<PAGE>   1

                                                                    EXHIBIT 10.7
                                                                                
     Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

                    TECHNOLOGY TRANSFER AND LICENSE AGREEMENT


      This Agreement is effective as of May 28, 1997 (the "Effective Date") by
and between Millennium Pharmaceuticals, Inc., a Delaware corporation having its
principal office at 640 Memorial Drive, Cambridge, Massachusetts 02139-4815
("MPI"), and Millennium BioTherapeutics, Inc., a Delaware corporation having its
principal place of business at 640 Memorial Drive, Cambridge, Massachusetts,
02139-4815 ("MBI").

                                  INTRODUCTION

      1. MPI is willing to transfer and license to MBI, and MBI desires to
acquire and license from MPI, certain technology and intellectual property
rights thereto for the purpose of allowing MBI to develop and market products in
the MBI Core Field (as defined below) using such technology and intellectual
property rights thereto.

      2. In the future, MPI may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MPI is
willing to grant to MBI a license or sublicense to use such developments,
technology or rights for research, and to exploit such developments, technology
or rights for development and commercialization in the MBI Core Field.

      3. In the future, MBI may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MBI is
willing to grant to MPI a license or sublicense to use such developments,
technology or rights for research, and to exploit such developments, technology
or rights for development or commercialization in the MPI Core Field (as defined
below).

      4. In consideration of the transfer and license by MPI to MBI of such
technology and rights, MBI has agreed to issue certain equity securities to MPI.

      NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, MPI and MBI hereby agree as follows:

SECTION 1.  Definitions

      As used herein, the following terms shall have the meanings set forth
below:


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     Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

      "Affiliate" means any corporation, company partnership, joint venture
and/or firm which controls, is controlled by or is under common control with a
Party. For the purposes of this definition, "control" shall mean, (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.

      "Agreement Term" means the period commencing on the Effective Date and
ending on the later of (a) May 31, 2002, and (b) the date on which MBI ceases to
be an Affiliate of MPI.

      "Antibody-based Product" means any drug or drug candidate which comprises
(a)
********************************************************************************
********************************************************************************
**************************************************or (b)
********************************** *************************** of the type
described in (a) (e.g., ********************** ***************.

      "Antisense-based Product" means any drug or drug candidate which comprises
************************************************************************ and
which is complementary to a ****************************************************
***** and which, upon delivery *************************************************
******************************** of or by such target gene.

      "Collaborative Partner" means a party (other than MPI or MBI) to a
collaboration agreement with either of MPI or MBI.

      "Confidential Information" means all trade secrets or confidential or
proprietary information designated as such in writing, whether by letter or by
the use of an appropriate proprietary stamp or legend, prior to or at the time
any such trade secret or confidential or proprietary information is disclosed to
the receiving Party. Notwithstanding the foregoing, information which is orally
or visually disclosed to the receiving Party, or is disclosed in writing without
an appropriate letter, proprietary stamp or legend, shall constitute
Confidential Information if (i) it would be apparent to a reasonable person,
familiar with the business and the industry of the disclosing Party, that such
information is of a confidential or proprietary nature the maintenance of which
is important to the disclosing Party or if (ii) the disclosing Party, within
thirty (30) days after such disclosure, delivers to the receiving Party a
written document or documents describing such information and referencing the


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     Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

place and date of such oral, visual or written disclosure and the names of the
employees or officers.

      "Gene Therapy-based Product" shall mean any ****************************
********************************************************************************
and which, upon delivery ****************************************************
which is expressed.

      "Joint Product Technology" means all information and methods, exclusive of
Joint Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in either the MPI Core Field or the MBI
Core Field, and which is developed, acquired or otherwise controlled jointly by
the Parties during the Agreement Term, including, but not limited to, any
improvement to Joint Product Technology that is developed or acquired or
otherwise controlled jointly by the Parties during the Agreement Term.

      "Joint Product Technology Patent Right(s)" means a Patent Right that
covers Joint Product Technology.

      "Joint Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule E
which may be updated by the Parties in writing from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology methods) for the research, discovery, production and/or
characterization of genes and/or proteins which is developed, acquired or
otherwise controlled jointly by the Parties during the Agreement Term, including
but not limited to any improvements to Joint Research Technology that is
developed, acquired or otherwise controlled jointly by the Parties during the
Agreement Term.

