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                                                                   EXHIBIT 10.17


                           RESEARCH FUNDING AGREEMENT

     This Agreement is effective as of January 11, 2000, by and between Baxter
Healthcare Corporation, a Delaware corporation, acting through its
CardioVascular Group, having offices at 17221 Red Hill Avenue, Irvine,
California 92614 (hereinafter referred to as "BAXTER") and Sangamo Biosciences,
Inc., a Delaware corporation, having an office at Point Richmond Tech Center,
501 Canal Blvd., Suite A100, Richmond, California 94840 (hereinafter referred to
as "SANGAMO").

                                    RECITALS

     WHEREAS, BAXTER and SANGAMO have entered into a License Agreement,
contemporaneously herewith (the "License Agreement"); and

     WHEREAS, SANGAMO wishes to undertake research relating to the further
development of its proprietary zinc finger binding protein and gene therapy
technology and BAXTER wishes to fund such research to facilitate SANGAMO's
ability to license such technology to BAXTER under the License Agreement;

     NOW, THEREFORE, the parties hereto agree as follows:

                             ARTICLE 1. Definitions

All terms used in this agreement (other than names of the parties and Article
headings) which are set forth in upper case letters, but not defined herein,
shall have the respective meanings set forth in the License Agreement.

                          ARTICLE 2. Research Activity

2.1  Research Program. The research program which is contemplated by this
Agreement is set forth in the research plan (the "Research Plan") attached as
Exhibit A. The Research Plan sets forth the research tasks and objectives to be
performed by SANGAMO. SANGAMO agrees to use its commercially reasonable efforts
consistent with international practice in the biotechnology industry, SANGAMO's
sound business judgment, and research, regulatory and market conditions, to
conduct the SPONSORED RESEARCH in accordance with the Research Plan in
consideration for the funding provided in Section 2.2.

2.2  Funding. BAXTER agrees to fund the SPONSORED RESEARCH as follows: (i) One
Million Dollars ($1,000,000) on or before January 21, 2000; and (ii) One
Million Dollars ($1,000,000) on the earlier of April 1, 2001, or the date on
which SANGAMO has fulfilled its obligations set forth in Clause 5.1(b) of the
License Agreement. If the parties mutually agree to extend the term of this
Agreement for additional research projects, the parties shall amend this

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Agreement to establish a mutually acceptable research plan, budget and payment
schedule for such extension; provided, however, that the budget and payment
schedule therefor shall be calculated on the basis of the reasonably
anticipated fully burdened cost to SANGAMO to perform the additional research
projects under the new research plan at rates not to exceed SANGAMO's then
standard FTE rate for performing similar research programs.

2.3  Evaluation of Research Plan. Within thirty (30) days after the end of each
calendar quarter during the term of the SPONSORED RESEARCH, SANGAMO shall
submit to BAXTER a written report describing any INVENTIONS conceived or
reduced to practice, and the progress of the SPONSORED RESEARCH, including
without limitation, a written report and analysis of all experimentation
conducted pursuant to performing the SPONSORED RESEARCH during such calendar
quarter. If the STEERING COMMITTEE determines pursuant to the LICENSE AGREEMENT
that modifications of the existing Research Plan are required, the Research Plan
will be amended as mutually agreed to in writing by the parties.

2.4  Exclusivity of Research. SANGAMO agrees that during the term of the
License Agreement it will not perform any research in the FIELD OF RESEARCH
similar to the SPONSORED RESEARCH for any other entity, nor assist any other
entity, in pursuing any work in the FIELD OF RESEARCH, without the written
approval of BAXTER.

2.5  Personnel Agreements. SANGAMO represents and warrants that it has
agreements with any individual employed to perform the SPONSORED RESEARCH under
this Agreement sufficient to procure and implement the rights and restrictions
granted and imposed by this Research Funding Agreement.

2.6  Access to Records. SANGAMO agrees to maintain and preserve the documents,
laboratory notebooks, graphs and charts and other original records and data
that result from the SPONSORED RESEARCH, and agrees to provide BAXTER access to
such records upon reasonable notice during normal business hours during the
term of this Agreement and the License Agreement solely for the purpose of
exercising its rights under the LICENSE AGREEMENT.

