Prepared by MerrillDirect





CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.


EXHIBIT 10.22


RESEARCH
AND TECHNOLOGY AGREEMENT


This
Research and Technology Agreement (the “Agreement”) is made effective as
of  January 24,  2001 (the “Effective Date”) between INTRABIOTICS PHARMACEUTICALS,
INC., a Delaware  corporation, having its principal place of
business in Mountain View, California (hereinafter referred to as
“INTRABIOTICS”), and NEW CHEMICAL ENTITIES, INC.,
a Delaware  corporation having a
principal place of business in Bothell, Washington (hereinafter referred to as
“NCE”).


WHEREAS,
INTRABIOTICS is a biotechnology company involved in the development of products
useful for the treatment of infectious diseases or conditions;


WHEREAS,
NCE has created a collection of proprietary natural products, related drug
discovery libraries and technologies to facilitate lead drug discovery; and


WHEREAS,
the parties wish to collaborate to identify compounds within NCE’s proprietary
drug discovery libraries which have anti-fungal or anti-bacterial activities,
to identify compounds that INTRABIOTICS may develop and commercialize.


NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:


1.          DEFINITIONS


             1.1         “Activity”
means a response as measured in a specific drug screen, at a level to be
determined [ * ] in the course of the Research Program.


             1.2         “Confidential
Information” shall have the meaning set forth in Section 7.1.


             1.3         “Disclosing
Party” shall have the meaning set forth in Section 7.1.


             1.4         “Diversity
Library” means NCE’s library of unfractionated natural product extracts as it
exists as of the Effective Date.


             1.5         "Exclusive
Research Program Patents” means all patents and patent applications, both
foreign and domestic, including, without limitation, provisionals, converted
provisionals, continuations, divisionals or continuations in part, (i) covering
Exclusive Research Program Technology; or (ii) that claim methods of making or
isolating a compound(s) within an Identified Compound Family, provided that
such claimed method of making or isolating is limited only to such compound(s).







             1.6         “Exclusive
Research Program Technology” means all information, know-how, trade secrets,
inventions and data made during the course of the parties’ performance under
the Research Program that are directed to a composition, formulation or use of
a compound within an Identified Compound Family.  Exclusive Research Program Technology does not include
information, know-how, trade secrets, inventions or data applicable to methods
of making, separating, or purifying compounds within an Identified Compound
Family.


             1.7         “[ * ]
Product” means the [ * ] Product for which a party has paid to the other party
the royalty payment in Section [ * ].


             1.8         “FTE”
means one (1) full time equivalent research employee of NCE.


             1.9         “Identified
Compound(s)” means (i) a compound(s) that has Activity against a Target, (ii)
that is obtained from a Screening Library and (iii) the chemical structure of
which INTRABIOTICS requests in writing that NCE identify pursuant to this Agreement.


             1.10       “Identified
Compound Family” means an Identified Compound and all [ * ] as determined by
the Research Committee according to the procedure set forth in Appendix B, and
mutually agreed to in writing by both parties.


             1.11       “Material”
means microorganism cultures or strains provided to INTRABIOTICS pursuant to
Section 3.10.


             1.12       “NCE
Patents” means all patents and patent applications, both foreign and domestic
including without limitation, provisionals, converted provisionals,
continuations, divisionals or continuations in part covering NCE Technology.


             1.13       "NCE
Research Program Patents" means all patents and patent applications, both
foreign and domestic, including, without limitation, provisionals, converted
provisionals, continuations, divisionals or continuations in part, covering NCE
Research Program Technology.


             1.14       "NCE
Research Program Technology" means all information, know-how, trade
secrets, inventions and data that are made during the course of the parties’
performance under the Research Program that are not Exclusive Research Program
Technology.


             1.15       “NCE
Technology” means and includes technology, data, information, know-how and
inventions, in each case that is useful for producing or isolating a compound
within an Identified Compound Family and that was owned by NCE prior to the
Effective Date.


             1.16       “Net
Sales”means the gross
amount invoiced by INTRABIOTICS for the sale to a third party of Product in
finished form by INTRABIOTICS, its affiliates or its sublicensees, as
applicable, less the following deductions:


                                    
    (i)                       Amounts repaid or credited by reason of timely
rejections, returns or recalls;


                                    
    (ii)                      Taxes, excises or other governmental charges
upon or measured by the production, sale, transportation, delivery or use of
goods;







                                      
  (iii)                     Transportation and delivery charges actually
incurred and separately included as an item in the invoice, or as verified by
other documentation including shipping insurance and packing costs;


                                    
    (iv)                     Normal and customary trade, cash and quantity
discounts and allowances granted to third parties, including mandatory rebates
to governmental agencies; and


                                    
    (v)                      Third Party royalties owed with respect to
Product.


             For any Products sold in combination with another
product (“Combination Products”), where amounts received by INTRABIOTICS are
attributable to sales of such Combination Products, then Net Sales will be
calculated for such combination product by multiplying the actual Net Sales of
such combination product [ * ].  If, on
a country-by-country basis, the Combination Products in the combination are not
sold separately in said country, Net Sales for the purpose of determining
royalties of the combination product shall be calculated by multiplying actual
Net Sales of such combination product by [ * ].  If, on a country-by-country basis, neither the Product nor the
Combination Products included in the combination product is sold separately in
said country, Net Sales for the purposes of determining royalties of the
combination product shall be determined by the parties in good faith on the
basis of respective fair market values.


             1.17       "Other
Product" means a Product for use in the Product Field that is not a
Screening Product.


             1.18      
“Premium Library” means NCE’s library of fractionated natural products extracts
as it exists as of the Effective Date.


             1.19       “Product”
means a product that is or includes a compound within an Identified Compound
Family(s) in all formulations and for all uses.


             1.20       “Product
Field” means any diagnostic, preventive or therapeutic application.


             1.21       “Receiving
Party” shall have the meaning set forth in Section 7.1.


             1.22       “Requested
Unavailable Compound(s)” shall have the meaning set forth in Section 2.7.