      "Joint Research Technology Patent Right(s)" means a Patent Right that
covers Joint Research Technology.

      "MBI Core Field" means the discovery, development and commercialization of
********************************************************************************
********************************************************************************
The MBI Core Field shall *******************************************************
********************************************************************************
********************************************************************************


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      "MBI Product Technology" means all information and methods, exclusive of
MBI Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in the MPI Core Field, and which is
developed, acquired or otherwise controlled by MBI during the Agreement Term,
including, but not limited to, any improvement to MPI Product Technology that is
developed, acquired or otherwise controlled by MBI during the Agreement Term.

      "MBI Product Technology Patent Right(s)" means a Patent Right that covers
MBI Product Technology.

      "MBI Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule C
which may be updated by the Parties in writing from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology methods) for the research, discovery, production and/or
characterization of genes and/or Proteins, which is developed, acquired or
otherwise controlled by MBI during the Agreement Term, including but not limited
to any improvement to MPI Research Technology that is developed, acquired or
otherwise controlled by MBI during the Agreement Term.

      "MBI Research Technology Patent Right(s)" means a Patent Right that covers
MBI Research Technology.

      "MPI Core Field" means the discovery, development and commercialization of
all products and services outside of the MBI Core Field.

      "MPI Product Technology" means all information and methods, exclusive of
MPI Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in the MBI Core Field, and is developed,
acquired or otherwise controlled by MPI prior to the Effective Date or by MPI
during the Agreement Term, including but not limited to any improvement to MBI
Product Technology that is developed, acquired or otherwise controlled by MPI
during the Agreement Term.

      "MPI Product Technology Patent Right(s)" means (a) the Patent Rights
listed on Schedule A ("Initial Product Technology Patent Rights") and (b) any
additional Patent Right that covers MPI Product Technology.

      "MPI Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule D
which may be updated in writing by the Parties from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology


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     Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

methods) for the research, discovery, production and/or characterization of
genes and/or Proteins which are controlled by MPI on the Effective Date or are
developed, acquired or otherwise controlled by MPI during the Agreement Term,
including, but not limited to, any improvement to MBI Research Technology that
is developed, acquired or otherwise controlled by MPI during the Agreement Term.

      "MPI Research Technology Patent Right(s)" means (a) the Patent Rights
listed on Schedule B ("Initial Research Technology Patent Rights"), and (b) any
additional Patent Right that covers MPI Research Technology.

      "Patent Right" means a patent or patent application and all divisions,
continuations, continuation-in-part, reissues, reexaminations, extensions,
Supplementary Protection Certificates and foreign counterparts thereof that is
owned or otherwise controlled by MBI or by MPI.

      "Party" means MPI or MBI; "Parties" means MPI and MBI.

      "Peptidomimetic" means a *************************** that (a) is designed
or developed using *************************************************************
*******************.

      "Person" means any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity.

      "Protein-based Product" means any drug or drug candidate that comprises a
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************************************************************
************************************. Protein-based Products shall not include a
Peptidomimetic.

      "Rights Exchange Agreement" means the Rights Exchange Agreement between
MPI and MBI dated as of May 28, 1997.

      "Small Molecule Drug" has the meaning set forth for such term in the
Collaboration Agreement between MBI and Eli Lilly and Company to be executed on
or about the Effective Date.


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<PAGE>   6

SECTION 2.  Transfer of Certain Existing Patent Rights

      Subject to the terms and conditions of this Agreement, MPI hereby
transfers and assigns to MBI all of MPI's right, title and interest in and to
(i) the Initial Product Technology Patent Rights, and (ii) the Initial Research
Technology Patent Rights. MPI shall deliver to MBI a separate, recordable
assignment document of such MPI Patent Rights within thirty (30) days of the
Effective Date of this Agreement.

SECTION 3.  Licenses

      3.1 MPI Licenses to MBI. Subject to the terms and conditions of this
Agreement, MPI hereby grants to MBI the following licenses.