2.7  Compliance with Laws. SANGAMO agrees to comply in all material respects
with all applicable national and local laws of the jurisdiction wherein it
conducts business, including compliance at all times with applicable Good
Laboratory Practice guidelines as established by the FDA. SANGAMO further agrees
that any compensation it receives under this Agreement shall not be disbursed
for any purpose which is unlawful or unethical under those laws.

                           ARTICLE 3. Property Rights

3.1  Property Rights. Any and all INVENTIONS shall be owned by or otherwise
assigned to SANGAMO and licensed back to BAXTER pursuant to the terms of the
License Agreement. BAXTER agrees to assign to SANGAMO and hereby assigns any
and all of its rights to BAXTER INVENTIONS and to JOINT INVENTIONS, including
rights under the patent, copyright and other intellectual property laws of the
United States or any other country.


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3.2  Disclosure of INVENTIONS. SANGAMO and BAXTER shall disclose promptly to
each other such INVENTIONS within thirty (30) days of conceiving and/or
reducing to practice such INVENTIONS.

                        ARTICLE 4. Term and Termination

4.1  The term of this Agreement shall be three (3) years commencing on its
effective date and shall expire automatically unless sooner terminated in
accordance with this Article 4.

4.2  In addition to any rights it may have hereunder, a party may terminate
this Agreement upon (30) days prior written notice following the occurrence of
any of the following:

     (a)  the bankruptcy, insolvency, dissolution or winding up of the other
party (other than dissolution or winding up for the purposes of a solvent
reconstruction or amalgamation); or

     (b)  the failure of the other party to cure the breach of any provision of
this Agreement for the payment of funds within thirty (30) days after written
notice thereof by the non-breaching party; or

     (c)  the failure of the other party to cure the breach of any material
provision of this Agreement, except nonpayment of funds, within sixty (60) days
after written notice thereof by the non-breaching party.

4.3  Performance under this Agreement may be terminated by BAXTER upon one
hundred eighty (180) days prior written notice to SANGAMO. If circumstances
beyond SANGAMO's control preclude continuation of the SPONSORED RESEARCH,
SANGAMO may terminate this Agreement upon one hundred eighty (180) days prior
written notice to BAXTER, provided that SANGAMO explains its reasons for
terminating.

4.4  This Agreement automatically shall terminate upon termination of the
LICENSE AGREEMENT.

4.5  Upon termination of this Agreement pursuant to Section 4.2, SANGAMO agrees
that BAXTER's only obligation is to reimburse SANGAMO for all costs and
non-cancelable commitments incurred to date in the performance of the SPONSORED
RESEARCH, such reimbursements not to exceed the total amount specified in this
Agreement for the SPONSORED RESEARCH. SANGAMO acknowledges and agrees that it
will have no recourse against BAXTER for such termination beyond the described
reimbursements. Furthermore, SANGAMO agrees to be bound by the terms of Articles
3, 5, 6 and 7 in the event of the termination of this Agreement.

                           ARTICLE 5. Confidentiality

5.1  This Article 5 applies, except as otherwise provided in this Article 5,
during the term of this Agreement, and thereafter for a period of five (5)
years. Both SANGAMO and BAXTER shall maintain in confidence, not disclose to
any Third Party and use only for the purposes of this Agreement information and
data which is not generally known and which (a) results from the use or
development of the Technology and Inventions pursuant to this Agreement or the
License



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Agreement, or (b) is supplied by SANGAMO or BAXTER after April 13, 1999 in
connection with this Agreement or the License Agreement (or discussions leading
up to them) and is marked, identified or otherwise acknowledged to be
confidential ("Information").

5.2     To the extent it is reasonably necessary to fulfill their obligations
or exercise their rights pursuant to this Agreement, BAXTER and SANGAMO may
disclose Information they are otherwise obligated pursuant to this Article 5
not to disclose, to its Affiliates, its bona fide proposed sublicensees and
its permitted sublicensees, and shall limit disclosure of such Information to
its and their respective officers, directors, employees and consultants on a
need-to-know basis, in each case provided that such persons and entities
agree to keep the Information confidential for the same time periods and to
the same extent as the disclosing party is required to keep the Information
confidential. BAXTER and SANGAMO may also disclose such information to
government or other regulatory authorities to the extent that such disclosure
is required to be disclosed to obtain a patent or authorization to conduct a
clinical trial or to commercially market any product arising out of the
Technology or is otherwise required by applicable law, regulation or court
order, in each case provided that the disclosing party shall provide written
notice to the other party and sufficient opportunity to object to such
disclosure or to request confidential treatment thereof. The obligation not
to disclose Information shall not apply to any part of such Information that:

        (a)     is or becomes patented, published or otherwise part of the
public domain other than by acts of the person obligated not to disclose such
Information in contravention of this Agreement;

        (b)     is disclosed to the receiving party by a Third Party, provided
such Information was not obtained from such Third Party directly or indirectly
from SANGAMO or BAXTER (as the case may be);

        (c)     prior to disclosure pursuant to this Agreement, was already in
the possession of the receiving party, provided such Information was not
obtained directly or indirectly from SANGAMO or BAXTER (as the case may be);

        (d)     is developed independently of the Information obtained from
SANGAMO or BAXTER (as the case may be), by persons without access to or use of
the Information, as demonstrated by written evidence; or

        (e)     is disclosed by either SANGAMO or BAXTER with the prior written
consent of the other.

5.3     SANGAMO and BAXTER agree to not disclose the existence of or the
financial terms or conditions of this Agreement or the License Agreement to any
Third Party without the prior written consent of the other, except as required
by applicable law or regulatory authority.

5.4     Notwithstanding the provisions of Article 5, neither BAXTER nor SANGAMO
shall release any media release or other oral or written announcement for
dissemination to the media concerning or arising from this Agreement or the
License Agreement without the written consent of the other party.




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5.5  This Article 5 survives the termination of this Agreement.

                ARTICLE 6. Limitation of Liability and Indemnity

6.1  SANGAMO agrees to indemnify, hold harmless and defend BAXTER, its
directors, trustees, officers, employees and agents against any and all losses,
liabilities, damages and expenses (including reasonable attorneys' fees and
costs) incurred as a result of any Third Party claims, suits, demands, causes
of action or other proceedings to the extent arising out of SANGAMO's
performance of the Sponsored Research, except to the extent arising from the
negligence or willful misconduct of BAXTER, or its directors, officers,
employees, and agents.

6.2  BAXTER agrees to indemnify, hold harmless and defend SANGAMO, its
directors, trustees, officers, employees and agents, against any and all
losses, liabilities, damages and expenses (including reasonable attorneys' fees
and costs) incurred as a result of any Third Party claims, suits, demands,
causes of action or other proceedings to the extent arising out of the
negligence or willful misconduct of BAXTER, or its directors, officers,
employees and agents.

6.3  This Article 6 survives the termination of this Agreement.

                              ARTICLE 7. Insurance

7.1  SANGAMO shall maintain insurance, including product liability insurance,
with respect to its performance of the SPONSORED RESEARCH in such amount as is
customarily maintained in accordance with good practice for the
biopharmaceutical industry. SANGAMO shall maintain such insurance for so long
as it continues to conduct the SPONSORED RESEARCH, and thereafter for so long
as SANGAMO maintains insurance for itself covering such activities. The
liability insurance requirement of this Section may be satisfied through
self-insurance with reserves consistent with industry practices.

7.2  SANGAMO shall, upon the request of BAXTER:

     (a)  produce evidence of the currency of such insurance; and

     (b)  note the interest of BAXTER on the policy in respect of such
insurance.

                            ARTICLE 8. Miscellaneous

8.1  Any notice, demand, consent or other communication ("Notice") given or
made under this Agreement:

     (a)  must be in writing and signed by a person duly authorized by the
sender;

     (b)  must either be delivered to the intended recipient as follows:

          (i)  to Sangamo
               Biosciences, Inc.:       Point Richmond Tech Center
                                        501 Canal Blvd., Suite A 100
                                        Richmond, California 94840


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                                        Attention: President
                                        Fax No.: (510) 236-8951

          (ii) to Baxter Healthcare
               Corporation:             17221 Red Hill Avenue
                                        Irvine, California, 92614-5686
                                        Attention: Group Vice President
                                        CardioVascular Group
                                        Fax No.: (949) 250-6850

     (c)  will be effective upon receipt by the intended recipient.

