<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

                       DEVELOPMENT AND LICENSE AGREEMENT

THIS DEVELOPMENT AND LICENSE AGREEMENT (the "Agreement") is made the 25th day
of January, 2000, by and between TITAN PHARMACEUTICALS, INC., a corporation
organized and existing under the laws of the State of Delaware and having its
principal place of business at 400 Oyster Point Boulevard, Suite 505, South
San Francisco, California 94080, U.S.A. (hereinafter referred to as "Titan")
and SCHERING AG, a corporation organized and existing under the laws of
Germany and having its principal place of business at Muellerstrasse 178,
Berlin-Wedding, D-13342 Berlin, Germany (hereinafter referred to as
"Schering"). Titan and Schering are sometimes referred to herein individually
as a "Party" and collectively as the "Parties."

WHEREAS:

(A)   Titan is developing through its research and development activities a
compound consisting of human retinal pigment epithelial cells on
microcarriers for use, inter alia, in the treatment of Parkinson's Disease
and Parkinsonian Movement Disorders and has the right to grant rights and
licenses and/or sublicenses under the Titan Patents (hereinafter defined) and
Titan Know-How (hereinafter defined);

(B)   Schering has expressed to Titan its interest in obtaining from Titan
certain rights and licenses under the Titan Patents and Titan Know-How and in
cooperating with Titan in the development and commercialization of Product(s)
containing the Compound (hereinafter defined);

(C)   Titan is willing to grant such rights and licenses and/or sublicenses
to Schering and to cooperate with Schering under the terms and conditions set
forth in this Agreement:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements contained herein, the Parties hereto, intending to
be legally bound, do hereby agree as follows:

1.       DEFINITIONS

         The following terms, when capitalized, shall have the following
         meanings (such meanings to be equally applicable to both the singular
         and plural forms of the terms defined) as used in this Agreement:

1.1      "Additional Indications" means the use of Product for any preventative,
         diagnostic or therapeutic indication(s) other than the Initial
         Indication.

1.2      "Affiliate" means any person, corporation, partnership, firm, joint
         venture or other entity which, directly or indirectly, through one or
         more intermediaries, controls, is controlled by, or is under common
         control with, Titan or Schering, as the case may be. As used in this
         definition, "control" means the possession of the power to direct or
         cause the direction of the management and policies of an entity,
         whether through the ownership of the outstanding voting securities or
         by contract or otherwise.
<PAGE>

1.3      "Agreement Year" shall mean a period of twelve months beginning on the
         Effective Date and each anniversary thereof.

1.4      "Bankruptcy Event" shall have the meaning set forth in Section 11.2(d).

1.5      "Clinical Development" shall refer to all activities relating to
         planning and execution of clinical studies in humans directed toward
         obtaining Regulatory Approval of a Product, but does not include any
         activities falling within the definition of CMC / Manufacturing.
         Clinical Development includes clinical studies and related regulatory
         affairs and outside counsel regulatory legal services.

1.6      "CMC / Manufacturing" shall mean the development of one or more
         processes for the manufacture and packaging of the Compound and / or
         the Product for Preclinical Development, Clinical Development and
         Commercialization, and shall include, without limitation, formulation,
         production, fill / finish, sourcing of components, raw materials and
         packaging supplies, development of regulatory methods and controls,
         including assays, quality control and quality assurance methodology and
         stability protocols, and qualification of one or more Compound and
         Product production facilities.

1.7      "Commercialization" and "Commercialize" shall refer to all activities
         undertaken relating to the pre-marketing, marketing, distribution and
         sale of the Product.

1.8      "Confidential Information" shall have the meaning set forth in Article
         7.

1.9      "Compound" shall mean a composition consisting of neo-natal human
         retinal pigment epithelial (RPE) cells on microcarriers (biocompatible
         particulate support matrices for cells).

1.10     "Control" or "Controlled" shall refer to possession of the ability to
         grant a license or sublicense of Patent Rights, Know-How, information
         or other intangible rights as provided for herein without violating the
         terms of any agreement or other arrangement with any Third Party.

1.11     "Development" or "Develop" shall refer to all activities relating to
         Preclinical Development, Clinical Development and CMC / Manufacturing.

1.12     "Development Plan" and Budget" shall have the meaning set forth in
         Section 3.2(b).

1.13     "Drug Approval Application" shall mean an application for Regulatory
         Approval required to be approved before commercial sale or use of a
         Product as a drug in a regulatory jurisdiction, including, for the
         purposes of Regulatory Approval in the United States, a Biologic
         License Application and all supplements filed pursuant to the
         requirements of the FDA (including all documents, data and other
         information concerning a Product which are necessary for or included in
         FDA approval to market the Product) and, for the purposes of Regulatory
         Approval in Europe, applications for Regulatory Approval to EMEA.

1.14     "Effective Date" shall mean the date set out at the start of this
         Agreement.


                                       2
<PAGE>

1.15     "EMEA" shall mean the European Medicines Evaluation Agency, or any
         successor agency.

1.16     "Europe" shall mean the countries which are members of the European
         Union as such membership may change from time to time.

1.17     "FDA" shall mean the United States Food and Drug Administration or any
         successor agency.

1.18     "Field" shall mean all uses of Product for the Initial Indication and
         for any Additional Indications which Schering decides, at it
         discretion, to develop and commercialize.

1.19     "First Commercial Sale" shall mean the date on which Schering or an
         Affiliate or a sublicensee of Schering first sells commercially,
         pursuant to a Regulatory Approval, a Product in any country of the
         Territory.

1.20     "GCPs" shall mean clinical practices in conformity with the current
         Good Clinical Practices as established by the International Conference
         on Harmonization, as such regulations may be interpreted by governing
         regulatory agencies or as may be amended from time to time, and in
         conformity with equivalent regulations and interpretations in
         regulatory jurisdictions in the Territory.

1.21     "GLPs" shall mean laboratory practices in conformity with the FDA's
         regulations and regulatory interpretations of such regulations
         governing current good laboratory practices set forth in 21 C.F.R. Part
         58 et seq., as such regulations may be amended and interpreted by FDA
         from time to time, and in conformity with equivalent regulations in
         regulatory jurisdictions in the Territory.

1.22     "GMPs" shall mean manufacturing practices in conformity with the
         FDA's regulations and regulatory interpretations of such
         regulations governing current good manufacturing practices set forth in
         21 C.F.R. Part 210 et seq., as such regulations may be amended and
         interpreted by FDA from time to time, and in conformity with equivalent
         regulations in regulatory jurisdictions in the Territory.

1.23     "Initial Indication" shall mean the use of Product for the in vivo
         therapeutic prevention, treatment, cure or mitigation of
         Parkinson's Disease and / or Parkinsonian Movement Disorders.

1.24     "Joint Development Committee" or "JDC" shall mean the committee
         established pursuant to Section 3.1 below.

1.25     "Joint Patents" shall have the meaning set forth in Section 8.3(a).

1.26     "Know-How" shall mean techniques and data relating to the Compound or
         the Product, including but not limited to inventions, practices,
         methods, knowledge, know-how, skill, trade secrets, experience, test
         data including pharmacological, toxicological, preclinical and clinical
         test data, regulatory submissions, adverse reactions, analytical and
         quality


                                       3
<PAGE>

         control data, assays, marketing, pricing, distribution, cost, sales
         and manufacturing data or descriptions.

1.27     "Net Sales" shall mean the amount invoiced by or on behalf of a Party,
         its Affiliates or its sublicensees from sales of the Product by or on
         behalf of such Party to Third Parties in the Territory, less the
         following deductions applicable to the Product for (i) all trade, cash
         and quantity credits, discounts, refunds or rebates, including premiums
         or chargebacks; (ii) allowances or credits to customers on account of
         governmental requirements, price differences, rejection, outdating,
         returns, or recalls of Product; (iii) sales commissions; (iv) sales
         taxes (including value added tax) or other governmental charges imposed
         upon sales of the Product and paid by Schering; (v) transportation
         charges and insurance charges paid by Schering estimated not to exceed
         1% (one per cent) of invoice; (vi) price adjustments actually made; and
         (vii) deductions for uncollectible invoices. For the purpose of
         calculating Net Sales, the Parties recognize that (a) Schering's
         customers may include persons in the chain of commerce who enter into
         agreements with Schering as to price even though title to the Product
         does not pass directly from Schering to such customers and even though
         payment for such Product is not made by such customers directly to
         Schering; and (b) in such cases, chargebacks paid by Schering to or
         through a third party (such as a wholesaler) can be deducted by
         Schering from gross revenue in order to calculate Net Sales. Any
         deductions above which involve a payment by Schering shall be taken as
         a deduction against aggregate sales for the period in which the payment
         or deduction is made. In the event that a Product is sold in the form
         of a combination product containing one or more active ingredients in
         addition to a Product, Net Sales for such combination product will be
         adjusted by multiplying actual Net Sales of such combination product by
         the fraction A/(A+B) where A is the invoice price of the Product, if
         sold separately, and B is the invoice price of any other active
         ingredient or ingredients in the combination, if sold separately. If,
         on a country-by-country basis, the other active ingredient or
         ingredients in the combination are not sold separately in that country,
         Net Sales shall be calculated by multiplying actual Net Sales of such
         combination product by the fraction A/C where A is the invoice price of
         the Product if sold separately and C is the invoice price of the
         combination product. If, on a country-by-country basis, neither the
         Product nor the other active component or components of the combination
         product is sold separately in said country, Net Sales shall be
         determined between the Parties in good faith.

1.28     "NYU License" shall mean the Agreement effective November 20, 1992
         between New York University and Theracell Corporation (predecessor
         corporation to Titan), as amended from time to time, attached hereto
         and incorporated herein by reference in Exhibit B.

1.29     "Packaged Product" shall mean the Product packaged and labeled in
         compliance with the specifications and requirements of the Regulatory
         Approval of the country of commercial distribution, in a form ready for
         delivery to the customer.

1.30     "Patents" shall mean all existing patents and patent applications and
         patent applications hereafter filed covering Compound or Product within
         the Field, including any continuation, continuation-in-part, division,
         provisional or any substitute applications,


                                       4
<PAGE>

         any patent issued with respect to any such patent applications, any
         reissue, re-examination, renewal or extension (including any
         supplemental protection certificate) of any such patent and
         confirmation patent or registration patent or patent of addition
         based on any such patent. The term "cover" or "covering", when used
         in this Agreement in connection with a Patent shall signify that the
         manufacture, use, sale, or import of a Compound or a Product by an
         unlicensed party would infringe such a Patent for use in the Field.

1.31     "Patent Expenses" shall mean the fees, expenses and disbursements and
         outside counsel fees and payments to Third Party agents incurred in
         connection with the preparation, filing, prosecution and maintenance of
         Titan Patents covering the Compound or Product within the Field,
         including Titan's costs of patent interference and opposition
         proceedings and actions at law and equity for patent infringement.

1.32     "Pivotal Clinical Trial" shall mean any clinical trial designed by
         Schering and discussed with the respective regulatory authorities
         (e.g., FDA, EMEA) within a country which can be expected to fulfill the
         criteria for a grant of a marketing approval by the respective
         regulatory authorities.

1.33     "Preclinical Development" shall refer to all activities relating to the
         planning and execution of non-human studies conducted in in vitro or in
         relevant in vivo animal models directed toward obtaining Regulatory
         Approval of a Product in each regulatory jurisdiction in the Territory.
         This includes preclinical testing, pharmacokinetics, toxicology,
         documentary and medical writing directly related to Preclinical
         Development activities, and related regulatory affairs and outside
         counsel regulatory legal services.

1.34     "Product" shall mean any pharmaceutical composition which
         pharmaceutical composition contains Compound as a pharmaceutically
         active ingredient (either alone or in combination with one or more
         other pharmaceutically active ingredients) suitable to deliver dopamine
         and possibly other therapeutic materials after transplantation into
         patients in the Field.

1.35     "Regulatory Approval" shall mean any approvals, product and / or
         establishment licenses, registrations or authorizations of any federal,
         state or local regulatory agency, department, bureau or other
         governmental entity, necessary for the manufacture, use, storage,
         importation, export, transport or sale of Product in a regulatory
         jurisdiction.

1.36     "Research Reimbursement" shall have the meaning set forth in Section
         5.1.

1.37     "Royalty Percentage" shall have the meaning set forth in Section 5.2.

1.38     "Schering Patents" shall mean any Patents owned or Controlled by
         Schering or its Affiliates covering the research, development,
         manufacture, use, importation, sale, or offer for sale of the Compound
         or the Product.

1.39     "Titan Know-How" shall mean all Know-How, whether currently existing or
         developed or obtained during the course of this Agreement, and whether
         or not patentable or confidential that is now Controlled or hereinafter
         becomes Controlled by Titan or its


                                       5
<PAGE>

         Affiliates and that relates to the research, development,
         utilization, manufacture or use of the Compound or the Product.
         Notwithstanding anything herein to the contrary, Titan Know-How
         shall exclude Titan Patents.

1.40     "Titan Patents" shall mean any Patents owned or Controlled by Titan or
         its Affiliates covering the research, development, manufacture, use,
         importation, sale or offer for sale of the Compound or the Product.

1.41     "Territory" shall mean all countries of the world.

1.42     "Third Party" shall mean any entity other than Titan or Schering and
         their respective Affiliates and sublicensees.

1.43     "Valid Claim" shall mean a claim of any issued, unexpired United States
         or foreign patent which shall not have been withdrawn, canceled or
         disclaimed, or held invalid or unenforceable by a court of competent
         jurisdiction in an unappealed or unappealable decision.

1.44     "Written Disclosure" shall have the meaning set forth in Section 7.6.

2.       LICENSES AND ASSIGNMENT

2.1      EXCLUSIVE LICENSE: Subject always to the NYU License (with which this
         Agreement must be consistent), and subject to the last sentence of this
         paragraph, Titan grants to Schering an exclusive (even as to Titan)
         worldwide license and / or sublicense, with a right to sublicense,
         under the Titan Patents, the Titan Know-How and the Joint Patents to
         use, develop, manufacture, have manufactured, market, sell, import for
         sale and distribute the Compound and / or the Product in the Territory
         for use in the Field, subject to the terms and conditions hereof and
         the terms and conditions of the NYU License. Notwithstanding the
         foregoing, Titan shall retain the right to conduct Development and
         related activities to the extent specifically provided for in this
         Agreement, subject to the terms and conditions hereof. Should an
         existing agreement preclude the granting of a sublicense by Schering,
         then upon written request by Schering, Titan will grant additional
         sublicenses to third parties designated by Schering; provided, however,
         that the terms and conditions of such further sublicenses shall not be
         inconsistent with the terms and conditions of this Agreement, and that
         the terms and conditions of the further sublicenses shall not be less
         favorable to Titan than those of this Agreement; provided further that
         any consideration payable by such designated sublicensees for or in
         connection with the grant of such sublicenses shall be exclusively for
         Schering's account; and provided further that, until Schering has paid
         Titan the Research Reimbursements under Sections 5.1(a) through 5.1(c),
         any consideration paid by such designated sublicensees shall (except in
         the case of sublicenses to Affiliates where such consideration is
         always exclusively for Schering's account) be shared equally by
         Schering and Titan after deduction of any amount due to New York
         University. A list of the Titan Patents identified as of the Effective
         Date is attached hereto as Exhibit A. Such list shall be modified from
         time to time to reflect any changes to Titan Patents and to include any


                                       6
<PAGE>

         Titan Patents acquired by or coming under the Control of Titan during
         the term of this Agreement.

2.2      EXISTING LICENSES: The licenses granted under Section 2.1 include
         sublicenses of Third Party Know-How and Patents existing and licensed
         to Titan on the Effective Date. A list of all such agreements as of the
         Effective Date is attached hereto as Exhibit B, true, correct and
         complete copies of which have been provided to Schering prior to the
         Effective Date. Any royalties payable to Third Parties (except for any
         that may be due under the Percell Biolytica AB Agreement, as defined in
         Section 6 of this Agreement) pertaining to technology discussed in the
         previous sentence shall be paid by Titan and, if not so paid, may be
         paid by Schering and offset or deducted from royalty payments under
         Section 5. From time to time at Schering's request, Titan will use
         its commercially reasonable efforts to obtain a consent (a "Consent")
         from existing licensors and other contractual counterparties with
         Titan. Such Consent shall contain the agreement of such licensor to (i)
         give reasonable written notice to Schering prior to terminating the
         underlying license or contract, (ii) provide Schering a reasonable
         period to cure any default under such license or contract, and (iii)
         permit Schering or one or more of its Affiliates to assume Titan's
         obligations thereunder as sublicensee or assignee of Titan's rights
         thereunder, in each case at Schering's option.

2.3      ORPHAN DRUG ACT:  To the fullest extent permitted by law,

         (a)      Promptly upon Schering's decision to initiate Pivotal Clinical
                  Trial of the Product and upon Schering's making the Research
                  Reimbursement payment described in Section 5.1(a), Titan shall
                  transfer to Schering legal title to and possession of any and
                  all Orphan Drug Act applications, including FDA-designated
                  Orphan Biological Application 97-1057, and other requests for
                  designation by FDA of the Product as an orphan drug, and / or
                  any and all Orphan Drug Act designations by FDA of the Product
                  as an Orphan Drug. The Parties confirm that Schering will have
                  the right to claim and use any taxation credits, deductions or
                  other benefits available as a result of Orphan Drug Act
                  designation by FDA of the Product or a grant of marketing
                  exclusivity by FDA for the Product pursuant to the Orphan Drug
                  Act.

         (b)      Subject always to the provisions of Section 11.2 below,
                  Schering shall use commercially reasonable best efforts to
                  obtain Orphan Drug exclusivity for the Product for the Initial
                  Indication. Titan agrees to cooperate with and assist Schering
                  to the extent reasonably requested by Schering in the
                  preparation, amendment and / or prosecution of petitions or
                  other requests for Orphan Drug Act designation or Orphan Drug
                  Act exclusivity for Product, and any other marketing
                  exclusivity available in the United States or any other
                  country of the Territory. Such assistance shall include
                  without limitation participation by Titan representatives in
                  meetings with U.S. governmental authorities as reasonably
                  requested by Schering, and subject to the availability of
                  Titan personnel. Schering shall keep Titan apprised of its
                  progress in obtaining Orphan Drug Act exclusivity and any
                  other marketing exclusivity that becomes available in the
                  United States or any other country of the Territory. Schering
                  shall be the legal


                                       7
<PAGE>

                  and beneficial owner of Orphan Drug exclusivity or any
                  other marketing exclusivity obtained in regard to any
                  Product in the United States or any other country of the
                  Territory.

2.4      As long as this Agreement remains in effect, and for so long as
         Schering remains actively engaged in the development or
         commercialization of a Product for use in the Field, Titan shall not
         develop, manufacture, or commercialize a product that utilizes
         cell-coated microcarrier technology and that competes with the Product.
         The provisions of this Section 2.4 shall have no force or effect in the
         European Union or in any other country where it may contravene any
         antitrust directive or law.

3.       DEVELOPMENT

3.1      JDC

         (a)      FORMATION OF THE JDC: Within fifteen (15) days after the
                  Effective Date (or such later time as may be mutually agreed
                  to by the Parties), the Parties shall establish the JDC. The
                  JDC shall consist of an equal number of representatives of
                  Titan and Schering to be agreed upon by the Parties from time
                  to time. Either Party may designate a substitute for a member
                  unable to be present at a meeting. One of the Schering members
                  of the JDC, chosen at the sole discretion of Schering, along
                  with one of the Titan members of the JDC, chosen at the sole
                  discretion of Titan, shall serve as co-chairs of the JDC.
                  Regardless of the number of representatives from each Party on
                  the JDC, each Party shall have one vote on any issue. Meetings
                  of the JDC shall be held quarterly, and may be called by
                  either Party with not less than twenty (20) business days
                  notice to the other unless such notice is waived, and meetings
                  shall be held alternately at the offices of Titan or of
                  Schering or an Affiliate as may be designated by Schering. The
                  JDC may be convened, polled or consulted from time to time by
                  means of telecommunication or correspondence. Each Party will
                  disclose to the other proposed agenda items reasonably in
                  advance of each meeting of the JDC. Each Party shall bear its
                  own costs for participation in the JDC.

         (b)      FUNCTIONS OF THE JDC: The JDC shall function as a forum for
                  the Parties to inform and consult with one another concerning
                  progress of and changes to Development and the Development
                  Plan, meeting Development goals, dealing with obstacles to
                  successful Development, and the status of obtaining Regulatory
                  Approvals. The JDC shall have no role, consultative or
                  otherwise, with regard to Commercialization other than those
                  reasonably necessary to transition from Development to
                  Commercialization. The following specific functions shall be
                  delegated to the JDC:

                  (i)      plan, coordinate and oversee the Development of the
                           Product in order to obtain Regulatory Approval in the
                           Territory;

                  (ii)     assume responsibility for the Development Plan as
                           established in Section 3.2(b);


                                       8
<PAGE>

                  (iii)    propose updates yearly to the Development Plan, which
                           plan will specify a reasonable level of detail by
                           which Titan and Schering will conduct Preclinical
                           Development, Clinical Development and CMC /
                           Manufacturing;

                  (iv)     propose any amendments of the Development Plan which
                           are not covered in the yearly updates;

                  (v)      prepare detailed budgets consistent with the
                           Development Plan and allocate such budgets to
                           particular Development tasks; and

                  (vi)     subject to Section 3.4, evaluate any proposal to
                           contract with any Third Party to perform any
                           Development activities.

         (c)      LIMITATION ON JDC AUTHORITY: Notwithstanding the creation of
                  the JDC, each Party to this Agreement shall retain the rights,
                  powers and discretions granted to it hereunder, and the JDC
                  shall not be delegated or vested with any such rights, powers
                  or discretion unless such delegation or vesting is expressly
                  provided for herein or the Parties expressly so agree in
                  writing. The JDC shall not have the power to amend or modify
                  this Agreement which may be amended or modified only as
                  provided in Section 13.11.

         (d)      RESOLUTION OF DISPUTES: If the JDC cannot reach a unanimous
                  decision with respect to the Development matters delegated to
                  it within ten (10) days then the disputed matter shall be
                  promptly referred to a senior manager of each Party designated
                  by such Party. If the senior managers are unable to resolve
                  such matter within ten (10) days after one Party notifies the
                  other of its desire to have the matter referred to such senior
                  managers, the decision of Schering's senior manager shall
                  control.

3.2      DEVELOPMENT

         (a)      Titan and Schering each agree to cooperate in the Development
                  of the Product and to use commercially reasonable efforts to
                  develop and bring the Product to market. Subject always to
                  Section 11.2 of this Agreement, Titan and Schering each agrees
                  to use commercially reasonable efforts to execute and
                  substantially perform the obligations assumed by it under the
                  Development Plan, exercising the same degree of diligence in
                  Commercialization of the Product as it exercises with respect
                  to proprietary products of comparable commercial potential.

         (b)      The Development of the Product shall, subject to Section 11.2
                  of this Agreement, be governed by a development plan
                  ("Development Plan"), which shall provide for the Development
                  of the Product in the Territory and shall be updated, amended,
                  supplemented and otherwise modified from time to time by the
                  JDC. The Parties have agreed upon and approved the Initial
                  Development Plan which is attached hereto as Exhibit C.
                  Subject to Schering's obligation to provide the development
                  funding referred to in Section 3.3 below, Titan and Schering
                  shall


                                       9
<PAGE>

                  each be responsible for the costs of the Development
                  activities allocated to that Party pursuant to the Initial
                  Development Plan.

         (c)      Applications to carry out clinical studies: Schering shall be
                  responsible for preparing, filing and prosecuting applications
                  for permission to conduct Clinical Development in such
                  countries of the Territory which require such applications to
                  be filed. With respect to the United States and any other
                  country where Titan has such an application on file with the
                  appropriate regulatory authorities, Titan shall transfer such
                  application to Schering upon Schering's written request
                  following Schering's decision to initiate the Pivotal Clinical
                  Trial of the Product and upon Schering's making the Research
                  Reimbursement payment described in Section 5.1(a) of this
                  Agreement. Prior to the transfer to Schering, all
                  communications and interactions with regulatory authorities by
                  Titan with respect to such applications shall be reviewed and
                  approved in advance by Schering.

         (d)      Drug Approval Applications: Schering shall be responsible for
                  preparing, filing and prosecuting Drug Approval Applications
                  and seeking Regulatory Approvals for the Product in all
                  countries of the Territory wherein Schering, in good faith and
                  in the exercise of reasonable business judgment, considers it
                  is commercially reasonable to do so, including preparing all
                  reports necessary as part of a Drug Approval Application.
                  Schering shall file first for Regulatory Approval in the U.S.,
                  the European Union, Canada and Japan, in an order acceptable
                  to Schering. All such Drug Approval Applications shall be
                  filed in the name of Schering and a copy of each such Drug
                  Approval Application shall be promptly provided to Titan. In
                  connection with all Drug Approval Applications being
                  prosecuted by Schering under this Section 3.2, Schering agrees
                  to provide Titan with a copy (which may be wholly or partly in
                  electronic form) of all filings to regulatory agencies that it
                  makes hereunder within thirty (30) days after written request
                  by Titan, at no cost to Titan, and Titan shall thereafter, on
                  reasonable advance notice to Schering, have the right freely
                  to utilize such filings for its Drug Approval Applications
                  outside the Field. Titan will inform Schering of all such
                  utilization of Schering filings for Titan's Drug Approval
                  Applications outside the Field and shall provide Schering with
                  such information on such filings as Schering considers
                  reasonably necessary to safeguard Schering's interests in the
                  Product.

         (e)      Cooperation: The Parties shall consult and cooperate
                  (including in the case of Titan providing such commercially
                  reasonable assistance as Schering shall reasonably request) in
                  the preparation of each regulatory submission and in obtaining
                  and maintaining Regulatory Approvals within the Territory,
                  provided however, that, except with regard to the pilot U.S.
                  trial, prior to and following approval of a Drug Approval
                  Application, Schering shall be solely responsible for
                  interactions with regulatory authorities throughout the
                  Territory. In order to facilitate consultation on submissions,
                  a shared database will be set up using the Schering Globe Doc
                  System, and the Parties will agree upon the format of
                  individual reports. Subject to the foregoing, Schering shall
                  provide Titan and Titan shall provide Schering with reasonable
                  advance notice of any scheduled meeting with the FDA, EMEA or
                  any other regulatory authority in a major


                                       10
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

                  regulatory jurisdiction relating to any Drug Approval
                  Application, and Titan and Schering shall have the right to
                  participate in any such meeting. Schering shall from time
                  to time promptly inform Titan about any significant
                  Regulatory Approval milestones achieved. In connection with
                  all Drug Approval Applications being prosecuted by Schering
                  under this Section 3.2, Schering agrees to provide Titan
                  with a copy (which may be wholly or partly in electronic
                  form) of all filings to regulatory agencies that it makes
                  hereunder within thirty (30) days after written request by
                  Titan, at no cost to Titan. In the event that any
                  regulatory agency threatens or initiates any action to
                  remove a Product from the market or there is any recall or
                  equivalent action (whether voluntary of involuntary) in any
                  country of the Territory, Schering shall notify Titan of
                  such communication within three (3) business days of
                  receipt by Schering. As between the Parties, Schering shall
                  be the legal and beneficial owner of all Drug Approval
                  Applications and related approvals in the Territory.

         (f)      Each Development Plan shall provide a reasonably detailed
                  written time line for each step to be achieved with respect to
                  the Development and Regulatory Approval of the Product, the
                  estimated Development Expenses of obtaining such Regulatory
                  Approval and the description of a final Product.

         (g)      Each Development Plan shall be updated annually by the JDC and
                  submitted by October 1 of each calendar year to the Parties
                  for review and approval not later than sixty (60) days after
                  such submission.

3.3      DEVELOPMENT FUNDING: Schering undertakes to provide the following
         funding to Titan in order to partially support the conduct by Titan of
         the Preclinical and pilot CMC / Manufacturing Development activities
         allocated to Titan pursuant to the Development Plan.

         In the first Agreement Year:            [             *           ]

         In the second Agreement Year:           [             *           ]

         In the third Agreement Year:            [             *           ]

         The funding referred to in this Section 3.3 will be provided to Titan
         by Schering in equal monthly installments in advance, the first payment
         to be made within five business days of the Effective Date. Titan
         undertakes to use such Development funding exclusively for the purposes
         of carrying out its Development obligations hereunder.

3.4      RIGHT TO ENGAGE THIRD PARTIES

         Titan may, with the prior written consent of Schering, such consent not
         to be unreasonably withheld, engage Third Parties to conduct
         Preclinical and CMC / Manufacturing Development assigned to Titan in
         the Development Plan as defined in Section 3.2(b).


                                       11
<PAGE>

3.5      SCHERING STEP-IN RIGHTS: Without prejudice to any other remedies
         available to Schering under this Agreement or at law, if Titan
         materially fails to undertake the reasonable Development tasks
         allocated to it under this Agreement in accordance with the time lines
         and other conditions allocated to it under this Agreement and in
         accordance with the time lines and other conditions allocated to it
         under the Development Plan and this Agreement generally, Schering may,
         after ninety (90) days prior written notice to Titan, undertake that
         particular task ("Work") and complete it at its own expense if Titan
         has not at such time begun to carry out such Work in a reasonable
         manner. Schering shall be entitled to commercially reasonable
         cooperation and assistance from Titan to accommodate its efforts,
         including assignments to Schering of sponsorship of regulatory filings
         if necessary to permit the exercise by Schering of its rights under
         this Section 3.5. Costs reasonably incurred by Schering in carrying out
         such Work will be reimbursed by Titan on a quarterly basis or may, at
         Schering's option, be set off against any payments otherwise due to
         Titan under this Agreement; provided, however, that the amount of
         reimbursement shall be limited to that portion of the Development
         Funding of Section 3.3 allocated to the specific task.

4.       COMMERCIALIZATION

4.1      Subject always to Section 11.2 of this Agreement, Schering undertakes
         to use commercially reasonable efforts to begin the regular commercial
         production, use, and sale of the Product in good faith and as soon as
         commercially practicable, and in no event later than six (6) months
         from obtaining Regulatory Approval, and to continue diligently
         thereafter to commercialize the Product, exercising the same degree of
         diligence in Commercialization of the Product as it exercises with
         respect to proprietary products of comparable commercial potential.

4.2      Subject to applicable laws and regulations, labeling on all Product
         sold by or on behalf of Schering pursuant to this Agreement, and all
         advertising, marketing and promotional materials used in connection
         therewith, will identify Titan as the licensor of the Product.

5.       PAYMENTS

5.1      RESEARCH REIMBURSEMENT: Schering shall make the following payments
         ("Research Reimbursement") to Titan within thirty (30) business days
         after the first achievement of each of the following milestones. Each
         of these Research Reimbursement payments shall be paid only once for
         Product(s) in the Field regardless of the number of times the
         milestones are achieved by the Product or the number of indications for
         which the Product is developed or commercialized.

-------------------------------------------------------------------------------
EVENT                                                        PAYMENT
-------------------------------------------------------------------------------


                                       12
<PAGE>


Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

--------------------------------------------------------------------------------
(a)      Schering's decision to initiate Pivotal Clinical    [        *        ]
         Trial of the Product, such decision to be made
         within thirty (30) days of delivery of the safety
         and efficacy report on the pilot clinical trials
         as specified in the Development Plan.
--------------------------------------------------------------------------------
(b)      Regulatory Approval of the Product by               [        *        ]
         the FDA.
--------------------------------------------------------------------------------
(c)      Upon Regulatory Approval by EMEA                    [        *        ]
--------------------------------------------------------------------------------

5.2      ROYALTIES:

         (a)      GENERAL: Subject as hereinafter provided, Schering shall pay
                  to Titan, on a country-by-country basis, a royalty equal to [
                  * ] of Net Sales of the Product (the "Royalty Percentage") in
                  each country for which a Valid Claim of a Titan Patent exists,
                  such Royalty Percentage to be payable for as long as such a
                  Valid Claim exists in the country in question.

         (b)      EXPIRY OF VALID CLAIM: In any country of the Territory in
                  which a Valid Claim of a Titan Patent existed at the date of
                  First Commercial Sale but ceases to exist at any time before
                  the expiry of fifteen (15) years from First Commercial Sale,
                  the Royalty Percentage will be reduced to [ * ] and will be
                  payable for the shorter of:

                  (i)      five years from the date on which the Valid Claim
                           ceased to exist; and

                  (ii)     the period between the date on which the Valid Claim
                           ceased to exist and the date fifteen years after
                           First Commercial Sale.

                  On expiry of the shorter of the above periods, Schering shall
                  have no obligation to pay any Royalty Percentage to Titan
                  under this Section 5.2 for the country in question.

         (c)      NO VALID CLAIM: In each country of the Territory in which a
                  Valid Claim does not exist at the date of First Commercial
                  Sale, the Royalty Percentage will be [ * ] of Net Sales, such
                  Royalty Percentage to be payable to Titan for a period of five
                  (5) years from First Commercial Sale whereupon Schering's
                  obligation to pay the Royalty Percentage will cease; provided
                  however that if, during the five (5) years following First
                  Commercial Sale, a Valid Claim of a Titan Patent comes into
                  being in the relevant country, the Royalty Percentage set out
                  in Section 5.2(a) above shall apply from the date that such
                  Valid Claim of a Titan Patent exists until the date of expiry
                  of such Valid Claim.

         (d)      LICENSE FOLLOWING EXPIRATION: Following the expiration of the
                  royalty obligations on a country-by-country basis, Schering
                  shall thereafter have an exclusive (even


                                       13
<PAGE>

                  as to Titan), paid-up license under Titan Know-How to make,
                  have made, use, sell, offer for sale, have sold and import
                  the Compound and / or the Product in that country.

         (e)      ROYALTY REPORTS AND PAYMENTS: Schering shall make royalty
                  payments to Titan quarterly within fifty-five (55) days after
                  the end of each calendar quarter in which Net Sales occurred.
                  A report summarizing the Net Sales of the Products during the
                  relevant quarter on a country-by-country basis shall be
                  delivered to Titan within fifty-five (55) days following the
                  end of each calendar quarter for which royalties are due.

         (f)      PAYMENTS; INTEREST: Any payments due under this Agreement
                  shall be due on such date as specified in this Agreement and,
                  in the event such date is a day on which commercial banks are
                  not authorized to conduct business in either San Francisco,
                  California, or Berlin, Germany, then the next succeeding
                  business day, and shall be made by wire transfer to a
                  designated bank account of the receiving Party. Any failure by
                  a Party to make a payment within five days after the date when
                  due shall obligate such Party to pay interest to the receiving
                  Party at a rate per annum equal to 2% (two per cent) over the
                  prime rate as quoted by Bank America on Reuters screen
                  "USPRIME1" as of the date such payment is due or the following
                  business day, from the due date until the payment date, such
                  interest also being due on the payment date.

5.3      TAXES: The Party receiving royalties shall pay any and all taxes levied
         on account of royalties it receives under this Agreement. If laws or
         regulations require that taxes be withheld, the Party remitting
         royalties will (a) deduct those taxes from the remittable royalty, (b)
         timely pay the taxes to the proper taxing authority, and (c) send proof
         of payment to the other Party within thirty (30) days of receipt of
         confirmation of payment from the relevant taxing authority. The Party
         remitting royalties agrees to make all lawful and reasonable efforts to
         minimize such taxes to the other Party.

5.4      PAYMENTS TO OR REPORTS BY AFFILIATES: Any payment required under any
         provision of this Agreement to be made to either Party or any report
         required to be made by any Party shall be made to or by an Affiliate of
         that Party if designated by that Party as the appropriate recipient or
         reporting entity without relieving such Party from responsibility for
         such payment or report.

5.5      PAYMENT CURRENCY: Payments by Schering under this Agreement shall be
         made in U.S. dollars. Except for Net Sales in the United States, where
         payments are based on Net Sales in countries other than the member
         states of the European Currency Union, the amount of such payments
         expressed in the currency of each country shall be converted into Euros
         at the exchange rate of the last date of the applicable calendar
         quarter. The applicable exchange rate will be the Euro foreign exchange
         reference spot rate published daily by the European Central Bank,
         Frankfurt/Main. If no Euro foreign exchange reference spot rate is
         determined for the relevant currency, the Parties shall agree upon
         another reference rate. Finally, the payable Euro amount shall be
         converted into US dollars by the Euro foreign exchange reference spot
         published by the European Central


                                       14
<PAGE>

         Bank, Frankfurt/Main, at the last day of the applicable calendar
         quarter. These Euro foreign exchange reference spot rates are
         currently published by Reuters on screen "ECB37."

6.       MANUFACTURE AND SUPPLY

         Schering will be responsible for the manufacture of Compound and
         Product for use and sale in the Field in the Territory. Titan will
         grant to Schering a sublicense under the License and Supply Agreement
         effective January 1, 1999, between Theracell Inc. and Percell Biolytica
         AB, as may be required for the Development and Commercialization of the
         Product in the Field. Schering shall thereafter be responsible for
         payment of all royalties to Percell Biolytica AB. If and when, but only
         if and when, Schering exercises the specific option set forth in
         Section 13.15(b)(iv) (and not any other option set forth in Section
         13.15), then Titan agrees that it will work with Percell Biolytica AB
         to arrange for assignment of the License and Supply Agreement of
         January 1, 1999, to Schering, or alternatively, at Titan's option, for
         the right of Schering to negotiate its own supply agreement with
         Percell Biolytica AB. Titan agrees to take any actions and execute any
         documents that Schering may reasonably request to accomplish the intent
         of this Section.

7.       CONFIDENTIALITY

7.1      CONFIDENTIALITY; EXCEPTIONS: Except to the extent expressly authorized
         by this Agreement or otherwise agreed in writing, the Parties agree
         that the receiving Party and its employees (who shall be bound in
         writing to observe the confidentiality provisions of this Agreement)
         shall keep confidential and shall not publish or otherwise disclose or
         use for any purpose other than as provided for in this Agreement any
         information and other information and materials furnished to it by the
         other Party pursuant to this Agreement or any information developed
         during the course of the collaboration hereunder, or any provisions of
         this Agreement that are the subject of an effective order of the U.S
         Securities and Exchange Commission granting confidential treatment
         pursuant to the Securities Act of 1934, as amended (collectively,
         "Confidential Information"), except to the extent that it can be
         established by the receiving Party that such Confidential Information:

                  (i)      was already known to the receiving Party, other than
                           under an obligation of confidentiality, at the time
                           of disclosure by the other Party;

                  (ii)     was generally available to the public or otherwise
                           part of the public domain after its disclosure and
                           other than through any act or omission of the
                           receiving Party in breach of this Agreement;

                  (iii)    became generally available to the public or otherwise
                           part of the public domain after its disclosure and
                           other than through any act or omission of the
                           receiving Party in breach of this Agreement;

                  (iv)     was disclosed to the receiving Party, other than
                           under an obligation of confidentiality, by a Third
                           Party who had no obligation to the disclosing Party
                           not to disclose such information to others; or


                                       15
<PAGE>

                  (v)      was independently discovered and / or developed by
                           the receiving Party as documented in its corporate
                           records.

7.2      AUTHORIZED DISCLOSURE: Each Party may disclose Confidential Information
         hereunder to the extent such disclosure is reasonably necessary in
         filing or prosecuting patent applications, prosecuting or defending
         litigation, filing or updating any Drug Approval Application, complying
         with applicable governmental laws, rules and regulations or conducting
         preclinical or clinical trials or, in the case of Schering, engaging in
         marketing, sales, professional services, professional education, or
         adverse events or complaint collecting analysis or reporting
         activities; provided, that if a Party is required by law or regulation
         to make any such disclosures of the other Party's Confidential
         Information it will, except where impracticable for necessary
         disclosures, for example in the event of medical emergency, give
         reasonable advance notice to the other Party of such disclosure
         requirement and, except to the extent inappropriate in the case of
         patent applications, will use its reasonable efforts to secure
         confidential treatment of such Confidential Information required to be
         disclosed. In addition and with prior written notice to the other Party
         of each Third Party with whom a confidential disclosure agreement is
         being entered into, each Party shall be entitled to disclose, under a
         binder of confidentiality, Confidential Information to any Third Party
         for the purpose of carrying out the purposes of this Agreement. Where
         materiality of disclosure requires a press release or other disclosure
         pertaining to this Agreement by one Party, the disclosing Party shall
         give the other Party a copy of the proposed disclosure and afford that
         Party at least two (2) business days.

7.3      SURVIVAL: This Article 7 shall survive the termination or expiration of
         this Agreement for a period of five (5) years.

7.4      TERMINATION OF PRIOR AGREEMENT: This Agreement supersedes the
         Confidentiality Agreement between Titan and Schering dated as of
         January 22, 1999. All Information exchanged between the Parties under
         the said Confidentiality Agreement shall be deemed to be Confidential
         Information and shall be subject to the terms of this Article 7, and
         shall be included within the definition of Confidential Information.

7.5      PUBLICATIONS: Schering shall determine the overall strategy
         for publication in support of the Product in the Territory.

7.6      PUBLICITY REVIEW: Subject to the other provisions of this Section 7, no
         Party shall originate any written publicity, news release, or other
         announcement or statement relating to this Agreement or to performance
         hereunder or the existence of an arrangement between the Parties
         (collectively "Written Disclosure") without the prior prompt review and
         written approval of the other Party, which approval shall not be
         unreasonably withheld or delayed. Notwithstanding the foregoing
         provisions of this Section 7.6, any Party may make any public Written
         Disclosure it believes in good faith based upon the advice of counsel
         is required by applicable law or any listing or trading agreement
         concerning its publicly traded securities, provided that prior to
         making such Written Disclosure, the disclosing Party shall provide the
         other Party with a copy of the materials


                                       16
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]and/or
an asterisk *, have been separately filed with the Commission.

         proposed to be disclosed and provide the receiving Party with at least
         two (2) business days to review the proposed Written Disclosure.

8.       OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS

8.1      OWNERSHIP: Each Party shall solely own any inventions made solely by
         that Party's employees or consultants in the course of performing
         work under this Agreement. Inventions made jointly by employees or
         consultants of Titan and Schering and any Patents resulting therefrom
         shall be owned by Schering subject to the licenses granted to Titan
         pursuant to Section 11.2. However, Titan will have a worldwide
         non-exclusive license to such Patents for use outside the Field, with
         royalties under the license to be negotiated by the parties in good
         faith (but in no event shall the royalties exceed [ * ] of net sales).

8.2      DISCLOSURE OF JOINT INVENTIONS: Any such patent application disclosing
         inventions made jointly by the Parties shall be provided by one Party
         to the other reasonably in advance of the intended date for submission
         of such application to a governmental patent authority.

8.3      PATENT FILINGS

         (a)      Each Party, at its sole discretion, cost and responsibility,
                  shall prepare, file, prosecute and maintain Patents to cover
                  discoveries and inventions made solely by its own employees or
                  consultants relating to Compound or Product and use
                  commercially reasonable efforts to file initially all such
                  applications in the Territory or the appropriate forum under
                  the circumstances wherein such a Party determines it is
                  commercially reasonable to do so. Schering shall file,
                  prosecute and maintain Patents to cover inventions relating to
                  the discovery, evaluation, manufacture, use or sale of the
                  Compound or the Product that are made jointly by personnel of
                  Titan and Schering in the course of the collaboration (herein
                  referred to as "Joint Patents"). The determination of the
                  countries in the Territory in which to file Joint Patents
                  shall be made by Schering. Schering shall have the right to
                  direct and control all material actions relating to the
                  prosecution or maintenance of Joint Patents in the Territory,
                  including interference proceedings, reexaminations, reissue
                  opposition and revocation proceedings.

         (b)      The Parties agree to use commercially reasonable efforts to
                  ensure that any Patent filed outside the United States prior
                  to a filing in the United States will be in a form sufficient
                  to establish the date of original filing as a priority date
                  for the purposes of a subsequent filing in the United States.
                  Schering shall bear all costs related to the filing of Joint
                  Patents. The Parties agree to use commercially reasonable
                  efforts to ensure that any Patent filed in the United States
                  prior to filings outside of the United States will be in a
                  form sufficient to establish the date of original filing as a
                  priority date for the purpose of a subsequent filing in any
                  contracting state of the Paris Convention.


                                       17

<PAGE>

8.4      THIRD PARTY PATENTS: Each Party agrees to bring to the attention of the
         other Party any Third Party Patent it discovers or has discovered and
         which relates to the subject matter of this Agreement.

8.5      ENFORCEMENT RIGHTS:

         (a)      NOTIFICATION OF INFRINGEMENT: If either Party learns of any
                  infringement or threatened infringement by a Third Party of
                  Titan Patents, Schering Patents or Joint Patents, such Party
                  shall promptly notify the other Party and shall provide such
                  other Party with all available evidence of such infringement.

         (b)      ENFORCEMENT IN THE TERRITORY: Subject to the next sentence,
                  Titan shall be obligated, at its own expense, to defend Titan
                  Patents and Schering shall be obligated, at its own expense,
                  to defend Joint Patents in the Territory. Schering shall have
                  the right but not the obligation to institute, prosecute and
                  control at its own expense any action or proceeding with
                  respect to infringement of any Titan Patents or Joint Patents
                  covering the manufacture, use, importation, sale or offer for
                  sale of the Product in the Territory, by counsel of its own
                  choice. Titan shall have the right, at its own expense, to be
                  represented in any action by counsel of its own choice. If
                  Schering fails to bring an action or proceeding or otherwise
                  take appropriate action to abate such infringement within a
                  period of one hundred eighty (180) days of notice by Titan to
                  Schering requesting action, Titan will have the right to bring
                  and control any such action or proceeding relating to Titan
                  Patents by counsel of its own choice and Schering will have
                  the right to be represented in any such action by counsel of
                  its own choice and at its own expense. If one Party brings any
                  such action or proceeding, the other Party agrees to be joined
                  as a party plaintiff if necessary to prosecute the action or
                  proceeding and to give the first Party commercially reasonable
                  assistance and authority to file and prosecute the suit. Any
                  damages or other monetary awards recovered pursuant to this
                  Section 8.5(b) shall be allocated first to the costs and
                  expenses of the party bringing suit, then to the costs and
                  expenses, if any, of the other Party. In the event that
                  Schering brings such action, any amounts remaining shall be
                  distributed as follows: compensatory damages shall be treated
                  as Net Sales in the country and calendar quarter received and
                  punitive and exemplary damages shall be paid equally to
                  Schering and Titan. In the event that Titan brings such
                  action, any damages or other monetary awards recovered shall
                  be divided equally between the Parties.

         (c)      SETTLEMENT WITH A THIRD PARTY: The Party that controls the
                  prosecution of a given action shall also have the right to
                  control settlement of such action, provided however, that if
                  one Party controls, no settlement shall be entered into
                  without the written consent of the other Party (which consent
                  shall not be unreasonably withheld) if such settlement would
                  materially and adversely affect the interests of the other
                  Party.


                                       18
<PAGE>

8.6      DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS: If a Third Party asserts
         that a patent owned by it is infringed by any Product, Titan will be
         solely responsible for defending against any such assertions at its
         cost and expense (subject to the provisions of Section 8.5(b)), but no
         settlement may be entered into without the written consent of Schering,
         which shall not be unreasonably withheld. The costs of any such
         settlement (including, without limitation, damages, expense
         reimbursements, compliance, future royalties or other amounts) shall be
         paid exclusively by Titan. If any Third Party is successful in any such
         claim and Schering is ordered to make any payments to such Third Party
         in connection therewith, any such payments may be offset or deducted
         from the payment obligations of Schering under the Agreement.

8.7      PATENT EXPENSES: All worldwide Patent Expenses with respect to Titan
         Patents shall be borne by Titan and all worldwide Patent Expenses with
         respect to Joint Patents shall be borne by Schering, subject in both
         cases to the terms of this Agreement.

8.8      TRADEMARKS: Schering shall be responsible for the selection,
         registration and maintenance of all trademarks which it employs in
         connection with the Product and shall own and control such trademarks
         and pay any costs in connection therewith. Titan recognizes the
         exclusive ownership by Schering of the proprietary Schering name,
         logotype or trademark furnished by Schering (including Schering's
         Affiliates) for use in connection with the Product. Titan shall not,
         either while this Agreement is in effect or at any time thereafter
         register, use or attempt to obtain any right in or to any such name,
         logotype or trademark or in and to any name, logotype or trademark
         confusingly similar thereto. Only Schering will be authorized to
         initiate, at its own discretion and at its own cost, legal proceedings
         against any infringement or threatened infringement of the trademarks
         applicable to the Product.

8.9      USE OF NAMES: Neither Party shall use the name of the other Party in
         relation to this transaction in any public announcement, press release
         or other public document without the written consent of such other
         Party, which consent shall not be unreasonably withheld or delayed,
         provided however, that either Party may use the name of the other Party
         in any document filed with any regulatory agency or authority,
         including the FDA and the Securities and Exchange Commission, in which
         case Schering shall be referred to as "Schering AG, Germany". The
         Parties agree not to use the name of the other Party in relation to
         this transaction in any press release, public announcement or other
         public document without the approval of such other Party, which
         approval shall not be unreasonably withheld or delayed.

8.10     NO TRADEMARK RIGHTS: Except as otherwise provided herein, no right,
         express or implied, is granted by this Agreement to use in any manner
         the name "Schering" or "Titan" or any other trade name or trademark of
         the other Party or its Affiliates in connection with the performance of
         this Agreement.

9.       REPRESENTATIONS AND WARRANTIES

9.1      REPRESENTATIONS AND WARRANTIES:


                                       19
<PAGE>

         (a)      Each of the Parties hereby represents and warrants to the
                  other Party as follows:

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

                  (ii)     Titan has not granted and during the term of the
                           Agreement neither Party will grant any right to any
                           Third Party relating to the Titan Patents, Titan
                           Know-How and Joint Patents in the Field which would
                           conflict with the rights granted to either Party
                           hereunder.

         (b)      Titan hereby represents and warrants to Schering that Titan:

                  (i)      Has provided or shown to Schering all information in
                           its possession or control or of which it is aware as
                           of the Effective Date, concerning efficacy, side
                           effects, injury, toxicity or sensitivity, reaction
                           and incidents of severity thereof, associated with
                           any clinical use, studies, investigations or tests
                           with the Product (animal or human), whether or not
                           determined to be attributable to the Product.

                  (ii)     Has conducted or has caused its contractors or
                           consultants to conduct, and will in the future
                           conduct, the preclinical and clinical studies of the
                           Product in accordance with applicable United States
                           law, known or published standards of the FDA, and the
                           scientific standards applicable to the conduct of
                           studies in the United States.

                  (iii)    Has employed and will in the future employ
                           individuals of appropriate education, knowledge, and
                           experience to conduct or oversee the conduct of
                           Titan's clinical and preclinical studies of the
                           Product.

                  (iv)     Has not employed (and, to the best of its knowledge,
                           has not used a contractor or consultant that has
                           employed) and in the future will not employ (or, to
                           the best of its knowledge, use any contractor or
                           consultant that employs) any individual or entity
                           debarred by the FDA or, to the best knowledge of
                           Titan, any individual who or entity which is the
                           subject of an FDA debarment investigation or
                           proceeding (or similar proceeding of the EMEA), in
                           the conduct of the preclinical or clinical studies of
                           the Product.

                  (v)      In the course of developing the Product, has not
                           conducted, and during the course of this Agreement it
                           will not conduct, any Development activities in
                           violation of applicable GCPs, GLPs or GMPs;


                                       20
<PAGE>

                  (vi)     As of the Effective Date, except as it may have
                           previously disclosed to Schering in writing, has not
                           received any notices of infringement or any written
                           communications relating in any way to a possible
                           infringement with respect to the Compound or any
                           potential Products, and that it is not aware that the
                           manufacture, use or sale of Compound or any potential
                           Products infringes any Third Party patent rights.

                  (vii)    As of the Effective Date, it is not aware of any
                           prior act or any fact which causes it to conclude
                           that any Titan patent is invalid or unenforceable.

                  (viii)   Has complied in all material respects with each
                           license listed on Exhibit B hereto, and during the
                           term hereof will comply in all material respects and
                           use all reasonable efforts to keep in full force and
                           effect each such license; neither this Agreement nor
                           any of the transactions contemplated hereby will,
                           with the giving of notice or the lapse of time or
                           both constitute a default or breach of any such
                           license.

                  (ix)     Titan has obtained or licensed all rights to the
                           Compound and the Titan Patents and the Titan Know-How
                           free and clear of any liens, encumbrances or rights
                           to repurchase.

                  (x)      During the term hereof, Titan will not grant a lien
                           on this Agreement or on any of Titan's rights or
                           obligations hereunder or on the Titan Patents or
                           Titan Know-How related to the Product.

         (c)      Schering hereby represents and warrants that Schering:

                  (i)      Will conduct or cause its contractors and consultants
                           to conduct, the preclinical and clinical studies of
                           the Product in accordance with applicable United
                           States law, known or published standards of the FDA
                           and EMEA, and the scientific standards applicable to
                           the conduct of studies in the United States and the
                           European Union.

                  (ii)     Will not employ (or, to the best of its knowledge,
                           use any contractor or consultant that employs) any
                           individual or entity debarred by the FDA (or subject
                           to a similar sanction of EMEA) or, to the best
                           knowledge of Schering, any individual who or entity
                           which is the subject of an FDA debarment
                           investigation or proceeding (or similar proceeding of
                           the EMEA), in the conduct of the preclinical or
                           clinical studies of the Product.

                  (iii)    In the course of developing the Product, will not
                           conduct any Development activities in violation of
                           applicable GCPs, GLPs, or GMPs.

9.2      INDEMNIFICATION FOR BREACHES OF REPRESENTATIONS AND WARRANTIES: Without
         prejudice to any other right or remedy available to either Party
         arising out of the breach by the other of any of the representations
         and warranties set out in Section 9.1 above, each Party hereby agrees
         to indemnify, defend, and hold the other Party and its shareholders,
         directors, officers, agents and employees harmless from and against any
         and all losses


                                       21
<PAGE>

         resulting directly or indirectly from the breach of any
         representation or warranty made by such Party hereunder. In the event
         that a Party is seeking indemnification under this Section 9.2, it
         shall inform the other Party of a claim as soon as reasonably
         practicable after it receives notice of the claim, shall permit the
         indemnifying Party to assume direction and control of the defense of
         the claim (including the right to settle the claim solely for monetary
         consideration), and shall cooperate as requested (at the expense of the
         indemnifying Party) in defense of the claim.

9.3      PERFORMANCE BY AFFILIATES: The Parties recognize that each Party may
         perform some or all of its obligations under this Agreement through
         Affiliates, provided however, that each Party shall remain responsible
         for and be a guarantor of the performance by its Affiliates and shall
         cause its Affiliates to comply with the provisions of this Agreement in
         connection with such performance.

10.      INFORMATION AND REPORTS

10.1     INFORMATION AND REPORTS DURING DEVELOPMENT AND COMMERCIALIZATION:
         Schering and Titan will disclose and make available (subject to any
         confidentiality agreements or requirements of law) to each other
         without charge all preclinical, clinical, regulatory and other
         Information, including copies of all preclinical and clinical reports
         known by Schering or Titan directly concerning the Product within the
         Field at any time during the term of this Agreement. Each Party shall
         own and maintain its own database of clinical trial data accumulated
         from all clinical trials of the Product for which it was responsible
         and of adverse drug event information for the Product. At the option of
         the requesting Party, such data shall be provided in a computer
         readable or other electronic format by the providing Party, to the
         extent available, which shall also assist in the transfer and
         validation of such data to the receiving Party. Without limitation of
         the foregoing, each Party shall supply to the other the information
         required by the other Party and requested by it (either as a routine
         practice or as a specific request) for purposes of compliance with
         regulatory requirements. With respect to information concerning
         Commercialization, Schering agrees to keep Titan regularly informed on
         all post marketing activities but shall have no obligation, except as
         specifically set out in this Agreement, to share pricing, marketing or
         sales information with Titan.

10.2     ADVERSE DRUG EXPERIENCES; COMPLAINTS: The Parties agree to enter into a
         standard operating procedure by and between the Parties to govern the
         exchange of information relating to adverse drug experiences, Product
         quality and Product complaints.

10.3     RECORDS OF REVENUES AND EXPENSES: Each Party will maintain complete and
         accurate records which are relevant to revenues, costs, expenses and
         payments on a country-by-country basis in the Territory under this
         Agreement and such records shall be open during reasonable business
         hours for a period of three (3) years from creation of individual
         records for examination at the other Party's expense and not more often
         than once each year by a firm of certified public accountants selected
         by the other Party, or the other Party's internal accountants unless
         the first Party objects to the use of such internal accountants, for
         the sole purpose of verifying for the inspecting Party the correctness
         of calculations and classifications of such revenues, costs, expenses
         or payments made


                                       22
<PAGE>

         under this Agreement. Each Party shall bear its own costs related to
         such audit; provided that, for any underpayments greater than five
         (5) percent by Schering, Schering shall pay Titan the amount of
         underpayment, interest as provided for in Section 5.2(f) from the
         time the amount was due and Titan's out-of-pocket expenses. For any
         underpayments less than five (5) percent by Schering found under
         this Section, Schering shall pay Titan the amount of underpayment.
         Any overpayments by Schering will be credited to future royalties.
         Any records or accounting information received from the other Party
         shall be Confidential Information for purposes of Article 7. Results
         of any such audit shall be provided to both Parties, subject to
         Article 7.

10.4     If there is a dispute between the Parties following any audit performed
         pursuant to Section 10.3, either Party may refer the issue (an "Audit
         Disagreement") to an independent certified public accountant for
         resolution. In the event an Audit Disagreement is submitted for
         resolution by either Party, the Parties shall comply with the following
         procedures: (a) the Party submitting the Audit Disagreement for
         resolution shall provide written notice to the other Party that it is
         invoking the procedures of this Section 10.4; (b) within thirty (30)
         days of the giving of such notice, the Parties shall jointly select a
         recognized international accounting firm to act as an independent
         expert to resolve such Audit Disagreement; (c) the Audit Disagreement
         submitted for resolution shall be described by the Parties to the
         independent expert, which description may be in written or oral form,
         within ten (10) business days of the selection of such independent
         expert; (d) the independent expert shall render a decision on the
         matter as soon as practicable but in no event more than sixty (60) days
         after submission of the Audit Disagreement to the expert; (e) the
         decisions of the independent expert shall be final and binding unless
         such Audit Disagreement involves alleged fraud, breach of this
         Agreement, or construction or interpretation of any of the terms and
         conditions thereof; (f) all fees and expenses of the independent
         expert, including any third party support staff or other costs incurred
         with respect to carrying out the procedures specified at the direction
         of the independent expert in connection with such Audit Disagreement,
         shall be borne by each Party in inverse proportion to the disputed
         amounts awarded to the Party by the independent expert through such
         decision (e.g., Party A disputes $100, the independent expert awards
         Party A $60, then Party A pays forty percent (40%) and Party B pays
         sixty percent (60%) of the independent expert's costs.)

11.      TERM AND TERMINATION

11.1     TERM: This Agreement shall commence as of the Effective Date and,
         unless sooner terminated as provided herein shall continue in effect
         until such time as no royalties are payable under Article 5 hereunder
         to Titan, provided that the license to Titan Know-How granted pursuant
         to Section 2 shall survive such termination.

11.2     TERMINATION

         (a)      EARLY TERMINATION: In the event that Schering elects not to
                  initiate the Pivotal Clinical Trial of the Product pursuant to
                  Section 5.1(a), this Agreement shall terminate, and all
                  payments made by Schering to Titan shall be retained by Titan;
                  and Titan shall retain full rights to use any data and
                  information generated, up to


                                       23
<PAGE>

                  the date of termination, by Titan, Schering, or jointly
                  pertaining to the Compound and the Product.

         (b)      TERMINATION AT WILL: Schering will have the right to terminate
                  this Agreement for the Territory or on a country-by-country
                  basis and be fully released of all obligations hereunder
                  (except as expressly provided for herein) by ninety (90) days'
                  notice given at any time, and Titan shall thereafter retain
                  full rights to use any data and information generated, up to
                  the date of termination, by Titan, Schering, or jointly
                  pertaining to the Compound and the Product.

         (c)      TERMINATION FOR MATERIAL BREACH: Failure by Schering or Titan
                  to comply with any of the respective material obligations and
                  conditions contained in this Agreement shall entitle the other
                  Party to give the Party in default notice requiring it to cure
                  such default. If such default is not cured within ninety (90)
                  days after receipt of such notice, the notifying Party shall
                  be entitled (without prejudice to any of its other rights
                  conferred by this Agreement) to terminate this Agreement or,
                  in the event of an uncured material breach by Titan, to invoke
                  the rights of Schering set forth in Section ll.2(f) by giving
                  a notice to take effect immediately. The right of either Party
                  to terminate this Agreement as hereinabove provided shall not
                  be affected in any way by its waiver of, or failure to take
                  action with respect to, any previous default.

         (d)      TERMINATION FOR INSOLVENCY: In the event that one of the
                  Parties hereto shall go into liquidation, a receiver or a
                  trustee be appointed for the property or estate of that Party
                  and said receiver or trustee is not removed within sixty (60)
                  days, or the Party makes an assignment for the benefit of
                  creditors (collectively, a "Bankruptcy Event"), and whether
                  any of the aforesaid Bankruptcy Events be the outcome of the
                  voluntary act of that Party or otherwise, the other Party
                  shall be entitled to terminate this Agreement (or in the event
                  Titan suffers such a Bankruptcy Event, Schering may effect its
                  rights described in Section 11.2(f) forthwith by giving a
                  written notice to Titan.

         (e)      EFFECT OF TERMINATION: In the event that this Agreement is
                  terminated by Schering in one or more countries or in its
                  entirety in accordance with Section 11.2(b), or this Agreement
                  is terminated by Titan pursuant to Section 11.2(c) either in
                  one country or in its entirety, Schering will, with respect to
                  each country to which the termination applies:

                  (i)      deliver to Titan the Titan Know-How and assign to
                           Titan its rights in said Titan Know-How and Titan
                           Patents, if any, in either case relating solely to
                           the country that is the subject of the termination;

                  (ii)     not use the Titan Know-How as long as it has to be
                           kept confidential pursuant to Article 7 hereof in
                           such country;

                  (iii)    not infringe any of the Titan Patents in such
                           country;


                                       24
<PAGE>

                  (iv)     transfer all regulatory filings and approvals related
                           to the Product in such country to Titan upon
                           Titan's written request for same;

                  (v)      sell to Titan, at any time within ninety (90) days of
                           such termination, at Titan's election, all or any
                           portion of the inventory of the Compound or Product
                           owned by Schering or its Affiliates which are
                           intended for sale in such country at a price equal to
                           Schering's or its Affiliate's cost for such
                           inventory; such election shall be made by Titan in
                           writing and within thirty (30) days of such election
                           Schering shall ship, at Titan's cost and
                           direction such inventory to Titan. Titan shall pay
                           for such inventory within forty-five (45) days of
                           receipt of such inventory.

         (f)      EFFECT OF TERMINATION BY SCHERING PURSUANT TO SECTIONS 11.2(C)
                  AND (D): In the event of a Bankruptcy Event or a material
                  default described in Sections 11.2(c) and (d) by Titan, which
                  default is not cured as provided therein, Schering may elect
                  in lieu of terminating this Agreement to declare the license
                  granted pursuant to this Agreement to be irrevocable. From the
                  date of receipt of notice of such election, Titan shall have
                  no further rights or obligations (except for those arising
                  under Section 7.3) under this Agreement except that Titan may
                  enforce any financial obligations of Schering provided that if
                  such election occurs prior to the First Commercial Sale of the
                  Product, any additional Development Expenses and any
                  reasonable costs incurred by Schering to Commercialize the
                  Product as a result of such election shall be credited against
                  amounts payable by Schering to Titan.

         (g)      GENERAL: Except where expressly provided for otherwise in this
                  Agreement, termination of this Agreement shall not relieve the
                  Parties hereto of any liability, including any obligation to
                  make payments hereunder, which accrued hereunder prior to the
                  effective date of such termination nor preclude any Party from
                  pursuing all rights and remedies it may have hereunder or at
                  law or in equity with respect to any breach of this Agreement
                  nor prejudice any Party's right to obtain performance of
                  any obligation.

         (h)      SURVIVING RIGHTS: The rights and obligations set forth in this
                  Agreement shall extend beyond the term or termination of the
                  Agreement only to the extent expressly provided for herein, or
                  the extent that the survival of such rights or obligations are
                  necessary to permit their complete fulfillment or discharge.

12.      INDEMNIFICATION

12.1     Sections 14 and 15, the indemnification and insurance provisions of the
         NYU License (Exhibit B), are incorporated herein by reference. NYU is
         an intended third party beneficiary of this Agreement for purposes of
         enforcing such indemnification and insurance provisions.

12.2     INDEMNIFICATION BY SCHERING FOR NEGLIGENCE, WILLFUL MISCONDUCT, OR
         BREACH: Schering shall indemnify, defend and hold harmless Titan and
         its shareholders, employees, agents,


                                       25
<PAGE>

         officers, managers, partners and directors and each of them (a
         "Titan Indemnified Party") from and against any and all Third Party
         claims, causes of action, losses, damages and costs (including
         reasonable attorneys' fees regardless of outcome) of any nature made
         or asserted against a Titan Indemnified Party or lawsuits or other
         proceedings filed or otherwise instituted against a Titan
         Indemnified Party, in each case by a Third Party (hereinafter
         individually and collectively (a) "Titan Loss(es)") resulting from
         or arising out of the development, manufacture, sale or marketing of
         Product in the Territory but solely to the extent that such Titan
         Loss(es) arise out of or result from the negligence or willful
         misconduct of Schering, its Affiliates or sublicensees or the breach
         by Schering, its Affiliates or sublicensees of any of its or their
         representations or warranties or obligations or covenants hereunder.

12.3     INDEMNIFICATION BY TITAN FOR NEGLIGENCE, WILLFUL MISCONDUCT, OR BREACH:
         Titan shall indemnify, defend and hold harmless Schering and its
         Affiliates and their respective shareholders, employees, agents,
         officers, managers, partners and directors and each of them (a
         "Schering Indemnified Party") from and against any and all Third Party
         claims, causes of action, losses, damages and costs (including
         reasonable attorney's fees regardless of outcome) of any nature
         made or asserted against a Schering Indemnified Party, in each case by
         a Third Party (hereinafter individually and collectively (a) "Schering
         Loss(es)" resulting from or arising out of the manufacture, use,
         marketing or sale of Product in the Territory but solely to the extent
         that such Schering Loss(es) arise out of or result from the negligence
         or willful misconduct of Titan or its Affiliates, or the breach by
         Titan or its Affiliates of any of its or their representations or
         warranties or obligations or covenants hereunder.

12.4     CONDITIONS TO INDEMNIFICATION: A person or entity that intends to claim
         indemnification under this Article 12 (the "Indemnitee") shall promptly
         notify the other party (the "Indemnitor") of any Schering Loss(es) or
         Titan Loss(es) as the case may be in respect of which the Indemnitee
         intends to claim such indemnification. Indemnitor shall have the right
         to control the defense of any Schering Loss(es) or Titan Loss(es) as
         the case may be as to which the obligation to indemnify the Indemnitee
         has been acknowledged by the Indemnitor in writing under Section 12.2
         or 12.3. The indemnity agreement in this Article 12 shall not apply to
         amounts paid in settlement of any loss, claim, damage, liability or
         action if such settlement is effected without the consent of the
         Indemnitor, which consent shall not be withheld or delayed
         unreasonably. The failure to deliver notice to the Indemnitor within a
         reasonable time after the commencement of any such action, only if
         prejudicial to its ability to defend such action, shall relieve such
         Indemnitor of any liability to the Indemnitee under this Article 12,
         but the omission so to deliver notice to the Indemnitor will not
         relieve it of any liability that it may have to any Indemnitee
         otherwise than under this Article 12. The Indemnitee under this Article
         12, its employees and agents shall cooperate fully with the Indemnitor
         and its legal representatives in the investigations and defense of any
         action, claim or liability covered by this indemnification. The
         Indemnitee shall have the right to participate in the defense of such
         action.

13.      MISCELLANEOUS


                                       26
<PAGE>

13.1     ASSIGNMENT:

         (a)      Schering may assign any of its rights or obligations under
                  this Agreement in any country to any of its Affiliates,
                  provided that such assignment shall not relieve Schering of
                  its responsibilities for performance of its obligations under
                  this Agreement.

         (b)      Titan may assign any of its rights or obligations under this
                  Agreement in any country to any of its Affiliates, and Titan
                  may assign its rights or obligations under this Agreement as
                  part of a transaction such as a merger, acquisition, or sale
                  of all or substantially all of the assets of Titan; provided
                  that such assignment shall not relieve Titan of its
                  responsibilities for performance of its obligations under this
                  Agreement; and provided further that the financial obligations
                  of Schering shall survive any such assignment.

         (c)      This Agreement shall be binding upon and inure to the benefit
                  of the successors and permitted assigns of the Parties. Any
                  assignment not in accordance with this Agreement shall be
                  void.

13.2     RETAINED RIGHTS: Nothing in this Agreement shall limit in any respect
         the right of either Party to conduct research and development and to
         market products using such Party's technology other than as herein
         expressly provided.

13.3     FURTHER ACTIONS: Each Party agrees to execute, acknowledge and deliver
         such further instruments, and to do all such other acts as may be
         necessary or appropriate in order to carry out the purposes and intent
         of this Agreement.

13.4     NOTICES: All notices hereunder shall be in writing and shall be deemed
         given if delivered personally or two days after mailed by registered or
         certified mail (return receipt requested), postage prepaid, or sent by
         express courier service, to the Parties at the following addresses (or
         at such other address for a Party as shall be specified by like notice;
         provided that notices of a change of address shall be effective only
         upon receipt thereof).

         (a)      If to Titan:

                  Titan Pharmaceuticals, Inc.
                  400 Oyster Point Boulevard, Suite 505
                  South San Francisco, California 94080
                  U.S.A.
                  Attn.:  President and CEO


                                       27
<PAGE>


         (b)      If to Schering:

                  Schering AG
                  Muellerstrasse 178
                  Berlin-Wedding
                  D-13342 Berlin
                  Germany
                  Attn.:  Legal Department

13.5     WAIVER: Except as specifically provided for herein, the waiver from
         time to time by either of the Parties of any of their rights or their
         failure to exercise any remedy shall not operate or be construed as a
         continuing waiver of same or any other of such Party's rights or
         remedies provided in this Agreement.

13.6     SEVERABILITY: If any term, covenant or condition of this Agreement or
         the application thereof to any Party or circumstances shall, to any
         extent or in any country, be held to be invalid or unenforceable, then
         (i) the remainder of this Agreement, or the application of such term,
         covenant or condition of this Agreement shall be valid and be enforced
         to the fullest extent permitted by law; and (ii) the Parties hereto
         covenant and agree to renegotiate any such term, covenant or
         application thereof in good faith in order to provide a reasonably
         acceptable alternative to the term, covenant or condition of this
         Agreement or the application thereof that is invalid or unenforceable,
         it being the intent of the Parties that the basic purposes of this
         Agreement are to be effected.

13.7     AMBIGUITIES: Ambiguities, if any, in this Agreement shall not be
         construed against any Party, irrespective of which Party may be deemed
         to have authored the ambiguous provision.

13.8     GOVERNING LAW AND JURISDICTION: This Agreement shall be governed by and
         interpreted under the laws of the State of New York as applied to
         contracts entered into and performed entirely in New York by New York
         residents.

13.9     HEADINGS: The sections and paragraph headings contained herein are for
         the purposes of convenience only and are not intended to define or
         limit the contents of said sections or paragraphs.

13.10    COUNTERPARTS: This Agreement may be executed in one or more
         counterparts (and by facsimile), each of which shall be deemed an
         original but all of which together shall constitute one and the same
         instrument.

13.11    ENTIRE AGREEMENT; AMENDMENTS: This Agreement, including all Exhibits
         attached hereto and thereto, and all documents delivered concurrently
         herewith and therewith, set forth all the covenants, promises,
         agreements, warranties, representations, conditions and understandings
         between the Parties hereto and supersede and terminate all prior
         agreements and understandings between the Parties. There are no
         covenants, promises, agreements, warranties, representations,
         conditions or understandings, either oral or written, between the
         Parties other than as set forth herein and therein. No subsequent


                                       28
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

         alteration, amendment, change or addition to this Agreement shall be
         binding upon the Parties hereto unless reduced to writing and signed by
         the respective authorized officers of the Parties. This Agreement,
         including without limitation the exhibits, schedules and attachments
         thereto, are intended to define the full extent of the legally
         enforceable undertakings of the Parties hereto, and no promise or
         representation, written or oral, which is not set forth explicitly
         herein or therein is intended by either Party to be legally binding.
         Both Parties acknowledge that in deciding to enter into the Agreement
         and to consummate the transaction contemplated hereby neither has
         relied upon any statement or representations, written or oral, other
         than those explicitly set forth herein.

13.12    EXPENSES: Except as otherwise specified in this Agreement, all costs
         and expenses including, without limitation, fees and disbursements of
         counsel, financial advisors and accountants, travel, lodging, meals and
         entertainment incurred in connection with this Agreement and the
         transactions contemplated hereby shall be paid by the Party incurring
         such costs and expenses.

13.13    INDEPENDENT CONTRACTORS: The status of the parties under this Agreement
         shall be that of independent contractors. Neither Party shall have the
         right to enter into any agreements on behalf of the other Party, nor
         shall it represent to any person that it has any such right or
         authority. Nothing in this Agreement shall be construed as establishing
         a partnership or joint venture relationship between the Parties. This
         Agreement is not intended to be a partnership between Titan and
         Schering for federal, state or local income tax purposes.

13.14    EQUITY INVESTMENT: Upon successful completion of pilot clinical trials
         and Schering's decision to enter into Pivotal Clinical Trials, Schering
         may make an equity investment of up to [ * ] in Titan on terms to be
         mutually agreed upon by the Parties.

13.15    In further consideration for the payments made hereunder, and for other
         good and valuable consideration the receipt of which is hereby
         acknowledged, Titan extends to Schering a one year worldwide exclusive
         option, which option expires on the first anniversary of the Effective
         Date of this Agreement ("Option Period"), to enter into a further
         License Agreement for any expanded Compound(s) consisting of cells,
         other than RPE cells, on microcarriers used in Product(s) for all
         indications. Should Schering exercise an Option in this Section 13.15,
         the Parties agree to enter into good faith negotiations to conclude a
         further definitive License Agreement(s) which, in addition to the terms
         and conditions usual and customary in such agreements, shall include at
         least the following provisions obligating Schering to take the
         following actions:

         (a)      Prepare and execute a Development Plan for the Product(s) of
                  the expanded Compound(s) in a manner similar to that set forth
                  in Section 3.2 of this Agreement.

         (b)      Pay to Titan a license fee between [ * ], the amount of which
                  fee shall be mutually agreed upon in good faith and shall be
                  dependent upon the breadth of the Field, e.g.:

                  (i)      For expanded Compound(s) for a single therapeutic
                           indication; or


                                       29
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

                  (ii)     For expanded Compound(s) for all CNS indications; or

                  (iii)    For expanded Compound(s) for all non-CNS indications;
                           or

                  (iv)     For expanded Compound(s) for all indications.

Such license fee shall additionally be dependent upon the relative contribution
of each Party to the development of supportive data for such Additional
Indications during the Option Period.

         (c)      Pay to Titan milestone payments, in amounts to be determined
                  in good faith negotiations between the Parties, upon the
                  occurrence of each of the following events:

                  (i)      The submission of an IND to the FDA for a Product
                           containing an expanded Compound; and

                  (ii)     Regulatory Approval by FDA of a Product containing an
                           expanded Compound; and

                  (iii)    Regulatory Approval by the EMEA of a Product
                           containing an expanded Compound.

         (d)      Pay to Titan royalties on Net Sales of Products covered by the
                  further License Agreement, on a Product by Product and
                  country-by-country basis, as follows: [ * ] of Net Sales if
                  the Product is covered by both a Patent and Titan Know-How; or
                  [ * ] of Net Sales if the Product is covered only by Titan
                  Know-How.

                  IN WITNESS WHEREOF Titan and Schering have caused this
agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.

SCHERING AG                             TITAN PHARMACEUTICALS, INC.

BY:   /s/ Professor Dr. G. Stock        BY:   /s/ Louis R. Bucalo
      ----------------------------            ----------------------------
TITLE:____________________________      TITLE:____________________________

SCHERING AG

BY:     /s/ Dr. J. Kapp
        --------------------------
TITLE:____________________________


                                       30
<PAGE>

                                    EXHIBIT A

                      U.S. PATENTS AND PATENT APPLICATIONS

Pursuant to Section 2.1 of this Agreement, the following U.S. Patents and Patent
Applications are currently under the control of Titan:

Issued U.S. Patents:

US 5,618,531                                    Issued April 8, 1997

         Method of Increasing Viability of Cells which are Administered to the
Brain or Spinal Cord.

US 5,750,103                                    Issued May 12, 1998

         Method of Transplanting Cells into the Brain and Therapeutic Uses
Therefor.

US Patent Applications:

US 08/460,706                                   Filed June 2, 1995

         Method for Transplanting Cells into the Brain and Therapeutic Uses
Therefor.

US 08/629,308                                   Filed April 8, 1996

         Method for Gene Transfer to the Central Nervous System.

US 09/002,413                                   Filed January 2, 1998

         Use of Pigmented Retinal Epithelial Cells for Creation of an Immune
Privileged Site.

US 09/289,576                                   Filed April 9, 1999

         Methods of Treating Schizophrenia.


                                       31
<PAGE>

                                    EXHIBIT B

                                EXISTING LICENSES

Agreement between New York University and Theracell Corporation, effective
November 20, 1992, with First Amendment to that Agreement effective February 21,
1995, and Second Amendment to that Agreement effective December 1, 1995.

License and Supply Agreement between Theracell Inc. and Percell Biolytica AB,
effective January 1, 1999.


                                       32
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.

                                    EXHIBIT C

                            INITIAL DEVELOPMENT PLAN

                                       ***





                                       33
<PAGE>

Certain portions of this Exhibit have been omitted pursuant to a request for
confidentiality. Such omitted portions, which are marked with brackets [ ]
and/or an asterisk *, have been separately filed with the Commission.


                                       ***



                                       34