<PAGE>

[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]

                                                                   Exhibit 10.12

                               LICENSE AGREEMENT
                               -----------------

           This License Agreement (the "Agreement"), effective as of
                   February 23, 2000 (the "Effective Date"),
                           is entered by and between

ASULAB SA., organized under the laws of Switzerland, with offices at Rue des
Sors 3, CH-2074 Marin, Switzerland ("Asulab"),

                                      AND

THERASENSE, Inc., a California corporation with principal place of business at
1360 South Loop Road, Alameda, CA 94502, USA ("TheraSense").

BACKGROUND
----------

A.   Asulab owns certain Patent Rights (as defined below) relating to sensors
     for measuring analyte levels in body fluids; and

B.   TheraSense desires to obtain a license under the Patent Rights, and Asulab
     desires to grant such a license to TheraSense, on the terms and conditions
     herein.

NOW THEREFORE, Asulab and TheraSense agree as follows:
<PAGE>

                                                                               2

1.   DEFINITIONS
     -----------

1.1  "Affiliate" means any corporation or other entity, which is directly or
      ---------
     indirectly controlling, controlled by or under the common control with
     Asulab or TheraSense. For the purpose of this Section 1.1, "control" shall
     mean the direct or indirect ownership of at least fifty percent (50%) of
     the outstanding shares or other voting rights of the subject entity to
     elect the majority of the directors, or the maximum percentage control or
     ownership rights permitted under the law of the relevant country.

1.2  "Confidential Information" shall mean
     ------------------------

     a)   any proprietary or confidential information or material in tangible
          form disclosed hereunder that is marked as "Confidential" at the time
          it is delivered to the receiving party, or

     b)   proprietary or confidential information disclosed orally hereunder
          which is identified as confidential or proprietary when disclosed and
          such disclosure of confidential information is confirmed in writing
          within thirty (30) days by the disclosing party.

1.3  "Patent Rights" shall mean the patents and patent applications listed on
     --------------
     Exhibit A and all directly related patents and patent applications filed in
     any country worldwide necessary for development and commercialization of
     the Products (including all reissues, extensions, substitutions,
     reexaminations, supplementary protection certificates and the like, patents
     of addition, provisionals, continuations, continuations-in-part,
     divisionals, reissues, and foreign counterparts thereof).

1.4  "Field" means analytical and diagnostic instruments for diabetes
      -----
     monitoring.

1.5  "FreeStyle" means a system for the in vitro monitoring of glucose using a
      ---------
     test strip manufactured by TheraSense which coulometrically measures less
     than 0.4 microliters of body fluid. For the avoidance of doubt FreeStyle
     does not include the electronic meter for TheraSense's in vivo glucose
     sensor.
<PAGE>

                                                                               3

1.6  "Licensed Product" means any current or future product, which is within the
      ----------------
     scope of an issued Valid Claim or was within the scope of an issued Valid
     Claim. Each individual disposable test strip shall be counted as one
     Licensed Product.

1.7  "Net Sales" means the gross revenues actually received by TheraSense or its
      ---------
     Affiliates form a third party from sales of Licensed Products, less

     a) normal and customary rebates, and cash and trade discounts, actually
        taken;

     b) sales, use and/or other excise taxes or duties actually paid;

     c) amounts allowed or credited due to returns.


     For purposes of clarification in the event that sales are made through
     distributors, Net Sales shall be based on gross revenues actually received
     by TheraSense from the Distributors less the discounts listed above.

1.8  "Territory" means the entire world.
      ---------

1.9  "Valid Claim" means
      -----------

      a)     a claim of an issued and unexpired patent included within the
             Patent Rights which has not been held unenforceable or invalid by a
             court or other governmental agency of competent jurisdiction, and
             which has not been disclaimed or admitted to be invalid or
             unenforceable through reissue or otherwise; or

      b)     a claim of a pending patent application within the Patent Rights.

2.    LICENSE
      -------

2.1   Grant to TheraSense
      -------------------

      Asulab hereby grants to TheraSense and its Affiliates a non-exclusive
      license under Patent Rights to make, import, have imported, use, sell,
      have sold and offer for sale the Licensed Products in the Territory for
      use in the Field.



