<PAGE>
 

The symbol "**" is used throughout this exhibit to indicate that a portion of
the exhibit has been omitted and filed separately with the Commission.

                                  Exhibit 10.44
                                  -------------

                        RELEASE AND SETTLEMENT AGREEMENT

          This Release and Settlement Agreement (the "Agreement"), dated March
26, 1997 (the "Effective Date"), is made by and among CELL GENESYS, INC., a
Delaware corporation ("Cell Genesys"), ABGENIX, INC., a Delaware corporation and
subsidiary of Cell Genesys ("Abgenix"), XENOTECH, L.P., a California limited
partnership ("Xenotech"), JAPAN TOBACCO INC., a Japanese corporation ("Japan
Tobacco"), and GENPHARM INTERNATIONAL, INC., a California corporation
("GenPharm").  Cell Genesys, Abgenix, Japan Tobacco, Xenotech and GenPharm are
referred to collectively as the "Parties."


                                    RECITALS

                                        
          WHEREAS, Cell Genesys, Abgenix, Xenotech and Japan Tobacco, on the one
hand, and GenPharm, on the other hand, each desires to settle any and all claims
and, as part of that settlement, will enter into a patent cross-license.

          NOW THEREFORE, for and in consideration of the covenants, conditions
and undertakings hereunder set forth, it is agreed by and among the Parties as
follows:


1.   CONSIDERATION.  Simultaneously with the execution of this Agreement:
<PAGE>
 
     1.1  Cross License Agreement.  The Parties are entering into a patent cross
          -----------------------                                               
license in the form attached hereto as Exhibit A.


     1.2  Sublicense Agreement. GenPharm and Cell Genesys are entering into a
          --------------------                                               
sublicense agreement in the cell mediated therapy field in the form attached
hereto as Exhibit B.


     1.3  Dismissal of Infringement Actions.  GenPharm is delivering to Abgenix,
          ---------------------------------                                     
for filing with the United States District Court for the Northern District of
California, executed requests in the form attached hereto as Exhibit C for
dismissal with prejudice of the suit filed by GenPharm against Abgenix in the
United States District Court for the Northern District of California on October
24, 1996 (Case No. C-96-3861 CW, styled GenPharm International, Inc. v. Abgenix,
                                        ----------------------------------------
Inc.) and the suit filed by GenPharm against Abgenix in the United States
----                                                                     
District Court for the Northern District of California on January 7, 1997 (Case
No. C-97-0058 CW, styled GenPharm International, Inc. v. Abgenix, Inc.).  Each
                         ---------------------------------------------        
party shall bear its own costs.


     1.4  Dismissal of Antitrust Appeal.  GenPharm is delivering to Cell Genesys
          -----------------------------                                         
and Japan Tobacco by delivery to O'Melveny & Myers for filing, promptly upon
receipt of the payments under Section 1.6 of this Agreement and Section 3.1 of
the Cross License Agreement, with the United States Court of Appeals for the
Ninth Circuit, an executed agreement in the form attached hereto as Exhibit D
for the dismissal with prejudice of the

                                       2
<PAGE>
 
appeal currently pending before the United States Court of Appeals for the Ninth
Circuit (Docket No. 97-15108) of the dismissal by the United States District
Court for the Northern District of California of the suit filed by GenPharm
against Cell Genesys and Japan Tobacco  (Case No. C-96-0487 CW, styled GenPharm
                                                                       --------
International, Inc. v. Japan Tobacco Inc., et al.).  Each party shall bear its
-------------------------------------------------                             
own costs.


     1.5  Interference Settlement Procedure Agreement.  The Parties are entering
          -------------------------------------------                           
into an agreement regarding potential interference proceedings in the United
States, the terms of which are attached hereto as Exhibit E.


     1.6  Payment.  In partial consideration of this Agreement, Japan Tobacco
          -------                                                            
will pay GenPharm [**] within fifteen business days of the Effective Date of
this Agreement. Time shall be of the essence with respect to the time period for
this payment. Upon payment, GenPharm shall promptly provide a written
acknowledgment thereof to Japan Tobacco.


     1.7  No Deduction or Set-off, etc.  All payments under Section 1.6 shall be
          ----------------------------                                          
made without any set-off and without deduction whatsoever for or on account of
any non-United States taxes or similar governmental charges or costs of
transfer.