      (a) MPI Research Technology. MPI hereby grants to MBI and its Affiliates
      (other than MPI) a royalty-free, non-exclusive right and license, without
      the right to grant sublicenses except to Affiliates of MBI, to MPI
      Research Technology and MPI Research Technology Patent Rights (excluding
      the Initial Research Technology Patent Rights which are subject to the
      assignment set forth in Section 2) and MPI's rights in Joint Research
      Technology and Joint Research Technology Patent Rights, for use by MBI
      solely in the MBI Core Field. MBI shall not be permitted or authorized to
      use or practice MPI Research Technology, MPI Research Technology Patent
      Rights or MPI's rights in Joint Research Technology and Joint Research
      Technology Patent Rights outside the MBI Core Field except with the
      written consent of MPI.

      (b) MPI Product Technology. MPI hereby grants to MBI and its Affiliates
      (other than MPI) a royalty-free, exclusive right and license, with the
      right to grant sublicenses, to MPI Product Technology, MPI Product
      Technology Patent Rights (excluding the Initial Product Technology Patent
      Rights, which are subject to the assignment set forth in Section 2) and
      MPI's rights in Joint Product Technology and Joint Product Technology
      Patent Rights for use by MBI or MBI's sublicensee solely in the MBI Core
      Field. Notwithstanding the foregoing, in the event that MPI enters into a
      collaboration agreement, strategic alliance, license agreement or similar
      arrangement with a Collaborative Partner (a "Collaboration Agreement"),
      and pursuant to Section 2(c) of the Rights Exchange Agreement, MPI is
      permitted to grant licenses and rights to such Collaborative Partner in
      the MBI Core Field, then the license set forth in this subsection (b)
      shall not apply with respect to MPI Product Technology and MPI Product
      Technology Patent Rights developed or acquired pursuant to such
      Collaboration Agreement.

      3.2 MBI Licenses to MPI. Subject to the terms and conditions of this
Agreement, MBI hereby grants to MPI the following licenses.


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      (a) MBI Research Technology. MBI hereby grants to MPI and its Affiliates
      (other than MBI) a royalty-free, non-exclusive right and license, without
      the right to grant sublicenses except to Affiliates of MPI, to MBI
      Research Technology, MBI Research Technology Patent Rights and MBI's
      rights in Joint Research Technology and Joint Research Technology Patent
      Rights for use by MPI solely in the MPI Core Field. MPI shall not be
      permitted or authorized to use or practice MBI Research Technology, MBI
      Research Technology Patent Rights outside the MPI Core Field except with
      the written consent of MBI.

      (b) MBI Product Technology. MBI hereby grants to MPI and its Affiliates
      (other than MBI) a royalty-free, exclusive right and license, with the
      right to grant sublicenses, to MBI Product Technology, MBI Product
      Technology Patent Rights and MBI's rights in Joint Product Technology and
      Joint Product Technology Patent Rights for use by MPI or MPI's sublicensee
      solely in the MPI Core Field. Notwithstanding the foregoing, in the event
      that MBI enters into a Collaboration Agreement with a Collaborative
      Partner, and pursuant to Section 2(c) of the Rights Exchange Agreement,
      MBI is permitted to grant licenses and rights to such Collaborative
      Partner in the MPI Core Field, then the license set forth in this
      subsection (b) shall not apply with respect to such MBI Product Technology
      and MBI Product Technology Patent Rights developed or acquired pursuant to
      such Collaboration Agreement.

SECTION 4.  Disclosure and Transfer of Technology

      4.1 MPI shall disclose to MBI on an ongoing basis during the Agreement
Term all MPI Research Technology and MPI Product Technology which MPI reasonably
believes to be pertinent to the MBI Core Field. At the time MPI discloses MPI
Research Technology to MBI that is not currently listed on Schedule D, the
Parties shall agree upon an update to Schedule D describing such technology.
Notwithstanding the foregoing, MPI need not disclose to MBI any MPI Research
Technology and/or MPI Product Technology which MPI is precluded from disclosing
under any agreement binding upon it.

      4.2 MBI shall disclose to MPI on an ongoing basis during the Agreement
Term all MBI Research Technology and MBI Product Technology which MBI reasonably
believes to be pertinent to the MPI Core Field. At the time MBI discloses a MBI
Research Technology to MPI, the Parties shall agree upon an update to Schedule C
describing such technology. Notwithstanding the foregoing, MBI need not disclose
to MPI any MBI Research Technology and/or MBI Product Technology which MBI is
precluded from disclosing under any agreement binding upon it.

