Royalty Territory if:

              (i) Chiron participates, directly or indirectly, in the 
                  marketing, sale or distribution of any product in that
                  country that directly competes with an indication included
                  in a Regulatory Approval for a Product in the same country;
                  and

              (ii) Chiron has failed to diligently develop and commercialize 
                   such Product under Section 7.3 hereof in that country.


                                     -33-
<PAGE>

          (b)  PROCEDURES.  Cephalon shall give Chiron written notice of the 
existence of the conditions described in clause (a) above, and Chiron shall 
have a period of 90 days in which to cure. If the conditions have not been 
adequately cured in Cephalon's reasonable judgment by the end of such period, 
Cephalon's right to detail shall be effective upon written notice from 
Cephalon to Chiron at which time Cephalon shall be entitled to detail all 
Products in such country on a nonexclusive basis. Cephalon shall be paid a 
reasonable fee by the JV for such activities and Cephalon's costs to detail 
the Products shall not be an Allowable Expense. Chiron's obligations to 
compensate the JV under Article 8 shall continue as to any Products continued 
to be marketed and sold by it or detailed by Cephalon, except that the 
royalty payable with respect to such Net Sales shall be reduced to the rate 
determined under Section 8.1(b) hereof as to any Product that Cephalon is 
detailing. The election by Cephalon to detail Products in the Royalty 
Territory shall not affect Chiron's rights under this Agreement.

                  ARTICLE 8 - ROYALTIES AND REPORTS, ETC.

     SECTION 8.1  ROYALTIES.  In consideration of the licenses granted to 
Chiron under Section 5.4 hereof, Chiron shall pay to the JV in each country 
within the Royalty Territory a royalty equal to:

          (a)  [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of a Product
containing IGF-1 for a particular indication in any country where the Product 
has Market Exclusivity for that indication; and

          (b)  [CONFIDENTIAL TREATMENT REQUESTED] of the Net Sales of a Product
containing IGF-1 for a particular indication in any country where the Product 
does not have Market Exclusivity for that indication; and

          (c)  in the case of any Product containing a Compound other than 
IGF-1, a reasonable royalty to be negotiated by the Collaborators in good 
faith (which shall be not less than [CONFIDENTIAL TREATMENT REQUESTED] of Net 
Sales), to be determined upon the request of either Collaborator but in no event
later than the first commercialization of a Product in the Royalty Territory.

     SECTION 8.2  ROYALTY RATE ADJUSTMENTS.

          (a)  The royalty rate payable under Section 8.1(a) shall be reduced 
by an equitable amount to be determined by the Management Committee with 
respect to a Product in a country in the Royalty Territory if a product 
containing the same Compound either (i) is being sold by a third party (other 
than a third party having rights through a Collaborator) in that country for 
the same indication, or (ii) is approved for an indication in that country 
covered by the patent used to establish Market

                               -34-

<PAGE>

Exclusivity for the indication in the same country and there is no other basis 
for establishing Market Exclusivity as to the Product indication in that 
country.

          (b)  The royalty rate payable under Section 8.1(b) for a particular 
country in the Royalty Territory shall be increased to the rate specified in 
Section 8.1(a) with respect to a Product in such country in the Royalty 
Territory if Cephalon can reasonably demonstrate that even without Market 
Exclusivity, there is no significant competition for the Product in that 
country with respect to the indication for which the Product received 
Regulatory Approval in the country. For purposes of this provision, 
"significant competition" means sales of a product by a third party or third 
parties (other than third parties authorized by a Collaborator under this 
Agreement) constitute more than [CONFIDENTIAL TREATMENT REQUESTED]

          (c)  If a royalty rate specified in Section 8.1 is such that Chiron, 
after paying such royalties, would not receive a fair return on sales of the 
Products because of market conditions outside of its control, Cephalon and 
Chiron shall meet and confer as to whether the royalty rates should be 
reduced to provide Chiron with a fair allocation of the economic 
benefits in the Royalty Territory. Conversely, if the royalty rates specified 
in Section 8.1 are such that the JV's share of profits from the royalties on 
sales of Products in the Royalty Territory is less than the share of profits 
anticipated by the parties as of the Effective Date, Cephalon and Chiron shall 
meet and confer as to whether the royalty rates should be increased to 
provide the JV with a fair allocation of the economic benefits in the Royalty 
Territory, but in no event shall any such increase exceed a royalty rate of 
[CONFIDENTIAL TREATMENT REQUESTED] of Net Sales. Any such adjustment may be made
on a country-by-country and Product-by-Product basis.

          (d)  The royalty rates payable by Chiron to the JV under Section 
8.1 shall be subject to increase to provide Cephalon with a share of 
Operating Profits of the JV that is sufficient to pay any royalty or other 
compensation Cephalon may owe CCP under an Amended and Restated Product 
Development Agreement dated as of August 11, 1992 (the "CCP Agreement"), in a 
country within the CCP Territory. For purposes of this clause (d), the term 
"CCP Territory" means the geographic area encompassed by the following 
countries on the date hereof: Albania, Andorra, Bulgaria, the Commonwealth of 
Independent States, Cyprus, Czechoslovakia, Gibraltar, Hungary, Iceland, 
Liechtenstein, Malta, Monaco, Poland, Romania, San Marino, Turkey and 
Yugoslavia. The term "CCP Territory" shall also include the geographic area 
encompassed by any of the republics that were formerly part of the U.S.S.R. 
and Yugoslavia, regardless of whether such republics are as of the date hereof 
members of the

                                    -35-

<PAGE>

Commonwealth of Independent States or Yugoslavia, as applicable. Chiron and 
Cephalon shall meet and confer as to whether the royalty rates payable by 
Chiron to the JV under Section 8.1 should be increased with respect to any 
country or Product to provide Cephalon with a share of Operating Profits of 
the JV that is sufficient to provide a fair return to Cephalon.

          (e)  The royalty rates under Section 8.1 also are subject to 
reduction under Sections 9.2 and 9.3 hereof.

     SECTION 8.3  ALLOCATIONS OF NET SALES IN THE ROYALTY TERRITORY.

          (a)  OFF-LABEL SALES.  If a Product of the Collaboration receives 
Regulatory Approval in the Royalty Territory prior to the receipt by Chiron 
(or its licensee or joint development partner) of Regulatory Approval in the 
Royalty Territory of a product containing the same Compound as the Product 
for an indication outside the Field, then all sales of such Product used for 
any indication (whether inside or outside the Field) in the Royalty Territory 
shall be included in the Net Sales used to calculate the royalty payable by 
Chiron pursuant to Section 8.1. Notwithstanding the foregoing, [CONFIDENTIAL 
TREATMENT REQUESTED] All sales of the Product used in any indication outside 
the Field (according to market reports accepted in the industry) in a country 
in the Royalty Territory shall be excluded for purposes of calculating the 
royalty payable by Chiron pursuant to Section 8.1 in such country when Chiron
(or its licensee or joint development partner) receives Regulatory Approval 
for an indication outside the Field for such Product either in such country 
itself or in any country in the Major Markets, whichever occurs first.

          (b)  SALES FOR DIABETES.  The portion of Net Sales in any country in 
the Royalty Territory that is deemed to be sales of an IGF-1 Product for 
diabetic neuropathy in such country shall be determined in accordance with 
Section 6.2(b).

     SECTION 8.4  THIRD PARTY ROYALTIES.  Chiron shall be responsible for any 
royalties or other compensation owed by either Collaborator under the 
agreements specified on SCHEDULE IV to any third party as a result of 
Chiron's commercialization of Products in the Royalty Territory including, 
without limitation, compensation payable pursuant to the CIBA Agreement and 
pursuant to the SIBIA Rights. Notwithstanding the foregoing: (i) Cephalon 
shall be responsible for any royalties owed by it pursuant to the CCP 
Agreement, (ii) Chiron may offset royalties

                                 -36-


<PAGE>

payable to certain third parties to the extent provided in Section 9.2(e), 
and (iii) Chiron may include in the determination of Net Sales subject to 
royalty under Section 8.1, a deduction for any royalty payable to a third 
party in any country in the Royalty Territory under any license or similar 
agreement that has been approved by the Management Committee under Section 
5.9, but in no event shall the total deductions for such royalties reduce the 
royalty payment by more than 50% in the aggregate.