[**] Confidential Treatment Requested

                                       3
<PAGE>
 
2.   RELEASES.


     2.1  GenPharm's Release.  GenPharm hereby releases Cell Genesys, Abgenix,
          ------------------                                                  
Xenotech and Japan Tobacco, and their successors and assigns, parents,
subsidiaries, divisions, affiliated corporations, directors, officers,
shareholders, agents, representatives, employees, consultants and attorneys,
past and present, and each of them, from all claims, duties, obligations or
causes of action, known or unknown, suspected or unsuspected, concealed or not,
arising prior to the date of this Agreement.  This release includes, but is not
limited to, claims for damages, equitable relief, costs and fees related to
allegations of patent infringement, trade secret misappropriation, unfair
business practices, abuse of process, malicious prosecution, breach of contract,
and violation of federal or state antitrust laws.  This release shall, at
GenPharm's option, be void nunc pro tunc, if, by fifteen business days following
                           ---- --- ----                                        
the Effective Date, the payments provided in Section 1.6 of this Agreement and
Section 3.1 of the Cross License Agreement have not been made.  Time shall be of
the essence with respect to the time period for these payments.


     2.2  Cell Genesys' and Abgenix' Release.  Cell Genesys and Abgenix hereby
          ----------------------------------                                  
each releases GenPharm, and its successors and assigns, parents, subsidiaries,
divisions, affiliated corporations, directors, officers, shareholders, agents,
representatives, employees, consultants and attorneys, past and

                                       4
<PAGE>
 
present, and each of them, from all claims, duties, obligations or causes of
action, known or unknown, suspected or unsuspected, concealed or not, arising
prior to the date of this Agreement.  This release includes, but is not limited
to, claims for damages, equitable relief, costs and fees related to allegations
of patent infringement, trade secret misappropriation, unfair business
practices, abuse of process, malicious prosecution, breach of contract, and
violation of federal or state antitrust laws.


     2.3  Xenotech's Release.  Xenotech hereby releases GenPharm, and its
          ------------------                                             
successors and assigns, parents, subsidiaries, divisions, affiliated
corporations, directors, officers, shareholders, agents, representatives,
employees, consultants and attorneys, past and present, and each of them, from
all claims, duties, obligations or causes of action, known or unknown, suspected
or unsuspected, concealed or not, arising prior to the date of this Agreement.
This release includes, but is not limited to, claims for damages, equitable
relief, costs and fees related to allegations of patent infringement, trade
secret misappropriation, unfair business practices, abuse of process, malicious
prosecution, breach of contract, and violation of federal or state antitrust
laws.


     2.4  Japan Tobacco's Release.  Japan Tobacco hereby releases GenPharm, and
          -----------------------                                              
its successors and assigns, parents, subsidiaries, divisions, affiliated
corporations, directors, officers, shareholders, agents, representatives,
employees, consultants and

                                       5
<PAGE>
 
attorneys, past and present, and each of them, from all claims, duties,
obligations or causes of action, known or unknown, suspected or unsuspected,
concealed or not, arising prior to the date of this Agreement. This release
includes, but is not limited to, claims for damages, equitable relief, costs and
fees related to allegations of patent infringement, trade secret
misappropriation, unfair business practices, abuse of process, malicious
prosecution, breach of contract, and violation of federal or state antitrust
laws.


     2.5  Civil Code (S) 1542.  In order to make the releases set forth in
          -------------------                                             
Sections 2.1, 2.2, 2.3 and 2.4 hereof effective as to unknown, unsuspected or
concealed claims, Cell Genesys, Abgenix, GenPharm, Xenotech and Japan Tobacco
each expressly waives the benefits of California Civil Code (S) 1542:


          A general release does not extend to claims which the creditor does
          not know or suspect to exist in his favor at the time of executing the
          release, which if known by him must have materially affected his
          settlement with the debtor.


Cell Genesys, Abgenix, GenPharm, Xenotech and Japan Tobacco have each been
advised by their respective legal counsel and understand the significance of
this waiver of California Civil Code (S) 1542 relating to unknown, unsuspected
and concealed claims.

                                       6
<PAGE>
 
3.   SETTLEMENT; NO ADMISSION.  This Agreement in part constitutes a settlement
of disputed claims.  By entering into this Agreement and documents referred to
in Article 1 hereof, none of the Parties admits any wrongdoing, liability or the
merit or lack of merit of any claims or defenses arising from or in connection
with any past or pending litigation between or among any of the Parties.  The
Parties agree that this Agreement and documents referred to in Article 1 hereof
shall not be offered or used as evidence of liability nor as an admission of
liability, responsibility or wrongdoing, at any time in any proceeding
whatsoever.