      4.3 MPI shall provide to MBI biological materials related to the MBI Core
Field and MBI shall provide to MPI biological materials related to the MPI Core
Field in either case, such as genes, gene fragments, vectors, cell lines,
strains, transgenic


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organisms, model organisms, DNA and DNA fragments, as well as information
relating to such materials. At the time of each transfer of biological material
the Parties shall establish a written record evidencing the transfer and
indicating the type and amount of transfer and any limitations on the
transferred biological materials. The written record shall be initialed by the
appropriate officer or senior employee of each Party. Without limiting the
foregoing, the Parties acknowledge the transfer from MPI to MBI of the
biological materials listed on Schedule F. The Party receiving such transferred
biological materials shall not be permitted or authorized to transfer such
biological material to a third party without the prior written authorization of
the providing Party. Notwithstanding the foregoing, neither Party is required to
transfer any biological materials which such Party is precluded from
transferring under any agreement binding upon such Party.

      4.4 MPI shall provide reasonable technical assistance and instruction, at
MBI's sole option and expense, in understanding, interpreting and applying MPI
Research Technology and MPI Product Technology, and MBI shall provide reasonable
technical assistance and instruction, at MPI's sole option and expense, in
understanding, interpreting and applying MBI Research Technology and MBI Product
Technology. Each Party shall make its employees reasonably available for
consultation by telephone, or in person at the Party's offices, in connection
with such assistance and instruction, all at the requesting Party.

SECTION 5.  Issuance of Equity

      In consideration for the transfers and licenses set forth herein, MBI
hereby agrees to issue, and MPI hereby agrees to accept, 9,000,000 shares of
Series A Convertible Preferred Stock, $.001 par value per share of MBI pursuant
to a Stock Purchase Agreement in the form of Exhibit A hereto.

SECTION 6.  Grantback of Licenses to Assigned MPI Patent Rights.

      MBI hereby grants back to MPI (a) a perpetual, royalty-free and exclusive
right and license to the Initial Research Technology Patent Rights, and (b) a
perpetual royalty-free and exclusive right and license to the Initial Product
Technology Patent Rights (except such license shall be co-exclusive with Eli
Lilly and Company with respect to the development and/or commercialization Small
Molecule Drugs) in either case for use solely in the MPI Core Field.

SECTION 7.  Patent Rights

      The Patent Rights of the Parties on a country by country basis shall be as
defined below, provided that, in no event shall either Party have the right to
prepare and prosecute a patent application which discloses Confidential
Information of the other Party without the prior written consent of the other
Party. Except as provided


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in the Research Services and Collaboration Agreement between MPI and MBI dated
as of May 28, 1997, each Party shall solely own inventions conceived or reduced
to practice by their own employees and the Parties shall jointly owned any
inventions conceived or reduced to practice jointly by the Parties.

      7.1   Patent Rights of MPI.

      (a) MPI Research Technology Patent Rights. MPI shall have the exclusive
      right, at its expense and its sole discretion, to prepare and prosecute
      patent applications, and to maintain and enforce any patents issued
      thereon, with respect to inventions relating to MPI Research Technology
      (other than Joint Research Technology Patent Rights).

      (b) MPI Product Technology Patent Rights in the MPI Core Field. MPI shall
      have the exclusive right, at its expense and its sole discretion, to
      prepare and prosecute patent applications, and to maintain and enforce any
      patents issued thereon, with respect to inventions relating to MPI Product
      Technology in the MPI Core Field (other than Joint Product Technology
      Patent Rights).

      (c) MPI Product Technology Patent Rights in the MBI Core Field. At MBI's
      expense, MPI shall prepare and prosecute patent applications and shall
      maintain and enforce any patents issued thereon, with respect to MPI
      Product Technology in the MBI Core Field. In the event that MBI elects not
      to assume these costs in any country, MPI shall have the right and option
      to undertake such responsibilities, at its sole expense. If MPI undertakes
      such responsibilities at its sole expense, then (i) the license under
      Section 3 to any such MPI Product Technology Patent Right in such country
      shall terminate and (ii) MPI shall have the exclusive right to develop
      and/or commercialize such MPI Product Technology in either the MBI Core
      Field or the MPI Core Field.

      7.2   Patent Rights of MBI.

      (a) MBI Research Technology Patent Rights. MBI shall have the exclusive
      right, at its expense and its sole discretion, to prepare and prosecute
      patent applications, and to maintain and enforce any patents issued
      thereon, with respect to inventions relating to MBI Research Technology
      (other than Joint Research Technology Patent Rights).