<PAGE>

                                                                               4

2.2      Limitation of Rights
         --------------------

2.2.1    Notwithstanding the rights granted in Section 2.1, TheraSense agrees
         that:

          a)   the deposition of electron transfer mediators onto a Licensed
               Product shall only be performed by TheraSense or TheraSense
               Affiliates; and

          b)   the package for Licensed Product shall be marked with a
               trademark, trade name or brand name owned by TheraSense or a
               TheraSense Affiliate. Sales of Licensed Product marked with a
               trademark, trade name or brand name of a company other than
               TheraSense or a TheraSense Affiliate shall require Asulab's prior
               written approval. Such an approval may be withheld without
               reasons. Notwithstanding the foregoing, TheraSense and its
               distributors shall mark all Licensed Product in accord with local
               laws and regulations.

2.2.2    Notwithstanding the rights granted in Section 2.1, Asulab agrees that
         TheraSense may contract with third parties to manufacture and supply
         one or more components, including the synthesis of chemicals, necessary
         or useful in the manufacture of the Licensed Products for use in the
         Field.

2.2.3    TheraSense does not have the right to sublicense the Patent Rights.

3.       CONSIDERATION
         -------------

3.1      Commercialization of Asulab System
         ----------------------------------

         TheraSense shall conduct in-house clinical testing, clinical trials,
         market research, and preparation and submission of FDA 510k application
         for the Asulab system. Upon execution of a mutually agreeable
         distribution agreement between Asulab and TheraSense, TheraSense shall
         market the Asulab System to major US retailers. TheraSense shall use
         its best reasonable efforts to commercialize the Asulab System with one
         or more major retailers in North America. For a period of two (2) years
         from the Effective Date, Asulab shall work exclusively with TheraSense
         on the marketing of the Asulab System in North America. For a period of
         two (2) years from the Effective Date, Asulab shall not directly or
         indirectly engage in
<PAGE>

                                                                               5

         discussions with North American retailers or marketing partners (other
         than TheraSense) regarding the sale of the Asulab system in North
         America.

3.2      Royalties
         ---------

         In consideration of the license granted herein, for each calendar year
         beginning in 2000 TheraSense shall pay to Asulab the greater of:

3.2.1    a minimum royalty of *** for the year 2000, *** for the year 2001,
         and *** for each calendar year thereafter (such minimum royalties to
         be paid at the end of each calendar year); or

3.2.2    a running royalty based on Net Sales of all Licensed Products. The
         royalty rate on Net Sales of Licensed Products shall be as follows:

         a)    *** until TheraSense files 510k application with the US FDA for
               clearance to market the in vitro glucose monitoring system
               provided by Asulab to TheraSense on November 24, 1999 (the
               "Asulab System"); then

         b)    *** until the US FDA approves TheraSense's 510k application to
               market the Asulab System; then

         c)    *** until a total of      Licensed Products are sold in the
               Territory in any calendar year; then

         d)    *** for the remainder of that calendar year and in all years
               thereafter.

          In the event that:

         i)    TheraSense reasonably cannot submit a 510k application to the US
               FDA on the Asulab System within nine (9) months of the Effective
               Date,

         ii)   the US FDA rejects TheraSense's application to market the Asulab
               System; or


*** Confidential treatment requested
<PAGE>

                                                                               6

     iii) the Asulab System cannot reasonably be expected to be commercialized,
          in spite of ThereSense having used its best efforts to obtain FDA
          approval,

     and the responsibility for event i), ii) or iii) belongs primarily to
     Asulab (for example, due to product performance, product availability,
     patent encumbrances, etc.), then the royalty rate shall begin at *** and
     drop to *** as soon as *** Licensed Products are sold and follow from there
     on what is specified in Section 3.2.2 c) and d).


     For sales in countries where there are no issued Valid Claims, the royalty
     rate shall be equal to *** of the royalty rates specified herein above in
     this Section 3.2.2 for sales in countries in which a Valid Claim exists if
     the Licensed Product originates also from a country without Valid Claim. If
     however the Valid Claim exists either in the country of origin or in the
     country of destination of the Licensed Product, the royalty rate shall be
     *** of the rates specified herein above in Section 3.2.2. If the Valid
     Claim exists in both the country of origin and the country of destination,
     the royalty rate shall be the *** according to Section 3.2.2 herein
     above.