4.   CONFIDENTIALITY; PUBLICITY.


     4.1  Japan Tobacco, Abgenix, Xenotech and Cell Genesys, on the one hand,
and GenPharm, on the other hand, each agree that it will make no assertion of
wrongdoing against the other in connection with any claim released hereunder,
notwithstanding the allegations set forth in any past or pending litigation
between or among any of the Parties.


     4.2  The Parties shall keep the terms of this Agreement confidential except
where disclosure is required by law, legal process or tax purposes or where the
disclosure is made pursuant to an undertaking or understanding of
confidentiality.

                                       7
<PAGE>
 
     4.3  Each of the Parties agrees that, if it chooses to make a public
announcment of this Agreement, it shall issue at a coordinated time the joint
announcement attached hereto as Exhibit F.  The Parties agree, and agree to
cause their directors, officers and attorneys, not to make any statements to the
media inconsistent with the joint announcement and the undertaking set forth in
Section 4.1 above.


     4.4  The Parties agree that nothing herein shall limit the discretion of
any Party to give references with respect to the activities of its employees,
past or present.  No breach, or alleged breach, of any provision of Section 3 or
this Section 4 shall be deemed to be so material a breach of this Agreement, or
of any of the documents being executed contemporaneously herewith, as to provide
a basis for termination or cancellation of this Agreement, or of any of the
documents being executed contemporaneously herewith, or of any part of any of
them.  No Party shall have the right of setoff by reason of any breach, or
alleged breach, of any provision of Section 3 or this Section 4.


     4.5  Notwithstanding anything in this Section 4, each Party may disclose to
its shareholders (and its directors may disclose to the general and limited
partners of investment funds that are shareholders of such Party, if applicable)
the payments to be made by the Parties under this Agreement and the documents
that are referred to in Article 1 hereof and the exhibits to such documents, the
contingencies and other material terms with

                                       8
<PAGE>
 
respect to future payments described in Section 3.2 of the Cross License
Agreement, and the terms of the convertible subordinated promissory note of Cell
Genesys, as well as any other information disclosed publicly by any of the other
Parties, including disclosures to public shareholders or in publicly available
government filings.


5.   NOTICE.  Any notice required or permitted to be given to the Parties hereto
shall be given in writing and shall be deemed to have been properly given if
delivered in person or when received if mailed by first class certified mail to
the other party at the appropriate address as set forth below or to such other
addresses as may be designated in writing by the parties from time to time
during the term of this Agreement.


     Xenotech:                Xenotech, L.P.
                              7601 Dumbarton Circle
                              Fremont, CA  94555
                              Attn: Chief Financial Officer

     Japan Tobacco Inc.:      Japan Tobacco Inc.
                              JT Building
                              2-1 Toranomon 2-chome
                              Minato-ku, Tokyo 105
                              Japan
                              Attn: Vice President,
                              Pharmaceutical Division

     with a copy to:          JT America Inc.
                              1825 South Grant Street, Suite 220
                              San Mateo, CA 94402
                              Attn: President

                                       9
<PAGE>
 
     and to:                  Gilbert, Segall and Young LLP
                              430 Park Avenue
                              New York, NY  10022
                              Attn:  Neal N. Beaton, Esq.

     Cell Genesys, Inc.:      Cell Genesys, Inc.
                              342 Lakeside Drive
                              Foster City, California 94404
                              Attn: President and CEO

     with a copy to:          O'Melveny & Myers
                              275 Battery Street
                              San Francisco, California 94111
                              Attn:  George A. Riley, Esq.

     Abgenix, Inc.            Abgenix, Inc.
                              7601 Dumbarton Circle
                              Fremont, CA  94555
                              Attn:  President and CEO
 
     with a copy to:          O'Melveny & Myers
                              275 Battery Street
                              San Francisco, California 94111
                              Attn:  George A. Riley, Esq.

     GenPharm International,  GenPharm International, Inc.
      Inc.                    855 California Ave., Suite C
                              Palo Alto, CA  94304
                              Attn:  CEO

6.   MISCELLANEOUS.

     6.1  No Prior Transfer.  Each of the Parties  represents and warrants that
          -----------------                                                    
they have not previously transferred any claim released in this Agreement.