             1.23       “Research
Program” means the work to be performed pursuant to the plan set forth in
Appendix B, by INTRABIOTICS, and by NCE in identifying the chemical structure
of Identified Compound(s) that is paid for by INTRABIOTICS. 


             1.24       "Research
Term" means the initial [ * ] term of the Research Program or any
extension thereof agreed to by the parties in writing.


             1.25       “Screening
Data” means the data resulting or derived from the screening of the libraries
by INTRABIOTICS, including but not limited to the data describing the specific
Activity of each of the samples of interest to INTRABIOTICS, including [ * ].







             1.26       “Screening
Field” means the identification of compounds having anti-bacterial or
anti-fungal properties.


             1.27       “Screening
Libraries” means individually and collectively the Diversity Library and
Premium Library.


             1.28       "Screening
Product" means a Product for use as an anti-bacterial agent or anti-fungal
agent in each case in the Product Field.


             1.29       “Successive
Products” means all Products for which a party makes the royalty payment set
forth in Section 5.6 after it has made such payment for the [ * ] Product.


             1.30       “Target”
means INTRABIOTICS’ targets of interest as listed in Appendix B, as may be
amended from time to time by INTRABIOTICS during the Research Program.


             1.31       “Technology
Access Fee” shall have the meaning set forth in Section 5.2.


             1.32       “[ * ]”
means the [ * ] Product for which a party makes the royalty payment set forth
in Section [ * ].


2.          SCREENING LIBRARIES


             2.1         Upon
INTRABIOTICS’ request, NCE shall supply to INTRABIOTICS one (1) aliquot, [ * ]
of no less than the equivalent of [ * ] of the original [ * ] or [ * ] of each
sample, [ * ] in the Screening Libraries, at NCE’s expense, in accordance with
Appendix A.


             2.2         INTRABIOTICS
agrees that all right, title and interest in and to the Screening Libraries
shall be vested in NCE.  NCE shall be
free to provide the Screening Libraries to third parties for screening purposes
both inside and outside the Screening Field.


             2.3         INTRABIOTICS
agrees that the Screening Libraries: (i) will be maintained and used by
INTRABIOTICS only at the sites designated in Appendix C; (ii) will not be
transferred to any other location; (iii) will only be used by employees of
INTRABIOTICS, or its permitted sublicensees and those consultants of
INTRABIOTICS who agree to be bound by the terms and conditions of this
Agreement including but not limited to this Section 2.3 listed in Appendix C,
who will require access thereto for the performance of this Agreement; (iv)
will only be used for screening against the Targets and for no other purpose,
with such use permitted only during the [ * ] period following the date that
the relevant Screening Library is received by INTRABIOTICS; (v) that
INTRABIOTICS will not attempt to identify any of the components contained in
the Screening Libraries except as expressly permitted in Section 2.5 with
respect to [ * ]; and (vi) will not be transferred to any third party
except in connection with a sublicense pursuant to Section 4.1.  INTRABIOTICS may, in its sole discretion,
amend Appendix B from time to time to add targets to the Target list.







             2.4         In the
event that INTRABIOTICS uses the Screening Libraries for any purpose not
permitted under this Agreement, in addition to any other remedies NCE may have,
NCE may cause INTRABIOTICS to (i) assign to NCE all right, title and interest
to all intellectual property arising from such use (except to the extent such
intellectual property would also cover a permitted use) and (ii) execute those
documents as requested by NCE necessary to document and/or perfect the
assignment of such intellectual property.


             2.5         INTRABIOTICS
shall have the right to conduct [ * ] studies of the samples contained in the
Screening Libraries, solely in order to identify a [ * ] of such sample likely
to demonstrate Activity. Such studies will not include attempts to identify the
chemical structures of any components of any such [ * ].  INTRABIOTICS and its designees’ rights to
such [ * ] and such [ * ] methods shall be used solely for the benefit of
INTRABIOTICS or NCE, as applicable, under this Agreement.


             2.6         In the
event that INTRABIOTICS desires to isolate and/or identify the chemical
structure of a  compound within a
Screening Library, INTRABIOTICS agrees, except to the extent permitted under
under Section 2.5,  that it will not attempt
to perform such separation and or identification itself, and will not request
any person or entity other than NCE to perform such separation or
identification.


             2.7         Should
INTRABIOTICS [ * ] the Screening Libraries which exhibit the relevant Activity,
and should INTRABIOTICS desire to learn the chemical structure of the compound
exhibiting such Activity, INTRABIOTICS may, at its election and in its sole
discretion, request in writing that NCE disclose to INTRABIOTICS the chemical
structure of such compound (which shall be known thereafter as an Identified
Compound). INTRABIOTICS shall provide NCE with all Screening Data which it has
accumulated regarding such [ * ] in electronic format. NCE shall conduct
statistical analyses of the Screening Data provided by INTRABIOTICS and perform
such other work as necessary to determine the chemical structure of the
Identified Compound. NCE shall conduct these analyses under a mutually agreed
timetable established after the submission of such Screening Data by INTRABIOTICS.
Both parties acknowledge that [ * ]. 
Promptly following identification by NCE of the structure of the
Identified Compound, NCE shall provide INTRABIOTICS with the chemical structure
of the Identified Compound and the relevant underlying data and statistical
analysis that NCE relied on in making such determination (the “Written
Materials”), and INTRABIOTICS shall have thirty (30) days from receipt of such
chemical structure and Written Materials to accept the licenses set forth in
Article 3 with respect to the relevant Identified Compound Family in accordance
with the procedures set forth in Section 3.2. 
INTRABIOTICS shall reimburse NCE as described in Sections 2.8 and 2.9
for the work performed in conducting such data analysis.  If NCE has granted rights to the compound of
interest to a third party prior to identifying the chemical structure of such
compound for INTRABIOTICS, such compound shall be designated “Requested
Unavailable Compound(s).”  If at any time
during the term of this Agreement, NCE is able to grant to INTRABIOTICS a
license to any or all of such Requested Unavailable Compound(s), NCE shall so
notify INTRABIOTICS in writing and such Requested Unavailable Compounds shall
be deemed Identified Compounds under this Agreement if the parties mutually
agree to the terms of a license.