3.3. Combination Products
     --------------------

     In the event that a test strip that is a Licensed Product is sold in
     combination as a single product with another component or other product
     whose manufacture, sale and use are not covered by a claim within the
     Patent Rights for which the combination product is sold, Net Sales from
     such sales for purposes of calculating the amounts due under Sections 3.2
     above shall be as reasonably allocated between such Licensed Product and
     such component or other product, based upon their relative importance and
     proprietary protection. Combination Products currently contemplated by
     TheraSense and the corresponding royalty rates are listed in Exhibit B.

3.4  One Royalty
     -----------

     No more than one royalty payment shall be due with respect to a sale of a
     particular Licensed Product. No multiple royalties shall be payable because
     any Licensed Product, or its manufacture, sale or use is covered by more


*** Confidential treatment requested
<PAGE>

                                                                               7

         than one Valid Claim. No royalty shall be payable under Section 3.2
         above with respect to Licensed Products distributed for use in research
         and/or development, in clinical trials or as promotional samples,
         unless they are sold or distributed against a counter-benefit.

3.5      Royalty Term
         ------------

         Royalties due under this Article 3 shall be payable on a Licensed
         Product-by-Licensed Product basis until the expiration of the last-to-
         expire issued Valid Claim covering such Licensed Product.

3.6      Payments, Reports and Records
         -----------------------------

3.6.1    Payments; Currency
         ------------------

         TheraSense agrees to pay all running royalties due to Asulab within
         sixty (60) days after the last day of each half-calendar year in which
         they accrue. If the running royalty accrued in a given calendar year is
         less than the minimum royalty for that calendar year, the difference
         shall be paid within sixty (60) days after the last day of the calendar
         year. All payments due hereunder shall be paid in United States
         dollars.

3.6.2    Taxes
         -----

         The royalty payments to Asulab shall be net of taxes. In case taxes are
         due, TheraSense shall guarantee that it will correctly declare and pay
         such taxes that are to be withheld for the sale of Licensed Products in
         the country of the sales.

3.6.3    Royalty Reports
         ---------------

         TheraSense shall deliver to Asulab within sixty (60) days after the end
         of each half-calendar year in which Licensed Products are sold a report
         setting forth in reasonable detail the calculation of the royalties
         payable Asulab for such half-calendar year, including the Licensed
         Products sold per country and the net Sales thereof. Such reports shall
         be Confidential Information of TheraSense subject to Article 5 herein.




<PAGE>

                                                                               8

3.7      Books and Records
         -----------------

         TheraSense and its Affiliates shall maintain accurate books and records
         which enable the calculation of royalties payable hereunder to be
         verified. TheraSense shall retain the books and record for each
         half-calendar year period for three (3) years after the submission of
         the corresponding report under Section 3.6.3 hereof. Upon thirty (30)
         days prior notice to TheraSense, independent accountants selected by
         Asulab reasonably acceptable to TheraSense, after entering into a
         confidentiality agreement with TheraSense, may have access to
         TheraSense's books and records during TheraSense's normal business
         hours at mutually agreed times to conduct a review or audit once per
         calendar year, for the sole purpose of verifying the accuracy of
         TheraSense's payments and compliance with this Agreement. The audit
         will be limited to TheraSense's books and records documenting Net Sales
         and royalty calculations.

3.8      FreeStyle Meter Manufacturing
         -----------------------------

         During the term of the Agreement, in the event that TheraSense
         determines that it would like to sell an electronic meter utilizing a
         *** for use with FreeStyle test strip Licensed Product, then TheraSense
         shall solicit bids for the design and manufacture of the ***
         and the meter. In the event that TheraSense wishes to perform the
         design or manufacture of the *** and the meter then TheraSense may
         submit an internal bid for some or all of the project. Asulab shall
         have a right of first bid and last call for the design and manufacture
         of the *** and meter to be sold in Europe. In order for Asulab's bid
         not to be accepted by TheraSense, the bid of TheraSense or a third
         party must be equivalent or superior to the specifications, quality,
         delivery, price and other terms that are proposed in Asulab's bid.
         Asulab's bid shall be due on the same date as the third parties' bids.