     6.2  Complete Agreement; Amendments.  This Agreement, together with the
          ------------------------------                                    
Exhibits hereto, is complete.  There are no warranties, representations,
agreements or understandings not set forth in it.  Any prior negotiations,
statements, representations or agreements that are inconsistent with any
provision in this

                                       10
<PAGE>
 
Agreement are merged into and superseded by this Agreement, and neither
GenPharm, Japan Tobacco, Cell Genesys, Xenotech nor Abgenix has relied on any
representation or promise, oral or otherwise, which is not set forth in this
Agreement.  This Agreement may only be amended, modified, waived or terminated
by a writing signed and delivered by authorized representatives of each of the
Parties, which writing specifically refers to this Agreement.


     6.3  Counterparts.  This Agreement may be executed in one or more
          ------------                                                
counterparts, each of which shall be deemed an original.


     6.4  Governing Law.  This Agreement is to be governed by and construed
          -------------                                                    
under the laws of the State of California, without regard to conflicts of law
principles.


     6.5  Attorneys' Fees.  Each Party shall bear its own costs, including
          ---------------                                                 
attorneys' fees incurred in the negotiation and execution of this Agreement.


     6.6  Heirs, Successors and Assigns.  This Agreement shall be binding upon
          -----------------------------                                       
and inure to the benefit of the heirs, successors, representatives and permitted
assigns of the Parties.


     6.7  No Party Drafter.  The Parties each warrant, represent and agree that,
          ----------------                                                      
in executing and delivering this Agreement, it has done so freely and
voluntarily, with independent legal advice

                                       11
<PAGE>
 
from its attorneys, and that this Agreement shall not be construed against any
Party on the basis that such Party drafted it.


     6.8  Severable.  In the event that any provision of this Agreement becomes,
          ---------                                                             
or is declared by a court of competent jurisdiction to be, illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision and the Parties shall discuss in good faith appropriate
revised arrangements.


     6.9  Authority to Execute.  This Agreement and all documents, certificates
          --------------------                                                 
and instruments executed or to be executed by GenPharm, Japan Tobacco, Abgenix,
Xenotech or Cell Genesys in furtherance of the transactions contemplated by this
Agreement have been or will be duly authorized, executed and delivered by the
applicable Party.


     6.10 Authorization.  GenPharm, Japan Tobacco, Abgenix, Xenotech and Cell
          -------------                                                      
Genesys each represents and warrants that it has the full right, power and
authority to execute and perform this Agreement on its own behalf.

                                       12
<PAGE>
 
     IN WITNESS WHEREOF, the Parties have executed this Agreement, their
respective officers hereunto duly authorized, as of the day and year first above
written.

CELL GENESYS, INC.                  JAPAN TOBACCO, INC.


By: /s/ Stephen A. Sherwin          By: /s/ Masakazu Kakei
   ------------------------------      ----------------------------

Name: Stephen A. Sherwin            Name: Masakazu Kakei
     ----------------------------        --------------------------
Title: Chairman & CEO               Title: Managing Director, Pharmaceutical 
      ---------------------------          Business
                                           ---------------------------------


ABGENIX, INC.                       GENPHARM INTERNATIONAL, INC.


By: /s/ R. Scott Greer              By: /s/ Jonathan MacQuitty
   ------------------------------      ----------------------------

Name: R. Scott Greer                Name: Jonathan MacQuitty
     ----------------------------        --------------------------
Title: President & CEO              Title: CEO
      ---------------------------         -------------------------



XENOTECH, L.P.
BY:      XENOTECH, INC.
         ITS GENERAL PARTNER


By: /s/ Raymond M. Withy            By: /s/ Takashi Kamiya
   ------------------------------      ----------------------------

Name: Raymond M. Withy             Name:  Takashi Kamiya
     ----------------------------        --------------------------
Title: Chairman                    Title:  President & CEO
      ---------------------------         -------------------------



Approved as to form:

O'MELVENY & MYERS, LLP              GILBERT, SEGALL AND YOUNG LLP


By: /s/ George Riley                By: /s/ Neal N. Beaton
   ------------------------------      ----------------------------
   Attorneys for                       Attorneys for Japan
   Cell Genesys, Inc. and              Tobacco Inc.
   Abgenix, Inc.


LASKY, HAAS & COHLER, P.C.


By: /s/ Charles B. Cohler  
   _______________________
     Attorneys for GenPharm
     International, Inc.

                                       13