<PAGE>


Collaboration and License Agreement Between Esperion Therapeutics, Inc. and
Pharmacia & Upjohn AB dated June 24, 1998.

Confidential treatment requested for portions of this document.

                                                                  EXHIBIT 10.2


                      COLLABORATION AND LICENSE AGREEMENT

     COLLABORATION AND LICENSE AGREEMENT (this "Agreement") dated as of the 24th
                                                ---------
day of June, 1998, by and between Pharmacia & Upjohn AB, a Swedish corporation
with a principal place of business at Lindhagensgatan 133, S-112 87, Stockholm,
Sweden ("PNU"), and Esperion Therapeutics, Inc., a Delaware corporation with a
         ---
principal place of business at 690 KMS Place, Ann Arbor, Michigan 48108, U.S.A.
(the "Company").
      -------

                              W I T N E S S E T H:
                              - - - - - - - - - -

     WHEREAS, PNU has been engaged in the development of the Compound (as
defined below) as a therapeutic for cardiovascular market, and owns certain
patent rights and know-how with respect thereto; and

     WHEREAS, PNU has decided for strategic reasons to divest such project from
its portfolio; and

     WHEREAS, the Company has as its principal business objective the
development of novel anti-atherogenic therapies, and has an interest in
acquiring exclusive rights to the project from PNU and continuing the
development of the Compound and pursuing the commercialization thereof; and

     WHEREAS, the parties desire to enter into an agreement pursuant to which
(i) PNU shall transfer and assign to the Company the project and certain patent
rights, know-how and technology relating thereto, (ii) the Company will pursue
the continued development of the Compound and ultimately the commercialization
thereof and (iii) PNU shall have certain options to participate in the
development and marketing of the Compound.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:

SECTION 1.    DEFINITIONS
     For the purpose of this Agreement, the following words and phrases shall
have shall have the meanings set forth below:

1.1  "Affiliate" means, with respect to any Person, any other Person that
      ---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under control with such Person.  For purposes hereof, the
term "control" (including, with its correlative meanings, the terms "controlled
      -------                                                        ----------
by" and "under common control with"), with respect to any Person, means the
--       -------------------------
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person (whether through the
ownership of voting securities, by contract or otherwise); provided, that in
                                                           --------
each event in which any Person owns directly or indirectly more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or more than 50% of the
securities having ordinary


**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.
<PAGE>

voting power for the election of directors or other governing body of a
corporation or more than fifty percent (50%) of the ownership interest of any
other Person, such Person shall be deemed to control such corporation or other
Person.

1.2  "Aggregate Cash Reserves" means cash and marketable securities.
      -----------------------

1.3  "Assigned Contracts" means the contracts specified in Appendix A hereto.
      ------------------

1.4  "Assigned PNU Patent Rights" means all Patents owned by PNU or its
      --------------------------
Affiliates as of the date of this Agreement and listed in Appendix B hereto.
The Patents listed in Appendix B hereto include Patents (a) which have issued as
of the date of this Agreement, and (b) which issue at any time from applications
(i) pending as of the date of this Agreement or (ii) subsequently filed
worldwide.

1.5  "Company Know-How" means any and all technology, manufacturing and other
      ----------------
know-how, technical information, inventions, discoveries, methods,
specifications and trade secrets owned or Controlled by the Company relating to
the development, manufacture, use, marketing or sale of Licensed Products or any
Improvements with respect thereto.

1.6  "Company Patent Rights" means any and all Patents owned or Controlled by
      ---------------------
the Company claiming inventions necessary or useful to the development,
manufacture, use, marketing or sale of Licensed Products or any Improvements
with respect thereto, including the Assigned PNU Patent Rights.

1.7  "Compound" means the Milano variant of Apolipoprotein A-I.
      --------

1.8  "Confidential Information" means any and all information (in any and every
      ------------------------
form and media) not generally known in the relevant trade or industry, which was
obtained from any party or any Affiliate thereof in connection with this
Agreement or the respective rights and obligations of the parties hereunder,
including, without limitation, (a) information relating to trade secrets of such
party or any Affiliate thereof, (b) information relating to existing or
contemplated products, services, technology, designs, processes, formulae,
research and development (in any and all stages) of such party or any Affiliate
thereof, (c) information relating to the Compound or the Licensed Products, and
(d) information relating to business plans, methods of doing business, sales or
marketing methods, customer lists, customer usages and/or requirements and
supplier information of such party or any Affiliate thereof, except that
                                                             ------
"Confidential Information" shall not include any information which (i) at the
-------------------------
time of disclosure, is generally known to the public, (ii) after disclosure,
becomes part of the public knowledge (by publication or otherwise) other than by
breach of this Agreement by the receiving party, (iii) the receiving party can
verify by written documentation was in its possession at the time of disclosure
and which was not obtained, directly or indirectly, from the other party or any
Affiliate thereof, (iv) the receiving party can verify by written documentation
results from research and development by the receiving party or any Affiliate
thereof independent of disclosures by the other party or any Affiliate thereof
or (v) the receiving party can prove was obtained from any Person who had the
legal right to disclose such

                                       2
<PAGE>

information, provided that such information was not obtained to the knowledge
             --------
of the receiving party or any Affiliate thereof by such Person, directly or
indirectly, from the other party or any Affiliate thereof on a confidential
basis.

1.9  "Control" means, with respect to any Licensed PNU Patent Rights or PNU
      -------
Know-How, or any Company Patent Rights Company Know-How, the possession of the
ability to grant a license or sublicense with respect thereto as provided for
herein without violating the terms of any agreement with, or the rights of, any
third Person.

1.10  "FDA" means the United States Food and Drug Administration or any
       ---
successor agency thereof.

1.11  "Governmental Approval" means any and all approvals, licenses,
       ---------------------
registrations or authorizations, including pricing approval and reimbursement,
if required, of any Federal, State or local agency, department, bureau or other
governmental entity, foreign or domestic, necessary for the manufacture, use,
storage, import, transport and sale of the Licensed Products in any regulatory
jurisdiction.

1.12  "Improvements" means any invention, discovery or improvement to the PNU
       ------------
Patent Rights, the PNU Know-How, the Company Patent Rights or the Company Know-
How made, discovered, developed, acquired or Controlled by either party after
the date hereof, whether or not patentable or patented.  For purposes of this
Agreement, "Improvements" shall not include any novel technology, uses,
techniques or methods (whether or not incorporated into or used in connection
with the Licensed Products).

1.13  "Licensed PNU Patent Rights" means all Patents (other than Assigned PNU
       --------------------------
Patent Rights) (i) which have issued as of the date of this Agreement, a list of
which is attached hereto as Appendix C hereto, or (ii) which issue at any time
from applications pending as of the date of this Agreement or subsequently filed
worldwide and claiming priority from such pending application, now owned or
Controlled during the term of this Agreement, by or on behalf of PNU or any of
its successors or Affiliates, claiming inventions necessary or useful to the
development, manufacture, purification, formulation, use, marketing or sale of
the Compound and/or the Licensed Products or any Improvements with respect
thereto.

1.14  "Licensed Product" means any pharmaceutical product including the Compound
       ----------------
as its active ingredient the manufacture, use or sale of which (i) would
infringe one of the issued, valid unexpired claims or one of the pending claims
contained in the PNU Patent Rights in any country or (ii) involves use of the
PNU Know-How.

1.15  "NDA" means a complete New Drug Application and all supplements thereto
       ---
filed with the FDA, including all documents, data and other information
concerning a Licensed Product which are necessary for, or included in, FDA
approval to market such Licensed Product as more fully defined in 21 C.F.R.
(S)314.5 et seq.
         ------

1.16  "Net Sales" means gross receipts received by any party and/or such party's
       ---------
Affiliates for sale of the Licensed Products, less the sum of the following
(collectively, "Permitted Deductions"):
                --------------------

                                       3
<PAGE>

        (i)    discounts and rebates allowed in amounts customary in the trade;

        (ii)   sales taxes, customs and tariff duties and/or use taxes directly
               imposed and with reference to particular sales;

        (iii)  outbound transportation and delivery charges (including insurance
               premiums related to transportation and delivery), prepaid or
               allowed;

        (iv)   amounts repaid, allowed or credited on returns; and

        (v)    commissions paid or allowed to distributors, dealers and agents
               which are not Affiliates of such party.