4.       DILIGENCE
         ---------

Commercially Reasonable Efforts
-------------------------------

TheraSense agrees to use best efforts to develop and commercialize the Licensed
Products and obtain such approvals as may be necessary for the sale of the

*** Confidential treatment requested

<PAGE>

                                                                               9

Licensed Products in the Territory. TheraSense may conduct such activities
itself or through third parties.

5.       CONFIDENTIALITY
         ---------------

5.1      Confidential Information
         ------------------------

         Each party agrees not to use the Confidential Information disclosed to
         it by the other party for its own use or for any purpose except to
         carry out discussions concerning, and the undertaking of, any business
         relationship between the two; except to the extent that such
         Confidential Information:

         a)   was already known to the receiving party, other than under
              obligation of confidentiality, at the time of such disclosure;

         b)   was generally available to the public or otherwise part of the
              public domain at the time of its disclosure to the receiving
              party;

         c)   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;

         d)   was independently developed by the receiving party as demonstrated
              by documented evidence prepared contemporaneously with such
              independent development;

         e)   was subsequently lawfully disclosed to the receiving party by a
              person other than a party hereto.

         Neither party will disclose any Confidential Information of the other
         party to third parties except those directors, officers, employees,
         consultants and agents who are required to have the information in
         order to carry out the business relationship. Each party has had or
         will have those directors, officers, employees, consultants and agents
         to whom Confidential Information of the other party is disclosed or who
         have access to Confidential Information of the other party sign a
         Non-Disclosure Agreement in content substantially similar to the terms
         of this Article 5. Each party agrees that it will take all reasonable
         measures to protect the secrecy of and avoid disclosure
<PAGE>

                                                                              10

         or use of Confidential Information of the other party in order to
         prevent it from falling into the public domain or the possession of
         persons other than those persons authorized hereunder to have any such
         information, which, measures shall include the highest degree of care
         that either party utilizes to protect its own Confidential Information
         of a similar nature. Each party agrees to notify the other party in
         writing of any misuse or misappropriation of such Confidential
         Information of the other party which may come to its attention.

5.2      Mandatory Disclosure
         --------------------

         In the event that either party or their respective directors, officers,
         employees, consultants or agents are requested or required by legal
         process to disclose any of the confidential Information of the other
         party, the party required to make such disclosure shall give prompt
         notice so that the other party may seek a protective order or other
         appropriate relief. In the event that such protective order is not
         obtained, the party required to make such disclosure shall disclose
         only that portion of the Confidential Information which its counsel
         advises that it is legally required to disclose.

5.3      Return of Materials
         -------------------

         Upon termination of this Agreement for any reason, any materials or
         documents which have been furnished by one party to the other will be
         promptly returned, accompanied by all copies of such documentation,
         except for one copy which may be retained by each party's legal
         department to monitor its compliance with this Agreement.

5.4      Term
         ----

         The commitments of either party under this Article 5 shall survive
         termination of this Agreement, and shall continue for a period of five
         (5) years following the termination date of this Agreement.

5.5      Confidential Terms
         ------------------

         Each party agrees not to disclose any terms of this Agreement to any
         third party without the consent of the other party; provided
         disclosures may be made as required by securities or other applicable
         laws, or to a party's
<PAGE>

                                                                              11


     accountants, attorneys and other professional advisors, or by TheraSense to
     actual or prospective investors or corporate partners.

6.   REPRESENTATIONS AND WARRANTIES
     ------------------------------

6.1  Asulab
     ------

     Asulab represents and warrants that

     a)   it is a corporation duly organized, validly existing and in good
          standing under the laws of Switzerland; and

     b)   the execution, delivery and performance of this Agreement have been
          duly authorized by all necessary corporate action on the part of
          Asulab; and

     c)   as of the Effective Date, it has the right to grant the rights and
          licenses granted herein, and the Patent Rights are free and clear of
          any lien, encumbrance or security interest;

     d)   it has not previously granted, and will not grant during the term of
          this Agreement, any exclusive license on the Patent Rights, or any
          portion thereof; and

     e)   as of the Effective Date, there are no threatened or pending actions,
          lawsuits, claims or arbitration proceedings in any way relating to the
          Patent Rights.