   SECTION 8.5  PAYMENT OF ROYALTIES. Royalties payable to the JV under 
Section 8.1 shall be due within sixty (60) days after the end of the Calendar 
Quarter in which Net Sales were recorded by Chiron.

   SECTION 8.6  REPORTS. Unless otherwise agreed by Cephalon and Chiron, 
Chiron shall deliver to the JV within sixty (60) days after the end of each 
Calendar Quarter in which royalties are due a report of the chief financial 
officer of Chiron, setting forth in reasonable detail the calculation of the 
royalties payable to the JV for such Calendar Quarter, including the Net 
Sales on a Product by Product and country-by-country basis. In addition, 
within ninety (90) days after the close of each calendar year, Chiron, upon 
Cephalon's request, shall cause its independent public accountants to prepare 
a report confirming the procedures performed in reviewing the accuracy of the 
aggregate Net Sales and calculation of royalties payable to the JV under 
Section 8.1 for that calendar year. Cephalon shall reimburse Chiron for the 
reasonable costs of such review.

   SECTION 8.7  CURRENCY RESTRICTIONS. If Chiron is prevented from making any 
royalty payment to the JV under this Agreement by virtue of restrictions on 
currency conversion or repatriation under the statutes, laws, codes or 
governmental regulations of the country from which the payment is to be made, 
then such royalty payments may be paid by depositing them in the currency in 
which accrued to the JV's account in a bank acceptable to the JV in the 
country whose currency is involved.

   SECTION 8.8  TAXES. All taxes, assessments and fees of any nature levied or 
incurred on account of any payments accruing under this Agreement by 
national, state or local governments in the Royalty Territory, will be 
assumed and paid by Chiron, except taxes levied thereon as income to the JV. 
If taxes payable by the JV are required to be withheld by Chiron, they will 
be deducted from such payments due to the JV and will be paid by Chiron for 
the account of the JV.

                                      -37-
<PAGE>

                         PART IV - GENERAL PROVISIONS

                  ARTICLE 9 - INTELLECTUAL PROPERTY MATTERS

   SECTION 9.1  INTELLECTUAL PROPERTY PROTECTIONS.

      (a) CONTROL. Each Collaborator shall be responsible for and shall have 
the right to control the prosecution, maintenance, reissue, reexamination, 
renewal and extension of the patent applications, issued patents and 
Trademarks included in the intellectual property in the Territory licensed by 
it to the other Collaborator or to the JV pursuant to Article 5 hereof. Each 
Collaborator, upon reasonable request, shall report to the Management 
Committee the status of any such activities and shall furnish copies of any 
correspondence, file wrappers, office actions and such other documents as the 
Management Committee shall reasonably require to monitor the activities in 
the Territory. If a Collaborator elects not to continue the prosecution of 
any application, reissue, reexamination, renewal or extension or to pay any 
maintenance fee related to any such intellectual property right, it shall 
notify the Management Committee of such decision at least thirty (30) days in 
advance of the due date for such action or payment, and the other 
Collaborator shall have the right, but not the obligation, to assume 
responsibility therefor. Cephalon shall be responsible for coordinating its 
activities with CCP and Chiron shall be responsible for coordinating its 
activities with CIBA.

      (b) COOPERATION. Each Collaborator shall cooperate with the other 
Collaborator to facilitate the activities under paragraph (a) above, 
including, without limitation, executing all lawful papers and instruments 
and making all rightful oaths and declarations as may be necessary in the 
preparation and prosecution of the patent applications, issued patents, 
Trademarks and other rights included in the JV Technology or in the transfer 
of any prosecution obligations under Section 9.1(a).

      (c) ALLOWABLE EXPENSES. The Costs incurred by a Collaborator under this 
Section 9.1 shall be an Allowable Expense to the extent approved by the 
Management Committee as attributable to the Products in the Major Markets. 
The Costs incurred by a Collaborator that are attributable to the Products in 
the Royalty Territory shall be borne by the Collaborator.

   SECTION 9.2  DEFENSE OF INFRINGEMENT CLAIMS.

      (a) NOTICE. If a claim is asserted against Chiron, Cephalon or the JV 
by a third party alleging infringement of the third party's intellectual 
property rights resulting from the development, manufacture, use or sale of a 
Product in the 

                                      -38-
<PAGE>

Territory, it shall promptly notify the other parties of such claim.

      (b) DEFENSE OF CLAIM. The Collaborator against whom the claim has been 
made shall control the defense of a claim attributable to the Products in the 
Major Markets. Chiron shall be obligated to defend Cephalon and to control 
the defense of a claim asserted in the Royalty Territory.

      (c) COSTS AND JUDGMENTS IN THE MAJOR MARKETS. The reasonable Costs 
(including any judgments or monetary damages awarded in an action) incurred 
by a Collaborator in defending an infringement claim shall be an Allowable 
Expense to the extent approved by the Management Committee as attributable to 
the Products in the Major Markets.

      (d) COSTS AND JUDGMENTS IN THE ROYALTY TERRITORY. Chiron shall pay its 
out-of-pocket costs (including attorneys' fees) of defending a claim 
attributable to the Products in the Royalty Territory, except that Chiron 
may apply 100% of its reasonable out-of-pocket costs actually incurred 
(including reasonable attorneys' fees) as a credit against any royalty 
payments payable to the JV under Section 8.1 hereof. If any damages 
(excluding punitive or exemplary damages) awarded against Chiron in a 
judgment or order related to such claim are stated to be compensation to the 
plaintiff for lost sales, 50% of such amount, to the extent not covered by 
insurance, may be offset against the royalties payable under Section 8.1. If 
Chiron licenses intellectual property rights to settle such claim in a 
settlement that has been approved by Cephalon, Chiron may reduce the 
royalties payable under Section 8.1 by 50% of the royalty payable to the 
third party.

   SECTION 9.3  PROSECUTION OF THIRD PARTY INFRINGEMENTS.

      (a) NOTICE. Cephalon and Chiron shall promptly give written notice to 
the other party and to the Management Committee of any infringement or 
possible infringement of any of the JV Technology by a third party in the 
Territory.

      (b) CONTROL OF PROSECUTION IN THE MAJOR MARKETS. The Collaborator 
owning the infringed technology right may, at its discretion, take such steps 
as it deems necessary or desirable to prosecute any such infringement 
attributable to Products in the Major Markets. If the Collaborator owning the 
technology right does not bring suit or take other appropriate action within 
120 days after receiving notice of such claim, the JV (or the Collaborator, 
if the JV so elects) shall have the right, but not the obligation, to bring 
suit or take other appropriate action with respect to the infringed right. 
If the right consists of a joint invention or other JV Technology not owned 
solely by a 

                                      -39-
<PAGE>

Collaborator, the Management Committee shall determine the appropriate 
procedures for handling the alleged infringement.

          (c) COSTS AND RECOVERIES IN THE MAJOR MARKETS.  All monetary 
damages awarded in any action against a third party under paragraph (b) that 
are attributable to a Product within the Major Markets shall be treated as Net 
Sales of the Collaboration in the calculation of Operating Profits. The JV 
may retain 100% of any recovery in any proceeding brought by it, except that 
any recovery explicitly attributable to a subject matter other than the 
Products shall be remitted to the Collaborator who owns the technology right 
at issue.

          (d)  CONTROL OF PROSECUTION IN THE ROYALTY TERRITORY.  The JV, 
through the Management Committee, shall have the right, but not the 
obligation, to control the prosecution of an infringement claim attributable 
to the Products in the Royalty Territory. If within forty-five (45) days after 
receiving notice of such claim, the JV informs Chiron that it declines to 
prosecute any such claim, Chiron shall have the right, but not the 
obligation, to bring the claim.

          (e)  COSTS AND RECOVERIES IN THE ROYALTY TERRITORY.  The 
prosecuting party shall pay its out-of-pocket costs (including attorneys' 
fees) of prosecuting the claim and shall be entitled to retain any award in 
such action, except that if Chiron prosecutes the claim, it shall pay the JV 
a royalty under Section 8.1 as to any portion of an award it receives that is 
stated to be compensation for lost sales (after deducting a proportionate share 
of Chiron's legal costs and expenses attributable to the award).