             2.8         NCE
agrees to commit the personnel, facilities, expertise and other resources
reasonably necessary to perform its responsibilities under the Research
Program. During each year of the Research Program, NCE will, at INTRABIOTICS’ expense in accordance
with Section 2.9, maintain a minimum of [ * ] and a maximum of [ * ] devoted to
performing NCE’s responsibilities under the Research Program, each of whom
shall be appropriately qualified to perform such work.  The number of FTEs allocated by NCE shall be
set forth in Appendix B, as amended from time to time by mutual consent of the
parties.  In addition, from time to time, upon the
parties’ mutual agreement, NCE will maintain at INTRABIOTICS’ cost additional FTEs in excess of [ * ]
committed to performance of work under the Research Program.  In the first year, INTRABIOTICS agrees to
fund [ * ] at NCE under the Research Program.


             2.9         INTRABIOTICS agrees to pay NCE research
funding based on the number of FTEs of NCE involved in performing research
activities under the Research Program, both during the initial [ * ] term
thereof and any extensions to which the Parties may agree, as determined under
Section 2.8. For each such FTE, INTRABIOTICS
shall pay NCE at an annualized rate of [ * ] per FTE, per year.  [ * ].


             2.10       INTRABIOTICS
acknowledges that the Screening Libraries and [ * ] thereof, as well as
Identified Compounds, are experimental products of unknown toxicity and hazard,
and are furnished solely for research purposes.  During the term of this Agreement, NCE shall inform INTRABIOTICS
of any actual or potential toxicity or other possible hazardous property or
handling condition related to the Screening Libraries and parts thereof, as
well as Identified Compounds, which are known to NCE.  INTRABIOTICS agrees to take all reasonable precautions and
conform with all applicable local regulations in the handling, storage, use and
disposal of the Screening Libraries and parts thereof, as well as Identified
Compounds.


             2.11       The
parties agree to cooperate with each other with respect to the Research
Program.


             2.12       NCE
agrees to provide to INTRABIOTICS technical information available to NCE that
is reasonably requested by INTRABIOTICS to enable INTRABIOTICS to use the Screening
Libraries for screening against Targets during the Research Term as permitted
by this Agreement and INTRABIOTICS shall have the right to use such technical
information for such purpose.


3.          CLINICAL AND COMMERCIAL LICENSES.


             3.1         Subject
to the terms and conditions of this Agreement, NCE grants to INTRABIOTICS:


                           (i)          a
worldwide exclusive license, with the right to sublicense, under Exclusive
Research Program Patents and Exclusive Research Program Technology to conduct
research and development with respect to, and to make, have made, use, sell,
offer to sell and import Product for use in the Product Field;


                           (ii)         a
worldwide non-exclusive license, with the right to sublicense,  under NCE Research Program Patents, NCE
Research Program Technology, NCE Technology and NCE Patents to make and have
made Product, in research quantities as permitted under Section 3.8, and under
then-current GMP conditions to support the clinical program and for
commercialization of such Product.







             3.2         Commencing
upon receipt by INTRABIOTICS, pursuant to Section 2.7, of (i) the chemical
structure of the relevant Identified Compound and (ii) written notice that
rights to such Identified Compound are available for license, INTRABIOTICS
shall have thirty (30) days in which to accept the licenses set forth in
Section 3.1 with respect to the relevant Identified Compound Family and pay the
sum due pursuant to Section 5.4, and such licenses shall be effective upon the
date such sum is paid to NCE. 
INTRABIOTICS acknowledges and agrees that if INTRABIOTICS fails to make
the payment required under Section 5.4 when due, it shall have no further right
to obtain such license with respect to the relevant Identified Compound Family.


             3.3         INTRABIOTICS
shall make reasonable commercial efforts to develop and commercialize
Products.  In the event that
INTRABIOTICS, in its sole discretion, is not interested in pursuing research,
development and commercialization of at least one compound within an Identified
Compound Family, INTRABIOTICS shall notify NCE thereof in writing.  If requested by NCE, INTRABIOTICS shall
grant to NCE a worldwide exclusive sublicense (with the right to further
sublicense) under the Exclusive Research Program Patents, and Exclusive Research
Program Technology, each to the extent they are directed to such abandoned
Identified Compound Family, to make, have made, use, sell, offer to sell and
import Product, and NCE shall pay to INTRABIOTICS all future milestone payments
and royalties that would have been paid by INTRABIOTICS to NCE under Section
5.5 with respect to such Product. 
INTRABIOTICS shall provide to NCE all records and files related to any
patents required to be licensed to NCE pursuant to this Section 3.3, and shall
execute such documents and reasonably cooperate with NCE as may be necessary to
perfect and maintain such patent protection or term extension.  NCE shall promptly reimburse INTRABIOTICS
for all reasonable expenses that INTRABIOTICS incurs in connection with
rendering this assistance.  Effective on
the date of grant from INTRABIOTICS, NCE shall assume all responsibility for
prosecuting, maintaining and defending, at NCE’s cost and expense, the relevant
Exclusive Research Program Patent(s).


             3.4         At the
request of NCE, INTRABIOTICS shall actively and in a timely fashion and using
reasonable efforts consider granting to NCE a worldwide, exclusive sublicense
under the relevant Exclusive Research Program Technology and Exclusive Research
Program Patents, to make, have made, use, sell, offer to sell and import one or
more Other Products for the purpose of granting a further sublicense to a third
party.  The decision to grant a
sublicense shall be at INTRABIOTICS sole discretion. In such event, NCE shall
pay to INTRABIOTICS [ * ] of the sublicense and milestone fees and royalties
received by NCE for and under such sublicense.


             3.5         (a)         During the Research Term, NCE shall
retain, consistent with its usual commercial practices, all microbial cultures
from which the samples, [ * ] provided to INTRABIOTICS were fermented or otherwise
obtained or derived.