      (b) MBI Product Technology Patent Rights in the MBI Core Field. MBI shall
      have the exclusive right, at its expense and its sole discretion, to
      prepare and prosecute patent applications, and to maintain and enforce any
      patents issued thereon, with respect to inventions relating to MBI Product
      Technology in the MBI Core Field (other than Joint Product Technology
      Patent Rights).


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      (c) MBI Product Technology Patent Rights in the MPI Core Field. At MPI's
      expense, MBI shall prepare and prosecute patent applications and shall
      maintain and enforce any patents issued thereon, with respect to MBI
      Product Technology in the MPI Core Field. In the event that MPI elects not
      to assume these costs in any country, MBI shall have the right and option
      to undertake such responsibilities, at its sole expense. If MBI undertakes
      such responsibilities at its sole expense, then (i) the license under
      Section 3 to any such MBI Product Technology Patent Right in such country
      shall terminate and (ii) MBI shall have the exclusive right to develop
      and/or commercialize such MBI Product Technology in either the MBI Core
      Field or the MPI Core Field.

      7.3 Joint Product Technology Patent Rights and Joint Research Technology
Patent Rights. Patent applications relating to Joint Research Technology Patent
Rights and Joint Product Technology Patent Rights shall be prepared and
prosecuted by patent counsel selected by the Party in whose core field the
technology is most relevant; provided that, if the technology is relevant to the
core fields of both Parties then MPI shall select the patent counsel to prepare
and prosecute such patent application. The costs of such preparation and
prosecution of such patent applications, and the maintenance of any patent
issuing thereon, shall be borne equally by the Parties. Should either Party
determine that it no longer desires to prosecute such patent application or
maintain any patent issued thereon, then such Party shall be obligated to
transfer its entire right, title and interest in and to such patent application
or patent to the other Party and such patent application or patent shall not be
subject to the license provisions of Section 3.

      7.4   Improvements.

      (a) Improvements made by MPI to MBI Research Technology or MBI Product
      Technology. MBI shall have the right to prohibit MPI from preparing and
      prosecuting a patent application directed to any improvement made by MPI
      to MBI Research Technology or MBI Product Technology. If MBI consents to
      the preparation and prosecution of such patent application, then such
      patent application shall be prepared and prosecuted, in MPI's name and at
      MPI's expense, by patent counsel selected by MBI. If MPI decides not to
      prepare and prosecute such patent application, then MBI shall not have the
      right to assume the preparation and prosecution of such patent
      application.

      (b) Improvements made by MBI to MPI Research Technology or MPI Product
      Technology. MPI shall have the right to prohibit MBI from preparing and
      prosecuting a patent application directed to any improvement made by MBI
      to a MPI Research Technology or MPI Product Technology. If MPI consents to
      the preparation and prosecution of such patent application, then such
      patent application shall be prepared and prosecuted, in MBI's name and at
      MBI's expense, by patent counsel selected by MPI. If MBI decides not to


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      prepare and prosecute such patent application, then MPI shall not have the
      right to assume the preparation and prosecution of such patent
      application.

      (c) Joint Improvements. The Parties shall discuss and shall mutually agree
      to prepare and prosecute patent applications relating to jointly developed
      improvements to any of the MPI Product Technology, MPI Research
      Technology, MBI Product Technology or MBI Research Technology, provided
      that the Party from whose technology such improvement derives shall have
      the right to prohibit the preparation and prosecution of any such patent
      applications. If the Parties agree to prepare and prosecute any such
      patent applications, then the preparation and prosecution shall be
      controlled by the Party to whose technology such improvement relates. The
      costs of the preparation and prosecution of such patent applications shall
      be borne equally by the Parties. Should either Party determine that it no
      longer desires to prosecute such patent application or maintain any patent
      issued thereon, then such Party shall be obligated to transfer its entire
      right, title and interest in and to such patent application or patent to
      the other Party and such patent application or patent shall not be subject
      to the license provisions of Section 3.

SECTION 8.  Confidential Information and Permitted Disclosures.