     SECTION 9.4  JOINDER.  Any party prosecuting or defending a claim under 
this Article 9 shall have the right to join the other party in such 
proceeding, only if it is necessary to use the other party's name to prosecute 
or defend such action; however, the prosecuting party shall indemnify the 
joined party against any liabilities asserted against the joined party solely 
by virtue of being named in the prosecution and independent of any conduct by 
the joined party.

     SECTION 9.5  SETTLEMENT OF CLAIMS.  Neither Collaborator may settle a 
claim described in this Article 9 without the consent of the other 
Collaborator, if such settlement would impose any monetary obligation on the 
JV or the other Collaborator or require the JV or the other Collaborator to 
submit to an injunction or otherwise limit the JV's or the other 
Collaborator's rights under this Agreement.

     SECTION 9.6  COOPERATION.  In conducting the defense or prosecution of 
any claim described in this Article 9, Cephalon and Chiron shall consult with 
and keep the Management Committee

                               - 40 -

<PAGE>

informed of the status of the action. Upon reasonable request, the JV and the 
Collaborators shall assist the person or persons controlling the defense or 
prosecution of an infringement claim, the Costs of which shall be an 
Allowable Expense to the extent attributable to the Products in the Major 
Markets. In addition, any Collaborator or the JV may protect its interests in 
such matter by participating in the proceeding, through attorneys of its 
choice, the Costs of which shall not be an Allowable Expense.

     SECTION 9.7  TRADEMARK MATTERS.

          (a)  TRADEMARKS IN MAJOR MARKETS.  Subject to Section 4.6, the 
Marketing Committee shall approve the Trademarks to be used for each Product 
in the Major Markets.

          (b)  TRADEMARKS IN ROYALTY TERRITORY.  Chiron's selection of 
Trademarks for Products in the Royalty Territory is subject to Section 7.2 
hereof. Chiron agrees that any rights arising to it from the use of the 
Trademarks in the Royalty Territory and any goodwill related thereto shall 
inure to the benefit of the JV to the extent it is the same or substantially 
similar to a Trademark used in the Major Markets for the corresponding 
Product.

          (c)  TRADEMARK PROTECTIONS.  Subject to Section 4.6, the Marketing 
Committee shall establish procedures and restrictions on use of the 
Trademarks for Products in the Territory to be observed by the JV and the 
Collaborators to ensure maintenance of the Trademarks in accordance with good 
trademark practice.

          (d)  OWNERSHIP.  Subject to Section 4.6, all Trademarks for Products 
in the Territory created after the Effective Date shall be deemed Joint 
Technology and may be used by a Collaborator with a product containing the 
corresponding Compound outside the Field or outside the Territory, subject 
to the rights of Kyowa Hakko under the applicable Cephalon Agreement.

          (e)  NO CONTEST.  To the extent permitted by applicable law, 
neither Collaborator shall, during the term of this Agreement, contest the 
other Collaborator's ownership of the Trademarks licensed to the JV under 
this Agreement or take any action adverse to the ownership of such Trademarks 
by the other Collaborator or its successors or assigns.

          (f)  INSPECTION RIGHTS.  The JV and each Collaborator shall have 
the right, upon reasonable notice and during normal business hours, to 
inspect the relevant facilities of the other Collaborator to ensure 
compliance by the other Collaborator with this Section 9.7. Any such 
inspection shall be subject to the confidentiality obligations of the 
inspecting party under Article 12 hereof.

                                  - 41 -

<PAGE>

                    ARTICLE 10 - PAYMENTS AND RECORDS

     SECTION 10.1  PAYMENTS.

          (a)  PLACE OF PAYMENT.  All payments to a Collaborator or the JV 
under this Agreement shall be made by wire transfer in immediately available 
funds in legal currency of the United States to the account designated in 
writing by each Collaborator or the JV, as applicable, from time to time.

          (b)  CURRENCY CONVERSION.  Any amount received in a currency other 
than U.S. dollars shall be converted into U.S. dollars using the average 
for the month in which the amount was received of the composite conversion 
rate for each business day in such month of the non-U.S. currency into U.S. 
dollars as reported in the BLOOMBERG FINANCIAL MARKETS, COMMODITIES & NEWS (or 
any mutually acceptable successor thereto).

          (c)  LATE PAYMENT.  Payments hereunder shall be deemed paid as of 
the day on which they are received at the account designated pursuant to 
paragraph (a) above. Any payment which is not paid within fourteen (14) days 
after the date when due shall accrue interest thereon from such date until 
the date of its payment in full at one (1) percentage point over the per 
annum interest rate published as the Prime Rate as reported in the BLOOMBERG 
FINANCIAL MARKETS, COMMODITIES & NEWS (or any mutually acceptable successor 
thereto), but in no event shall such rate exceed the maximum rate permitted 
by applicable law.

     SECTION 10.2  BOOKS AND RECORDS; ACCOUNTING.

          (a)  MAINTENANCE OF RECORDS.  The Collaborators and Chiron, on 
behalf of the JV shall maintain complete and accurate books of account in 
accordance with generally accepted accounting principles and the principles 
specified in Schedule V hereto, consistently applied, in sufficient detail to 
allow the calculation of Allowable Expenses and Operating Profits under 
Article 6 and the calculation of royalties under Article 8 to be verified. 
The Collaborators and the JV shall retain such records for so long as the 
Management Committee shall specify, and, in the event of a disagreement as to 
the necessity of retention, or upon the dissolution of the JV, either 
Collaborator may take possession of such records or copies thereof.

          (b)  ACCESS AND INSPECTION.  The Collaborators shall have 
reasonable access to the books and records of the JV while in the possession 
of the JV, and each Collaborator, at its own expense (which shall not be an 
Allowable Expense) and upon reasonable prior notice, shall have the right to 
have such books and records examined and audited by outside auditors. Each 
Collaborator shall make its relevant books and records available

                              - 42 -

<PAGE>


for inspection and audit by the independent accountant of the JV or of the 
other Collaborator, at the expense of the inspecting party (which shall not 
be an Allowable Expense), not more than once each calendar year, upon 
reasonable prior notice and during normal business hours. Any inspection of 
the JV's or a Collaborator's books and records shall be conducted subject to 
the confidentiality obligations under Article 12 hereof.


                    ARTICLE 11 - CERTAIN REGULATORY MATTERS

             SECTION 11.1 GOVERNMENTAL INSPECTIONS AND INQUIRIES

         (a) Each Collaborator shall advise the Management Committee of any 
governmental visits to, or written or oral inquiries about, any facilities or 
procedures for the manufacture, storage or handling of a Product in the 
Territory, promptly (but in no event later than fifteen (15) calendar days) 
after such visit or inquiry. Each Collaborator shall furnish to the Management 
Committee, within fifteen (15) days after receipt, a copy of any report or 
correspondence issued by the governmental authority in connection with such 
visit or inquiry, purged only of confidential or proprietary 
information that is unrelated to the Products or the activities under this
Agreement.

         (b) Each Collaborator also shall advise the other Collaborator of 
any inquiry, notice or investigation initiated or made by any governmental 
authority relating to the promotion, advertisement, marketing or sale of the 
Products or any of its other activities under this Agreement.  The 
Collaborators shall cooperate and consult with each other in responding to 
the governmental authority.

    SECTION 11.2 ADVERSE REACTIONS.  The Development Committee shall 
establish procedures by which each Collaborator will receive notice from the 
other Collaborator and the JV, and will report to the JV and the other 
Collaborator, any adverse drug reactions related to a Product (including 
events related to products containing the same active ingredient as 
Products outside the Field and/or outside the Territory). The procedures shall 
be established by the Development Committee promptly after the Effective Date. 
Until such procedures ard approved, each Collaborator shall use its customary 
procedures in complying with the reporting requirements of applicable law and 
shall promptly furnish a written copy of any such report to the other 
Collaborator. Prior to the establishment of the JV, Cephalon shall serve as 
the reporting party for adverse events related to the Products.

     SECTION 11.3 RECALLS AND MARKET WITHDRAWALS. If at any time (i) any 
governmental or regulatory authority issues a request, directive, or order 
that a Product be recalled or


                                     -43-


<PAGE>


withdrawn, or (ii) a court of competent jurisdiction orders such a recall or 
withdrawal in a Major Market, or (iii) the Management Committee determines 
that a Product should be recalled in a Major Market, the parties shall take 
all appropriate corrective actions to effect the recall or withdrawal. If a 
dispute about the necessity of a recall can not be resolved in accordance 
with Section 15.1 hereof, either Collaborator may order a recall (without 
proceeding to arbitration under Section 15.2) if in its reasonable judgment 
it is required to do so by law. The cost and expenses of notification and 
destruction or return of the recalled or withdrawn Product in a Major Market 
shall be an Allowable Expense.