                           (b)        At
the written request of INTRABIOTICS, NCE shall identify, maintain and retain in
the possession of NCE the microbial culture that produces an Identified
Compound or Identified Compound Family specified in such writing by
INTRABIOTICS to the extent that such microbial culture is within the possession
and control of NCE at the time of the request, using commercially reasonable
efforts to maintain viability of each such culture.  Subject to Section 3.5(a), NCE shall not be obligated to retain
more than [ * ] microbial cultures under this Section 3.5(b).  Where required for the filing or granting of
an Exclusive Research Program Patent pursuant to this Agreement, as reasonably
determined by counsel for INTRABIOTICS, NCE will cooperate with INTRABIOTICS in
the required deposit of the producing culture with ATCC or such other mutually
acceptable depository.   INTRABIOTICS
shall be responsible for all fees and expenses charged by the depository.


             3.6         INTRABIOTICS
shall make payment to NCE for each microbial culture that is retained by NCE
pursuant to Section 3.5(b), as follows:


             (i)          [ * ]
per year for the first culture and [ *
] per year for each additional culture.


             (ii)         The
amount of Section 3.6(i) shall be paid for each culture at the time of the
request and shall be prorated as appropriate for the balance of the calendar
year in which the request is made.  For
each additional calendar year the applicable amount shall be due and payable on
the first business day of the calendar year.


             3.7         NCE
shall have the right to supply to INTRABIOTICS compounds of an Identified
Compound Family for research purposes at the FTE rate set forth in Section
2.9.  INTRABIOTICS agrees to purchase
all of INTRABIOTICS’ research requirements of compounds within an Identified
Compound Family that NCE is willing to supply except those quantities of
compounds that can be made using synthetic methods, and shall make all orders
of compounds in writing, specifying quantity and delivery dates.  Not later than thirty (30) days after the
date of such written order, NCE shall confirm in writing the quantity of
compound that it will supply and the delivery dates.


             3.8         INTRABIOTICS
shall have the right to produce or to obtain from a third party such quantities
of compound that NCE does not confirm it will supply on the requested
reasonable delivery dates, or that, despite confirmation of INTRABIOTICS’
order, NCE does not deliver on the requested delivery date or such other
delivery date as is mutually agreed upon.


             3.9         Upon
written request of INTRABIOTICS to NCE, if available to NCE, NCE shall provide
to INTRABIOTICS a microbial culture that produces the compound within the
Identified Compound Family that is or is included in a Product under
development by INTRABIOTICS (the “Commercial Product”). INTRABIOTICS shall pay
NCE [ * ] concurrent with the delivery of such written request.


             3.10       INTRABIOTICS
shall have the right to use the culture for making and having made the
Commercial Product under then-current GMP conditions for clinical and
commercial uses and INTRABIOTICS agrees to use such culture obtained pursuant
to Section 3.10 only for such purposes as are permitted under the non-exclusive
license grant set forth in Section 3.1(ii) and only for the period that INTRABIOTICS
retains a license under this Agreement for such Commercial Product.


             3.11       INTRABIOTICS
agrees that INTRABIOTICS will use NCE Technology, NCE Research Program
Technology and Exclusive Research Program Technology only as licensed under
this Agreement and only for the period of the license grant.







4.          RESEARCH LICENSE


             4.1         NCE
hereby grants to INTRABIOTICS a non-exclusive, worldwide, royalty-free license,
with the right to grant sublicenses to the third party contractors named in
Appendix C, to use the Screening Libraries in the Screening Field to conduct
the Research Program in accordance with this Agreement.


             4.2         INTRABIOTICS
shall have the right to have such screening performed by the contractors listed
in Appendix C, provided that such contractors agree in writing to be bound by
the terms and conditions of this Agreement with respect to use of the Screening
Libraries including, but not limited to, Section 2.3.  The screening work performed by such contractors shall be
considered work performed by INTRABIOTICS for the purposes of this Agreement,


             4.3         No
licenses, other than those expressly granted in this Agreement, whether express
or implied, are granted by this Agreement.


5.          FEES


             5.1         INTRABIOTICS
agrees to pay to NCE an initial payment of [ * ] payable upon the Effective
Date.


             5.2         INTRABIOTICS
shall pay to NCE a “Technology Access Fee” of [ * ] which shall be due and
payable in [ * ] due each quarter. The first such installment shall be due upon
the Effective Date and each of the following [ * ] payments shall be due on the
first day of each calendar quarter following the first calendar quarter of
2001.  [ * ].


             5.3         In the
event that this Agreement is terminated for any reason other than breach by
NCE, any portion of the Technology Access Fee that has not been paid, shall
become immediately due and payable.


             5.4         (a)         INTRABIOTICS shall pay to NCE the
following payments:


i.                         [
* ] payable with respect to the [ * ] within [ * ] after NCE provides to
INTRABIOTICS the structure of the [ * ] and notifies INTRABIOTICS in writing
that NCE has not granted rights to a third party with respect to such [ * ].



ii.                        [
* ] payable with respect to [ * ] after NCE provides to INTRABIOTICS the
structure of [ * ] and notifies INTRABIOTICS in writing that NCE has not granted
rights to a third party with respect to such [ * ].



             5.5         INTRABIOTICS
shall pay to NCE the following payments not later than [ * ] after the
achievement of the corresponding milestone event:


             i.                    
     [ * ]*


             ii.                        [
* ]*


             iii.                       [ * ]*



             iv.                       
[ * ]**







             *           [ * ]


             **
        [ * ]


             Each party acknowledges that although INTRABIOTICS
desires to develop several Products under this Agreement, there is no guarantee
that INTRABIOTICS will be able to develop any Products under this Agreement.


             [ * ].