     In the event of any sale of the Licensed Products by any party to any
Affiliate thereof for resale to its customers, "Net Sales" shall be based on the
                                                ---------
greater of the amount actually received by such party from its Affiliate or the
amount actually received by such Affiliate from its customers for the sale of
the Licensed Products, less (in either such case) the Permitted Deductions.
                       ----

     If any party or any of its Affiliates sells any Licensed Products in
combination with other items which are not Licensed Products such as other
active compounds or convenience systems ("Other Items") at a single invoice
                                          -----------
price, "Net Sales" for purposes of computing royalty payments on the combination
        ---------
shall be determined as follows:

        (a)  if all Licensed Products and Other Items contained in the
             combination are available separately, "Net Sales" for purposes of
                                                    ---------
             computing royalty payments shall be determined by multiplying Net
             Sales of the combination by the fraction A/(A+B), where A is the
             selling price of all Licensed Products at comparable doses and
             strengths in the combination and B is the selling price of all
             Other Items in the combination;

        (b)  if the combination includes Other Items which are not sold
             separately (but all Licensed Products contained in the combination
             are available separately), "Net Sales" for purposes of computing
             royalty payments shall be determined by multiplying Net Sales of
             the combination by A/C, where A is as defined above and C is the
             selling price of the combination; and

        (c)  if neither the Licensed Products nor the Other Items contained in
             the combination are sold separately, "Net Sales" for purposes of
                                                   ---------
             computing royalty payments shall be determined by multiplying Net
             Sales of the combination by the fraction D/(D+E), where D is the
             cost of manufacture of all Licensed Products in the combination and
             E is the cost of manufacture of all Licensed Products in the
             combination, all as reasonably determined by the parties or, if the
             parties are unable to agree, by an independent third party mutually
             agreed upon by the parties or, if the parties are unable to agree
             upon such third party within fifteen (15) days after either party
             requests that such third party make such determination, by
             arbitration as provided in Section 14.2 hereof (which determination
             shall be conclusive).

                                       4
<PAGE>

1.17  "Patent" means (i) unexpired letters patent (including inventor's
       ------
certificates) which have not been held invalid or unenforceable by a court of
competent jurisdiction from which no appeal can be taken or has been taken
within the required time period, including, without limitation, any
substitution, extension (such as supplementary protection certificates),
registration, confirmation, reissue, re-examination, renewal or any like filing
thereof, and (ii) pending applications for letters patent, including without
limitation any continuation, division or continuation-in-part thereof and any
provisional applications, and any foreign counterparts and all patents that
issue therefrom.

1.18  "Person" means any individual, estate, trust, partnership, joint venture,
       ------
association, firm, corporation or company, or governmental body, agency or
official.

1.19  "PNU Patent Rights" means, collectively, the Assigned PNU Patent Rights
       -----------------
and the Licensed Patent Rights.

1.20  "PNU Know-How" means any and all technology, manufacturing and other know-
       ------------
how, technical information, inventions, discoveries, methods, specifications and
trade secrets owned or Controlled by PNU as of the date hereof relating to the
Compound or the Licensed Products (the nature of which is described in the
internal reports of PNU listed or referred to in Appendix D hereto), and any
Improvements with respect thereto.

1.21  "U.S. Dollars" and the sign "$" each means lawful currency of the United
       ------------
States of America.

                              SECTION 2. GRANT

2.1  Transfer of Rights.  Upon the terms and subject to the conditions herein
     ------------------
stated, PNU hereby sells, assigns, transfers, conveys and delivers to the
Company, and the Company hereby purchases and accepts from PNU, good and valid
title to all of the Assigned PNU Patent Rights, free and clear of all liens and
other defects in title.  On the date hereof, or from time to time hereafter in
and to the extent the Company shall so request in order to give effect to this
Agreement, PNU shall, and shall cause its Affiliates to, deliver to the Company
(I) such specific assignments, bills of sale, endorsements and other good and
sufficient instruments of conveyance and transfer, in form and substance and
reasonably satisfactory to the Company, as shall be effective to assign and vest
in the Company good and valid title to all of the Assigned PNU Patent Rights,
free and clear of all liens and other defects in title, and (ii) originals or
copies of all records relating to the Assigned PNU Patent Rights, including
originals of any certificates of registration of any Assigned PNU Patent Rights
or renewals thereof.

2.2  Grant of License.  Upon the terms and subject to the conditions herein
     ----------------
stated, PNU hereby grants the Company an exclusive, worldwide license under the
Licensed PNU patent Rights and PNU Know-How to develop, make, use, import,
export, offer for sale and sell, and to have developed, made, used, imported,
exported, offered for sale and sold, the Licensed Products, with the right to
grant sublicenses.  The grant of any

                                       5
<PAGE>

sublicense shall not exceed the scope of the license granted to the Company
pursuant to this Agreement.

2.3  Delivery of PNU Know-How.  PNU shall deliver to the Company as soon as
     ------------------------
reasonably practicable after the date hereof copies of all of its records, data
and documentation relating to the PNU Know-How, including, without limitation,
scientific data and regulatory submissions and documentation, manufacturing
process, reagents, expression systems, formulations and other information
relevant to the Compound and/or the development, manufacture, purification,
formulation, use or marketing of any Licensed Products.  In addition, PNU shall
make available to the Company the necessary and appropriate PNU personnel who
are familiar with the PNU Know-How for a reasonable period of consultation at no
cost to the Company, in order to effect the transfer of the PNU Know-How to the
Company.

2.4  Delivery of Improvements.  To provide an ongoing procedure for the transfer
     ------------------------
of Improvements, PNU and the Company shall meet on a periodic basis (but not
less frequently than annually) to discuss Improvements to which either party may
wish to have access and obtain rights thereto in accordance with the provisions
of this Agreement.

2.5  Patent Assignment Procedure.  PNU shall execute and deliver to the Company
     ---------------------------
such patent assignments and such other instruments of transfer and conveyance,
in form and substance satisfactory to the requirements of each patent office, as
shall be effective to vest and/or confirm in the Company good and marketable
title to all of the Assigned PNU Patent Rights.  The Company shall perform and
accomplish all the other procedures for transfer and conveyance of the Assigned
Patent Rights required by applicable laws, decrees and regulations.  The
expenses incurred hereunder for transfer and conveyance of the Assigned PNU
Patent Rights, including reasonable attorneys' fees and expenses, shall be
shared equally by PNU and the Company.  The Company shall be responsible for all
costs relating to maintenance of the Assigned Patent Rights.

2.6  Assigned Contracts.  PNU hereby assigns and transfers to the Company and
     ------------------
the Company hereby accepts from PNU all PNU's rights and obligations under the
Assigned Contracts.  The transfer of each of the Assigned Contracts to the
Company is conditional upon consent to the assignment and transfer, where so
required, being obtained by PNU from the other party to the Assigned Contract,
and nothing in this Agreement shall be deemed to constitute an assignment or an
attempt to any Assigned Contract with any third party if the attempted
assignment thereof, without the consent of any such third party, would
constitute a breach thereof or adversely affect in any way the rights of PNU
thereunder.  If, after PNU has used reasonable efforts to obtain such consent
from any such third party, any such consent shall not have been obtained, PNU
shall cooperate with the Company, at the Company's expense, in any reasonable
arrangement designed to provide for the Company the benefits of such Assigned
Contract, provided that the Company also undertakes to perform and discharge the
          --------
outstanding obligations and liabilities of PNU under such Assigned Contract.