8.2  This Agreement and the License Agreement contain the entire agreement
between the parties with respect to its subject matter and supersede all prior
agreements and understandings between the parties in connection with them.

8.3  No amendment or variation of this Agreement is valid or binding on a party
unless made in writing executed by all parties.

8.4  Except as provided in this Section 8.4, neither BAXTER nor SANGAMO may
assign or otherwise transfer this Agreement or any of its rights or obligations
herein without the prior written consent of the other party, which consent
shall not be unreasonably withheld.

     (a)  Either party may assign this Agreement together with the License
Agreement, the Convertible Debenture Purchase Agreement and the Convertible
Debenture, without the prior written consent of the other party in connection
with the sale or transfer of all or substantially all of its stock or assets to
which this Agreement relates, by merger, divestiture, spin-off or similar
transaction, provided that such assignee undertakes in writing to be bound by
all the terms and conditions in this Agreement and the other party is notified
within thirty (30) days of such assignment taking place; and

     (b)  SANGAMO and BAXTER may assign this Agreement together with the
License Agreement, the Convertible Debenture Purchase Agreement and the
Convertible Debenture to an Affiliate provided that such Affiliate undertakes
to be bound by the terms and conditions of this Agreement.

8.5  No failure to exercise nor any delay in exercising an right, power or
remedy by a party operates as a continuing waiver. A single or partial exercise
of any right, power or remedy does not preclude any other or further exercise
of that or any other right, power or remedy. A waiver is not valid or binding
on the party granting the waiver unless made in writing.

8.6  Each party agrees to do all things and execute all deeds, instruments,
transfers or other documents as may be necessary or desirable to give full
effect to the provisions of this Agreement and the transactions contemplated by
it.

8.7  This Agreement does not constitute an employer/employee relationship,
partnership of any kind, an association or trust between the parties, each party
being individually responsible only for its obligations as set out in this
Agreement and in addition the parties agree that their



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relationship is one of independent contractors. BAXTER is not authorized or
empowered to act as agent on behalf of SANGAMO and BAXTER shall not on behalf
of SANGAMO enter into any contract, warranty or representation as to any
matter. SANGAMO shall not be bound by the acts or conduct of BAXTER. SANGAMO is
not authorized or empowered to act as agent on behalf of BAXTER and SANGAMO
shall not enter any contract, warranty or representations as to any matter on
behalf of BAXTER. BAXTER shall not be bound by the acts or conduct of SANGAMO.

8.8  This Agreement is governed by the laws of the State of California, USA.

8.9  This Agreement may be executed in any number of counterparts. All
counterparts together will be taken to constitute one instrument.

8.10 In the event of any delay in performance by either party of any of its
obligations or liabilities pursuant to this Agreement to the extent due to any
cause arising from or attributable to acts, events, non-happenings, omissions,
accidents or acts of God beyond the reasonable control of the party to perform
(including but not limited to strikes, lock-outs, shortage of labor, civil
commotion, riot, war, threat of or preparation for war, breaking off of
diplomatic relations, fire, explosion, sabotage, storm, flood, earthquake, fog,
subsidence, pestilence, epidemics, computer system or machinery breakdown,
failure of plant, collapse of structures, voluntary or mandatory compliance with
any direction, request or order of any person having or appearing to have
authority whether for defense or other governmental or national purposes, or any
requisition for materials or services apparently or stated to be used for the
purposes of defense, inability to obtain suitable raw material, equipment, fuel,
power, components or transportation), the party so delayed or prevented will be
under no liability for loss or injury suffered by the other party and any such
delay or failure to perform will not constitute a breach of this Agreement to
the extent due to such cause, provided that the party so delayed uses
commercially reasonable efforts to remedy the effect of such cause.

     IN WITNESS THEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

BAXTER HEALTHCARE CORPORATION                  SANGAMO BIOSCIENCES, INC.
CARDIOVASCULAR GROUP

By: /s/ J. H. Kehl, Jr.                        By: /s/ Edward O. Lanphier
   --------------------------------               ------------------------------

        VP Business Development
Title:  Cardiovascular Group                   Title:  President & CEO
      -----------------------------                  ---------------------------

Date:     1/10/2000                            Date:     1/7/2000
     ------------------------------                 ----------------------------


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