6.2  TheraSense
     ----------

     TheraSense represent and warrants that

     a)   it is a corporation duly organized, validly existing and in good
          standing under the laws of the State of California; and

     b)   the execution, delivery and performance of this Agreement have been
          duly authorized by all necessary corporate action on the part of
          TheraSense.
<PAGE>

                                                                              12

7.   PROSECUTION AND ENFORCEMENT
     ---------------------------

7.1  Asulab's Responsibilities
     -------------------------

     Asulab shall have the sole right to control the preparation, filing,
     prosecution and maintenance of the Patent Rights, and any interference or
     opposition proceeding relating thereto, using patent counsel of its choice
     and at its sole expense; provided Asulab shall keep .TheraSense informed of
     the preparation, filing, prosecution, and/or maintenance of the Patent
     Rights, and TheraSense may provide to Asulab substantive comment and input
     thereon.

7.2  Enforcement
     -----------

     If either party hereto becomes aware that any Patent Rights are being or
     have been infringed by any third party, such party shall promptly notify
     the other party hereto in writing describing the facts relating thereto in
     reasonable detail. Asulab shall decide what actions will be taken to
     enforce the Patent Rights, it being understood that TheraSense shall assist
     Asulab upon request and at Asulab's expense.

7.3  Infringement Claims
     -------------------

     If the practice by TheraSense of the license granted herein results in any
     allegation or claim of infringement of an intellectual property right of
     third party against TheraSense, TheraSense shall have the right to defend
     any such claim, suit or proceeding, at its own expense, by counsel of its
     own choice and shall have the right and authority to settle any such suit;
     provided, however, Asulab shall cooperate with TheraSense, at TheraSense's
     reasonable request and expense, in connection with the defense of such
     claim. If the Patent Rights are concerned Asulab shall have the right to
     decide on the actions to be taken and shall bear the related expenses.

8.   DISPUTE RESOLUTION
     ------------------

8.1  Mediation
     ---------

     If a dispute arises out of or relates to this contract, or the breach
     thereof, and if said dispute cannot be settled through negotiation, the
     parties agree first to
<PAGE>

                                                                              13

     try in good faith to settle the dispute by mediation under the mediation
     rules of the International Chamber of Commerce before resorting to
     arbitration, litigation, or some other dispute resolution procedures.

8.2  Arbitration
     -----------

     If the parties are unable to resolve any dispute, controversy or claim
     between them arising out of or relating to the validity, construction,
     enforceability or performance of this Agreement, including disputes
     relating to alleged breach or to termination of this Agreement (each, a
     "Dispute"), the Dispute shall be settled by binding arbitration conducted
     in Frankfurt, Germany, pursuant to the Arbitration Rules of the
     International Chamber of Commerce then in effect by one (1) arbitrator
     appointed in accordance with such rules. The arbitrator shall, in rendering
     its decision, apply the substantive law of Switzerland, without regard to
     its conflict of laws provisions. All proceedings and documents will be in
     the English language.

9.   INDEMNIFICATION
     ---------------

9.1  Indemnification of Asulab
     -------------------------

     TheraSense shall indemnify, defend and hold harmless Asulab, its Affiliates
     and its directors, officers and employees (each an "Asulab Indemnitee")
     from and against any and all liabilities, damages, losses, costs or
     expenses (including reasonable attorneys' and professional fees and other
     expenses of litigation and/or arbitration) (a "Liability") resulting from a
     claim, suit or proceeding (any of the foregoing, a "Claim") brought by a
     third party against an Asulab Indemnitee or one its Affiliate's Indemnitee,
     arising from or occurring as a result of activities performed by TheraSense
     in connection with the development, manufacture, sale or use of any
     Licensed Product, except to the extent caused by the negligence or willful
     misconduct of Asulab.

9.2  Indemnification Procedures
     --------------------------

     In the event that an Indemnitee intends to claim indemnification under this
     Article 9 it shall promptly notify the other party (the "Indemnitor") in
     writing of such alleged Liability. The Indemnitor shall have the sole right
     to control the
<PAGE>

                                                                              14

     defense and/or settlement thereof, provided that the indemnified party may
     participate in any such proceeding with counsel of its choice and at its
     own expense. The indemnity agreement in this Article 9 shall not apply to
     amounts paid in settlement of any Claim if such settlement is effected
     without the consent of the Indemnitor, which consent shall not be withheld
     unreasonably. The Indemnitee under this Article 9, its employees and
     agents, shall cooperate fully with the Indemnitor and its legal
     representatives and provide full information in the investigation of any
     Claim covered by this indemnification. Neither party shall be liable for
     any costs or expenses incurred by the other party without its prior written
     authorization.

10.  TERM AND TERMINATION
     --------------------

10.1 Term
     ----

     The term of this Agreement shall commence on the Effective Date, and unless
     earlier terminated as provided in this Article 10, shall continue in full
     force and effect on a Licensed Product-by-Licensed Product basis until the
     life of the last to expire patents under the Patent Rights.

10.2 Permissive Terminations
     -----------------------

     Beginning two (2) years from the Effective Date, TheraSense may terminate
     this Agreement with one hundred and twenty (120) days prior written notice
     to Asulab. In the event that TheraSense terminates this Agreement under
     this Section 10.2, TheraSense shall refrain from using the Patent Rights in
     whatever form.

10.3 Termination for Cause
     ---------------------

     In the event one party has materially breached or defaulted in the
     performance of any of its obligations hereunder, and such breach or default
     has continued for sixty (60) days after written notice thereof was provided
     to the breaching or defaulting party by the non-breaching or non-defaulting
     party, the other party may terminate this Agreement. Any termination shall
     become effective at the end of such sixty (60) days period unless the
<PAGE>

                                                                              15

       breaching or defaulting party has cured any such breach or default prior
       to the expiration of the sixty (60) day period; provided, however, if
       TheraSense receives notification from Asulab of a material breach and if
       TheraSense notifies Asulab in writing within thirty (30) days of receipt
       of such default notice that it disputes the asserted default, the matter
       will be submitted to arbitration as provided in Article 8 of this
       Agreement. In such event, Asulab shall not have the right to terminate
       this Agreement until it has been determined in such arbitration
       proceeding that TheraSense materially breached this Agreement, and
       TheraSense fails to cure such breach within sixty (60) days after the
       conclusion of such arbitration proceeding.

10.4   Termination for Insolvency
       --------------------------

       If voluntary or involuntary proceedings by or against TheraSense are
       instituted in bankruptcy under any insolvency law, or a receiver or
       custodian is appointed for TheraSense, or proceedings are instituted by
       or against TheraSense for corporate reorganization or the dissolution of
       TheraSense, which proceedings if involuntary, shall not have been
       dismissed within one hundred and eighty (180) days after the date of
       filing, or if TheraSense makes an assignment for the benefit of
       creditors, or substantially all of the assets of TheraSense are seized or
       attached and not released within one hundred and eighty (180) days
       thereafter, Asulab may immediately terminate this Agreement effective
       upon notice of such termination.

10.5   Effect of Termination
       ---------------------

10.5.1 Accrued rights and Obligations
       ------------------------------

       Termination of this Agreement for any reason shall not release any party
       hereto from any liability which, at the time of such termination, has
       already accrued to the other party or which is attributable to a period
       prior to such termination, nor preclude either party from pursuing any
       rights and remedies it may have hereunder or at law or in equity which
       accrued or are based upon any event occurring prior to such termination.
<PAGE>

                                                                              16

10.5.2  Stock on Hand
        -------------

        In the event this Agreement is terminated for any reason, TheraSense
        shall have the right to sell or otherwise dispose of the Stock of any
        licensed Product then on hand, within a period of 6 months, subject to
        Article 3.

10.6    Survival
        --------

        Section 7.2, 7.3, 10.5 and 10.6 and Articles 5,6,8,9 and 11 of this
        Agreement shall survive termination of this Agreement for any reason.