             5.6         Subject
to Section 5.8, INTRABIOTICS will pay to NCE royalty payments of (i) [ * ] of
Net Sales of the [ * ], and (ii) [ * ] of Net Sales of the [ * ].


             i.                       
  If
[ * ] is a [ * ] product then the royalty payment owed shall be reduced by [ *
]


             ii.                        The

parties shall each keep complete and accurate records pertaining to the sale or
other disposition of all Products for which royalty payments are due hereunder
and the royalty payments and other amounts payable under this Agreement in
sufficient detail to permit the receiving party to confirm the accuracy of all
payments due hereunder.  The receiving
party shall have the right to cause an independent, certified public accountant
to audit such records to confirm the paying party’s or its licensee’s Net Sales
as reported hereunder and royalty payments for the preceding year.  Such audit rights may be exercised no more
often than once a year, within three (3) years after the calendar quarter to
which such records relate, upon reasonable notice to the party whose records
are being audited and during normal business hours.  The party conducting the audit will bear the full cost of such
audit unless such audit discloses an underpayment of more than ten percent
(10%) from the amount of royalty payments due. 
In such case, the audited party shall bear the full cost of such
audit.  Within thirty (30) days of the
completion of such audit, the audited party shall pay to the other party the
amount of any underpayment disclosed in such audit.  The terms of this Section 5.6 shall survive any termination or
expiration or termination of this Agreement for a period of three (3) years.


             5.7         INTRABIOTICS
agrees that INTRABIOTICS will not research, develop, make, use or sell
Identified Compound and/or Product without making the payments of Sections 5.2
and 5.4 of this Agreement.


             5.8         In the
event that INTRABIOTICS grants a license to a third party to make, have made,
use, import, offer for sale or sell Other Product, then INTRABIOTICS shall pay
to NCE the greater of (i) [ * ] of the license and milestone fees and royalties
received by INTRABIOTICS for and under such license or (ii) the amounts [ * ]
from INTRABIOTICS with respect to such Other Product under [ * ].


             5.9         The
royalty obligations under Section 5.6 shall expire on a Product-by-Product and
country-by-country basis on the later of (i) ten (10) years from the date of
first commercial sale of a royalty-bearing Product in the relevant country or
(ii) the expiration of the last to expire Exclusive Research Program Patent
covering the Product in such country.





6.          INTELLECTUAL PROPERTY


             6.1         Inventorship
of any inventions arising out of the Research Program shall be determined
according to U.S. patent law.  NCE shall
own all right, title and interest in the NCE Research Program Patents,
Exclusive Research Program Patents, Exclusive Research Program Technology and
NCE Research Program Technology in each case, regardless of inventorship.  INTRABIOTICS shall own all Screening Data
and all intellectual property rights related thereto.


             6.2         Each
party shall continue to own all intellectual property owned by such party prior
to the Effective Date.


             6.3         Except
as provided in this Section 6, each party shall file, prosecute, defend and
maintain, at its sole discretion and expense, any and all patent applications and
patents covering technology owned by such party.


             6.4         INTRABIOTICS
shall have the right to file, prosecute, maintain and defend, at the cost and
expense of INTRABIOTICS and with counsel selected by INTRABIOTICS, the
Exclusive Research Program Patents.


             6.5         Both
parties shall cooperate as necessary to effect the intentions of this Section 6
including, without limitation:


                           (a) 
executing all papers and instruments, or using reasonable efforts to
cause its employees or agents to execute such papers and instruments, so as to
effectuate the ownership of intellectual property rights set forth in this
Section 6 and to enable the other party to file and to prosecute patent
applications and to maintain patents in any country;


                           (b) 
effecting any required microorganism or other biological deposits to
support the Exclusive Research Program Patents, as reasonably determined by
counsel for INTRABIOTICS;


                           (c) 
promptly informing the other party of any matters coming to such party’s
attention that may affect the preparation, filing or prosecution or maintenance
of any NCE Research Program Patents and Exclusive Research Program Patents; and


                           (d) 
undertaking no actions that are potentially deleterious to the
preparation, filing, prosecution or maintenance of NCE Research Program Patents
and Exclusive Research Program Patents.


             6.6         If
INTRABIOTICS elects (i) to abandon a granted Exclusive Research Program Patent
or (ii) not to file an application for patent protection with respect to
Exclusive Research Program Technology or (iii) to abandon a filed Exclusive
Research Program Patent without refiling thereof, INTRABIOTICS shall provide to
NCE reasonable notice thereof in writing, and NCE, at its option, shall have
the right to maintain, file and prosecute any such Exclusive Research Program
Patents at the cost and expense of NCE, with the consent of INTRABIOTICS, which
shall not be unreasonably withheld. 
INTRABIOTICS shall retain INTRABIOTICS’ license under any such Exclusive
Research Program Patents.







             6.7         Each
party shall promptly notify the other party in writing of any alleged or
threatened infringement of the NCE Research Program Patents or Exclusive
Research Program Patents of which it becomes aware and provide any information
available to that party relating to such infringement.


             6.8         INTRABIOTICS
shall have the right and option, but not the obligation, to bring and control,
by counsel of its own choice and at its own expense, any action or proceeding
with respect to third party infringement of any Exclusive Research Program
Patents that are either issued at the time of commencement of, or issue during
the pendency of, any such action or proceeding, and under which NCE has granted
a license to INTRABIOTICS.  Upon written
notice to NCE, INTRABIOTICS may require NCE to participate in such action as a
necessary party, at INTRABIOTICS’s expense. 
No settlement, consent judgment or other voluntary final disposition of
the action which adversely affects any Exclusive Research Program Patent may be
entered into without the consent of NCE, which consent shall not unreasonably
be withheld.  Any recovery of damages by
INTRABIOTICS for any such action shall be retained by INTRABIOTICS.


7.          CONFIDENTIALITY


             7.1         “Confidential
Information” shall mean any technical or business information furnished by one
party (the “Disclosing Party”) to the other party (the “Receiving Party”) in
connection with this Agreement, whether orally or in writing.  Such Confidential Information shall include,
without limitation, the existence and terms of this Agreement (which shall be
Confidential Information of both parties), trade secrets, know-how, inventions,
technical data or specifications, testing methods, business or financial
information, research and development activities, product and marketing plans,
and customer and supplier information, including, but not limited to, such
items that become known to a party during visits to the facilities of the other
party. The Screening Data shall be deemed INTRABIOTICS’ Confidential
Information.