      8.1 Confidential Information. Any Party receiving Confidential Information
shall maintain the confidential and proprietary status of such Confidential
Information, keep such Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any activity with respect
to the Confidential Information that is not specifically authorized by this
Agreement, use commercially reasonable efforts to prevent the disclosure of any
Confidential Information to any other Person, and use commercially reasonable
efforts to ensure that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however, that such
restriction shall not apply to any Confidential Information which is (a)
independently developed by the receiving Party, (b) in the public domain at the
time of its receipt or thereafter becomes part of the public domain through no
fault of the receiving Party, (c) received without an obligation of
confidentiality from a third party having the right to disclose such
information, (d) released from the restrictions of this Section 8.1 by the
express written consent of the disclosing Party, (e) disclosed to any permitted
assignee, permitted sublicensee or permitted subcontractor of either MPI or MBI
hereunder (if such assignee, sublicense or subcontractor is subject to the
provisions of this Section 8.1 or comparable provisions of such other
documents), or (f) required by law, statute, rule or court order to be disclosed
(the disclosing Party shall, however, use commercially reasonable efforts to
obtain confidential treatment of any such disclosure).


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      8.2 Employee Obligations. MPI and MBI each agree that it shall provide
Confidential Information received from the other Party only to its employees,
consultants, advisors and third party collaborators who have a need to know and
have an obligation to treat such information and materials as confidential.
Without limiting the generality of the foregoing, MPI and MBI each shall use
commercially reasonable efforts to obtain confidentiality agreements from its
respective employees and agents, similar in scope to Section 8.1, to protect the
Confidential Information.

      8.3 Third Party Obligations. Each Party acknowledges that the other Party
may from time to time have agreements with other persons which impose
obligations or restrictions on such other Party with respect to the disclosure
or use of inventions or information relating to the subject matter of such
agreements ("Third Party Agreements"). Without limiting the generality of the
foregoing, MPI acknowledges that MBI is subject to certain obligations and
restrictions under the Lilly Collaboration Agreement. Each Party agrees to be
bound by all such obligations and restrictions which are made known to it under
Third Party Agreements (excluding the Lilly Collaboration Agreement) relating to
Confidential Information, and MPI agrees to be bound by all such obligations and
restrictions under the Lilly Collaboration Agreement relating to Confidential
Information.

      8.4 Permitted Disclosures. Notwithstanding the provisions of Section 8.1
hereof, MPI and MBI may, to the extent necessary, disclose and use Confidential
Information, consistent with the rights of MPI and MBI otherwise granted
hereunder (a) for the purpose of engaging in research and development,
conducting clinical testing and marketing programs, or securing institutional or
government approval to clinically test or market any product, (b) for the
purpose of sharing clinical trial results and data with third parties conducting
clinical trials, (c) for the purpose of securing patent protection to the extent
provided in Section 7, or (d) for the purpose of obtaining private investment.

      8.5 Term The obligations set forth in this Section 8 shall survive for a
period of five (5) years from the expiration of the Agreement Term.

SECTION 9.  Term

      This Agreement becomes effective as of the Effective Date and shall remain
in effect during the Agreement Term. Upon the expiration of this Agreement, the
provisions of Sections 3, 6, 7, 8, 10, 11 and 12 shall survive the termination
of this Agreement.

SECTION 10.  Disclaimer of Warranty; Consequential Damages.


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      10.1 Disclaimer of Warranty. Nothing in this Agreement shall be construed
as a representation made or warranty given by either Party hereto that any
patents will issue based on pending applications or that any such pending
applications or patents issued thereon will be valid, or that the practice by
the other Party hereto of any license granted hereunder will not infringe the
patent or proprietary rights of any other Person. In addition, MPI and MBI
acknowledge that ALL KNOW-HOW LICENSED OR TRANSFERRED HEREUNDER IS LICENSED AND
TRANSFERRED, AS TO THE CASE MAY BE, TO MBI AND MPI, RESPECTIVELY, AS IS, AND MPI
AND MBI EXPRESSLY DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH KNOW-HOW, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

      10.2 Consequential Damages. EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER
PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO RECOVER FROM TO THE OTHER ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.

SECTION 11.  Indemnification

      11.1 Indemnification by MPI. MPI agrees to defend MBI at MPI's cost and
expense, and will indemnify and hold MBI and its directors, officers, employees
and agents (the "MBI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MPI or its licensees of the licenses granted
pursuant to Section 3, including the development, manufacture, use sale or other
disposition of products or services resulting therefrom. In the event of any
such claim against the MBI Indemnified Parties by any party, MBI shall promptly
notify MPI in writing of the claim and MPI shall manage and control, at its sole
expense, the defense of the claim and its settlement. The MBI Indemnified
Parties shall cooperate with MPI and may, at their option and expense, be
represented in any such action or proceeding. MPI shall not be liable for any
litigation costs or expenses incurred by the MBI Indemnified Parties without
MPI's prior written authorization. In addition, MPI shall not be responsible for
the indemnification of any MBI Indemnified Party arising from any negligent or
intentional acts by such party.

      11.2. Indemnification by MBI. MBI agrees to defend MPI at MBI's cost and
expense, and will indemnify and hold MPI and its directors, officers, employees
and agents (the "MPI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MBI or its licensees of the Patent Rights
transferred and assigned pursuant to Section 2 and the licenses granted pursuant
to Section 3, including the development, manufacture, use sale or other
disposition of products or services resulting therefrom. In the event of any
such claim against the MPI Indemnified


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Parties by any party, MPI shall promptly notify MBI in writing of the claim and
MBI shall manage and control, at its sole expense, the defense of the claim and
its settlement. The MPI Indemnified Parties shall cooperate with MBI and may, at
their option and expense, be represented in any such action or proceeding. MBI
shall not be liable for any litigation costs or expenses incurred by the MPI
Indemnified Parties without MBI's prior written authorization. In addition, MBI
shall not be responsible for the indemnification of any MPI Indemnified Party
arising from any negligent or intentional acts by such party.

SECTION 12.  General Provisions

      12.1 No Implied Waivers; Rights Cumulative. No failure on the part of MPI
or MBI to exercise, and no delay in exercising, any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.

      12.2 Force Majeure. Neither Party to this Agreement shall be responsible
to the other Party for nonperformance or delay in performance of the terms or
conditions of the Agreement due to acts of God, acts of governments, war, riots,
strikes, accidents in transportation, or other causes beyond the reasonable
control of such Party.

      12.3 Cooperation. Each Party agrees to cause each of its employees and
agents to take all actions and to execute, acknowledge and deliver all
instruments or agreements reasonably requested by the other Party, and necessary
for the perfection, maintenance, enforcement or defense of that Party's rights
as set forth herein.

      12.4 Notices. All notices, requests and other communications to MPI or MBI
hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission or by certified mail, return receipt requested, postage prepaid, in
each case to the respective address specified below (or to such other address as
may be specified in writing to the other Party hereto):

            Millennium Pharmaceuticals, Inc.
            640 Memorial Drive
            Cambridge, MA  02139-4815
            Attention:  Chief Business Officer
            with a copy to: Legal Department


                                       14
<PAGE>   15
            Millennium BioTherapeutics, Inc.
            640 Memorial Drive
            Cambridge, MA  02139-4815
            Attention:  Vice President and General Manager
            with a copy to: Legal Department

Any notice or communication given in conformity with this Section 12.4 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.

      12.5 Further Assurances. Each of MPI and MBI agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other Party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other Party its rights and remedies under, this Agreement.

      12.6 Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, MPI, MBI, and their
respective successors and assigns; provided, however, that neither MPI nor MBI
may assign or otherwise transfer any of its rights and interests, nor delegate
any of its respective obligations hereunder, including, without limitation,
pursuant to a merger or consolidation, without the prior written consent of the
other Party hereto, which consent shall not be unreasonably withheld. Any
attempt to assign or delegate any portion of this Agreement in violation of this
Section 12.6 shall be null and void. Subject to the foregoing, any reference to
MPI and MBI hereunder shall be deemed to include the successors thereto and
assigns thereof.

      12.7 Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
MPI or MBI therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by MPI and MBI,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreements course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by MPI and MBI.

      12.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.


                                       15
<PAGE>   16
      12.9 Severability. If any provision hereof should be held invalid, illegal
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible and (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, MPI and MBI hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.

      12.10 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration
interpreting, this Agreement.

      12.11 Execution in Counterparts. This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.

      12.12 Entire Agreement. This Agreement together with the Rights Exchange
Agreement, the Research Services and Collaboration Agreement, the Trademark
License Agreement, the Administrative Services Agreement, the Bioinformatics
License Agreement, and the Tax Sharing Agreement, each dated as of the date
hereof, constitute, on and as of the date hereof, the entire agreement of MPI
and MBI with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
MPI and MBI with respect to such subject matter are hereby superseded in their
entirety.