11.     MISCELLANEOUS
        -------------

11.1    Governing Law
        -------------

        This Agreement, and any proceeding subject to Article 8, shall be
        governed by and construed in accordance with the laws of Switzerland.

11.2    Independent Contractors
        -----------------------

        The relationship of the parties hereto is that of independent
        contractors. The parties hereto are not deemed to be agents, partners or
        joint ventures of the other for any purpose as a result of this
        Agreement or the transactions contemplated thereby.

11.3    Assignment
        ----------

        The parties agree that their rights and obligations under this Agreement
        shall not be delegated, transferred or assigned to a third party without
        prior written consent of the other party hereto; provided TheraSense may
        assign this Agreement, without Asulab's consent (a) to its Affiliates,
        and (b) to an entity that acquires all or substantially all of the
        business of assets of TheraSense to which this Agreement pertains,
        whether by merger, reorganization, acquisition, sale or otherwise. This
        Agreement shall be binding upon and inure to the benefit of the parties
        and their successors and assigns.
<PAGE>

                                                                              17

11.4   Rights to Develop Independently
       -------------------------------

       Nothing in this Agreement will impair TheraSense's right to independently
       acquire, license, develop for itself, or have develop for it,
       intellectual property and technology performing similar functions as the
       Patent Rights or to market and distribute Licensed Products or other
       products based on such other intellectual property and technology.

11.5   Notices
       -------

       Any required notices hereunder shall be given in writing by certified
       mail or international express delivery service (e.g. DHL) at the address
       of each party below, or to such other address as either party may
       substitute by written notice. Notice shall be deemed served when
       delivered or, if delivery is not accomplished by reason or some fault of
       the addressee, when tendered.

       If to Asulab SA:       Asulab SA
                              Rue des Sors 3
                              CH-2074 Marin
                              Switzerland
                              Attn. Dr. Rudolf Dinger, Director
                              Copy to Dr. Hanspeter Rentsch, General Counsel of
                              Swatch Group, Seevorstadt 6, CH-2501 Biel,
                              Switzerland

       If to TheraSense:      TheraSense Inc.
                              1360 South Loop Road
                              Alameda, CA 94502, USA
                              Attn. Ephraim Heller, Vice President of Business
                              Development

11.6   Force Majeure
       -------------

       Neither party shall lose any rights hereunder or be liable to the other
       party for damages or losses (except for payment obligations) on account
       of failure of performance by the defaulting party if the failure is
       occasioned by war, strike, fire, Act of God, earthquake, flood, lockout,
       embargo, governmental acts or orders or restrictions, failure of
       suppliers, or any other reason where failure to perform is beyond the
       reasonable control and not caused by the negligence,
<PAGE>

                                                                              18

       intentional conduct or misconduct of the nonperforming party and such
       party has exerted all reasonable efforts to avoid or remedy such force
       majeure; provided, however, that in no event shall a party be required to
       settle any labor dispute or disturbance.

11.7   Compliance with Laws
       --------------------

       Each party shall furnish to the other party any information requested or
       required by that party during the term of this Agreement or any
       extensions hereof to enable that party to comply with the requirements of
       any U.S. or foreign, state and/or government agency.

11.8   Severability, Waiver
       --------------------

       In the event that any provisions of this Agreement are determined to be
       invalid or unenforceable by a court of competent jurisdiction, the
       remainder of the Agreement shall remain in full force and effect without
       said provision. The parties shall in good faith negotiate a substitute
       clause for any provision declared invalid or unenforceable, which shall
       most nearly approximate the intent of the parties in entering this
       Agreement. The failure of a party to enforce any provision of the
       Agreement shall not be construed to be a waiver of the right of such
       party to thereafter enforce that provision or any other provision or
       right.

11.9   Entire Agreement, Modification
       ------------------------------

       This Agreement sets forth the entire Agreement and understanding of the
       parties with respect to the subject matter hereof, and supersedes all
       prior discussions, agreements and writings in relating thereto. This
       Agreement may not be altered, amended or modified in any way except by a
       writing signed by both parties.

11.10  Counterparts
       ------------

       This Agreement may be executed in two counterparts, each of which shall
       be deemed an original and which together shall constitute one instrument.
<PAGE>

IN WITNESS WHEREOF, Asulab and TheraSense have executed this Agreement by their
respective duly authorized representatives.

<TABLE>
<S>                                             <C>
Marin, 21, February 2000                        Alameda, 23 Feb 2000
       -----------------                                 -----------

Asulab SA __________________                    TheraSense Inc. ____________

     /s/ Signature Illegible                         /s/ Signature Illegible
By: ------------------------                    By: ------------------------

Print Name: W. SALATHE   R. DINGER              Print Name: Ephraim Heller
            ----------------------                          --------------

Title   DIRECTOR      MANG. DIRECTOR           Title: Vice President, Business Development
      ------------------------------                  ------------------------------------
</TABLE>
<PAGE>

                                   EXHIBIT A

                Asulab Mediator Patents and Patent Applications

Title:  Mono, bis or tris(substituted 2,2'-bipyridine) iron, ruthemium, osmium
-----   or vanadium complexes and their methods of preparation

--------------------------------------------------------------------------------
     Country      Application       Application       Patent        Date of
    or region        number             date          number         grant
--------------------------------------------------------------------------------
     Europe*       92903806.5        19.02.1992       0 526 603     04.12.1996
--------------------------------------------------------------------------------
    Australia        12441/92        19.02.1992         657 307     09.03.1995
--------------------------------------------------------------------------------
     Canada       2,080,834.9        19.02.1992       2,080,834     21.12.1999
--------------------------------------------------------------------------------
     Japan          503783/92        19.02.1992        2855481      27.11.1998
--------------------------------------------------------------------------------
      USA          07/949,485        19.02.1992       5,393,903     28.02.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, FR, GB, IT and NL
French priority patent application No 91 02199 of February 21, 1991 now
abandoned in favor of European patent designating France.


Title:  Sensor for measuring the amount of a component in solution
-----

--------------------------------------------------------------------------------
     Country      Application       Application         Patent        Date of
    or region        number             date            number         grant
--------------------------------------------------------------------------------
     Europe*       92903775.2        19.02.1992       0 526 602     02.01.1997
--------------------------------------------------------------------------------
    Australia        12219/92        19.02.1992         656 360     02.02.1995
--------------------------------------------------------------------------------
     Canada       2,808,840-3        19.02.1992       2,080,840     06.04.1999
--------------------------------------------------------------------------------
     Japan          503902/92        19.02.1992        2770250      17.04.1998
--------------------------------------------------------------------------------
      USA          07/938,219        19.02.1992       5,378,628     03.01.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, FR, GB, IT and NL
French priority patent application No 91 02200 of February 21, 1991 now
abandoned in favor of European patent designating France.


Title:  Sensor for measuring the amount of a component in solution
-----

--------------------------------------------------------------------------------
     Country      Application       Application        Patent        Date of
    or region        number             date           number         grant
--------------------------------------------------------------------------------
     France         91 07404         14.06.1991       91 07404      10.11.1994
--------------------------------------------------------------------------------


Title:  Transition metal complexes having 2,2'-bipyridine ligands substituted by
-----   at least one ammonium alkyl radical

--------------------------------------------------------------------------------
     Country      Application       Application       Patent         Date of
    or region        number             date          number          grant
--------------------------------------------------------------------------------
     France         92 15214        15.12.1992       92 15214      28.07.1995
--------------------------------------------------------------------------------
     Europe*       93119597.8       06.12.1993       0 602 488     31.03.1999
--------------------------------------------------------------------------------
    Australia        52404/93       14.12.1993        665 327      21.12.1995
--------------------------------------------------------------------------------
      ***
--------------------------------------------------------------------------------
      ***
--------------------------------------------------------------------------------
      USA          08/166,977       14.12.1993      5,410,059      25.04.1995
--------------------------------------------------------------------------------
*       BE, CH/LI, DE, GB, IT and NL
***
***

***     Confidential treatment requested

<PAGE>

                                   EXHIBIT B
                                   ---------

                             COMBINATION PRODUCTS

Combination Products shall include a starter kit that includes at least a
glucose meter and Licensed Products. The royalty due on sales of Licensed
Products included in such a starter kit shall be calculated based on a price of
$0.25 per Licensed Product.