             7.2         The
Receiving Party agrees that it shall:


                           (a)         
             Maintain
all Confidential Information and Material in strict confidence, except that the
Receiving Party may disclose or permit the disclosure of any Confidential
Information and Material to its affiliates, directors, officers, employees,
consultants, advisors and contractors listed in Appendix C and commercial and
clinical manufacturers of Product covered by Exclusive Research Program Patents
or Exclusive Research Program Technology licensed to INTRABIOTICS who are obligated
to maintain the confidential nature of such Confidential Information and who
need to know such Confidential Information and Material for the purposes set
forth in this Agreement;


                           (b)         
             Use
all Confidential Information and Material solely for the purposes set forth in,
or as permitted by, this Agreement; and


                           (c)         
             Allow
its affiliates, directors, officers, employees, consultants and advisors to
reproduce the Confidential Information and Material only to the extent
necessary to effect the purposes set forth in this Agreement, with all such
reproductions being considered Confidential Information and Material.







             7.3         Each
party shall be responsible for any breaches of Section 7.2. by any of its
affiliates, directors, officers, employees, consultants , advisors and
contractors. Each party will require those of its affiliates, directors,
officers, employees, consultants, advisors and contractors who have access to
the Confidential Information and Material be bound by written agreement to the
confidentiality obligations and use restrictions herein.


             7.4         The
obligations of the Receiving Party under Section 7.2. above shall not apply to
any portion of the Disclosing Party’s Confidential Information to the extent
that the Receiving Party can demonstrate by competent proof that such
Confidential Information:


                           (a)         
             Was
generally known to the public or otherwise part of the public domain prior to
the time of its disclosure under this Agreement;


                           (b)         
             Entered
the public domain after the time of its disclosure under this Agreement through
means other than an unauthorized disclosure resulting from an act or omission
by the Receiving Party or its affiliates, directors, officers, employees,
consultants, advisors, agents and contractors;


                           (c)         
             Was
already known to the Receiving Party, other than under an obligation of
confidentiality, at the time of disclosure by the Disclosing Party;


                           (d)         
             Is
or was disclosed to the Receiving Party at any time, whether prior to or after
the time of its disclosure under this Agreement, by a third party having no
fiduciary relationship with the Disclosing Party and having no obligation of
confidentiality to the Disclosing Party with respect to such Confidential
Information; or,


                           (e)         
             Is
required to be disclosed to comply with applicable laws or regulations (such as
disclosure to the United States Securities and Exchange Commission, the United
States Environmental Protection Agency, the United States Food and Drug
Administration, or the United States Patent and Trademark Office or to their
foreign equivalents), or to comply with a court or administrative order,
provided that the Disclosing Party receives prior written notice of such
disclosure and that the Receiving Party takes all reasonable and lawful actions
to obtain confidential treatment for such disclosure and, if reasonably
possible, to minimize the extent of such disclosure.


             7.5         The obligations set forth in this Article
7 shall remain in effect after termination or expiration of this Agreement for
a period of ten (10) years.


8.          INDEMNIFICATION


             8.1         INTRABIOTICS
shall defend, indemnify and hold NCE and its directors, officers, employees,
shareholders and agents, harmless from and against any and all third party
claims, suits or demands for liabilities, damages, losses, costs and expenses
(including the reasonable fees of attorneys and other professionals) arising
out of or resulting from (i) the development, manufacture, use, distribution or
sale of any Product by INTRABIOTICS, its affiliates, distributors,
co-marketers, licensees or sublicensees or any person or entity that prepares
or manufactures  Product for or on
behalf of any of the foregoing or any person or entity who receives or obtains
(directly or indirectly)  Product from
any of the foregoing, (ii) any breach of Section 10 of this Agreement, (iii)
INTRABIOTICS’ use of the Screening Libraries (except to the extent arising from
third party claims of infringement of intellectual property rights related to
the Screening Libraries), and/or (iv) the breach by a subcontractor listed in
Appendix C of any term of this Agreement. 
Such obligation shall not apply to those losses which arise out of the
negligence or intentional misconduct of NCE.







             8.2         NCE
shall defend, indemnify and hold INTRABIOTICS and its directors, officers, employees,
shareholders and agents, harmless from and against any and all third party
claims, suits or demands for liabilities, damages, losses, costs and expenses
(including the reasonable fees of attorneys and other professionals) arising
out of or resulting from (i) any breach of Section 10 of this Agreement, and/or
(ii) the development, manufacture, use, distribution or sale of any Product by
NCE, its affiliates, distributors, co-marketers or sublicensees or any person
or entity that prepares or manufactures 
Product for or on behalf of any of the foregoing or any person or entity
who receives or obtains (directly or indirectly)  Product from any of the foregoing.  Such obligation shall not apply to those losses which arise out
of the negligence or intentional misconduct of INTRABIOTICS.


             8.3         A
person or entity that intends to claim indemnification under this Section (the
“Indemnitee”) shall promptly notify the other party (the “Indemnitor”) of any
loss, claim, damage, liability or action in respect of which the Indemnitee
intends to claim such indemnification, and the Indemnitor shall assume the
defense thereof with counsel mutually satisfactory to the Indemnitee whether or
not such claim is rightfully brought; provided, however, that an Indemnitee
shall have the right to retain its own counsel, with the reasonable fees and
expenses to be paid by the Indemnitor if Indemnitor does not assume the
defense, or if representation of such Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other person represented by such
counsel in such proceedings. The indemnity agreement in this Section shall not
apply to amounts paid in settlement of any loss, claim, damage, liability or
action if such settlement is effected without the consent of the Indemnitor,
which consent shall not be withheld or delayed unreasonably. The Indemnitor
shall not settle any claim to be indemnified that could adversely affect the
Indemnitee without the consent of the Indemnitee, which consent shall not be
unreasonably withheld. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, only if prejudicial
to its ability to defend such action, shall relieve such Indemnitor of any
liability to the Indemnitee under this Section. The Indemnitee under this
Section, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigations of any action, claim or
liability covered by this indemnification.