                                       16
<PAGE>   17
      IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.


                                        MILLENNIUM PHARMACEUTICALS, INC.



                                        By: /s/Steven H. Holtzman
                                            -----------------------------------
                                            Steven H. Holtzman
                                            Chief Business Officer



                                        MILLENNIUM BIOTHERAPEUTICS, INC.



                                        By: /s/John Maraganore
                                            -----------------------------------
                                            John Maraganore
                                            Vice President and General Manager


                                       17
<PAGE>   18
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

                                   SCHEDULE A
                    Initial Product Technology Patent Rights

****************************************************************************
*********************************

****************************************************************************
************************************************

****************************************************************************
***************************************************

****************************************************************************
*********************************

****************************************************************************
****************************************************************************
*********************************

****************************************************************************
****************************************************************************
*********************************

****************************************************************************
****************************************************************************
*********************************

****************************************************************************
****************************************************************************
*********************

****************************************************************************
*********************************

****************************************************************************
*********************************

****************************************************************************
*********************************

****************************************************************************
*********************************
<PAGE>   19
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

                                   SCHEDULE B
                    Initial Research Technology Patent Rights


****************************************************************************
****************************************************************************
*********************

****************************************************************************
<PAGE>   20
                                   SCHEDULE C
                             MBI Research Technology









                                To be provided.







<PAGE>   21
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

                                   SCHEDULE D
                             MPI Research Technology



********
*************************
**************************************************
**************************************
***********************************************
************************************************
*************
*************
**************************************
*************************
*************
<PAGE>   22

                                   SCHEDULE E
                            Joint Research Technology






                               To be provided.

<PAGE>   23
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

                                   SCHEDULE F
                Biological Materials Transferred from MPI to MBI

***************************

*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
*****                  ***********************
<PAGE>   24
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.


*******************************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
*****                   ***********************
<PAGE>   25
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.



********************************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************
*****                    ***********************

*****************************************

*****
******, also known as *************, is a novel ********************************
originally isolated by *********************************************************
in the brain *******************************************************************
******************************************************* have been **************
of the ************** has been *************************************************
have been ********** in which the ********** has been *******. *****************
was recently published as ************************************. Our own data 
is in press at Nature.

*****
**********, also known as ************************************ is a novel ******
of the **********.  Originally isolated by *************************************
**************************** have since been ********* to completion.  *********
********************************* have been ************.  We have demonstrate
<PAGE>   26
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.

 ************************************************** and differential effects of
**************************************************************************
***************************************************** in the **************
has been ************************************************* close to the
**************************.

*****
************************************, was isolated by **************************
**************************************************** since derived.  **********
**************************************************************************
is a member of the ******************************************************.

*****
***** is a member of the ***************************.  Originally isolated by
**************************************************************************
**************************************************************************
******************have been built for**********************************.

*****
****************************************originally isolated as an *******
**************************************************************************
******************************************************************have been
*************************************************are being made.

*****
********************************************, was originally isolated by *****
**********************************************************************
********************* in the ******************************** has been isolated
and a ******************************************.

*****
********************************************, was originally isolated by *****
**********************************************************************
*****************and exists in ********************************* is in ********
to test for the presence of an ***********************.  As such, *******
*********************** will be useful to *********************** and, as
********************************************************************* have been
made.  *********************************************************************
***********************.
<PAGE>   27
      Confidential Materials have been omitted and filed separately with the
      Securities and Exchange Commission. Asterisks denote such omissions.


*****
******************************************************************, was
originally isolated by ****************************** are involved in early
**********************************************************is in the process of
*********************.


*****
****************************************************************** was
isolated from a ******************************************, although
*************************************************************************** are
being isolated.

*****
*********************************************************** was isolated by ***
********************************************************************************
************************************************************are being isolated.

*****
********************************************************************was isolated
by *************************************************************might therefore
be useful in the treatment of *******************************************in the
******************************************************************************.

*****
********************************************************************************
***************************, is a ************************** of the ***********.
*************************** the ability to *************************************
*************************** is currently being prepared.

*****
****************************************************** and was isolated by ****
********************************************************************************
********** is being derived.