                                       6
<PAGE>

                           SECTION 3. DEVELOPMENT

3.1  Development Effort.  The Company shall use its reasonable good faith
     ------------------
efforts to pursue the development of the Compound, including the necessary
manufacturing, process development, preclinical and clinical trials and
preparation and prosecution of regulatory submissions, and ultimately shall use
its reasonable good faith efforts to pursue commercialization of the Compound,
either on its own or in conjunction with one or more other Persons, as
determined by the Company.

3.2  Transfer of Materials.  PNU shall transfer and as soon as practicably
     ---------------------
possible deliver to the Company, at the location(s) specified by the Company,
all of its existing supplies and materials relating to the Compound and/or any
Licensed Products, including, without limitation, the Compound, finished
product, intermediates and formulation materials, master cell lines, antibodies
and any available custom-designed reagents, at no cost to the Company.

3.3  Rights of Election.  Upon completion of the Company's data analysis of
     ------------------
Phase IIb trials in the United States for the initial indication of the
Compound, the Company shall furnish written notice of such completion to PNU,
together with a written summary of the results thereof and, upon PNU's written
request, all written documentation reasonably necessary for PNU to review and
evaluate such data analysis and the results thereof.  PNU shall have the right
to elect, within ninety (90) days after receipt of such notice and summary (or,
if requested by PNU, the receipt by PNU of the written documentation), to
participate in the further development and/or marketing of the Compound pursuant
to one of the following two options:

        (i)  PNU may elect to have the exclusive right to co-develop and the
             exclusive right to market the Licensed Products in countries other
             than the United States and Canada, with the right to grant
             sublicenses in such countries (i.e., other than in the United
                                            ---
             States and Canada) and, if the Company chooses to pursue a co-
             development and co-promotion arrangement in the United States and
             Canada and with a third Person such as PNU, the right of first
             negotiation to co-develop and co-promote the Licensed Products in
             the United States and Canada. In the event that PNU makes such
             election and desires to exercise its right of first negotiation
             with respect to such rights for the United States and Canada, it
             shall give written notice thereof to the Company and, if the
             Company chooses to pursue such arrangement with another Person for
             co-development and co-production in the United States and Canada,
             the Company shall first offer such rights to PNU, and the Company
             and PNU shall enter into good faith negotiations for such rights.
             If the parties have been unable to enter into a mutually acceptable
             binding Heads of Agreement containing the basic terms of such a
             transaction within four months after such notice is given by PNU,
             then the Company may offer such rights to a third Person without
             further obligation to PNU; provided that the financial terms of
                                        --------
             such

                                       7
<PAGE>

             transaction, when taken in their entirety, are not more favorable
             to the third Person than the terms offered by PNU. In no event
             shall the Company pursue any discussions with a third Person
             without having first responded to a proposal made by PNU during
             such four month period.

        (ii) PNU may elect not to participate in the development or marketing of
             the Licensed Products.

     In the event that PNU does not deliver to the Company a written notice of
its election pursuant to the foregoing clause (i) or (ii) within ninety (90)
days after receipt of the notice and summary described in the firs sentence of
this Section 3.3, then PNU shall be deemed to have elected the option provided
in the foregoing clause (ii) of this Section 3.3.

     In the event that PNU makes the election provided in clause (i) of this
Section 3.3, PNU shall use its reasonable good faith efforts to commit the
resources necessary to develop and market the Licensed Products in the countries
in which PNU has exclusive marketing rights, including a collaborative global
strategy wherein studies conducted in the respective countries of the Company
and PNU will be, wherever possible, useful in submissions to regulatory
authorities in their respective countries.  In the event that PNU makes the
election provided in clause (i) of this Section 3.3, then resource allocation,
development and commercialization strategies shall be discussed jointly by the
parties in order to coordinate their respective activities for such countries in
which they have marketing rights, such discussions to be conducted through a
joint steering committee, to consist of an equal number of designees from each
of the Company and PNU, with disputes relating thereto to be resolved in
accordance with the provisions of this Agreement.

3.4  Development Charges.  All costs incurred by the Company in the development
     -------------------
of the Licensed Products, including, without limitation, payments for clinical
trials and other studies, tests and all filings and applications and other
actions necessary for achieving Governmental Approval of the Licensed Product,
shall be the sole responsibility of the Company, unless PNU elects the option
provided in clause (i) of Section 3.3 and pursuant to the provisions thereof the
Company grants co-development and marketing rights to PNU in the United States,
in which case the costs incurred by either party after completion of the Phase
IIb clinical trials in the United States shall be shared as mutually agreed upon
by the parties.

3.5  Manufacturing.  In the event that PNU elects the option provided in clause
     -------------
(i) of Section 3.3 and the parties enter into a marketing or co-promotion
agreement as the result of which PNU has certain rights to market and sell the
Licensed Products, the Company shall be and become the exclusive supplier to
PNU, its Affiliates and sublicensees of the Licensed Products for those
countries in which PNU has such marketing rights.  The supply of clinical trial
materials and commercial product shall be a  follows:

                                       8
<PAGE>

3.5.1  Clinical Trial Materials.  The Company shall provide to PNU clinical
       ------------------------
trial materials in accordance with the specifications of PNU, and will be
invoiced at the Company's fully burdened costs.

3.5.2  Commercial Product.  The Company and PNU shall enter into a separate
       ------------------
supply agreement incorporating a transfer price (including royalties) for
finished product equal to [**] of the Net Sales of the Licensed Products by PNU
and its Affiliates up to the first [**] in any given annual period and [**] of
the portion of Net Sales of the Licensed Products by PNU and its Affiliates
which is in excess of [**] in such annual period. The Company shall have both
primary and secondary sources for its production of commercial quantities of the
Licensed Product, and PNU shall be given the option of serving as a primary or
secondary vendor of manufacturing services.

                  SECTION 4.    ROYALTIES AND OTHER PAYMENTS

4.1  Initial License Fee.  The Company shall pay to PNU an initial license fee
---  -------------------
of 750,000 in cash, which initial license fee shall be paid within ninety (90)
days after the execution of this Agreement.

4.2  Milestone, Development and Royalty Obligations.

     4.2.1  For the rights, privileges and licenses granted hereunder, the
parties shall pay the following amounts to each other in the manner hereinafter
provided during the term of this Agreement:

        4.2.1.1  Upon completion of clinical studies showing preliminary safety
and initial proof-of-concept (which may include early Phase IIa studies), the
Company shall pay to PNU [**] in cash or by issuance of a promissory note,
with the form of payment to be at the exclusive option of the Company. In the
event that such payment is made by promissory note, the terms thereof shall be
as described in Section 4.2.2.

        4.2.1.2  In the event that PNU elects the option provided in clause (i)
of Section 3.3, the parties shall make the payments to each other provided in
this Section 4.2.1.2. In the case of milestone payments made by the Company to
PNU, such payments ,may be in the form of cash or a promissory note, as
determined by the Company, except that a milestone payment in cash if the amount
thereof is less than ten percent (10%) of the then Aggregate Cash Reserve of the
Company. The Company shall notify PNU whether it is obligated to pay the
milestone payment in cash, based upon its Aggregate Cash Reserves, and provide
financial documentation related thereto. Upon PNU's written request, PNU shall
have the right to arrange for an independent third party audit to verify whether
the Company shall be obligated to pay a milestone payment in cash, and the
Company will cooperate in such audit making available its financial books and
records to such auditor during normal business hours. If there is a discrepancy
of greater than five percent (5%) in PNU's favor, PNU shall be entitled to
reimbursement of

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       9
<PAGE>

the reasonable cost of such audit and, if such audit discloses that PNU shall
have been entitled to receive a milestone payment in cash that the Company paid
in the form of a promissory note shall be returned to the Company for
cancellation. If such payment is made by promissory note, the terms thereof
shall be as described in Section 4.2.2. The payments to be made pursuant to this
Section 4.2.1.2 are as follows:

(i)  a milestone payment in the amount of [**] shall be made by the Company to
     PNU upon the granting of Governmental Approval for marketing of the initial
     Licensed Product in the United States;