9.          TERMINATION


             9.1         (a)         This Agreement shall commence as of the
Effective Date and, unless sooner terminated as provided hereunder, shall
terminate when neither party has any remaining payment obligations to the other
party under this Agreement (i.e., upon the date that both parties have ceased
to research, develop and commercialize Products);







                           (b)        When
a party has made all of the payments required by this Agreement with respect to
a Product, such party shall have a fully paid up license to make, have made,
use, import, offer for sale or sell such Product that shall survive termination
of this Agreement.


             9.2         INTRABIOTICS
may terminate this Agreement at will effective no earlier than [ * ] by
providing NCE with [ * ] months prior written notice.


             9.3         Breach.


                           (a)         Failure
by either party to comply with any of its material obligations contained in
this Agreement shall entitle the other party to give to the party in default
notice specifying the nature of the default and requiring it to cure such
default. If such default is not cured within sixty (60) days (thirty (30) days
in the event of a default with respect to an obligation to pay money) after the
receipt of such notice, the notifying party shall be entitled, without
prejudice to any of its other rights conferred on it by this Agreement, and in
addition to any other remedies available to it by law or in equity, to
terminate this Agreement in its entirety, by giving written notice to take
effect immediately upon delivery of such notice. The right of either party to
terminate this Agreement, as provided in this Section 9.3, shall not be
affected in any way by its waiver or failure to take action with respect to any
previous default.


                           (b)        An
election of remedy by a party for a material breach of this Agreement under
this Section 9.3 on one occasion shall not constitute a waiver as to any other
remedy that may be available to such party under this Section 9.3 as to any
material breach on another occasion.


             9.4         The
following sections shall survive termination of this Agreement:   2.2, 2.3, 2.4, 2.6, 3.11, 5.3, 5.6 (ii),
5.7, 6.1, 6.2, 6.3, 6.5, 9.1(b), 9.4 and 10.4, and Articles 7, 8, 11 and 12.


             9.5         Upon
the earlier of termination of this Agreement or termination of the Research
Program, INTRABIOTICS shall return all Screening Libraries to NCE.


10.                      REPRESENTATIONS AND WARRANTIES


             10.1       Mutual
Representations and Warranties


             Each party represents to the other that:


                           (a)         Such
party is duly organized and validly existing under the laws of the state or
country of its incorporation and has full corporate power and authority to
enter into this Agreement and to carry out the provisions hereof;


                           (b)        Such
party is duly authorized to execute and deliver this Agreement and to perform
its obligations hereunder;


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







                           (d)        It
has not entered into any agreement with any third party which is in conflict
with the rights granted to the other party under this Agreement, and shall not
have taken any action that would in any way prevent it from granting the rights
granted to the other party under this Agreement, or that would otherwise
materially conflict with or adversely affect the rights granted to the other
party under this Agreement. and


             10.2       INTRABIOTICS
further represents and warrants to NCE that as of the Effective Date, without
having made an investigation, INTRABIOTICS has no actual knowledge that the
screening procedures that are to be used by INTRABIOTICS under this Agreement
infringes the intellectual property rights of a third party.


             10.3       NCE
further represents and warrants to  INTRABIOTICS
that:


                           (a)         All
information provided to INTRABIOTICS with respect to its ownership rights with
regard to Identified Compounds, and Products, and related intellectual property
rights, shall, to its knowledge, but without obligation to investigate, be
complete and accurate.


                           (b)        As
of the Effective Date, NCE has not received any notices of infringement or
misappropriation or any written communications relating in any way to a
possible infringement or misappropriation with respect to the use of the
Screening Libraries, and without having made an investigation it has no
knowledge that the use of the Screening Libraries as contemplated by this
Agreement will or may involve any infringement or unauthorized use of any
intellectual property rights of any third party;


                           (c)         To
the best of NCE’s knowledge, as of the Effective Date, NCE owns the Screening
Libraries that are to be provided to INTRABIOTICS under this Agreement and has
the right to grant the license thereto that is granted to INTRABIOTICS under
this Agreement.


                           (d)        To
the best of its knowledge, but without the obligation to investigate, as of the
Effective Date, NCE has no actual knowledge that any data or information given
to INTRABIOTICS relating to the Screening Libraries is untrue or inaccurate in
any material respect; and


                           (e)         As
of the Effective Date, without having made an investigation, NCE has no actual
knowledge that the Screening Libraries that are to be provided to INTRABIOTICS
under this Agreement or that the procedures that NCE plans to use for
identifying compounds under this Agreement infringes the intellectual property
rights of a third party.


                           (f)         NCE
will not grant to INTRABIOTICS a license in accordance with Sections 3.1 and
3.2 of this Agreement unless NCE has the right to grant to INTRABIOTICS such a
license.







             10.4       Each
party will follow good scientific practices in the performance of its duties
pursuant to this Agreement.  HOWEVER,
THE WORK TO BE PERFORMED HEREIN IS EXPERIMENTAL AND EACH PARTY EXPRESSLY
DISCLAIMS ANY STATED OR IMPLIED WARRANTIES OF PATENTABILITY, MERCHANTABILITY,
OR FITNESS FOR PARTICULAR PURPOSE OF ANY MATERIALS TO BE SUPPLIED BY SUCH PARTY
TO THE OTHER PARTY UNDER THIS AGREEMENT.  
IN NO EVENT SHALL EITHER PARTY OR ITS RESPECTIVE AFFILIATES AND PERMITTED
SUBLICENSEES BE LIABLE FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE
DAMAGES, WHETHER IN CONTRACT, WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE,
EXCEPT TO THE EXTENT SUCH PARTY MAY BE REQUIRED TO INDEMNIFY THE OTHER PARTY
FROM SUCH DAMAGES CLAIMED BY THIRD PARTIES UNDER SECTION 8.