                      ARTICLE 12 - CONFIDENTIALITY, ETC.

     SECTION 12.1 CONFIDENTIALITY.

          (a) INFORMATION RECEIVED FROM OTHER PARTY. Each Collaborator (a 
"Recipient") will keep in confidence any confidential or proprietary 
information (the "Confidential Information") received from the other 
Collaborator (the "Furnishing Party"), whether furnished before or after 
the Effective Date. The foregoing obligations shall not apply to, and the 
definition of "Confidential Information" does not include:

              (i) information that at the time of the use or disclosure by 
    the Recipient was already in the public domain other than through the 
    fault of the Recipient or its employees, licensees, agents or 
    subcontractors, in violation hereof;

              (ii) information that was rightfully known by the Recipient (as
    shown by its written records) prior to the date of disclosure by the 
    Furnishing Party to the Recipient in connection with this Agreement; or

              (iii) information that was received by the Recipient on an 
    unrestricted basis from a source under no duty of confidentiality to the
    Furnishing Party; or

              (iv) information that Recipient believes in good faith is
    required to be disclosed to comply with any applicable law, regulation or
    order of a government authority of court of competent jurisdiction 
    (including any securities laws applicable to a Collaborator), in which 
    event the disclosing party shall use all reasonable efforts to advise the
    other Collaborator in advance of the need for such disclosure; or


                                     -44-


<PAGE>


              (v) information that is independently developed by the 
    Recipient without reliance on the Confidential Information.

Notwithstanding the foregoing, it is understood that each Collaborator may 
disclose Confidential Information to its employees, licensees, consultants, 
contractors and agents if such persons are subject in writing to obligations 
of confidentiality with respect to such information to the same extent the 
Collaborator is so obligated hereunder.

    INFORMATION DEVELOPED FOR COLLABORATION. Information in the Field 
that is developed by a Collaborator in the conduct of a specific objective or 
activity under a Development Plan and which would be proprietary to the 
Collaborator shall be treated as Confidential Information by both 
Collaborators. Any disclosure or publication of such information shall be 
subject to the approval of the Management Committee (which approval shall not 
be unreasonably withheld). A Collaborator shall not be obligated to treat any 
other information developed by it (whether before or during the Collaboration)
as Confidential Information.

    SECTION 12.2 INJUNCTIVE RELIEF. Each Collaborator acknowledges that damages 
for breach of the covenants contained in Section 12.1 would be an inadequate 
remedy, and that in the event of any such breach, the other Collaborator 
shall be entitled to seek injunctive or other equitable relief in addition to 
any and all remedies available at law or in equity, including the recovery of 
damages and reasonable attorneys' fees.

    SECTION 12.3 PUBLICITY. The Collaborators shall consult with each other 
and coordinate all press releases and similar public announcements by the 
Collaborator concerning the existence and terms of this Agreement and the 
activities and progress of the Collaboration.  The Collaborators shall not 
disclose the confidential terms of such agreements to any third parties 
without the prior written consent of the other party or parties thereto. This 
Section 12.3 shall not apply to the extent that any disclosure is (a) of 
information in the public domain other than through the fault of the 
Collaborator or its employees, licensees, agents or subcontractors, in 
violation hereof, (b) believed in good faith to be required to comply with 
any applicable law, regulation or order of a government authority of court of 
competent jurisdiction (including any securities laws applicable to a 
Collaborator), in which event the disclosing party shall use all reasonable 
efforts to advise the other Collaborator in advance of the need for such 
disclosure, or (c) is made, under confidentiality, to a recipient who is a 
licensor, licensee or potential licensor or licensee and to whom such 
disclosure is reasonably required to define the scope of rights


                                     -45-


<PAGE>


which could be granted to the recipient without violating the terms of this 
Agreement.

         ARTICLE 13 - CERTAIN REPRESENTATIONS, WARRANTIES AND COVENANTS

     SECTION 13.1  CORPORATE STATUS AND AUTHORITY.  Each Collaborator 
represents to the other that as of the date hereof:

     (a)  it is a corporation duly organized, validly existing and in good 
standing under the laws of the jurisdiction of its incorporation;

     (b)  it has the corporate power and authority to execute, deliver and 
perform this Agreement;

     (c)  the execution, delivery and performance of this Agreement has been 
duly authorized by all necessary corporate action on the part of each 
Collaborator and the Agreement is binding and enforceable in accordance 
with its terms;

     (d)  the execution, delivery and performance of this Agreement by such 
party (i) does not conflict with, or constitute a breach or default under its 
Certificate of Incorporation, bylaws, or any law, order, judgment or 
governmental rule or regulation applicable to it, and (ii) does not conflict 
with, or constitute a breach or default under or require any consent or 
approval not obtained under, any provision of any material agreement, 
contract, commitment or instrument to which it is a party;

     (e)  to its knowledge, it owns all patents, know-how and other 
intellectual property rights included as of the Effective Date in its license 
to the other Collaborator under Section 5.1 hereof, except for rights 
licensed from or granted to third parties under the agreements listed on 
SCHEDULE I hereof;

     (f)  to its knowledge, it is not required to obtain the consent or 
approval of any third party to perform its obligations under this Agreement, 
or to license or transfer such rights to the other Collaborator or to the JV 
as contemplated under this Agreement; and

     (g)  in the case of Chiron, to its knowledge and except as disclosed 
to Cephalon in writing, it owns all patents, knowhow and other intellectual 
property rights required for use in the manufacture of the Products, except 
for the rights specified on SCHEDULE I hereto, which are licensed by 
Chiron from the third parties specified therein, and it has not received any 
notice from a third party indicating that the manufacture of Products by 
Chiron would infringe any intellectual property rights of any third party.

                                      -46-

<PAGE>

      SECTION 13.2  NO INCONSISTENT AGREEMENTS.  Neither Collaborator shall 
enter into any oral or written agreement after the date hereof that would be 
inconsistent with its obligations under this Agreement or deprive the other 
Collaborator of the benefits of the Collaboration in any substantial respect.

           ARTICLE 14 -- DISCLAIMER, INDEMNIFICATION AND INSURANCE

      SECTION 14.1  NO WARRANTY.  EXCEPT AS EXPRESSLY SET FORTH IN ARTICLE 8 
HEREOF, NEITHER COLLABORATOR MAKES ANY EXPRESS OR IMPLIED WARRANTIES, 
STATUTORY OR OTHERWISE, CONCERNING THE PRODUCTS OR THE TECHNOLOGY LICENSED BY 
IT TO THE OTHER COLLABORATOR OR TO THE JV, NOR DOES THE JV MAKES ANY EXPRESS 
OR IMPLIED WARRANTIES, STATUTORY OR OTHERWISE, CONCERNING THE JV TECHNOLOGY, 
THE PRODUCTS OR ANY INFORMATION LICENSED TO A COLLABORATOR UNDER THIS 
AGREEMENT. WITHOUT LIMITING THE FOREGOING, NEITHER COLLABORATOR NOR THE JV 
MAKES ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY, FITNESS FOR A 
PARTICULAR PURPOSE OR OTHERWISE, QUALITY OR USEFULNESS OF THE JV TECHNOLOGY 
OR THE PRODUCTS.

      SECTION 14.2  DEFENSE OF CLAIMS IN TERRITORY.  Except as provided in 
Article 9 hereof, each Collaborator and the JV shall be responsible for 
defending itself against any liabilities, losses, costs, damages and expenses 
(including reasonable attorneys' fees and costs) (collectively, 
"Liabilities") resulting from a claim asserted by a third party arising out 
of the manufacture, marketing, sale or use of a Product in the Territory, 
including, without limitation, any claim in the nature of product liability 
(whether under theories of strict liability, negligence, breach of warranty 
or otherwise). If any such claim is asserted against both Collaborators 
and/or the JV, the Management Committee shall control the defense of the 
claim.

      SECTION 14.3  COSTS AND EXPENSES.

          (a)  MAJOR MARKETS.  Except as provided in Article 9 hereof, the 
Costs (including any judgments or monetary damages awarded in an action) 
incurred by the Collaborators or the JV in defending against any claim 
described in Section 14.2 shall be an Allowable Expense to the extent 
attributable to the Products in the Major Markets, unless the claim is caused 
by: (i) the breach by the Collaborator or the JV of any covenant, 
representation or warranty contained in this Agreement, or (ii) any act or 
omission constituting gross negligence or willful misconduct by the 
Collaborator or the JV in the development, manufacturing, labelling, 
promotion, marketing or sale of a Product or any other activity conducted by 
it under this Agreement (each, an "Excluded Liability").

                                      -47-


<PAGE>

          (b)  ROYALTY TERRITORY.  Except as provided in Article 9 hereof, 
the Costs (including any judgments or monetary damages awarded in an action) 
incurred by the Collaborators or the JV in defending against any claim 
described in Section 14.2 shall be borne by the defending party (and shall 
not be an Allowable Expense) to the extent attributable to the Products in 
the Royalty Territory, unless the claim constitutes an Excluded Liability of 
the other Collaborator, in which case the defending party may seek indemnity 
from the other Collaborator under Section 14.4 hereof.

      SECTION 14.4  INDEMNITY FOR EXCLUDED LIABILITIES.  Each Collaborator 
and the JV (as such, an "Indemnifying Party") shall indemnify, defend and 
hold harmless the other Collaborator and the JV and its and their employees, 
officers, directors and agents (as such, an "Indemnified Party") from and 
against any Liabilities which the Indemnified Party may incur, suffer or be 
required to pay resulting from or arising in connection with (i) any Excluded 
Liability of the Indemnifying Party, (ii) any breach by the Indemnifying 
Party of any agreement listed on SCHEDULE I to which it or an Affiliate is a 
party, or (iii) the successful enforcement by an Indemnified Party of any of 
the foregoing.

      SECTION 14.5  PROCEDURES FOR INDEMNIFICATION. The obligations of the 
Indemnifying Party under this Article 14 are conditioned upon the delivery of 
written notice to the Indemnifying Party of any potential Liability, promptly 
after the Indemnified Party becomes aware of such potential Liability. The 
Indemnifying Party shall have the right to assume the defense of any suit or 
claim related to the Liability if it has assumed responsibility for the 
Liability in writing. If the Indemnifying Party defends the suit or claim, 
the Indemnified Party may participate in (but not control) the defense 
thereof, at its sole cost and expense (which shall not be an Allowable 
Expense).

      SECTION 14.6  SETTLEMENTS, ETC.  Neither Collaborator may settle a 
claim or action under this Article 14 without the consent of the other 
Collaborator, if such settlement would impose any monetary obligation on the 
JV or the other Collaborator or require the JV or the other Collaborator to 
submit to an injunction or otherwise limit the other party's rights under 
this Agreement.

      SECTION 14.7  LIMITATION OF LIABILITY.  With respect to any claim by 
one party against the other arising out of the performance or failure of 
performance of the other party under this Agreement, the liability of one 
party to the other party for such breach shall be limited under this 
Agreement or otherwise at law or equity to direct damages only; in no event 
shall a party be liable to the other party for indirect, incidental or 
consequential damages including, without limitation, lost profits.

                                      -48-

<PAGE>

   SECTION 14.8 INSURANCE. The Management Committee shall determine from time 
to time the types and amount of insurance coverage, if any, to be maintained 
by the JV and by each Collaborator to insure against the activities of the 
Collaborators and the Collaboration. The Costs incurred by a Collaborator in 
maintaining any insurance policy at the direction of the Management Committee 
shall be an Allowable Expense to the extent authorized by the Management 
Committee as attributable to its activities with respect to Products in the 
Major Markets and otherwise shall be the responsibility of the Collaborator.

                        ARTICLE 15 - DISPUTE RESOLUTION

      SECTION 15.1 DISPUTE RESOLUTION. If any dispute arises under this 
Agreement which can not be resolved expeditiously by the Management Committee 
after due consideration, the matter shall be submitted to the Chairman of 
Chiron and the Chief Executive Officer of Cephalon for resolution. If the two 
executives can not resolve the dispute to their mutual satisfaction within 
thirty (30) days, the dispute shall be referred to arbitration under Section 
15.2 below.

      SECTION 15.2 ARBITRATION.

      (a) Except as provided in subsection (d) hereof, all disputes arising 
between Cephalon and Chiron under this Agreement that have not been resolved 
pursuant to Section 15.1 shall be settled by arbitration conducted in the 
English language in accordance with the procedures of the Commercial Rules of 
the American Arbitration Association, before a panel of three arbitrators, 
one of whom is selected by Cephalon, one of whom is selected by Chiron, and 
one of whom is selected by Cephalon and Chiron (or by the other two 
arbitrators, if the parties cannot agree). The parties shall request an 
expedited hearing for any dispute related to a nonpayment hereunder, and 
shall otherwise cooperate with each other in causing the arbitration to be 
held in as efficient and expeditious a manner as practicable. Any arbitration 
proceeding instituted by a Collaborator shall be brought in the principal 
place of business of the defending party.

      (b) Any award rendered by the arbitrators shall be binding upon the 
parties hereto and shall be final, subject to review by a court of competent 
jurisdiction under the statutory standard of review applicable to 
arbitrations. Judgment upon the award may be entered in any court of record 
of competent jurisdiction.

      (c) Each party shall pay its own expenses of arbitration and the 
expenses of the arbitrators shall be equally shared unless otherwise ordered 
by the arbitrators.

                                     -49-
<PAGE>

      (d) Notwithstanding anything contained in this Section 15.2, each party 
shall have the right to institute judicial proceedings against the other 
party or anyone acting by, through or under such other party in order to (i) 
enforce the instituting party's rights hereunder through specific 
performance, injunction or similar equitable relief, or (ii) enforce its 
rights under Article 12 hereof.

                      ARTICLE 16 - TERM AND TERMINATION

   SECTION 16.1 TERM. This Agreement shall commence as of the Effective Date 
and shall continue until the last sale of a Product in the Territory pursuant 
to Article 4 or Article 7, unless terminated earlier in accordance with this 
Article 16.

   SECTION 16.2 TERMINATION OF AGREEMENT IN FULL.

      (a) TERMINATION FOR COMMERCIAL FAILURE. This Agreement may be 
terminated in full by either Collaborator, upon 180 calendar days written 
notice to the other Collaborator, if in the good faith conclusion of the 
terminating Collaborator, there is no reasonable, objective basis for further 
development of any Product within the Field. The terminated Collaborator 
shall, at its election, be a "Continuing Licensee" for purposes of Section 
16.5(b) hereof.

      (b) TERMINATION UPON BREACH. This Agreement may be terminated in full 
by either Collaborator upon material breach by the other Collaborator of any 
covenant, representation or warranty of this Agreement such that the 
non-breaching party is denied in a substantial respect the economic benefit 
of this Agreement and such breach is not substantially cured within sixty 
(60) calendar days after the non-breaching Collaborator gives the breaching 
Collaborator written notice of such breach. The terminating Collaborator 
shall, at its election, be a "Continuing Licensee" for purposes of Section 
16.5(b) hereof.

      (c) TERMINATION BY MUTUAL AGREEMENT. This Agreement may be terminated 
in whole or in part at any time by mutual written agreement of the 
Collaborators.

      SECTION 16.3 ACTIONS UPON CHANGE OF CONTROL. If either Collaborator 
experiences one or more of the following events (a "Change of Control"):

            (i) any person or group (other than a Collaborator or a group 
      including a Collaborator) becomes after the date hereof (whether by
      tender or exchange offer or otherwise) the beneficial owner, directly or
      indirectly, of securities of the Collaborator representing 50% or more

                                     -50-
<PAGE>

      of the combined voting power of such Collaborator's then outstanding 
      voting securities;

            (ii) the membership of the Collaborator's Board of Directors 
      changes as a result of one or more contested elections within a two 
      year period such that individuals who were members of such Board prior 
      to any such contested election no longer make up a majority of such 
      Board; or

            (iii) stockholders of the Collaborator approve a merger, plan of
      consolidation, the sale or disposition of all or substantially all of 
      such Collaborator's assets, or a plan of partial or complete liquidation
      of such Collaborator;

then the Collaborator experiencing the Change of Control shall promptly 
furnish the other Collaborator with written notice describing such event 
(reasonably in advance of such event, if possible, but in no event later than 
ten (10) days after such event).

   SECTION 16.4 PARTIAL TERMINATION IN ROYALTY TERRITORY.  Chiron may 
terminate its rights in any country in the Royalty Territory, in whole or as 
to any Product, without cause, upon 180 days written notice to the JV.

   SECTION  16.5 RIGHTS AND OBLIGATIONS ON TERMINATION.

   (a) BALANCING. Upon termination of this Agreement pursuant to Section 
16.2, the Collaborators shall balance any remaining deficiency in the equal 
funding of Allowable Expenses between the parties in a transaction (such as a 
purchase of assets) that is mutually acceptable to the parties and, at the 
option of the Collaborator balancing the deficiency, does not result in a 
current charge to the earnings of such Collaborator.

   (b) RIGHTS OF A CONTINUING LICENSEE.

            (I) SURVIVING LICENSES. A Collaborator who is a Continuing 
      Licensee may elect to have the applicable licenses granted to it or to 
      the JV under Article 5 convert into an exclusive license to the 
      Continuing Licensee, which shall survive termination of this Agreement 
      until the Continuing Licensee ceases to develop or commercialize 
      Products. The other Collaborator shall transfer to the Continuing 
      Licensee, upon request, all Confidential Information necessary or 
      useful for the manufacture, use or sale of the applicable Product in 
      its possession. In addition, the Continuing Licensee may elect to cause 
      the other Collaborator and the JV to transfer all Regulatory Approvals, 
      Pricing Approvals, marketing approvals, customer lists, contracts, 
      information or any other right that is necessary or useful for the 
      development, manufacture, use,

                                     -51-
<PAGE>

marketing or sale of the applicable Product or Products. The other 
Collaborator shall take such steps as are reasonably required to transfer all 
such approvals, contracts, information and rights to enable the Continuing 
Licensee to assume the business of developing, marketing and selling the 
applicable Product or Products.

     (ii) SUPPLY OF PRODUCTS. If the Continuing Licensee is not supplying 
any of the applicable Product or Products under this Agreement, it may either 
require the other party to continue to supply the applicable Product or 
Products, upon the terms and for the period described below, or cause the 
other party to transfer the required technology to the Continuing Licensee.

     If a Continuing Licensee elects to require the other party to continue 
to supply Products, it shall pay the supplying party, on a quarterly basis, 
an amount equal to [CONFIDENTIAL TREATMENT REQUESTED] for all Products 
continued to be supplied hereunder. The supplying party shall only be 
obligated to supply Products for a reasonable transition period, which period 
shall not exceed [CONFIDENTIAL TREATMENT REQUESTED] from the date that the 
Collaborator elects to become a Continuing Licensee. The Continuing Licensee
shall use all commercially reasonable efforts to identify a replacement 
manufacturer or establish a manufacturing facility for the Products in a 
timely manner. The supplying party shall take such steps as are reasonably 
required to enable the Continuing Licensee to assume the business of producing
the Products. If for any reason the supplying party is not legally permitted 
to transfer the necessary technology or rights to the Continuing Licensee for 
these purposes, the supplying party will continue to provide the applicable 
Product or Products under this Agreement or to otherwise make available to the
Continuing Licensee the benefits of this Section 16.4, pursuant to 
commercially reasonable terms to be mutually agreed upon by the parties. Any 
amounts owed by the Continuing Licensee for Product supply under this 
Agreement shall be set off against the amount, if any, of unbalanced 
Allowable Expenses of the Continuing Licensee existing as of the effective 
termination date of this Agreement.

    If a Continuing Licensee elects to cause a transfer of the required 
technology to manufacture Products, the transferring party shall take such 
steps as are reasonably required to enable the Continuing Licensee to 
manufacture (or have manufactured) the Products, including, without 
limitation, by providing to the Continuing Licensee: (x) all manufacturing 
information and descriptions of the applicable technology and processes in 
sufficient detail to permit the manufacture of the Products in commercial 
quantities in an efficient manner; (y) samples of all organisms or 
other biological material used in producing such Products; and (z) training 
of personnel as may be


                                        -52-

<PAGE>

necessary to permit the manufacture of the Products. The Continuing Licensee 
shall pay the transferring party a royalty on sales of Products at a rate to 
be negotiated by the parties in good faith at the time of such license, but 
shall not be more than [CONFIDENTIAL TREATMENT REQUESTED] of the royalties 
payable by Chiron under Article 8 hereof.

     (c) NON-COMPETE. A Collaborator that is not a Continuing Licensee shall 
refrain from selling Products in the Field in the Territory and shall 
refrain from participating, directly or indirectly, in any business, 
partnership, collaboration, license arrangement or other enterprise engaged 
in the business of the development, manufacture, marketing, use, distribution 
or sale of Products in the Field and in the Territory for a period of five 
(5) years after the termination date.

    (d) ROYALTY TERRITORY.

        (i) Cephalon shall have the right to assume Chiron's rights and 
     obligations as to any country or Product in the Royalty Territory upon 
     any termination of such country or Product under Section 16.4. However,
     no such assumption by Cephalon shall operate as waiver of or otherwise 
     extinguish Chiron's obligations for liabilities accrued prior to the 
     termination date. Chiron shall cooperate with Cephalon to allow Cephalon
     to conduct its business under this Agreement in a timely manner, including
     taking such steps as are reasonably required to allow Cephalon to obtain 
     supplies of Products for purposes of this Agreement. 

        (ii) Upon termination of a country or Product in the Royalty Territory
     by Chiron pursuant to Section 16.4, Chiron shall promptly deliver to the 
     JV or Cephalon, as applicable, all promotional materials and other data, 
     information, test results, marketing information, customer lists and 
     records, distributor lists and records, and any other information under 
     Chiron's control that is related to the manufacture, marketing or sale of
     the applicable Product or Products in the applicable country or countries
     within the Royalty Territory. Chiron also shall promptly transfer any 
     Regulatory Approvals and Pricing Approvals for the applicable Product or 
     Products in the applicable country or countries in the Royalty Territory
     to the JV or Cephalon, as applicable, to the extent permitted by law.

        (iii) Chiron may sell remaining inventory and finished goods for a 
     Product or Products as to which Chiron has terminated pursuant to Section 
     16.4 for a period not to exceed six (6) months, subject to the royalty 
     obligations and other provisions of this Agreement. Any inventory of

                                    -53-


<PAGE>

     Product remaining at the end of such period shall be transferred 
     pursuant to the instructions of the JV or Cephalon, the costs of which 
     shall be borne by the JV or Cephalon, as applicable.


     SECTION 16.6 TERMINATION UPON CCP TRANSFER. If for any reason Cephalon, 
after consultation with Chiron, either elects not to exercise its right to 
purchase the limited partnership interests of CCP under the Purchase 
Agreement included in the Cephalon Agreements, or Cephalon's rights under 
this Agreement are transferred to CCP for any other reason (including breach 
under the terms of the applicable Cephalon Agreements), Cephalon may transfer 
its rights under this Agreement to CCP, unless either CCP or Chiron elects to 
terminate this Agreement, upon 90 days written notice of termination to the 
other. In the event of such termination, any license to a Continuing Licensee 
under Section 16.5 hereof also shall terminate, the Chiron Technology shall 
revert to Chiron and the Cephalon Technology shall revert to CCP, subject to 
the perpetual licenses under Section 5.1 hereof.

     SECTION 16.7 EFFECTIVE DATE OF TERMINATION. Unless otherwise provided 
herein, a termination notice pursuant to this Article 16 shall be effective 
on the date of delivery of written notice of termination to the other party 
hereto.

     SECTION 16.8 SURVIVAL. Neither Collaborator nor the JV shall be relieved 
of its obligations to pay any sums of money due or payable or accrued under 
this Agreement as of the date of such termination. All accounts between the 
Collaborators and the JV shall be settled in full within ninety (90) days 
following the termination of this Agreement under Section 16.2. Article 12, 
Section 16.5 and this Section 16.7 shall survive the termination of this 
Agreement. In addition, any provision required to interpret and enforce the 
parties rights and obligations under this Agreement also shall survive to the 
extent required for the full observation and performance of this Agreement in 
accordance with its terms.

    SECTION 16.9 REMEDIES NOT EXCLUSIVE. Termination by either Collaborator 
pursuant to this Article 16 shall not prejudice any other remedy that such 
party might have in law or equity with the exception, however, of claiming 
compensation for loss or damages resulting from such termination.


                            ARTICLE 17 - MISCELLANEOUS

     SECTION 17.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the 
entire understanding of the Collaborators with respect to the subject matter 
hereof and supersedes all previous verbal and written agreements, 
representations and warranties.

                                     -54-


<PAGE>

This Agreement may be released, waived or modified only by written agreement 
signed by the party against whom enforcement of any release, waiver, 
modification, or other change is sought.

     SECTION 17.2  REFERENCES TO CIBA.  All references to CIBA in this 
Agreement shall be effective for so long as CIBA has the right of first 
refusal to sell or promote products containing IGF-1 under the CIBA 
Agreement. If at any time CIBA ceases to have such right, all references to 
CIBA's rights and obligations under this Agreement shall be of no further 
force and effect.

     SECTION 17.3  FORCE MAJEURE.  Failure of any party to perform its 
obligations under this Agreement (except the obligation to make payments) 
shall not subject such party to any liability or place them in breach of any 
term or condition of this Agreement to the other party if such failure is 
caused by any cause beyond the reasonable control of such nonperforming 
party, including without limitation acts of God, fire, explosion, flood, 
drought, war, riot, sabotage, embargo, strikes or other labor trouble, 
failure in whole or in part of suppliers to deliver on schedule materials, 
equipment or machinery, interruption of or delay in transportation, a 
national health emergency or compliance with any order or regulation of any 
government entity acting with color of right.

      SECTION 17.4  NO INTERFERENCE WITH EXISTING BUSINESSES.  Each of Chiron 
and Cephalon acknowledges that the other party is engaged in the business of 
developing, manufacturing, marketing and selling products, including Products 
outside the Field and products other than Products within the Field. Nothing 
in this Agreement shall prevent either Collaborator from continuing to carry 
on its business or to enter into agreements with third parties except as 
expressly provided in Sections 4.6, 5.5 and 16.5(c) hereof.

      SECTION 17.5  COMPLIANCE WITH LAW.  Each Collaborator shall comply with 
all laws, rules and regulations which are material to the conduct of its 
activities under this Agreement.

      SECTION 17.6  WAIVER.  The failure of a party to enforce any breach or 
provision of this Agreement shall not constitute a continuing waiver of such 
breach or provision and such party may at any time thereafter act upon or 
enforce such breach or provision of this Agreement. Any waiver of breach 
executed by either party shall affect only the specific breach and shall not 
operate as a waiver of any subsequent or preceding breach.

      SECTION 17.7  NO ASSIGNMENT.  No Collaborator may sell, assign, pledge 
or otherwise dispose of all or any portion of its interest in the 
Collaboration or right thereto without the prior written consent of the other 
Collaborator, except that no such consent is required for any transfer to an 
Affiliate or to a 

                                      -55-

<PAGE>

successor to substantially all of the Collaborator's business. Subject to the 
foregoing, this Agreement shall inure to the benefit of and be binding upon 
the Collaborators and their respective permitted successors and assigns.

      SECTION 17.8  SEVERABILITY.  If any clause or provisions of this 
Agreement is declared invalid or unenforceable by a court of competent 
jurisdiction, such provision shall be severed and the remaining provisions of 
the Agreement shall continue in full force and effect. The parties shall use 
their best efforts to agree upon a valid and enforceable provision as a 
substitute for the severed provision, taking into account the intent of this 
Agreement.

      SECTION 17.9  NOTICES.  Any notice, request or other communication 
required to be given pursuant to the provisions of this Agreement shall be in 
writing and shall be deemed to be given when delivered in person or five days 
after being deposited in the United States mail, postage prepaid, certified, 
return receipt requested, or by overnight courier (return receipt requested), 
to the parties addressed as follows:

         (a)  If to Chiron to:

              Chiron Corporation
              4560 Horton Street
              Emeryville, California  94608
              Attn:  Office of the President
              Tel:  (510)  655-8730
              FAX:  (510)  654-5360

              With a copy to:

              Law Department
              Chiron Corporation
              Tel:  (510)  655-8730
              FAX:  (510)  654-5360

         (b)  If to Cephalon, to

              Cephalon, Inc.
              145 Brandywine Parkway
              West Chester, PA  19380
              Attn:  President
              Tel:  (215)  344-0200
              FAX:  (215)  344-7253

                                      -56-

<PAGE>
              With a copy to:

              Barbara S. Schilberg
              Morgan, Lewis & Bockius
              2000 One Logan Square
              Philadelphia, PA  19013
              Tel:  (215)  963-5000
              FAX:  (215)  963-5299

Either party may change its address or its FAX number by giving the other 
party written notice, delivered in accordance with this Section.

      SECTION 17.10  PRONOUNS.  All pronouns and any variations thereof shall 
be deemed to refer to the masculine, feminine, neuter, singular or plural, as 
the context may require.

      SECTION 17.11  FURTHER INSTRUMENTS.  Each Collaborator shall execute 
and deliver such further instruments and do such further reasonable acts and 
things as reasonably may be required to carry out the intent and purpose of 
this Agreement.

      SECTION 17.12  GOVERNING LAW.  The validity, performance, construction, 
and effect of this Agreement will be governed by the laws of the State of 
Delaware, without giving effect to conflict of law rules.

      SECTION 17.13  COUNTERPARTS.  This Agreement shall become binding when 
any one or more counterparts hereof, individually or taken together, bears 
the signature of each of the parties hereto. This Agreement may be executed 
in any number of counterparts, each of which shall be an original as against 
the party whose signature appears thereon, but all of which taken together 
shall constitute but one and the same instrument.

                                      -57-
<PAGE>

    IN WITNESS WHEREOF, each party has caused this Agreement to be signed by 
its duly authorized officer as of the date first above written.

CHIRON CORPORATION                        CEPHALON, INC.



By: /s/ William J. Rutter, Ph.D.          By: /s/ Frank Baldino, Jr.
    -------------------------------          --------------------------------
    Name: William J. Rutter, Ph.D.        Name:  Frank Baldino, Jr.
    Title: Chairman                       Title: President and Chief
                                                 Executive Officer

<PAGE>
                                  SCHEDULE I

                            THIRD PARTY AGREEMENTS




[CONFIDENTIAL TREATMENT REQUESTED]







                                      -59-

<PAGE>

  
[CONFIDENTIAL TREATMENT REQUESTED]





                                      -60-

<PAGE>
                                   SCHEDULE II

                                  FIELD EXCLUSION


[CONFIDENTIAL TREATMENT REQUESTED]


                                      -61-

<PAGE>
                                  SCHEDULE III

                                 SOD TECHNOLOGY


[CONFIDENTIAL TREATMENT REQUESTED]


                                      -62-
<PAGE>
                                 SCHEDULE IV

                            THIRD PARTY ROYALTIES



[CONFIDENTIAL TREATMENT REQUESTED]



                                     -63-

<PAGE>

                                   SCHEDULE V

                   DEVELOPMENT EXPENSES FOR TRANSITION PERIOD



[CONFIDENTIAL TREATMENT REQUESTED]




                                      -64-

<PAGE>

                                  SCHEDULE VI

                 ALLOWABLE EXPENSES AND ACCOUNTING PRINCIPLES

      To be prepared in accordance with Section 2.3(c).

                                      -65-

<PAGE>
                                  SCHEDULE VII

                         PREFERRED INDICATIONS OF CHIRON

[CONFIDENTIAL TREATMENT REQUESTED]


                                      -66-

<PAGE>
                                  SCHEDULE VIII

                          CEPHALON NONFIELD INDICATIONS

[CONFIDENTIAL TREATMENT REQUESTED]

                                      -67-

<PAGE>

                                                                Exhibit 10.206

                        [CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]


                           [Letterhead]


                                        January 13, 1995

VIA FEDERAL EXPRESS

Chiron Corporation
4560 Horton Street
Emeryville, CA  94608
Attention: William H. Green, Esq.

      Re:  COLLABORATION AGREEMENT

Gentlemen:

      This letter is intended to confirm certain mutual understandings in 
connection with the Agreement between Cephalon, Inc. and Chiron Corporation 
dated January 7, 1994 (the "Agreement") related to the joint development and 
commercialization of IGF-1 and other specified compounds. All capitalized 
terms not otherwise defined herein are used as defined in the Agreement.

1.    The 1994 budget of Allowable Expenses by Cephalon for the use of IGF-1 
      in the treatment of ALS has been approved by the Management Committee 
      in the form attached as EXHIBIT A to this letter.

2.    The 1994 budget of [CONFIDENTIAL TREATMENT REQUESTED] of Allowable 
      Expenses by Chiron for IGF-1 has been approved by the Management 
      Committee.

3.    Section 6.1 of the Agreement is amended to read in its entirety as 
      follows:

           "SECTION 6.1  SHARING OF OPERATING PROFITS AND LOSSES.  The 
           Operating Profits and Operating Losses from the Major Markets and 
           the Royalty Territory shall be shared equally by Cephalon and 
           Chiron, except (i) for the special allocation described in 
           Section 6.2(a) hereof, and (ii) Cephalon shall receive from the JV 
           a royalty of [CONFIDENTIAL TREATMENT REQUESTED] in the Major Markets
           in Europe (i.e., the EC and EFTA countries) of a Product containing
           IGF-1 for use in treating ALS, before Operating Profits and 
           Operating Losses are calculated."

<PAGE>

Chiron Corporation
January 13, 1995
Page 2

4.    Cephalon will be responsible for the Costs related to the IGF-1 program 
      that were incurred by Cephalon in 1994, as specified on EXHIBIT B 
      hereto, and for any other Costs related to the European ALS study that 
      are designated as non-Allowable Expenses in the 1995 budget to be 
      approved by the Management Committee (all of such Costs being referred 
      to as the ""Reimbursable Costs"). However, Cephalon shall be entitled 
      to make draws under the Line of Credit Note to fund one-half of the 
      Reimbursable Costs, not to exceed $10 million. The Line of Credit Note 
      is hereby amended to the extent required to permit such draws and is 
      further amended to extend the Maturity Date of the Note by one year, to 
      January 6, 2000.

5.    Chiron shall have no right to receive any of the Operating Profits from 
      Net Sales in the Major Markets in Europe of a Product containing IGF-1 
      for use in treating ALS, unless it elects to repurchase its rights by 
      reimbursing Cephalon for the Reimbursable Costs, by written notice to 
      Cephalon delivered at any time before the earlier of (i) filing by 
      Cephalon of the first request for regulatory approval to market a 
      product containing IGF-1 in a Major Market, or (ii) the Maturity Date 
      of the Line of Credit Note. To repurchase such rights, Chiron shall 
      reimburse Cephalon for 50% of the Reimbursable Costs, plus interest 
      accrued at [CONFIDENTIAL TREATMENT REQUESTED], compounded annually from
      the date the Reimbursable Cost was incurred. The reimbursement shall 
      be paid out of Chiron's share of Operating Profits in the Territory from
      Net Sales of a Product containing IGF-1 for use in treating ALS. All of 
      Chiron's share of Operating Profits in the Territory will be subject to 
      the reimbursement, on a dollar-for-dollar basis, until the Reimbursable 
      Costs, plus accrued interest, have been paid in full. All such 
      reimbursements shall be applied first, to pay accrued interest and second,
      to pay the principal of the Reimbursed Costs. Chiron may at any time 
      prepay the Reimbursable Costs, plus interest accrued to the date of 
      prepayment.

      If Chiron elects to reimburse the Reimbursable Costs, Cephalon shall 
      repay the outstanding principal of the Line of Credit Note related to 
      the draws used to fund the Reimbursable Costs in an amount equal to, and 
      concurrently with, each payment by Chiron of Reimbursable Costs. If 
      Chiron gives written notice of its election to repurchase such rights, 
      the Maturity Date of the Line of Credit Note shall automatically be 
      extended to the extent required to permit the payment by Cephalon of 
      such principal of the Note concurrently with reimbursement by Chiron of 
      the Reimbursable Costs.

<PAGE>

Chiron Corporation
January 13, 1995
Page 3

      If the foregoing accurately reflects your understanding as to these 
matters, please indicate your agreement in the space provided below.

                                       Very truly yours,

                                       /s/ Bruce A. Peacock

                                       Bruce A. Peacock
                                       Executive Vice President &
                                       Chief Operating Officer

Accepted and agreed to by:

CHIRON CORPORATION



By: /s/ William G. Green
        ----------------

cc:  Frank Baldino, Jr. Ph.D.
     Barbara S. Schiberg, Esq.


<PAGE>
                                                           EXHIBIT A


[CONFIDENTIAL TREATMENT REQUESTED]

<PAGE>

                                                           EXHIBIT B


[CONFIDENTIAL TREATMENT REQUESTED]

<PAGE>


                        [CONFIDENTIAL TREATMENT REQUESTED]

[Certain information has been omitted herein pursuant to a request for
confidential treatment pursuant to Rule 24b-2.]

                                                           Exhibit 10.85


                                              May 23, 1995

VIA FAX

Chiron Corporation
4560 Horton Street
Emeryville, CA  94606
Attention: William Green, Esq.

     Re:  AMENDMENT TO AGREEMENT

Gentlemen:

     This letter is to confirm our understanding as to certain matters under 
the Agreement dated January 7, 1994 between Caphalon, Inc. and Chiron 
Corporation, as amended (the "Agreement"). All terms not otherwise defined 
herein are used as defined in the Agreement.

     1.   If Chiron is not for any reason manufacturing on behalf of the 
Collaboration commercial supplies of a Product containing IGF-1, and Cephalon 
is manufacturing the Product, Cephalon will receive [CONFIDENTIAL TREATMENT
REQUESTED] of the Operating Profits from the Major Markets and the Royalty 
Territory, and Section 6.1 of the Agreement is hereby amended to add a new 
clause (iii) after the word 'except', which states in its entirety as follows:

     "(iii) if Chiron is not for any reason manufacturing on behalf of the 
     Collaboration commercial supplies of a Product containing IGF-1, 
     Cephalon will receive an additional [CONFIDENTIAL TREATMENT REQUESTED] of 
     the Operating Profits from the Major Markets and the Royalty Territory 
     attributable to Net Sales of any such Product that was manufactured by 
     Cephalon (the 'Manufacturing Premium') (i.e., for a total share of 
     [CONFIDENTIAL TREATMENT REQUESTED] of such Operating Profits)."

     2.   The payment by the Collaboration of Manufacturing Premium does not 
operate as a waiver of any party's rights or obligations under the Agreement, 
including Chiron's obligations to manufacture Products in accordance with the 
terms of the Agreement.

     3.  Chiron has elected not to participate in Cephalon's option to 
buy-down the royalty rate and license fees payable under a License Agreement 
dated March 6, 1992, as amended, between Cephalon and The Salk Institute of 
Biotechnology/Industrial Associates, Inc. ("SIBIA"). Even if Cephalon 
exercises its option to buy-down the SIBIA compensation, the Collaboration 
will nevertheless continue to be responsible for the full amount of the 
compensation (royalties and license fees) owed to SIBIA under the SIBIA 
License as in effect before such buy-down, to the extent such compensation 
results from the activities of the Collaboration. The payment of SIBIA

<PAGE>

Chiron Corporation
May 23, 1995
Page 2

compensation will be made to Cephalon, who will remit the appropriate amount 
to SIBIA. As an illustration, assuming that before the buy-down the royalty 
owed to SIBIA on sales of a Product in the Field is [CONFIDENTIAL TREATMENT
REQUESTED] and that Cephalon buys down [CONFIDENTIAL TREATMENT REQUESTED] of 
the SIBIA royalty, the Collaboration will pay Cephalon the [CONFIDENTIAL
TREATMENT REQUESTED] royalty and Cephalon will remit the [CONFIDENTIAL
TREATMENT REQUESTED] royalty to SIBIA.

     If the above accurately describes our understanding, please indicate your 
agreement in the space provided below.

                                                 Sincerely yours,


                                                 /s/ Bruce A. Peacock

                                                 Bruce A. Peacock
                                                 Executive Vice President and
                                                 Chief Operating Officer

Acknowledged and agreed to by:

CHIRON CORPORATION

By: /s/ William G. Green
   ----------------------------