        (ii)   the Company shall pay to PNU royalties in the amount of [**] of
               the Net Sales of the Licensed Product by the Company and its
               Affiliates up to the first [**] of Net Sales in any annual period
               and [**] of the Net Sales of the Licensed Product by the Company
               and its Affiliates in excess of [**] in such annual period,
               except that the Company shall pay PNU [**] of the royalties
               received by the Company based on the Net Sales of the Licensed
               Products by its sublicensees (other than PNU, its Affiliates and
               sublicensees) and [**] of any and all license fees and milestone
               payments received by the Company (other than from PNU, its
               Affiliates and sublicensees) or [**] of the Net Sales of its
               sublicensees (other than PNU, its Affiliates and sublicenses),
               whichever is greater;

        (iii)  PNU shall pay to the Company royalties in the amount of [**] of
               the Net Sales of the Licensed Products by PNU and its Affiliates
               up to the first [**] of Net Sales in any annual period and [**]
               of the portion of Net Sales of the Licensed Products by PNU and
               its Affiliates which is in excess of [**] in such annual period;
               and

        (iv)   in the event that PNU has granted sublicensees to any Person
               other than the Company or any Affiliate thereof, PNU shall pay
               the Company [**] of any and all payments received by PNU and/or
               any of is Affiliates from such sublicensees (including, without
               limitation, any royalties, sublicense issue fees, lump sum
               payments, technology transfer payments or other similar fees and
               payments) or [**] of the Net Sales of PNU's sublicensees,
               whichever is greater.

     If PNU and the Company enter into a definitive co-development and co-
promotion agreement with respect to the United States and Canada pursuant to
clause (i) of this Section 3.3, [**] of the amount of the milestone payment
payable by the Company pursuant to clause (i) of this Section 4.2.1.2. shall be
credited against future royalties owned by the Company to PNU hereunder.

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       10
<PAGE>

4.2.1.3  In the event that PNU elects the option provided in clause (ii) of
Section 3.3, the Company shall make the payments to PNU provided in this Section
4.2.1.3.  In the case of milestone payments made by the Company to PNU, such
payments may be in the form of cash or a promissory note, as determined by the
Company, except that a milestone payment will be made in cash if the amount
thereof is less than ten percent (10%) of the then aggregate cash reserves of
the Company.  If such payment is made by promissory note, the terms thereof
shall be as provided in Section 4.2.2.  The payments to be made pursuant to this
Section 4.2.1.3 are as follows:

(i)  a milestone payment in the amount of [**] shall be made by the Company to
     PNU upon the enrollment of the first patient in the first Phase III trial
     for the initial Licensed Product in the United States;

        (ii)   a milestone payment in the amount of [**] shall be made by the
               Company to PNU upon the filing of the first NDA with respect to
               marketing of the initial Licensed Product in the United States;

        (iii)  a milestone payment in the amount of [**] shall be made by the
               Company to PNU upon the filing of the first application with the
               applicable regulatory authorities for Governmental Approval of
               the marketing of the initial Licensed Product in any two of the
               following countries: France, Italy, Germany and the United
               Kingdom;

        (iv)   a milestone payment in the amount of [**] shall be made by the
               Company to PNU upon the final approval by the FDA of the first
               NDA with respect to the marketing of the initial Licensed Product
               in the United States;

        (v)    a milestone payment in the amount of [**] shall be made by the
               Company to PNU upon final Governmental Approval of the first
               application to market the initial Licensed Product in any two of
               the following countries: France, Italy, Germany and the United
               Kingdom; and

        (vi)   the Company shall pay to PNU royalties in the amount of [**] of
               the Net Sales of the Licensed Products by the Company and its
               Affiliates up to the first [**] of Net Sales in any annual period
               and [**] of the Net Sales of the Licensed Products by the Company
               and its Affiliates in excess of [**] in such annual period,
               except that the Company shall pay PNU [**] of the royalties
               received by the Company based on the Net Sales of the Licensed
               Products by its sublicensees (other than PNU, its Affiliates and
               sublicensees) and [**] of any and all license fees and milestone
               payments received by the Company

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       11
<PAGE>

               (other than from PNU, its Affiliates and sublicensees) or [**] of
               the Net Sales of its sublicensees (other than PNU, its Affiliates
               and sublicensees), whichever is greater.

     The Company shall be entitled to a credit against future royalties
otherwise payable by the Company to PNU hereunder in an amount equal to [**] of
the amount of the milestone payments paid by the Company pursuant to clause (i,
(ii) and (iii) of this Section 4.2.1.3 and [**] of the amount of the milestone
payments paid by the Company pursuant to clauses (iv) and (v) of this Section
4.2.1.3. In no event shall the Company be entitled to use such credits to offset
than [**] of the royalties otherwise payable to PNU with respect to any calendar
year, and any unused credits shall be carried over and used by the Company in
subsequent years.

                4.2.2  Each promissory note, if any, delivered by the Company to
        PNU as a milestone payment pursuant to this Section 4 shall (i) be
        issued by the Company to PNU and be dated the date such milestone
        payment is due, (ii) be assignable by the holder thereof, (iii) bear
        interest at the prime rate per annum plus [**] using the prime rate as
        quoted in The Wall Street Journal on the date such milestone payment
                                -----------------------
        is due and (iv) provide for the payment of the principal amount thereof,
        together with interest thereon to the date of payment, on the first to
        occur of (a) the fifth anniversary of the date on which such milestone
        payment is due or (b) the closing date of the first public offering of
        securities of the Company which results in receipt by the Company of net
        proceeds of at least [**]. Each such note shall also provide that it may
        be prepaid in full at any time without penalty.

4.3  Limitation on Royalties.  Notwithstanding anything to the contrary
---  -----------------------
contained herein, (a) no royalties shall be payable by any party hereunder with
respect to the Net Sales of the Licensed Products to any of its Affiliates or by
any of such party's Affiliates to any other Affiliate thereof, and (b) no
multiple royalties shall be payable in the event that any of the Licensed
Products or the manufacture, use or sale thereof is covered by more than one
percent included in the PNU Patent Rights.

4.4  Royalties to Third Persons.  The parties recognize that acquisition of
---  --------------------------
various technologies in the future development work on the Compound or the
Licensed Product by the Company may require the Company to undertake royalty
obligations to third parties.  The parties further recognize that such royalty
obligations may render the project financially unacceptable.  Therefore, if the
Company contemplates the acquisition of new valuable technologies for the
development of the Compound or the Licensed Product prior to the Company's
notice of completion to PNU pursuant to Section 3.3, and which acquisition
includes royalty obligations that may render the project financially
unacceptable, the parties agree to discuss suitable arrangements to accommodate
for such acquisition of technology, which may include the absorption by PNU of
part of such third party royalty (and PNU agrees to consider any reasonable such
arrangements in good faith).

**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission.  The omitted
portions have been filed separately with the Commission.

                                       12
<PAGE>

4.5  Withholding Taxes.  The parties acknowledge and agree that there may be
deducted from any payments or royalties otherwise due and payable hereunder any
taxes or other payments required to be withheld under applicable law with
respect to such payments or royalties or otherwise relating to the Licensed
Product.

                SECTION 5. PAYMENT OF ROYALTIES, ACCOUNTING FOR
                           ROYALTIES, RECORDS, ETC.

5.1  Payment.  Royalties payable hereunder shall be paid within 30 days after
---  -------
the end of each calendar quarter, based on the Net Sales of the Licensed
Products by the parties and their respective Affiliates during the preceding
calendar quarter.  Such payments shall be accompanied by a statement setting
forth the Net Sales of the Licensed Products.

5.2  Accounting; Foreign Currency.  The aggregate amount of the Net Sales of the
---  ----------------------------
Licensed Products used for computing the royalties payable hereunder shall be
computed in U.S. Dollars, and all payments of such royalties shall be made in
U.S. Dollars.  For purposes of determining the amount of royalties due, the
amount of the Net Sales of the Licensed Products in any foreign currency shall
be computed by converting such amounts into U.S. Dollars at the prevailing
commercial rate of exchange for purchasing U.S. Dollars, as quoted in The Wall
Street Journal, on the last business day of the calendar quarter with respect to
which such royalty payment is payable hereunder.

5.3  Records.  Each party hereto shall keep for five (5) years complete and
---  -------
accurate records of the Net Sales of the Licensed Products sold by such party
and its Affiliates in sufficient detail to allow the royalties payable by such
party hereunder to be accurately determined.  Each party hereto shall have the
right for a period of five (5) years after receiving any report or statement
with respect to royalties due and payable hereunder by the other party hereto to
appoint an independent accounting firm to inspect and audit the relevant records
of the party furnishing such report or statement and its Affiliates to verify
such report or statement.  Each party hereto and its Affiliates shall make their
records available for inspection and audit by such independent accounting firm
during regular business hours at such place or places where such records are
customarily kept, upon reasonable notice of the other party hereto, to the
extent reasonably necessary to verify the accuracy of the reports and payments
required hereunder.  The cost of any such inspection and audit shall be paid by
the party conducting such inspection and audit, unless such inspection and audit
discloses for any calendar quarter examined that there shall have been a
negative discrepancy of greater than five percent (5%) between the royalties
payable hereunder by the relevant party and the royalties actually paid by the
relevant party with respect to such calendar quarter, in which case the party
paying such royalties shall be responsible for the payment of the entire cost of
such inspection and audit.

                         SECTION 6. PATENT PROSECUTION

6.1  Prosecution Obligation.  The Company shall, at its sole cost and expense,
---  ----------------------
maintain during the term of this Agreement any and all Assigned PNU Patent
Rights.

                                       13
<PAGE>

PNU shall, at its sole cost and expense, apply for, and use its reasonable good
faith efforts to seek issuance of, and maintain during the term of this
Agreement any and all Licensed PNU Patent Rights, in a timely and reasonably
prudent business manner.

                  SECTION 7. REPRESENTATIONS AND WARRANTIES.

7.1  By the Company.  The Company hereby represents and warrants to PNU that (a)
     --------------
the Company has full legal right, power and authority to execute, deliver and
perform its obligations under this Agreement, (b) the execution, delivery and
performance by the Company of this Agreement do not contravene or constitute a
default under any provision of applicable law or its articles or by-laws (or
equivalent documents) or of any agreement, judgment, injunction, order, decree
or other instrument binding upon the Company, (c) all licenses, consents,
authorizations and approvals, if any, required for the execution, delivery and
performance by the Company of this Agreement have been obtained and are in full
force and effect and all conditions thereof have been complied with, and no
other action by or with respect to, or filing with, any governmental authority
or any other Person is required in connection with this execution, delivery and
performance by the Company of this Agreement, (d) this Agreement constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.

7.2  By PNU.  PNU hereby represents and warrants to the Company that (a) PNU has
     ------
full legal right, power and authority to execute, deliver and perform its
obligations under this Agreement, (b) the execution, delivery and performance by
PNU of this Agreement do not contravene or constitute a default under any
provision of applicable law or of its articles of incorporation or by-laws (or
equivalent documents) or of any agreement, judgment, injunction, order, decree
or other instrument binding upon PNU or otherwise relating to the Compound, the
PNU Patent Rights or the PNU Know-How, (c) all licenses, consents,
authorizations and approvals, if any, required for the execution, delivery and
performance by PNU of this Agreement have been obtained and are in full force
and effect and all conditions thereof have been complied with, and no other
action by or with respect to, or filing with, any governmental authority or any
other Person is required in connection with the execution, delivery and
performance by PNU of this Agreement, (d) PNU is the exclusive owner of all
legal and beneficial right, title and interest in and to the PNU Assigned Patent
Rights, free and clear of any lien, claim or encumbrance or rights of any other
Person, and PNU owns or Controls sufficient legal rights to the PNU Licensed
Patent Rights and the PNU Know-How to grant to the Company the exclusive
licenses and rights contemplated hereby, (e) except as set forth in Schedule 7.2
attached hereto, to the best knowledge of PNU, the practice of the PNU Patent
Rights and/or the PNU Know-How as contemplated by Section 2.2 hereof does not
infringe or violate any patent or other right of any Person, (f) Appendix B
hereto contains a complete and correct list of all Patents owned by PNU or its
Affiliates as of the date hereof claiming inventions relating solely to the
development, manufacture, purification, formulation, use or sale of the
Compound, and (g) this Agreement constitutes a valid and binding agreement of
PNU, enforceable against PNU, in accordance with its terms.

                                       14
<PAGE>

7.3  Due Diligence.  The Company and its consultants have, prior to the
     -------------
execution of this Agreement, conducted a due diligence of the PNU Patent Rights
and the PNU Know-How.  The parties agree that the Company shall not entitled to
raise any claims for compensation for Losses (as defined in Section 8.2.1)
against PNU or its Affiliates insofar as such claims relate to circumstances
that PNU can prove were evidence from the information made available to the
Company and its consultants in the above-mentioned due diligence.  The liability
of PNU under Sections 7.2(d) and (e) hereof shall remain valid for eighteen (18)
months from the effective date of this Agreement, prior to which date the
Company must notify PNU in writing of any claim specifying the exact nature and
the Losses relating to such claim, and after said eighteen (18) month period the
Company shall be precluded from raising claims for compensation for such Losses
against PNU or its Affiliates.

7.4  Survival of Representations and Warrants.  The representations and
     ----------------------------------------
warranties contained herein shall survive the execution, delivery and
performance of this Agreement by the parties, notwithstanding any investigation
at any time on or prior to the date hereof made by or on behalf of any party or
parties.

                  SECTION 8. INFRINGEMENT AND INDEMNIFICATION

8.1  Infringement Claims.
     -------------------

8.1.1  Third Party Infringement.  Each party shall promptly notify the other
       ------------------------
party of its knowledge of any potential or actual infringement of the PNU Patent
Rights or the Company Patent Rights.  The party having the exclusive marketing
rights to Licensed Products in the territory where the infringement takes place
shall have the first option to take such action against infringers as such
party, using prudent business judgment, deems appropriate.  For the purpose of
this Section 8.1, the Company shall be deemed to have the exclusive marketing
rights for U.S. and Canada, even if PNU and the Company conclude a co-promotion
agreement for said countries.  If the party having the exclusive marketing
rights fails to take appropriate action against any infringer within six (6)
months from written notice requesting such action from the other party, then
such other party shall have the right to take action against such infringer.
The party taking action to enforce any of the PNU Patent Rights or the Company
Patent Rights shall do so at its own expense and for its own benefit, except
that if a party with exclusive marketing rights is awarded damages by any court
of under any settlement, it shall report such amounts, less out-of-pocket
expenses, as Net Sales for royalty-related purposes insofar as such amounts
relate to damages for lost sales of Licensed Products.  In the event that any
such infringement shall not have terminated in any country within one (1) year
after the receipt of notice thereof to the party entitled to receive royalties
hereunder with respect to Net Sales of the Licensed Products in such country,
then the party having the marketing rights in such country shall be entitled to
a royalty reduction, on a country-by-country basis, as follows:  if sales of the
product(s) sold by or on behalf of the infringer exceed ten percent (10%) of the

                                       15
<PAGE>

combined sales of such product(s) sold by or on behalf of the infringer exceed
ten percent (10%) of the combined sales of such product(s) and the Licensed
Products, the royalty rate otherwise applicable shall be reduced by twenty-five
percent (25%) of the combined sales, the royalty rate otherwise applicable shall
be reduced by fifty percent (50%).

8.1.2  Third Party Claims.  Except to the extent arising out of a breach of such
       ------------------
party's representations and warranties set forth in Section 7 hereof, each party
shall defend at its own expense any actions brought against it, its Affiliates
or sublicensees alleging that the development, manufacture, marketing, use or
sale of any Licensed Products infringes any claim of any third party Patent in
any country of the world and such party shall pay all damages and costs payable
by such party in such actions.  If any claim or proceeding is made or brought
(or, in the reasonable opinion of such party's outside patent counsel (which
patent counsel must be reasonably acceptable to the other party) set forth in
writing and delivered to the other party, is likely to be made or brought)
against a party, its Affiliates or sublicensees, based on any claim of
infringement or alleged infringement of any third party's patent or other
proprietary rights necessary for the practice of the intellectual property
rights licensed or acquired by either party under this Agreement, then such
party may, in its sole judgment but after consultation with the other party,
settle such claim or proceeding (or potential claim or proceeding) by acquiring
or obtaining a license under such third party patent or other proprietary
rights.  In such case, the party acquiring or obtaining a license may offset one
hundred percent (100%) of the costs of such acquisition or license against any
royalties otherwise payable to the other party up to one percent (1%) of Net
Sales and fifty percent (50%) of such costs exceeding one percent (1%) of Net
Sales, provided that such party may not exercise such right of offset for an
       --------
aggregate amount in excess of fifty percent (50%) of the royalty payments and
other amounts otherwise payable to the other party hereunder.

8.1.3  Revocation or Invalidity Actions.  Each party shall have the right to
       --------------------------------
defend at its own expense all suits or proceedings seeking to have any of its
Patents licensed to the other party hereunder revoked or declared invalid.  If
such party fails to take action in either case at least thirty (30) days prior
to the time that such party is obliged to respond to such suit or proceeding,
the other party shall have the right to take whatever action it deems
appropriate to defend such suit or proceeding.  All costs and expenses
(including attorney's fees) incurred by such party in such action may be
deducted from royalties and/or other amounts otherwise payable to the other
party hereunder from the sale of the Licensed Products in the country where such
revocation or invalidity suit or proceeding is pending, up to a maximum of fifty
percent (50%) of such royalties and/or other payments.

8.1.4  Competing Products.  If, as a result of revocation or invalidation of one
       ------------------
or more of the Patents or unlicensed competition under the PNU Patent Rights,
one or more third Persons begins to sell a product competing with the Licensed
Product (a "Competing Product") in any country of the world, then the party
            -----------------
having the marketing rights in such country shall be entitled to a royalty

                                       16
<PAGE>

reduction, on a country-by-country basis, as follows:  if the sales of the
Competing Product in such country exceed ten percent (10%) of the combined sales
of the Competing Product and the Licensed Products, the royalty rate otherwise
applicable shall be reduced by twenty-five percent (25%), and if sales of such
Competing Product exceed twenty-five percent (25%) of such combined sales, the
royalty rate otherwise applicable shall be reduced by fifty percent (50%).

8.2  Indemnification.
     ---------------

8.2.1  Indemnification by the Company. The Company hereby agrees that it shall
       ------------------------------
be responsible for, indemnify, hold harmless and defend PNU and PNU Affiliates,
and their respective directors, officers, managing members, shareholders,
partners, attorneys, accountants, agents, employees and consultants, and their
respective heirs, successors and assigns (collectively, the "PNU Indemnities"),
                                                             ---------------
from and against any and all claims, demands, losses, liabilities, damages,
costs and expenses (including the cost of settlement, reasonable legal and
accounting fees and any other expenses for investigating or defending any
actions or threatened actions) (collectively, "Losses") suffered or incurred by
                                               ------
any PNU Indemnitee arising out of, relating to, resulting from or in connection
with (a) any actual or alleged injury or death of any Person or damage to any
property caused or claimed to be caused by any Licensed Product marketed or sold
by the Company, but only to the extent the Company has insurance coverage
therefor, (b) the breach of any representation or warranty made by the Company
herein, (c) the default by the Company in the performance or observance of any
of its obligations to be performed or observed hereunder, and (d) any action,
suit or other proceeding, or compromise, settlement or judgment, relating to any
of the foregoing matters with respect to which PNU Indemnitees are entitled to
indemnification hereunder.  The foregoing shall not apply to the extent that
such Losses are due to the willful misconduct or gross negligence of any of the
PNU Indemnitees.

8.2.2  Indemnification by PNU.  PNU hereby agrees that it shall be responsible
       ----------------------
for, responsible for, indemnify, hold harmless and defend the Company and the
Company's Affiliates, and their respective directors, officers, managing
members, shareholders, partners, attorneys, accountants, agents, employees and
consultants, and their respective heirs, successors and assigns (collectively,
the "Company Indemnities"), from and against any and all Losses suffered or
     -------------------
incurred by any of the Company Indemnitees arising out of, relating to,
resulting from or in connection with (a) the breach of any representation or
warranty made by PNU herein, (b) the default by PNU in the performance or
observance of any of its obligations to be performed or observed hereunder, and
(c) any action, suit or other proceeding, or compromise, settlement or judgment,
relating to any of the foregoing matters with respect to which the Company
Indemnitees are entitled to indemnification hereunder.  The foregoing shall not
apply to the extent that such Losses are due to the willful misconduct or gross
negligence of any of the PNU Indemnitees.

                                       17
<PAGE>

8.2.3  Notice of Claims.  In the event that a claim is made pursuant to Section
       ----------------
8.2.1 and 8.2.2 above against any party which seeks indemnification hereunder
(the "Indemnitee"), the Indemnitee agrees to promptly notify the other party
      ----------
(the "Indemnitor") of such claim or action and, in the case of any claim by a
      ----------
third Person against the Indemnitee, the Indemnitor may, at its option, elect to
assume control of the defense of such claim or action; provided, however, that
                                                       --------  -------
(a) the Indemnitee shall be entitled to participate therein (through counsel of
its own choosing) at the Indemnitee's sole cost and expense, and (b) the
Indemnitor shall not settle or compromise any such claim or action without the
prior written consent of the Indemnitee, unless such settlement or compromise
includes a general release of the Indemnitee and all of the other PNU
Indemnities or the Company Indemnities, as the case may be, from any and all
liability with respect thereto.

                          SECTION 9. CONFIDENTIALITY

     The parties each recognize that the Confidential Information of the other
party and any and all Affiliates thereof constitutes valuable confidential and
proprietary information.  Accordingly, the parties each agree that they and
their respective Affiliates shall, during the term of this Agreement and for a
period of five (5) years after the termination hereof for any reason, hold in
confidence all Confidential Information of the other party (including this
Agreement and the terms hereof) and not use the same for any purpose other than
as set forth in this Agreement nor disclose the same to any other Person except
                                                                         ------
to the extent that it is necessary for such party to enforce its rights under
this Agreement or if required by law or any governmental authority (including,
without limitation, the FDA or any stock exchange upon which such party's shares
or other equity securities may be traded); provided, however, if any party shall
                                           --------  -------
be required by law to disclose any such Confidential Information to any other
Person, such party shall give prompt written notice thereof to the other party
and shall minimize such disclosure to the amount required.  Notwithstanding the
foregoing, either party may disclose Confidential Information of the other (a)
to such party's attorneys, accountants and other professional advisors under an
obligation of confidentiality to such party, (b) to such party's banks or other
financial institutions or venture capital sources for the purpose of raising
capital or borrowing money or maintaining compliance with agreements,
arrangements and understandings relating thereto, and (c) to any Person who
proposes to purchase or otherwise succeed (by merger, operation of law or
otherwise) to all of such party's right, title and interest in, to and under
this Agreement, if such Person agrees to maintain the confidentiality of such
Confidential Information pursuant to a written agreement in form and substance
reasonably satisfactory to the parties.  The standard of care required to be
observed hereunder shall be not less than the degree of care which each party or
Affiliate thereof uses to protect its own information of a confidential nature.

                SECTION 10. INTELLECTUAL PROPERTY; IMPROVEMENTS

10.1  Rights to Propriety Technology.  Neither party shall through this
      ------------------------------
Agreement obtain any rights to the other party's proprietary technology except
for such rights as are expressly granted or allocated under this Agreement.

                                       18
<PAGE>

10.2  Improvements and Filing, Prosecution and Maintenance of Patents.
      ---------------------------------------------------------------

10.2.1  Any Improvement to the Compound or any Licensed Product made, discovered
or developed by any party during the term of this Agreement shall be owned
solely by such party, provided that the Company is hereby granted a license upon
                      --------
the terms set forth in Section 2.2 hereof to any such Improvement and under any
PNU Patent Rights and PNU Know-How and under any other intellectual property
rights of PNU relating thereto owned or Controlled by PNU, to the extent that
such Improvement is used solely for the development, manufacture, use,
importation, marketing, offer for sale or sale of any Licensed Product.  If PNU
elects to co-develop and market the Licensed Products, then PNU shall have a
license upon the same terms as granted to the Company with respect to any
Improvements, and under any Company Patent Rights and Company Know-How and under
any other intellectual property rights of the Company relating thereto owned or
Controlled by the Company, to the extent that such Improvement is used solely
for the development, manufacture, use, importation, marketing, offer for sale or
sale of any Licensed Product in the countries in which PNU has marketing rights.
Each party agrees to give the other Party prompt written notice of any
Improvement to the Compound or any Licensed Product discovered or developed by
such party during the term of this Agreement.  Improvements to the Company
Patent Rights and the Company Know-How made, discovered or acquired by the
Company during the term of this Agreement shall be owned by the Company,
provided that with respect to any such Improvement to the Assigned Patents made
--------
or developed by the Company in the nature of a patentable manufacturing process
or technique, PNU shall have the option to acquire, for such consideration as
may be mutually agreed upon by the parties after negotiation in good faith, a
non-exclusive, worldwide license under any intellectual property rights owned or
Controlled by the Company relating to such Improvement, with the right to
sublicense upon obtaining the Company's prior written consent thereto (which
consent shall not be unreasonably withheld), to use such Improvement for
purposes other than (i) to develop, manufacture, use, market or sell the
Licensed Products or any other pharmaceutical products or compounds containing
an apolipoprotein as an active ingredient for medical treatment in the field of
atherosclerosis, or (ii) any such purpose that may be adverse to or in
competition with the interests of the Company.  Improvements to the PNU Patents
and the PNU Know-How made, discovered or acquired by the Company during the term
of this Agreement shall be owned by the Company, provided that PNU shall be
                                                 --------
granted a non-exclusive, free-of-charge, worldwide license under any
intellectual property rights owned or Controlled by the Company relating to such
Improvement, with the right to sublicense, to use such Improvements for purposes
other than to develop, manufacture, use, market or sell pharmaceutical products
or compounds containing an apolipoprotein as an active ingredient for medical
treatment in the field of atherosclerosis.

10.2.2  In the event that any Improvements owned by either party are deemed
patentable, such party shall be entitled to file and prosecute patent
applications related thereto and maintain patents issued thereon, at its own
cost

                                       19
<PAGE>

        and expense. The other party shall render reasonable assistance to such
        party in filing such applications whenever requested to do so, at such
        party's sole cost and expense. The Company and PNU agree to sign and
        execute such forms and documents as may be reasonably requested by the
        other party as being necessary or desirable to vest or confirm in such
        other party title to all such improvements owned by such other party.

                     SECTION 11. LIMITATIONS ON LIABILITY

11.1  No Warranties.  Except as expressly set forth in Section 7 hereof, neither
      -------------
party makes any representations or warranties as to any matter whatsoever.  EACH
PARTY HEREBY DISCLAIMS ANY AND ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE.

11.2  Limitations of Liability.  UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE
      ------------------------
LIABLE TO THE OTHER PARTY OR ANY OTHER PERSON FOR ANY SPECIAL, CONSEQUENTIAL OR
INDIRECT DAMAGES OF ANY KIND WHATSOEVER.

11.3  Force Majeure.  No party shall be liable for failure or delay in
      -------------
performing any of its obligations hereunder if such failure or delay is
occasioned by compliance with any governmental regulation, request or order, or
by circumstances beyond the reasonable control of the party so failing or
delaying, including, without limitation, Acts of God, war, insurrection, fire,
flood, accident, labor strikes, work stoppage or slowdown (whether or not such
labor event is within the reasonable control of the parties), or inability to
obtain raw materials, supplies, power or equipment necessary to enable such
party to perform its obligations hereunder.  Each party shall (a) promptly
notify the other party in writing of any such event of force majeure, the
expected duration thereof and its anticipated effect on the ability of such
party to perform its obligations hereunder, and (b) make reasonable efforts to
remedy any such event of force majeure.

                         SECTION 12. NON-USE OF NAMES

12.1  Non-use of Names.  Neither party shall use the name of the other party nor
      ----------------
the name of any of Affiliates or employees of such other party, nor any
adaptation thereof, in any advertising, promotional or sales literature without
prior written consent obtained from such other party in each case (which consent
shall not be unreasonably withheld or delayed).

12.2  Insurance.  The Company agrees to obtain and maintain in effect, from and
      ---------
after the first commercial sale of the Licensed Products, appropriate insurance
coverage for the Company's potential liability relating to the marketing and
sale of the Licensed Products consistent with industry standards for similar
companies.

                                       20
<PAGE>

                       SECTION 13. TERM AND TERMINATION

13.1  Term.  This Agreement shall be effective from the date of its execution by
      ----
the parties and, unless sooner terminated in accordance with the provisions of
this Section 13, shall continue until the later to occur of (i) 20 years from
the date of this Agreement, or (ii) the last to expire of any Patent included
within the PNU Patent Rights.

13.2  Events of Default.  Each party shall have the right to terminate this
      -----------------
Agreement upon the occurrence of any of the following events (each, an "Event of
                                                                        --------
Default") with respect to the other party (the "Defaulting Party"):  (a) a
-------                                         ----------------
decree or order shall have been entered by a court of competent jurisdiction
adjudging the Defaulting Party bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, readjustment, arrangement, composition
or similar relief for the Defaulting Party under any bankruptcy law or any other
similar applicable statute, law or regulation, or a decree or order of a court
of competent jurisdiction shall have been entered for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the
Defaulting Party or a substantial part of its property, or for the winding up or
liquidation of its affairs; and (b) the Defaulting Party shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy petition against it, or shall file a petition or answer
or consent seeking reorganization, readjustment, arrangement, composition,
liquidation or similar relief under any bankruptcy or insolvency of it or of a
substantial part of its property, or shall make an assignment for the benefit of
creditors, or shall be unable to pay its debts generally as they become due; or
(c) the Defaulting Party shall commit a material breach of the terms of this
Agreement and the same and all of its effects shall be remedied within 60 days
after written notice thereof is given by the other party to the Defaulting
Party.  The failure by either party to pay the other party any royalties or
other payments when due and payable in accordance with the provisions of Section
5 hereof shall be deemed a material breach of this Agreement.

13.3  Termination.  Each party may terminate this Agreement upon the occurrence
      -----------
of an Event of Default by giving written notice thereof to the other party,
which notice shall specifically identify the reason(s) for such termination.  In
addition, (i) the Company may terminate this Agreement and, PNU, if the option
set forth in Section3.3(i) hereof is elected by PNU, may terminate its co-
development and marketing rights hereunder at any time upon not less than ninety
(90) days' prior written notice to the other party, if the Board of Directors of
such party determines in good faith that the development, manufacture, marketing
or sale of the Licensed Product is not technically or commercially feasible and
such circumstances cannot be overcome by exerting reasonable good faith efforts
as provided in Sections 3.1 and 3.3, provided; that the other party shall have
                                     --------
the right to propose amended terms of this Agreement in order the improve the
technical or commercial feasibility for such party, which proposal such party
agrees to consider in good faith.  Such proposal shall be made in writing within
thirty (30) days following receipt of notice of termination and the party
receiving the proposal shall respond in writing within thirty (30) days
following receipt of such proposal.  (ii) PNU may terminate this Agreement by
giving at least 30 days' prior written notice to the Company in the event that
the Company has not obtained, in the aggregate, at least

                                       21
<PAGE>

$8,000,000 in equity financing within 12 months after the date of execution of
this Agreement.

13.4  Consequences of Termination.  Upon the termination of this Agreement, all
      ---------------------------
rights, privileges and licenses granted by PNU to the Company hereunder,
including the Assigned PNU Patent Rights (by reassignment), shall revert to PNU,
and the Company agrees thereupon to negotiate in good faith with PNU the terms
and conditions under which the Company would be willing to grant PNU a license
under the Company Patent Rights and the Company Know-How to make, use and sell
the Licensed Products, unless this Agreement has been terminated by PNU by
reason of a material breach or default by the Company with respect to its
obligations hereunder that shall not have been cured by the Company within one
hundred twenty (120) days following its receipt of written notice thereof from
PNU specifically describing such breach of default, in which case the Company
shall, without charge to PNU, (i) assign to PNU all of the Company Patent Rights
and the Company Know-How relating solely to the Licensed Products and (ii) grant
to PNU, free of charge, a license under any other Company Patent Rights and
Company Know-How, but only to the extent necessary to permit PNU to make, use
and sell the Licensed Products (with the right to grant sublicenses).  The
termination of this Agreement for any reason shall be without prejudice to (i)
the right of each party to receive all amounts accrued under Section 5 hereof
prior to the effective date of such termination, (ii) the rights and obligations
of the parties pursuant to Sections 6, 8 and 9 hereof, and (iii) any other
remedies as may now or hereafter be available to any party, whether under this
Agreement or otherwise.  Upon the termination of this Agreement (a) the Company
and its Affiliates and sublicensees shall immediately discontinue the
manufacture, use and sale of the Licensed Products, and (b) each party and its
Affiliates shall immediately discontinue the manufacture, use and sale of the
Licensed Products, and (b) each party and its Affiliates shall immediately cease
the use of all Confidential Information obtained from the other party or any
Affiliate thereof.

                           SECTION 14. MISCELLANEOUS

14.1  Notices.  All payments in the form of a promissory note, notices, reports
      -------
and/or other communications made in accordance with this Agreement, shall be
deemed to be duly made or given (i) when delivered by hand, (ii) three days
after being mailed by registered or certified mail (air mail if mailed
overseas), return receipt requested, or (iii) when received by the addressee, if
sent by facsimile transmission or by Express Mail, Federal Express or other
express delivery service (receipt requested), in each case addressed to such
party at its address set forth below (or to such other address as such party may
hereafter designate as to itself by notice to the other party hereto):

                                       22
<PAGE>

     In the case of the Company:

               Esperion Therapeutics, Inc.
               690 KMS Place
               Ann Arbor, MI 48108
               Attention:  President
               Telecopier:  (734)  332-0516

         with a copy to:

               Sills Cummis Radin
                 Tischman Epstein & Gross, P.A.
               One Riverfront Plaza
               Newark, New Jersey 07102
               U.S.A.
               Attention:     Ira A. Rosenberg, Esq.
               Telecopier:    (973)  643-6500

     In the case of PNU:

               Pharmacia & Upjohn AB
               Lindhagensgatan 133
               S-112 87, Stockholm
               SWEDEN
               Attention:    President
               Telecopier:   011-46-8-618-2668

         with a copy to:

               Pharmacia & Upjohn AB
               Legal Department
               Lindhagensgatan 133
               S-112 87, Stockhold
               SWEDEN
               Telecopier:  011-46-8-695-4708

14.2  Amendment, etc.  This Agreement may not be amended or modified, nor may
      ---------------
any right or remedy of any party be waived, unless the same is in writing and
signed by such party or a duly authorized representative of such party.  The
waiver by any party of the breach of any term or provision hereof by any other
party shall not be construed as a waiver of any other subsequent breach.

14.3  No Waiver; Remedies.  No failure or delay by any party in exercising any
      -------------------
of its rights or remedies hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.  The
rights and remedies of the

                                       23
<PAGE>

parties provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.

14.4  Successors and Assigns.  This Agreement shall be binding upon and inure to
      ----------------------
the benefit of the parties and their respective heirs, legal representatives,
successors and permitted assigns; provided that, except as expressly provided
                                  --------
herein, neither party may assign or otherwise transfer this Agreement or any of
its rights, duties or obligations hereunder without the prior written consent of
the other party (which consent shall not be unreasonably withheld or delayed);
except that no such consent shall be required for any assignment or transfer of
this Agreement by either party to an Affiliate thereof (in which case the party
shall give prompt notice of such assignment or transfer to the other party
unless such assignment or transfer is to a wholly-owned subsidiary of such party
in which event no such notice shall be required).

14.5  Relationship of Parties.  The Company and the PNU, are not (and nothing in
      -----------------------
this Agreement shall be construed to constitute them) partners, joint venturers,
agents, representatives or employees of the other party, nor to create any
relationships between them other than that of an independent contractor.
Neither party shall have any responsibility of liability for the actions of the
other party except as specifically provided herein.  Neither party shall have
any right or authority to bind or obligate the other party in any manner or make
any representation or warranty on behalf of the other.

14.6  Expenses.  Unless otherwise provided herein, all costs and expenses
      --------
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party which shall have incurred the same and the
other party shall have no liability relating thereto.

14.7  Entire Agreement.  This Agreement constitutes the entire agreement between
      ----------------
the parties and supersedes all prior proposals, communications, representations
and agreements, whether oral or written, with respect to the subject matter
hereof.

14.8  Severability.  Any term or provision of this Agreement which is invalid or
      ------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
hereof in any other jurisdiction.

14.9  Counterparts.  This Agreement may be signed in any number of counterparts,
      ------------
each of which shall be deemed an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

14.10  Headings.  The headings used in this Agreement are for convenience of
       --------
reference only and shall not affect the meaning or construction of this
Agreement.

14.11  Governing Law.  This Agreement, including the performance and
       -------------
enforceability hereof, shall be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine.  For
purposes of any legal proceedings described in the last sentence of Section
14.12, each party hereby

                                       24
<PAGE>

submits itself for the sole purpose of this Agreement and any controversy
arising hereunder to the jurisdiction of the courts located in the State of New
York and any courts of appeal therefrom, and waives any objection (on the
grounds of lack of jurisdiction, or forum non conveniens or otherwise) to the
exercise of such jurisdiction over it by any such courts.

14.12  Arbitration.  Except as expressly provided herein, any dispute,
       -----------
controversy, or claim arising out of or relating to this Agreement, its
validity, construction or enforceability or the breach of any of the terms or
provisions hereof shall be settled by arbitration under the American Arbitration
Association by a panel of three arbitrators, one selected by each party and the
third selected by the other two arbitrators.  Any arbitration proceeding
commenced by either party shall be held in the New York City, New York
metropolitan area (including Northern New Jersey).  The decision of the
arbitrators shall be final and binding upon the parties and judgment upon the
decision by the arbitrators may be entered in any court of competent
jurisdiction, and execution may be had thereon.  The expense of such
arbitration, including attorneys' fees, shall be allocated between the parties
as the arbitrators may decide and as the claims and interests of each party may
prevail.  Notwithstanding anything to the contrary contained in this Section
14.12, any dispute, controversy or claim relating to actual or threatened
unauthorized use or disclosure of any Confidential Information, or the validity,
applicability, enforceability or infringement of any patent rights, shall not be
required to be submitted to arbitration hereunder and may be resolved by a court
of competent jurisdiction.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written below.

                                PHARMACIA & UPJOHN AB


                                By: /s/ Hans Sievertsson
                                   -----------------------------

                                ESPERION THERAPEUTICS, INC.


                                By: /s/ Roger S. Newton
                                   -----------------------------

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