11.        NOTICE


             11.1       NOTICES
shall be sent as follows:


	If to NCE:	 	New Chemical Entities, Incorporated
	 	 	18804 North Creek Parkway
	 	 	Bothell, WA 98011 USA
	 	 	Attn.: Dr. Dwight Baker
	 	 	Tel. (425) 424-7250
	 	 	Fax (425) 424-7299


	If to INTRABIOTICS:	 	IntraBiotics Pharmaceuticals, Inc.
	 	 	2021 Stierlin Court
	 	 	Mountain View, CA 94043 USA
	 	 	Attn.: Dr. John Fiddes
	 	 	Tel. (650) 526-6800
	 	 	Fax
  (650) 969-0663



12.        MISCELLANEOUS


             12.1       Relationship
of Parties.  Nothing in this Agreement
is intended or shall be deemed to constitute a partnership, agency,
employer-employee or joint venture relationship between the parties. No party
shall incur any debts or make any commitments for the other, except to the
extent, if at all, specifically provided herein.


             12.2       Assignment.  Neither party shall be entitled to assign
its rights hereunder without the express written consent of the other party
hereto, except that either party may assign their respective rights and
transfer their respective duties hereunder to an affiliate, to any assignee of
all or substantially all of their business to which this Agreement relates, or
in the event of their respective merger or consolidation. Any assignment not in
accordance with this Section 12.2 shall be void and of no effect. No assignment
and transfer shall be valid or effective unless and until the
assignee/transferee shall agree in writing to be bound by the provisions of
this Agreement in which case the Agreement will inure to the benefit of such successors
and assigns.







             12.3       Further
Actions.  Each party agrees to
execute, acknowledge and deliver such further instruments, and to do all such
other acts, as may be necessary or appropriate in order to carry out the
purposes and intent of this Agreement.


             12.4       Use
of Name.  Except as otherwise
provided herein, neither party shall have any right, express or implied, to use
in any manner the name or other designation of the other party or any other
trade name or trademark of the other party for any purpose in connection with
the performance of this Agreement.


             12.5       Waiver.  A waiver by either party of any of the terms
and conditions of this Agreement in any instance shall not be deemed or
construed to be a waiver of such term or condition for the future, or of any
subsequent breach hereof. All rights, remedies, undertakings, obligations and
agreements contained in this Agreement shall be cumulative and none of them
shall be in limitation of any other remedy, right, undertaking, obligation or
agreement of either party.


             12.6       Severability.
If any term, condition or provision of this Agreement is held to be
unenforceable for any reason, it shall, if possible, be interpreted to achieve
the intent of the parties to this Agreement to the extent possible rather than voided.  In any event, all other terms, conditions
and provision of this Agreement shall be deemed valid and enforceable to the
full extent.


             12.7       Amendment.  No amendment, modification or supplement of
any provisions of this Agreement or the Appendices thereto (except with respect
to the addition or deletion of Targets) shall be valid or effective unless made
in writing and signed by a duly authorized officer of each party.


             12.8       Governing
Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Delaware without regard to its choice of law
principles.  In the event that either
party desires to initiate litigation with respect to this Agreement, such
litigation shall be conducted in a court of competent jurisdiction in the State
of Delaware and each party hereby submits to the jurisdiction of such court(s)
and agrees that venue is proper in such court(s).


             12.9       Entire
Agreement. This Agreement, together with the Exhibits hereto, sets forth
the entire agreement and understanding between the parties as to the subject
matter hereof and merges all prior discussions and negotiations between them.
Neither of the parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to such subject
matter other than as expressly provided herein or as duly set forth on or
subsequent to the date hereof in writing and signed by a proper and duly
authorized officer or representative of each party.


             12.10     Parties
in Interest. All the terms and provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties hereto
and their respective permitted successors and assigns.







             12.11     Descriptive
Headings. The descriptive headings of this Agreement are for convenience
only, and shall be of no force or effect in construing or interpreting any of
the provisions of this Agreement.


             12.12     Counterparts.
This Agreement may be executed simultaneously in any number of identical
counterparts, any one of which need not contain the signature of more than one
party but all such counterparts taken together shall constitute one and the
same agreement.


             12.13     Dispute
Resolution.  In the event of a
dispute between the parties relating to the subject matter of this Agreement
other than disputes arising from facts supporting the entry of a Temporary
Restraining Order or Preliminary Injunction or similar emergency relief, the
parties shall first submit such dispute to their respective Chief Operating
Officers for resolution.  If the Chief
Operating Officers are unable to resolve such dispute within thirty (30) days
after its submission, either party make seek such relief or remedy as it may
elect.


             12.14     To the
extent that there is an inconsistency between the Appendices and the main
portion of this Agreement, the main portion of the Agreement shall determine
the rights and obligations of the parties.


IN
WITNESS WHEREOF, the parties hereto, intending to be bound hereby, have caused
this Agreement to be executed as of the dates indicated herein:


 


	INTRABIOTICS PHARMACEUTICALS, INC.	NEW CHEMICAL ENTITIES, INC.
	By:
  /s/ Kenneth J. Kelley

	By:  /s/ Barry Berkowitz


	(Signature)	(Signature)
	Name:
  Kenneth J. Kelley	Name:	 Barry
  Berkowitz


	Title:  Chairman and Chief Executive Officer	Title:	CEO


	Date:
  	 January 24, 2001

	Date:
  	1/24/01


				



 





APPENDIX
A


to
RESEARCH AND TECHNOLOGY AGREEMENT


dated
January 24,  2001  between NCE, Inc. and INTRABIOTICS


[ *
]


             (one page of text omitted here)





APPENDIX
B


to
RESEARCH AND TECHNOLOGY AGREEMENT


dated
January 24,  2001  between NCE, Inc. and INTRABIOTICS


[ *
]


(3 1⁄2 pages of continuous text
omitted here)





APPENDIX C


to
RESEARCH AND TECHNOLOGY AGREEMENT


dated
January 24, 2001  between NCE, Inc. and
INTRABIOTICS


[ * ]


 


 


 











[ * ] =
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED.