10Q Q1 2001 EXH10.54




                                                          Exhibit 10.54




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 406 of the securities act of 1933, as
amended.


COLLABORATIVE RESEARCH AGREEMENT

This Collaborative Research Agreement is entered
effective as of June 12, 1995, by and between Sequana Therapeutics, Inc.,
a California corporation, having its principal place of business at 11099 North
Torrey Pines Road, Suite 160, La Jolla, California 92037 ("Sequana"),
and Boehringer Ingelheim International GmbH, a German corporation
having its principal place of business at D-55216 Ingelheim am Rhein
("BI").

Recitals

Whereas, Sequana has generated
data regarding the genetic basis of Asthma and Sequana and BI desire to
collaborate in the investigation into the genetic basis of Asthma pursuant to
the terms of this Agreement; and

Whereas, the goal of the collaboration is to identify
the gene or genes responsible for Asthma with a view to BI developing products
for the prevention or treatment of Asthma; and

Whereas, the Parties wish to provide for the
allocation of rights to therapeutic compounds, compositions and products and all
diagnostic devices, compounds, kits and services as provided herein; and

Whereas, of even date herewith Sequana and BI have
entered into a Stock Purchase Agreement pursuant to which BI has agreed to
purchase, and Sequana has agreed to sell to BI, shares of Sequana Series F
Preferred Stock.

Now, Therefore, the Parties agree as follows:

	DEFINITIONS

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



	"Affiliate" means any entity that
directly or indirectly Owns, is Owned by or is under common Ownership, with a
Party to this Agreement.  "Own," "Owned" or
"Ownership" means direct or indirect possession of at least fifty
percent (50%) of the outstanding voting securities of a corporation or at least
fifty percent (50%) equity interest in any other type of entity or substantial
control of a corporation or any other entity.


	"Agreement" means the present agreement
together with the Exhibits attached hereto.


	"Annual Research Plan" means the annual
plan for Research as described in Article 2.6.  An outline of the Annual
Research Plan for the first year of the Agreement is set forth in Exhibit
A.


	"Asthma" means asthma, including airway
hyperreactivity and atopy.


	"Asthma Database" means any Result(s)
that Sequana or BI owns, controls or has a license to, which such Party has the
right to sublicense, relating to families or individuals with Asthma which the
JRC designates to be the subject of the Research efforts of the Parties or any
third party under this Agreement.  This includes any Sequana Results existing as
of the Effective Date.


	"Asthma Gene" means a Gene that during
the Research Term:

(i)is discovered by either Party, or a third party
directed by the JRC, through studies with the Asthma Database; and

(ii)has been successfully cloned and sequenced by
or for either Party; and

(iii)has been shown by or for either Party to be
altered or deleted in coding, non-coding or control regions in individuals,
resulting in or associated with the pathophysiological or functional changes
causing, predisposing or suppressing the development of Asthma.


	"BI Products" means any pharmaceutical
composition of a Compound for the treatment or prevention of Asthma in humans or
animals which is covered by a BI Patent, Sequana Patent or Joint Patent.  BI
Products include Type I Products, Type 2a Products, Type 2b
Products, Type 3 Products and Type 4 Products, which correspond, in
each case, to the applicable Compound.  BI Product shall not include any
pharmaceutical composition of a compound that BI can demonstrate to the
satisfaction of Sequana pursuant to Article 4.11.1 was either already in
the structural optimization, pre-clinical or clinical phase of BI drug
development for the prevention or treatment of Asthma, prior to the date of any
disclosure to BI regarding the target such compound is active against, or was
developed totally independently of the information developed through the
Research.


	"BI Know-How" means all tangible and
intangible inventions, technology, trade secrets, data, processes, methods, and
any physical, chemical or biological material, including any replication or any
part of such material, or other information that BI owns, controls or has a
license to as of the Effective Date or during the Research Term, that are
necessary or useful to conduct the Research, and which BI has the right to
sublicense.  BI Know-How shall not include BI Patents, Joint Results or Joint
Patents.


	"BI Patents" means all Patent
Applications having a priority date prior to four (4) years following the end of
the Research Term, and any Patents issuing thereon, in each case, that are owned
or controlled by BI, which claim the discovery, development, manufacture, sale
or use of any Asthma Gene, Asthma Gene sequence information, Compound or any BI
Product or Sequana Product.  BI Patents shall not include BI Know-How, Joint
Results or Joint Patents.


	"BI Result" means any Result(s), made,
created, developed or reduced to practice solely by employees of BI, its
Affiliates, sublicensees, or other persons or entities on behalf of BI.


	"BI Software" means any software, code
or programs developed or owned-solely by BI or licensed exclusively to BI that
BI has the right to sublicense.


	"BI Technology" means, collectively, the
BI Patents, BI Know-How, BI Results and BI Software.


	"Compound", means any active ingredient
for use in a BI Product.  Compounds shall include Type 1, Type 2a,
Type 2b, Type 3 and Type 4 Compounds.



	"True 1 Compound" means (i) a
recombinant protein expressed by an Asthma Gene, or (ii) a peptide which is part
of a protein expressed by an Asthma Gene, regardless of how made.


	"Type 2a Compound" means any
Compound, developed based on information identified through the Research, that
directly inhibits (in whole or part), directly alters the activity of, directly
binds to, directly modulates or functionally replaces an Asthma Gene.  By way of
example and without limitation, examples of Type 2a Compounds would be
(i) an antisense oligomer or a modification thereof or (ii) a
polynucleotide used for gene therapy.


	"Type 2b Compound" means any
Compound (other than a Type 1 Compound) developed based on information
identified through the Research, that directly inhibits (in whole or part),
binds to, modulates or functionally replaces all or part of a protein expressed
by an Asthma Gene.  By way of example and without limitation, examples of
Type 2b Compounds would be (i) an antibody to the protein, (ii) a peptide,
other than a part of a protein expressed by an Asthma Gene, or (iii) a small
molecule drug.


	"Type 3 Compound" means any
Compound (other than a Type 1, 2a or 2b Compound) developed based on an
intervention point or target (other than an Asthma Gene or its Gene product)
upstream or downstream in a biochemical pathway elucidated through the
Research.


	"Type 4 Compound" means any
Compound directed at a target which BI can demonstrate to the satisfaction of
Sequana has been screened by BI for the identification of compounds for the
prevention or treatment of Asthma, prior to the target having been validated by
the information identified through the Research.


	"Confidential Information" means,
subject to the limitations set forth in Article 8, all BI Technology,
Sequana Technology, and all Joint Results.


	"Dominating Patent" shall mean an
unexpired patent that has not been invalidated by a court or a governmental
agency which is owned by a third party neither controlled, controlling nor under
common control with BI nor its Affiliates or sublicensees covering essential
features of BI Products made and sold by BI under circumstances such that BI has
no commercially reasonable alternative to obtaining a royalty-bearing license
under such patent in order to commercialize BI Products under this
Agreement.


	"Effective Date" means the date set
forth in the caption above.


	"FDA" means the United States Food and
Drug Administration, or any successor organization.


	"Field" means the identification and
study through the use of the Asthma Database of human Genes and Gene sequence
information responsible for causing, predisposing or suppressing the development
of Asthma.


	"Full Time Equivalent" or
"FTE" shall mean 1880 hours of work in the Research per
year.


	"Gene" means a gene including all its
regulatory sequences, and any and all variants thereof, including, without
limitation, "splice variants," alleles and mutations of the
gene.


	"Investigational New Drug Application"
or "IND" means an application to commence Phase I clinical
trials in a Major Country.


	"Joint Patents" means any or all Patents
and Patent Applications, both U.S.  and foreign, based upon Joint Results, that
have a priority date on or before four (4) years after the end of the Research
Term.


	"Joint Research Committee" or
"JRC" means a committee of Sequana and BI employees as
described in Article 3.1.


	"Joint Results" means any Result or
Results made or discovered jointly by Sequana (including its Affiliates,
sublicensees, or other persons or entities on behalf of Sequana) together with
BI (including its Affiliates, sublicensees, or other persons or entities on
behalf of BI).


	"Major Country" means any of the United
States of America, Canada, Australia, Japan or any country in the European
Union.


	"Net Sales" means the actual billing
price received by the Parties or their Affiliates or sublicensees, as
appropriate, from sales of BI Products or Sequana Products to third party
customers (but not including the sale by BI or Sequana to their respective
Affiliates or sublicensees), less the following deductions:

(i)Prompt payment or other trade or quantity
discounts actually allowed and taken in such amounts as are customary in the
trade, including private sector or governmental rebates such as Medicaid rebates
or rebates to pharmaceutical benefit organizations or managed health care
groups, directly relate to such;

(ii)Amounts repaid or credited by reason of timely
rejections or returns;

(iii)Taxes (other than franchise or income taxes
on the income of the selling Party), including any withholding taxes, directly
related to such sale and actually paid; and 

(iv)Transportation and delivery charges, including
insurance premiums, actually incurred.


	"New Drug Application" or
"NDA" means a new drug application to the IDA or the equivalent
agency of the European Union or Japan to commence commercial sale of a
drug.


	"Party or Parties" means BI or Sequana,
or BI and Sequana.


	"Patent" means an United States or
foreign patent or supplementary protection certificate issued on a Patent
Application, including, all extensions, reissues, re-examinations, renewals, and
inventors' certificates, and all foreign counterparts of the
aforementioned.


	"Patent Application" means a United
States or foreign application for a Patent, including all substitutions,
divisionals, continuations, and continuations-in-part, and all foreign
counterparts of the aforementioned.


	"Product License Application" or
"PLA" means an application to the FDA or the equivalent agency
of the European Union or Japan to commence commercial sale of a
biological.


	"Research" means all work by or on
behalf of BI and Sequana in the Field during the Research Term.


	"Research Term" means the period
commencing on the Effective Date and ending on the first to occur of:  (i)
termination of this Agreement according to Article 12; or (ii) the
fifth anniversary of the Effective Date, or such later day as the parties may
agree pursuant to Article 2.12.


	"Result(s)" means any and all
inventions, discoveries, methods, ideas, know-how, data (including the Asthma
Database), software, techniques and information, including any gene, genes, and
sequence information whether or not patentable, and all Patents, Patent
Applications, and other proprietary rights appurtenant thereto, that are made,
created, or reduced to practice in the course of the performance of the Research
or existing as of the Effective Date, as well as any and all reports relating to
the conduct of the Research during the Research Term.


	"Sequana Product" means a diagnostic
product in the form of a device, compound, kit or service developed based on an
Asthma Gene, and that is covered by a claim of a BI Patent, Sequana Patent or
Joint Patent.


	"Sequana Know-How" means all tangible
and intangible inventions, technology, trade secrets, data, processes, methods,
and any physical, chemical or biological material, including any replication or
any part of such material, or other information that Sequana owns, controls or
has a license to as of the Effective Date or during the Research Term, that are
necessary or useful to conduct the Research, and which Sequana has the right to
sublicense.  Sequana Know-How shall not include Sequana Patents and Sequana
Software.


	"Sequana Patents" means all Patent
Applications having a priority date prior to four (4) years following the end of
the Research Term, and any Patents issuing thereon, in each case, that are owned
or controlled by Sequana and claim the discovery, development, manufacture, sale
or use of any Asthma Gene, Asthma Gene sequence information, Compound, BI
Product or Sequana Product.  Sequana Patents shall not include Sequana Know-How,
Joint Results or Joint Patents.


	"Sequana Result" means any and all
Results made, created, developed or reduced to practice solely by employees of
Sequana, its Affiliates, sublicensees, or other persons or entities on behalf of
Sequana.


	"Sequana Software" means any software,
code or programs developed or owned solely by Sequana or licensed exclusively to
Sequana that Sequana has the right to sublicense.


	"Sequana Technology" means,
collectively, the Sequana Patents, Sequana Know-How, Sequana Software, and
Sequana Results.


	"SLRI" means the Samuel Lunenfeld
Research Institute/Mt.  Sinai Hospital.


	"SLRI Agreement" means that certain
agreement entered by Sequana and Mount Sinai Hospital Corporation, effective as
of July 15, 1994.
	RESEARCH



	Research Goals.  During the Research Term, BI and
Sequana shall conduct Research on a collaborative basis with the goal of
discovering Asthma Genes.  Specific goals of the Research will be the
identification of the Gene or Genes associated with Asthma, including analysis
of genetic linkage, physical mapping, sequencing and identification of mutations
in any particular Gene resulting in or associated with the pathophysiological or
functional changes causing, predisposing or suppressing the development of
Asthma.


	Initial Fee.  Within fifteen (15) days after the
Effective Date, BI will pay to Sequana an initial fee of $2,000,000, which
amount shall be non-refundable and noncreditable against other amounts due
Sequana under this Agreement.


	Research and Funding Obligations.



	General Obligations.  Each party shall use
reasonable commercial efforts to carry out their responsibilities in connection
with the Research to achieve the objectives of the Research as promptly as
practicable.


	Sequana Research Obligations.  During the Research
Term, Sequana will commit to the Research a team of ten (10) appropriately
qualified full time equivalent ("FTE") researchers (averaged over each
calendar year), or such greater number of FTE researchers as the JRC may agree,
to conduct the Research.  Sequana shall be responsible for the management of its
employees and contractors, including compensation and evaluation.


	BI Research Obligations.  BI, at BI's expense,
will to the extent available to BI, provide the necessary personnel, resources,
expertise and support for the activities necessary to carry out BI's obligations
under this Agreement in an effective and timely manner.  BI shall be responsible
for all of its own expenses incurred in connection with the Research and shall
be responsible for the management of its employees and contractors, including
compensation and evaluation.


	BI Funding Obligations.  BI will provide Sequana
funding for each FTE Sequana researcher involved in the Research at a rate of
$280,000 per year per FTE for the first year of the Agreement, which amount
shall increase by five percent (5%) per year in each subsequent year of the
Research.  Such amounts shall be paid to Sequana in equal installments every
three (3) months, in advance, with the first payment due within fifteen (15)
days after the Effective Date and the second payment due within fifteen (15)
days following the approval by the JRC of the initial Research Plan but in no
event earlier than three (3) months after the Effective Date.


	Research Patient Collection and Research Patient
Collection Funding.



	SLRI Agreement.  Prior to the Effective Date,
Sequana has entered into the SLRI Agreement which provides Sequana exclusive
rights to study patient samples provided by SLRI, including samples from Tristan
da Cunha.  The Tristan da Cunha samples obtained by Sequana from SLRI shall be
used in connection with the Research, and Sequana shall be responsible for
paying to SLRI any amounts due under the SLRI Agreement for the use of such
patient samples in the Research.


	Further Patent Samples: Third Party Research
Activities.  Sequana shall be reimbursed for the costs of acquiring patient
samples under agreements (other than the Tristan da Cunha samples under the SLRI
Agreement) entered by Sequana prior to the Effective Date as outlined in Exhibit
B in the sum of $347,000.  During the Research Term, Sequana may, with the
consent of the JRC, enter into further agreements to acquire additional patient
samples for use in the Research.  BI will pay to Sequana the costs of acquiring
such patient samples within thirty (30) days of Sequana incurring such costs, up
to a total of $6,000,000 (which sum includes the $347,000 to be reimbursed to
Sequana, which amount shall be paid to Sequana within fifteen (15) days of the
Effective Date).  Subject to JRC approval, a portion of such $6,000,000 may be
paid to third parties for the conduct of Research activities.


	Research Milestones.



	Milestone Payments.  BI will pay to Sequana the
research milestone payments below within thirty (30) days of the date of
confirmation by the JRC of the achievement of such milestone.


	
(a) Completion of genotyping and linkage analysis.  Linkage
for distinct loci determined at a maximal interval size (=flanking markers) of 5
cM, with LOD scores >3 or p values < 0.01 depending on the patient
material (i.e., families or sib pairs) for linked markers.
	 	
$1,000,000

	
(b) Completion of physical mapping containing greater than
95% of the minimal region, not to exceed the flanking markers described
above.
	 	
$1,000,000

	
(c) Successful identification of any Asthma Gene, up to a
total of five (5) Asthma Genes.  Successful identification shall be shown by
isolation of a cDNA with at least one of the following characteristics:  (i)
significant sequence re-arrangements in the coding or the promoter region in
affected individuals; or (ii) obvious disease-specific re-arrangements detected
by SSCP, DGGE or other appropriate mutation detection technologies.
	 	 
	
For each of the first two Asthma Genes.
	 	
$2,000,000

	
For each of the third, fourth and fifth Asthma Genes.
	 	
$1,000,000

	
No further milestones shall be due for any additional Asthma
Genes, beyond the first five (5) Asthma Genes, subject to
Article 2.5.2.
	 	 




Notwithstanding the above, payments for successful
identification shall only be made with respect to Gene sequences which have not
previously been patented by a third party or publicly shown to be altered in
asthma patients at the time of the identification of such sequences.


	Creditability.  The research milestone payments
for Gene identification paid pursuant to Article 2.5.1(c) with respect to a
particular Asthma Gene shall be non-refundable but creditable against any
further milestone or royalty payments owed by BI to Sequana under this Agreement
in the event that any Type 1, Type 2a or Type 2b Compound (but
not a Type 3 or Type 4 Compound) based on such Asthma Gene is found
following such payment to be within the scope of the claims of a Dominating
Patent.  In each such event, the applicable Asthma Gene shall be deemed not to
be one of the first five Asthma Genes and one further Asthma Gene beyond the
first five Asthma Genes identified will be counted as one of the first five
Asthma Genes for the purpose of any of the payment of Gene identification
milestones in accordance with Article 2.5.1(c).


	JRC Determination.  The JRC shall be responsible
for determining when each milestone has been achieved, and shall promptly make
such determination in writing.  Each milestone shall be deemed to have been
achieved when sufficient data is available to proceed to the next stage of
research.  In the event the JRC cannot agree whether a milestone has been
achieved, the decision will be subject to the dispute resolution procedure of
Article 3.5.


	Research Projects.



	Annual Research Plan.  The particular Research
projects to be carried out in each year of the Research Term will be described
in the Annual Research Plan prepared by the JRC according to this
Article 2.6.  The Annual Research Plan will delineate the specific studies,
number of researchers, timetable and technical goals to be pursued by Sequana
and BI during the applicable year.  The Annual Research Plan for the first year
of the Research Term will be written by the JRC based on the outline in Exhibit
A within ninety (90) days of the Effective Date and thereafter by each
anniversary of the Effective Date.


	Responsibilities of the Parties.  The Annual
Research Plan(s) shall provide that the Parties have the following
responsibilities: Sequana shall be responsible for conducting genotype analysis
on appropriate patient DNA samples and linkage analysis; Sequana shall be
responsible for gene identification studies, although BI may at its discretion
participate in such activities; and BI shall be responsible for Gene expression
and functional analysis of the Gene product(s) from the Genes identified,
although Sequana may at the discretion of the JRC participate in such
activities.


	Access To Technology.



	BI Technology.  BI shall make available and
disclose to Sequana during the Research Term the BI Technology necessary or
useful to conduct the Research.


	Sequana Technology.  Sequana shall make available
and disclose to BI during the Research Term the Sequana Technology necessary or
useful to conduct the Research.


	Availability of Samples.  Both Sequana and BI will
make available to the other chemical or biological samples relating to the
Asthma Database, in their possession, from the Effective Date until the date
three (3) years after the end of the Research Term.  Such samples may include,
but are not limited to, DNA and RNA.


	No Licenses.  No licenses are granted pursuant to
this Article 2.7.  All license rights granted the Parties are contained in
Article 5.


	Access to Data.  During the Research Term, each
Party will provide the other with raw data in original or on-line form or a
photocopy thereof for any and all Results as reasonably requested by the other
Party.


	Discovered Genes and Sequence Information.  Both
Sequana and BI shall notify the other as soon as reasonably practicable, of any
Asthma Gene and Asthma Gene sequence information discovered during the Research
Term from the analysis of the Asthma Database, or any Gene(s) or Gene sequence
information discovered during the Research Term by a Party in any way implicated
in Asthma.


	Rights to Gene Sequence Information.  Following
the identification of any Gene or Gene sequence information from the Asthma
Database that is determined not to be an Asthma Gene by the JRC, Sequana shall
grant to BI the right of first refusal to acquire an exclusive or non-exclusive
license, with the right to grant sublicenses according to Article 5.3, of
Sequana's rights in the identified Gene or Gene sequence.  BI shall have six (6)
months from the date of the determination by the JRC that the pertinent Gene or
Gene sequence is not an Asthma Gene to exercise its right of first refusal.
Upon written notification by BI to Sequana that it wishes to enter into a
license agreement with respect to the Gene or Gene sequence, the Parties shall
negotiate such an agreement in good faith.  During such six (6) month period BI
shall offer in writing the terms pursuant to which BI would enter into a license
agreement with Sequana with respect to such Gene or Gene sequence information.
If after the expiration of six (6) months from the date of determination by the
JRC with respect to any Gene or Gene sequence, BI has not notified Sequana in
writing of its interest in entering into a license agreement with respect
thereto, or upon earlier notification by BI to Sequana that it is not
interested, or, if BI has exercised its right of first refusal but the parties
have failed to execute a license agreement within six (6) months from the date
that BI provided Sequana notice of its interest in acquiring such a license (the
"Negotiation Period"), each Party may immediately use such Gene or
Gene sequence for any purpose; provided, if BI has exercised its right of first
refusal, Sequana will not grant a third party a license with respect to any such
Gene or Gene sequence on terms more favorable to the third party than those
offered by BI to Sequana during the Negotiation Period.


	Final Report.  Within ninety (90) days following
the end of the Research Term, the Parties shall exchange final written reports
detailing the Research.


	Research Term Extension.  Not less than ninety
(90) days prior to the fifth anniversary of the Effective Date, each Party shall
inform the other whether it wishes to continue the Research Term for an
additional one (1) year period to complete on-going projects.  If both Parties
desire to continue the Research, the Research Term shall be extended until the
sixth anniversary of the Effective Date.
	JOINT RESEARCH COMMITTEE



	Composition of the JRC.  Within ten (10) days of the
Effective Date, each Party will assign three (3) of its employees involved in
the Research to serve as regular members of the JRC.  BI or Sequana may replace
any of its appointed representatives to the JRC without the necessity of
amending this Agreement upon written notice to the other Party.  Other nonvoting
representatives of either Party, including employees not directly performing
Research, may from time to time, with the consent of the JRC, be asked or
permitted to participate in JRC meetings, but shall not be entitled to vote on
decisions made by the JRC at such meetings.  The Parties hereby agree that a
representative of SLRI reasonably acceptable to the Parties shall be permitted
to participate in JRC meetings but shall not be entitled to vote on decisions
made by the JRC at such meetings.


	Meetings.  The JRC will meet at least quarterly at
a venue and time to be agreed by the Parties.  Unless otherwise agreed, the
location of the meetings shall alternate between BI's facilities at Ingelheim,
Germany or Vienna, Austria, and Sequana's facilities at San Diego, California,
with the first JRC meeting to take place in Vienna, Austria.  The Party hosting
the meeting shall prepare a written report within thirty (30) days after the
meeting, summarizing in reasonable detail any reports of the Parties during the
meeting regarding the Results of the Research of each Party during the
immediately preceding period.  During the Research Term, the Parties shall
exchange written reports not less often than four (4) times per year presenting
a meaningful summary of the Research.


	Decisions.  A quorum consisting of at least two
(2) representatives of each Party must be present in order for the JRC to
conduct an official meeting.  All decisions of the JRC will require the
unanimous vote of its regular members, whether or not present at the meeting.
Votes can be conducted in person or by written consent.  Any matters which
cannot be resolved by the JRC shall be referred to the Chief Executive Officer
of Sequana and Corporate Board Member, Pharmaceuticals of BI for resolution,
pursuant to Article 3.5 below.


	Rights and Duties of the JRC.  The JRC
shall:

(i)facilitate the exchange of Results between the
Parties;

(ii)coordinate and plan the respective Research
efforts of the Parties;

(iii)direct the Research, and monitor and assess
the progress of such Research in relation to the stated goals and objectives of
this Agreement;

(iv)advise and assist in the resolution of any
scientific or technical difficulties which are experienced by either Party in
performing the Research;

(v)consider Results, inventions and discoveries
arising out of the Research including the determination and acknowledgment of
whether or not an identified sequence is an Asthma Gene;

(vi)review and attempt to resolve any disputes
relating to a proposed publication of material related to the Research;

(vii)review and attempt to resolve any other
disputes between the Parties;

(viii)prepare each Annual Research Plan;

(ix)adjust the size and composition of the
Research team of Sequana, and advise BI regarding the size and composition of
its Research team;

(x)stipulate when research milestones have been
achieved according to Article 2.5; and

(xi)prepare an annual estimate of payments to be
made by BI to Sequana under the terms of this Agreement.


	Dispute Resolution.  Any dispute between the
Parties which cannot be amicably settled, shall be resolved as set forth
below.



	Technical Disputes.  Disputes concerning any
matter relating to this Agreement which has a significant technical component,
including without limitation, (i) the conduct of the Research; (ii) whether any
research milestone subject to Article 2.5 has been achieved; or (iii)
whether a particular product developed or distributed by BI or its Affiliates or
sublicensees subject to this Agreement falls within the definition of a
particular BI Product Type, shall be resolved as follows.  Upon written notice
of a dispute by either Party to the other, representatives of the Parties shall
meet within thirty (30) days, or such other period as the parties may agree, to
attempt to resolve the dispute.  During the Research Term, such representatives
shall be members of the JRC; following the Research Term, such representatives
shall be designated by the Chief Executive Officer of Sequana and the Corporate
Board Member, Pharmaceuticals of BI for their respective Parties.  If such
representatives resolve the dispute, they shall set forth in writing the
resolution.  If the representatives are unable to resolve any such dispute
within the specified period, the dispute shall be automatically referred to the
Chief Executive Officer of Sequana and the Corporate Board Member,
Pharmaceuticals of BI, who will have a reasonable agreed period to resolve the
dispute.  If the Chief Executive Officer of Sequana and the Corporate Board
Member, Pharmaceuticals of BI resolve any such dispute, they shall set forth the
resolution in writing.  If the Chief Executive Officer of Sequana and the
Corporate Board Member, Pharmaceuticals of BI are unable to resolve the dispute
within a reasonable agreed time, and either Party wishes to finally resolve the
matter the dispute shall be resolved by binding arbitration pursuant to the
procedure described in Article 3.5.2 below.


	Arbitration.  Within thirty (30) days following
the decision of the Chief Executive Officer of Sequana and the Corporate Board
Member, Pharmaceuticals of BI that they cannot resolve a technical dispute
subject to Section 3.5.1, either Party may submit such matter to binding
arbitration.  Such arbitration shall be conducted by three (3) arbitrators in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA").  The Parties shall attempt to agree on
individuals who will serve as the arbitrators, selecting persons reasonably
qualified to resolve such technical disputes.  If the Parties are unable to
select arbitrators within the thirty (30) day period, then the arbitrators shall
be selected in accordance with AAA Rules.  Within seven (7) days after the
appointment of the arbitrators, each Party shall submit to the arbitrators and
each other a detailed written statement of that Party's proposed resolution of
the dispute.  The arbitrators shall be entitled to select one or the other of
the proposed resolutions and shall not be entitled to modify any proposed
resolution or to select a resolution other than one of those that has been
submitted by a Party.  The arbitrators shall select the proposed resolution that
is the closest to the resolution that the arbitrators believe is most consistent
with the Parties' obligations and expectations as evidenced by this Agreement
and also taking into consideration notions of fairness and what is appropriate
under the circumstances.  The arbitrators shall inform the Parties in writing of
the resolution selected as promptly as possible and in no event later than
thirty (30) days after submission of the last written statement by a Party.  The
decision of the arbitrators may be enforced in any court of competent
jurisdiction.  The costs of any arbitration shall be divided equally between the
Parties, and the Parties shall pay their own expenses (including attorneys fees)
incurred in connection with such arbitration.


	Non-Technical Disputes.  With respect to any
dispute which is not subject to Articles 3.5.1 and 3.5.2, either Party may seek
remedies at law or in equity, subject to Article 16.1 below.
	DEVELOPMENT MILESTONES AND ROYALTIES



	Milestones.



	Milestone Payments.  BI shall pay to Sequana the
applicable milestone payments set forth below, subject to Article 4.1.2,
within thirty (30) days after the achievement of the following development
milestones with respect to each BI Product: ("M" = millions of U.S.
dollars)


	 	
Type 1 Product
	
Type 2a Product
	
Type 2b Product
	
Type 3 Product
	
Type 4 Product

	
IND filing
	
$ 2 M
	
$2M
	
$ 1 M
	
$ 1 M
	
$ 0.5M

	
NDA/PLA filing
	
$ 4 M
	
$ 3 M
	
$2M
	
$2M
	
$ 2 M

	
NDA/PLA approval
	
$ 8 M
	
$4M
	
$2M
	
$2M
	
$ 2 M





The milestone payments made pursuant to this Article 4.1
shall be non-refundable but creditable against royalties due Sequana pursuant to
Article 4.2 below, beginning in the year following the third full calendar
year of commercial sale of any BI Product, up to a maximum of fifty percent
(50%) of the royalties due in any year.


	Milestone Reductions.  The milestone payments made
pursuant to this Article 4.1 shall be reduced for subsequent Type 1,
Type 2a and Type 2b Products as follows:  (i) for the second BI
Product of a particular BI Product Type based on a different Asthma Gene
from the first BI Product, BI shall pay to Sequana seventy percent (70%) of the
milestone payments above for such BI Product; and (ii) for the third BI Product
of a particular BI Product Type based on a different Asthma Gene from the
first two BI Products, BI shall pay to Sequana fifty percent (50%) of the
milestone payments above for such BI Product; provided, no milestone payments
shall be due for any such subsequent BI Product of a particular BI Product
Type.


	Milestone Payment Exclusions.  Notwithstanding the
above, no additional milestone payment shall be due by BI under this
Article 4.1 for a subsequent IND or NDA (as applicable) for improvements or
modifications to a BI Product based on a particular Asthma Gene, if the BI
Product is functionally equivalent to a BI Product based on the same Asthma Gene
for which the applicable commercialization milestone has been previously paid.
As used herein, an improved or modified BI Product shall be deemed functionally
equivalent to another BI Product if it works by a similar mechanism and is
directed at the same target.


	Royalties.  BI shall pay to Sequana the royalties
set forth below on Net Sales of BI Products by BI, and its Affiliates and
sublicensees:


	 	
Royalty

	
Type I Product
	
12%

	
Type 2a Product
	
5%

	
Type 2b Product
	
3%

	
Type 3 Product
	
2%

	
Type 4 Product
	
2%





In the event that a commercially significant competitive
product that acts on the same intervention point as a Type 3 or Type 4
Product is introduced by a party other than BI or its Affiliates or sublicensees
into a geographic market in which BI has Net Sales, the royalties due to Sequana
on such Type 3 or Type 4 Product in that market shall be reduced to 1%
of Net Sales, from the date the competitive product is introduced into the
particular market, as long as such product is sold in that market, and such
royalties shall not be subject to any further reductions or offsets.  In the
event such competitive product that acts on the same intervention point as a
Type 1, Type 2a or Type 2b Product is introduced by a party other
than BI or its Affiliates or sublicensees into such market, the Parties will
meet to discuss whether a reduction should be made in the royalties payable to
BI; provided, no such reduction shall occur without the mutual written consent
of the Parties.


	Royalty to BI on  Sequana Products.  In the event
that BI has contributed significantly to the development of a Sequana Product
(other than through the support of or performance of the Research), the parties
shall negotiate in good faith a royalty to be paid to BI by Sequana on Net Sales
of such Sequana Product, which royalty shall reflect BI's contribution to the
development of such Sequana Product.


	Third Party Licenses and Royalties.  BI shall be
responsible for the payment of any amounts due third parties for Intellectual
property necessary for the performance of the Research and the commercialization
of the BI Products; provided, BI may offset any amounts due third parties under
licenses required to commercialize BI Products, up to a maximum of fifty percent
(50%) of the royalties due Sequana in any quarter.  Notwithstanding the above,
Sequana shall be responsible for payments due SLRI under the SLRI
Agreement.


	Royalty Term.  BI's obligation to pay royalties to
Sequana shall continue for each BI Product on a country-by-country basis until
the earlier of (i) twelve (12) years following the first commercial sale of a BI
Product in a country, or (ii) the expiration of the last to expire Patent within
the BI Patents, Sequana Patents or Joint Patents covering a particular BI
Product in such country.


	Reports; Payments.  BI shall deliver to Sequana
written reports (consistent with generally accepted accounting principles and in
a format specified by the Parties and consistent with BI internal accounting
policy ) within sixty (60) days after the close of each calendar quarter,
showing separately for each BI Product: (i) gross sales by BI, its Affiliates
and sublicensees, broken down by both units sold and revenue and the calculation
of Net Sales pursuant to Article 1.26; (ii) details of the quantifies sold
in each country; (iii) royalties due to Sequana pursuant to Articles 4.2; and
(iv) details of payments (if any) by BI to third parties pursuant to any third
party licenses, as described in Article 4.4 above.  Concurrently with the
making of each such report, BI shall pay to Sequana all royalties due on account
of Net Sales during the preceding calendar quarter.


	Late Payments.  In the event either Party makes a
late payment or any amounts due under this Agreement, such Party shall pay
interest on such amount from the date such payment was due at a rate equal to
the prime rate reported by the Deutsche Bank, Frankfurt am Main, Germany plus
two percent.  The foregoing shall in no way limit any other remedies available
to either Parry.


	Currency Conversion.  All amounts required to be
paid pursuant to this Agreement shall be paid in U.S.  Dollars.  If any currency
conversion shall be required in connection with the calculation of royalties
hereunder, such conversion shall be made by converting the currency first into
German marks and then into U.S.  Dollars using in both cases the average monthly
exchange rates as published regularly by Deutsche Bank, Frankfurt am Main,
Germany, and as customarily used by BI in its accounting system.


	Audits.  BI shall keep complete and accurate
records in sufficient detail to properly reflect all gross sales, deductions
from Net Sales, and to enable the royalties payable hereunder to be determined.
Upon the written request of Sequana not more than once in each calendar year, BI
shall permit an independent certified public accounting firm of nationally
recognized standing, selected by Sequana and reasonably acceptable to BI, and at
Sequana's expense (except as provided below), to have access during normal
business hours to such of the records of BI as may be reasonably necessary to
verify the accuracy of the royalty reports hereunder for any year ending not
more than twenty-four (24) months prior to the date of such request.  The
accounting firm shall disclose all information gathered or concluded to BI and
to Sequana, only whether the records are correct or not and the specific details
concerning any discrepancies.  No other information shall be shared with
Sequana.  If the accounting firm concludes that additional royalties were owed
during such period, BI shall pay all costs associated with the audit and the
unpaid royalties within thirty (30) days of the date the accounting firm
delivers the firm's written report to the Parties, with interest thereon at the
prime rate reported by the Bank of America on the last calendar day of the
quarter in which such payments were due.  Should the accounting firm conclude
that BI has over paid any royalties, Sequana shall credit any overpayment to BI
against amounts later due Sequana.


	Withholding Taxes.




	Deduction.  BI shall deduct any withholding taxes
from the payments due under this Agreement and pay them to the proper tax
authorities as required by the laws of Germany applicable at the date of
payment.  BI shall not deduct any other withholding or any other governmental
charges from the payments due under this Agreement, including but not limited to
any such taxes or charges incurred as a result of an assignment pursuant to
Article 13 or a sublicense pursuant to Article 5 by BI, except as
noted above.  BI shall annually provide Sequana with official receipts of
payment of any withholding taxes and forward these receipts to Sequana.  The
Parties shall use their best efforts to ensure that any withholding taxes
imposed are reduced or eliminated as far as possible under the terms of the
current or any future double taxation agreement between the U.S.  and
Germany.


	Certificate of Tax Exemption.  In accordance with
the tax laws of Germany as of the Effective Date, a reduction of withholding tax
requires that the German Bundesamt fur Finanzen issue a Certificate of Tax
Exemption.  In order to achieve such a reduction, Sequana shall provide BI with
a completed Application for Tax Exemption and a Certificate of Filing a Tax
Return, which forms shall have been provided by BI to Sequana prior to the
Effective Date.  Payments due to Sequana under the terms of this Agreement are
not payable to Sequana until the pertinent Applications for Tax Exemption are
provided by Sequana to BI.  Notwithstanding the above, BI shall make the
payments due to Sequana under the terms of this Agreement, net of any applicable
withholding.  BI shall notify Sequana as soon as reasonably practicable of any
changes regarding the procedure for claiming withholding tax
exemptions.


	Product and Compound Definition
Disclosures.




	BI Product.  Within ten (10) days of the Effective
Date, and annually thereafter on the anniversary of the Effective Date, BI shall
deposit with Wilson, Sonsini, Goodrich & Rosati, P.C., or another agreed
party, a sealed list of all compound identification numbers and products for
which BI and its Affiliates have initiated structural optimization, pre-clinical
or clinical development for the treatment or prevention of Asthma.  Unless
otherwise agreed by the Parties, such lists shall remain sealed unless a dispute
arises with respect to whether a particular product is a BI Product within the
scope of Article 1.7.  In such event, both Parties shall be entitled to
copies of such lists for purposes of resolving such dispute.  Sequana shall
treat such copies as Confidential Information.


	Type 4 Compound.  Within ten (10) days of the
Effective Date, and annually thereafter on the anniversary of the Effective
Date, BI shall deposit with Wilson, Sonsini, Goodrich & Rosati, P.C., or
another agreed party, a sealed list of targets against which BI has initiated
screening for the identification of compounds for the prevention or treatment of
Asthma.  Unless otherwise agreed to by the Parties, such lists shall remain
sealed unless a dispute arises with respect to whether a particular product
contains a Type 4 Compound within the scope of Article 1.13.5.  In
such event, both Parties shall be entitled to copies of such lists for purposes
of resolving such dispute.  Sequana shall treat such copies as Confidential
Information.
	GRANT OF LICENSES



	Licenses to BI.



	Technology License for Research.  Subject to the
terms and conditions of this Agreement, Sequana grants to BI an exclusive,
except as to Sequana, paid-up, worldwide license, with the right to sublicense
pursuant to Article 5.3.1, under (i) the Sequana Technology existing as of
the Effective Date and developed during the Research Term, and (ii) Sequana's
interest in the Joint Results and Joint Patents, to make and use methods and
materials to conduct the Research in the Field during the Research
Term.


	Technology License for Commercialization of BI
Products.  Subject to the terms and conditions of this Agreement, Sequana
grants to BI, an exclusive, even as to Sequana, worldwide license, with the
right to sublicense pursuant to Article 5.3.1 under (i) the Sequana
Technology, and (ii) Sequana's interest in the Joint Results and Joint Patents,
to make, have made and use Compounds, and to make, have made, use and sell BI
Products, including all activities necessary to discover and develop Compounds
and BI Products.


	Right of First Refusal for Commercialization of
Sequana Products.  Sequana hereby grants to BI a Right of First Refusal to
acquire an exclusive, world wide license with the right to grant sublicenses
according to Article 5.3.1 under (i) the Sequana Technology and (ii)
Sequana's interest in the Joint Results and the Joint Patents to make, have
made, use and sell Sequana Products.



	In relation to Sequana Products that are necessary for
the successful marketing of a BI Product based on the same Asthma Gene, the
Right of First Refusal shall commence upon the earlier of (i) notification by
Sequana to BI of its decision to sublicense the development of Sequana Products,
or (ii) at the time BI enters Phase III testing for the corresponding BI
Product, in the event that Sequana has not earlier submitted the pertinent
Sequana Product to the FDA for marketing approval or is not capable of providing
diagnostic services, and stall terminate six (6) months thereafter or at such
other time as the Parties may mutually agree in writing.  As used in this
Article 5.1.3 and in Article 5.4, "necessary" shall mean
required for the identification of the patient population to be treated by a
particular BI Product.


	In relation to any Sequana Products not subject to
Section 5.1.3.1.  above, the Right of First Refusal shall commence upon
notification by Sequana to BI of any decision to sublicense the development of
such Sequana Product and shall terminate within six (6) months thereafter or at
such other time as the Parties may mutually agree in writing.


	The Right of First Refusal may be exercised by BI by
providing written notice to Sequana of its interest in entering into a license
agreement and the parties shall negotiate such an agreement in good faith for a
period of six (6) months.


	After the termination of the Right of First Refusal, or
any mutually agreed extension thereof, if BI has failed to exercise the Right of
First Refusal, or if BI and Sequana have not entered into a license with respect
to the applicable Sequana Product within the specified period, Sequana shall
have the right to seek other sublicensees according to Article 5.3.2;
provided, however, that Sequana shall not enter into such a license with any
third party on terms more favorable than those offered to BI.


	Licenses to Sequana.



	Technology License for Research.  Subject to the
terms and conditions of this Agreement, BI grants to Sequana an exclusive,
except as to BI, paid-up, worldwide license, with the right to sublicense
pursuant to Article 5.3.2, under (i) the BI Technology existing as of the
Effective Date and developed during the Research Term, and (ii) BI's interest in
the Joint Results and Joint Patents, to make and use methods and materials to
conduct the Research in the Field during the Research Term.


	Technology License for Commercialization of Sequana
Products.  Subject to the terms and conditions of this Agreement, BI grants
to Sequana, an exclusive, even as to BI, worldwide license, with the right to
sublicense pursuant to Article 5.3.2 under (i) the BI Technology, and (ii)
BI's interest in the Joint Results and Joint Patents, to make, have made, use
and sell Sequana Products including all activities necessary to discover and
develop Sequana Products.


	Technology License for the Commercialization of BI
Products.  In the event of termination pursuant to Article 7.4, BI
grants to Sequana, subject to the terms and conditions of this Agreement, an
exclusive, even as to BI, worldwide license, with the right to sublicense
pursuant to Article 5.3.2 under (i) the BI Technology, and (ii) BI's
interest in the Joint Results and Joint Patents, to make, have made, use and
sell BI Products.


	Sublicensing.



	Sublicenses Granted by BI.  BI shall have the
right to grant sublicenses under Article 5.1 to its Affiliates and third
parties, including its collaborators and contractors, according to
Article 6.2.  BI shall promptly notify Sequana in writing of any such
sublicenses to third parties.  BI shall include in each permitted sublicense a
provision requiring the sublicensee to make reports to BI, to keep and maintain
records of sales made pursuant to such sublicense and to grant access to such
records by Sequana's accounting firm to the same extent required of BI according
to Article 4.9.


	Sublicenses Granted by Sequana.  Sequana shall
have the right to grant sublicenses under Article 5.2 to its Affiliates,
and subject to Article 6.2 or Article 5.1.3 to third parties.


	Sublicensing Generally.  Any sublicenses granted
under this Article 5.3 shall be granted according to the following
provisions: (i) any such sublicenses shall be subject to the exclusivity
provisions of Article 6 and shall be nontransferable; (ii) any such
sublicenses shall be fully consistent with the terms of this Agreement; and
(iii) no sublicense granted under this Article 5.3 shall convey any rights
greater than the rights held by the Party granting the license.


	Sequana Product Distribution Rights.  If BI is
developing a BI Product, and it is necessary for the successful marketing of
such BI Product to distribute with it a Sequana Product based on the same Asthma
Gene, in the event that BI has not exercised its Right of First Refusal in
accordance with Article 5.1.3, Sequana will grant to BI solely in
conjunction with the commercialization of such BI Product the worldwide, co-
exclusive (with Sequana) fight to distribute Sequana Products relating to such
BI Products, on terms to be negotiated in good faith.
	EXCLUSIVITY



	Research Exclusivity.



	After the Effective Date and until two (2) years after
the end of the Research Term, subject to Sequana's existing agreements with
third parties relating to asthma patient samples and such further agreements as
the JRC may approve, neither Party will conduct any research in the Field with
any other third party except as provided according to Article 6.2;
provided, however, BI may collaborate with research and development relating to
Asthma with third parties, outside the Field.  Notwithstanding the above, either
party may conduct research and commercialization activities with respect to
diseases other than Asthma, alone or with third parties.


	Notwithstanding Article 6.1.1, in the event that
Sequana materially breaches the Agreement, and BI terminates this Agreement
pursuant to Section 12.2, BI may enter into collaborations with third parties to
conduct research in the Field.


	Notwithstanding Article 6.1.1, in the event that BI
materially breaches the Agreement or terminates the Research prior to the end of
the Research Term pursuant to Article 12.5, or Sequana terminates this
Agreement pursuant to Section 12.2, Sequana may enter into collaborations with
third parties to conduct research in the Field.


	Third Party Contractors and Collaborators.  During
the Research Term, either Party shall be permitted to engage in research
collaborations or scientific contract work to conduct Research with third
parties provided that each collaboration is approved by the JRC and subject to
the confidentiality provisions according to Article 8.  Such approval shall
include and set forth: (i) the financial terms of the third party collaboration,
including the amounts of funding to be provided by each of the Parties to the
third party collaborator; (ii) provisions that rights within the Field developed
or received by either Party in the course of the third party collaboration will
be considered rights of that Party under this Agreement; and (iii) provisions
for any grant of intellectual property rights to the third party.
	DEVELOPMENT



	BI Development.  BI will be responsible, at its
option, subject to Article 7.4 and at its expense, for all preclinical and
clinical development of the BI Products.  BI will use its reasonable commercial
efforts to conduct all such preclinical and clinical development as promptly as
practicable, to obtain worldwide regulatory approvals for the sale of BI
Products and to market the BI Products in all markets where BI receives
regulatory approval.  BI will, to the extent available to BI, provide the
necessary resources, expertise and support activities to carry out development
of BI Products in an effective and timely manner and will be responsible for the
costs involved.  BI is solely responsible for the development of all BI
Products, including: discovery, formulation, toxicology, pre-clinical efficacy
and clinical trials registration with all governmental authorities,
manufacturing, commercialization, sales and support.  BI's failure to develop BI
Products shall not be a failure by BI to fulfill any provision of this Agreement
and shall not be construed to be a material breach of this Agreement according
to Article 12.2, but shall be subject to Article 7.4 below.


	Due Diligence Reports.  BI will provide to Sequana
quarterly reports within thirty (30) days after the end of each BI calendar
quarter describing, in reasonable detail, the progress of BI's development of BI
Products.


	Sequana's Development.  Sequana may, at its option
and expense, provide the necessary resources, expertise and support activities
to carry out development of Sequana Products.  Sequana's failure to develop
Sequana Products shall not be a failure by Sequana to fulfill any provision of
this Agreement and shall not be construed to be a material breach of this
Agreement according to Article 12.2.


	Termination of BI Licenses.  If BI fails to use
diligent efforts to develop BI Products based on a particular Asthma Gene, in a
Major Country, then BI's license and rights to develop and market BI Products
based on the particular Asthma Gene in that Major Country shall terminate and
Sequana shall acquire such rights and licenses under Article 5.2.3.  Under
such circumstances BI shall be entitled to receive royalties on any sales of the
BI Product, in an amount which reflects BI's contribution to the development of
such BI Product, if such contribution was significant and other than through the
performance of the Research, and in any event in an amount no greater than that
set forth in Article 4.2 for comparable products.  As used herein, BI shall
be deemed to have used diligent efforts with respect to the development of BI
Products based on a particular Asthma Gene if BI devotes a commercially
reasonable level of resources, budget and personnel with respect to such
development.  BI's rights and licenses shall be terminated under the provisions
of this Article 7.4 only in the event that Sequana gives BI ninety (90)
days notice of its intention to terminate such rights and licenses based on BI's
failure to use diligent efforts, and only in the event that BI fails to initiate
diligent efforts during such ninety (90) day period.
	CONFIDENTIALITY



	Obligation of Non-Disclosure.  Any Confidential
Information communicated by the Parties under this Agreement shall be maintained
in strict confidence for a period of ten (10) years by the receiving Party and
shall not be disclosed by either Party to any third party, except as provided in Articles 9.2 or 10 or the following sentence.  Such
Confidential Information may be disclosed by a Party to an Affiliate, or to a
contractor or collaborator according to Article 6.2, or to a consultant
retained by a Party or retained by an Affiliate or to any other person or entity
permitted to be engaged pursuant to the terms of this Agreement, provided that
such Affiliate, consultant, collaborator or other person or entity agrees to be
bound substantially in writing to the same extent as the Parties under this
Article 8.


	Exceptions.  The provisions of Article 8.1
will apply to all Confidential Information except that which:



	is known by the receiving Party prior to its disclosure;
or,


	becomes known to the receiving Party from a third party
under no obligation of non-disclosure regarding such information; or,


	is public knowledge or later becomes public knowledge
through no act on the part of the receiving Party; or


	is filed with an IND, NDA or PLA, or contained in a press
release or published; as otherwise expressly authorized under this
Agreement.

In order to be treated as Confidential Information for
purposes of this Agreement, each Party shall use its best efforts to summarize
in writing and deliver to the other Party within sixty (60) days following
disclosure, any Confidential Information that is disclosed orally or visually
and which the disclosing Party wishes the receiving Party to maintain under an
obligation of non-disclosure under Article 8.1.

Nothing in this Article 8 shall prevent a Party from
disclosing Confidential Information received hereunder or generated by such
Party by itself to government authorities to the extent necessary, in the good
faith opinion of such Party, to receive government permission to make, have
made, use, or sell, BI Products or Sequana Products, as the case may be, or as
required in connection with the exercise of the licenses granted under
Article 5.

	PUBLICATION



	Manuscripts.  Manuscripts intended for publication
which relate to Research will require approval in writing by both Parties.  Each
Party will decide upon such approval within thirty (30) days of receipt by the
Party of each manuscript, or sixty (60) days in the case of manuscripts that
potentially relate to a Patent or Patent Application of a Party.


	Authorship.  All publications or communications
arising from the Research shall be authored pursuant to customary scientific
protocol, as determined by the JRC.  The order of authorship of all publications
will be decided by the JRC.


	Publicity Review.  BI and Sequana will jointly
discuss and agree, based on the principles of Article 9.4, on any statement
to the public regarding the execution and the subject matter of this Agreement,
the Research to be conducted by the Parties under this Agreement, or any other
aspect of this Agreement, except with respect to disclosures required by law or
regulation.


	Standards.  In the discussion and agreement
referred to in Article 9.3, the principles observed by BI and Sequana will
be accuracy, and the requirements for confidentiality under Article 8, the
advantage a competitor of BI or Sequana may gain from any public or third party
statements under Article 9.3, the requirements of disclosure under any
securities laws or regulations of the United States, including those associated
with public offerings, and the standards and customs in the pharmaceutical
industry for such disclosures by companies comparable to BI and
Sequana.
	PROPERTY RIGHTS AND PATENTS



	Ownership.  Sequana Technology is owned by Sequana.
BI Technology is owned by BI.  Joint Results and Joint Patents shall be owned
jointly by BI and Sequana.  Inventorship and ownership of Joint Results and
Joint Patents shall be determined in accordance with the laws of United States
and New York, as applicable.


	Sequana Patents.  Sequana Patents shall be
prosecuted and maintained by Sequana in consultation with BI, at Sequana's
expense and Sequana shall be responsible for the conduct of any interferences,
re-examinations, reissues or oppositions relating thereto.  Sequana shall keep
BI informed of the Sequana Patent filings, prosecution and maintenance
reasonably in advance of any relevant actions and deadlines to allow for review
and consultation with BI.  In the event that Sequana elects not to pursue
prosecution or maintenance of any Patent or Patent Application related to
Sequana Technology, Sequana shall give BI not less than sixty (60) days notice
before any relevant deadline or any public disclosure and BI shall have the
right to pursue, at its expense, prosecution of such Patent or Patent
Application.


	BI Patents.  BI Patents shall be prosecuted and
maintained by BI, in consultation with Sequana, at BI's expense and BI shall be
responsible for the conduct of any interferences, re-examinations, reissues or
oppositions relating thereto.  BI shall keep Sequana informed of the BI Patent
filings, prosecution and maintenance reasonably in advance of any relevant
actions and deadlines to allow for review and consultation with Sequana.  In the
event that BI elects not to pursue prosecution or maintenance of any Patent or
Patent Application related to BI Technology, BI shall give Sequana not less than
sixty (60) days notice before any relevant deadline or any public disclosure and
Sequana shall have the right to pursue, at its expense, prosecution of such
Patent or Patent Application.


	Joint Patents.  Joint Patents shall be prosecuted
and maintained by BI in consultation with Sequana, at BI's expense and BI shall
be responsible for the conduct of any interferences, re-examinations, re-issues
or oppositions relating thereto.  BI shall keep Sequana informed of the Joint
Patent Filings, prosecution and maintenance reasonably in advance of any
relevant actions and deadlines to allow for review and consultation with
Sequana.  In the event that BI elects not to pursue prosecution or maintenance
of any Patent or Patent Application within the Joint Patents, BI shall give
Sequana not less than sixty (60) days notice before any relevant deadline or any
public disclosure and Sequana shall have the right to pursue, at its expend,
prosecution or such Patent or Patent Application.


	Cooperation Among Parties.  Each Party shall make
available to the other its employees, agents or consultants as is reasonably
necessary or appropriate to enable such Party to file, prosecute and maintain
Patents and Patent Applications as permitted under this Agreement, including,
without limitation, by providing the other the opportunity to fully review and
comment on any documents as far in advance of filing dates as feasible which
will be filed in any patent office, and providing the other copies of any
documents that such party receives from such patent offices promptly after
receipt, including notice of all interferences, reissues, re-examinations,
oppositions or requests for patent term extensions.


	Infringement of Patents by Third Parties.



	Notice.  Each party shall promptly notify the
other in writing of any alleged or threatened infringement of the Sequana
Patents, the BI Patents, or the Joint Patents of which it becomes
aware.


	Sequana Patents.  Sequana shall retain the sole
right to bring, at Sequana's expense, an appropriate action against any person
or entity infringing a Sequana Patent directly or contributorily.  Any recovery
so obtained shall be paid to Sequana.  In the event that an alleged infringer is
engaged in the marketing or commercialization of a product that competes with a
BI Product or Compound in a country in which BI retains marketing or
commercialization rights, and Sequana is unable or unwilling to sue the alleged
infringer within one hundred twenty (120) days of the date of notice of such
infringement or thirty (30) days before the time limit, if any, set forth in the
appropriate laws and regulations for the filing of such actions, whichever comes
first, BI may, but shall not be required to, prosecute the alleged infringement
or threatened infringement.  In such event, BI shall act in its own name and at
its own expense, and Sequana shall cooperate fully and completely with BI, at
the expense of BI.  In the event of such action by BI, any recovery obtained
shall be paid to BI.


	BI Patents.  BI shall retain the sole right to
bring, at BI's expense, an appropriate action against any person or entity
infringing a BI Patent directly or contributorily.  Any recovery so obtained
shall be paid to BI.  In the event that an alleged infringer is engaged in the
marketing or commercialization of a product that competes with a Sequana Product
or Compound in a country in which Sequana retains marketing or commercialization
rights, and BI is unable or unwilling to sue the alleged infringer within one
hundred twenty (120) days of the date of notice of such infringement, or thirty
(30) days before the time limit, if any, set forth in the appropriate laws and
regulations for the filing of such actions, whichever comes first, Sequana may,
but shall not be required to, prosecute the alleged infringement or threatened
infringement.  In such event, Sequana shall act in its own name and at its own
expense, and BI shall cooperate fully and completely with Sequana, at the
expense of Sequana.  In the event of such action by Sequana, any recovery
obtained be to Sequana.


	Joint Patents.  In the event that the Parties
become aware of any alleged or threatened infringement of the Joint Patents, the
Parties shall confer and may agree jointly to prosecute such infringement.  If
the Parties do not agree on whether or how to proceed with enforcement activity
within:



	ninety (90) days following the notice of alleged
infringement or,


	thirty (30) days before the time limit, if any, set forth
in the appropriate laws and regulations for the filing of such actions,
whichever comes first, then either Party may act in its own name to commence
litigation with respect to the alleged or threatened infringement.

In the event a Party brings an infringement action, the other
Party shall cooperate fully and completely.  Neither Party shall have the right
to settle any patent infringement litigation under this Article 10.6.4, in
a manner that diminishes the rights or interests of the other Party without the
consent of such other Party.  The costs of any litigation commenced pursuant to
this Article 10.6.4, including attorneys' fees and expenses, shall be borne
equally by the Parties if joint prosecution was agreed upon, with such costs to
be accounted for in equalizing payments to be made on a quarterly basis, or
shall be borne by the single Party who prosecutes the infringement.  Only out-
of-pocket costs shall be accounted for and reimbursed under this
Article 10.6.4, without an allocation for internal resources devoted to
litigation.  Except as otherwise agreed to by the Parties as part of a cost
sharing arrangement, any recovery realized as a result of such litigation shall
be shared equally by the Parties if joint prosecution was agreed upon or shall
be the sole property of the single Party prosecuting the infringement.

	INDEMNITY AND INSURANCE



	BI.  BI agrees to indemnify, defend and hold Sequana,
its Affiliates and Sublicensees and their respective directors, officers,
employees and agents (the "BI Indemnitees") harmless from and against
any losses, costs, claims, damages, liabilities or expense (including reasonable
attorneys' fees and court and other expenses of litigation) (collectively,
"Liabilities") arising out of or in connection with third party claims
relating to (i) any BI Products or Sequana Products developed,
manufactured, used sold or otherwise distributed by or on behalf of BI, its
Affiliates, sublicensees or other designees pursuant to Article 5.1 herein
(including, without limitation, product liability claims), (ii) BI and its
Affiliate(s) performance of the Research, or (iii) any breach by BI of its
representations and warranties made in this Agreement, except, in each case, to
the extent such Liabilities resulted from the gross negligence (including
grossly negligent acts or omissions) or intentional misconduct of
Sequana.


	Sequana.  Sequana agrees to indemnify, defend and
hold BI, its Affiliates and Sublicensees and their respective directors,
officers, employees and agents (the "BI Indemnitees") harmless from
and against any losses, costs, claims, damages, liabilities or expense
(including reasonable attorneys' fees and court and other expenses of
litigation) (collectively, "Liabilities") arising out of or in
connection with third party claims relating to (i) any Sequana Products
developed, manufactured, used, sold or otherwise distributed by or on behalf of
Sequana, its Affiliates, sublicensees or other designees pursuant to
Article 5.2 herein (including, without limitation, product liability
claims), (ii) Sequana and its Affiliate(s) performance of the Research, or (iii)
any breach by Sequana of its representations and warranties made in this
Agreement, except, in each case, to the extent such Liabilities resulted from
the gross negligence (including grossly negligent acts or omissions) or
intentional misconduct of BI.


	Procedure.  In the event that any Indemnitee
intends to claim indemnification under this Article 11 it shall promptly
notify the other party in writing of such alleged Liability.  The indemnifying
party shall have the right to control the defense thereof with counsel of its
choice; provided, however, that arty Indemnitee shall have the right to retain
its own counsel at its own expense, for any reason, including if representation
of any Indemnitee by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnitee and any other party represented by such counsel in such proceeding.
The affected Indemnitees shall cooperate with the indemnifying party and its
legal representatives in the investigation of any action, claim or liability
covered by this Article 11.  The indemnified party shall not, except at its
own cost, voluntarily make any payment or incur any expense with respect to any
claim or suit without the prior written consent of the indemnifying party, which
such party shall not be required to give.


	Insurance.  BI will maintain in force at its sole
cost and expense a general liability insurance policy adequate to cover its
indemnification obligations hereunder.
	TERMINATION



	Termination by Mutual Agreement.  By mutual
agreement, the Parties may terminate this Agreement at any time.


	Termination for Material Breach.  Sequana or BI
may terminate this Agreement upon ninety (90) days written notice selling forth
in reasonable detail the specifics of the material breach, provided however,
that within such ninety (90) day period, the Party in material breach may cure
the deficiency or the Parties may agree on a settlement in which case the
termination by Sequana or BI shall not occur.  Disputes subject to resolution
pursuant to Articles 3.5.1 and 3.5.2 shall not be the basis of any material
breach under this Article.  Notwithstanding the above, except in the case where
there is a bona fide dispute over an amount due which the parties are attempting
to resolve, in the case of a failure to pay any amount due under this Agreement,
the failure to pay any such amount within thirty (30) days after written notice
of such failure shall be a material breach hereof.


	Termination for Bankruptcy.  Either Party may
immediately terminate this Agreement by giving written notice to the other Party
in the event of (i) the liquidation of the other Party, (ii) the appointment of
a receiver or similar officer for the other Party, (iii) an assignment by the
other Party for the benefit of all or substantially all of its creditors, (iv)
entry by the other Party into an agreement for the composition, extension, or
readjustment of all or substantially all of its obligations, or (v) the filing
of a meritorious petition in bankruptcy by or against the other Party under any
bankruptcy or debtors' law for this relief or reorganization which, in the case
of such a petition filed against the other Party, is not dismissed within sixty
(60) days.


	Effects of Termination for Breach or Bankruptcy.
Termination by Sequana or BI under Article 12.2 or 12.3 shall not affect
the rights of the terminating Party to take any other legal action (including
any action for damages arising from a material breach).  In the event of such
termination:



	any licenses granted to the breaching or bankrupt Party
under Article 5 with respect to Sequana Technology, BI Technology or Joint
Results and Joint Patents conceived or otherwise developed prior to the
effective date of termination will terminate; and


	any licenses granted to the non-breaching or non-bankrupt
Party under Article 5 prior to the effective date of termination will
continue in effect at the option of the non-breaching or non-bankrupt Party, as
long as the non-breaching or non-bankrupt Party abides by the terms of the
license and the surviving provisions of this Agreement, including but not
limited to the obligation to pay milestone payments and royalties under
Article 4, and subject to later termination under the terms of this
Article 12.  Any Court awarded damages granted to BI pursuant to this
Article 12.4, arising from material breach or bankruptcy of Sequana, may be
deducted from milestone and/or royalty payments which may subsequently be due to
Sequana.  In addition, if BI is the terminating non-breaching or non-bankrupt
Party, then BI's surviving licenses shall continue to be subject to reversion to
Sequana under Article 7.4.  In the case of a bankruptcy, the Parties
acknowledge that 11 U.S.C.   365 sets forth certain rights and obligations of
the Parties.


	BI Termination.



	Following the third anniversary of the Effective Date, BI
may, at its discretion, terminate this Agreement including the licenses granted
herein with six (6) months notice to Sequana.  In the event of any such
termination, at Sequana's request, BI shall assign BI's entire interest in the
Joint Results and Joint Patents to Sequana, and grant Sequana an exclusive
license, with the right to sublicense, under the BI Technology to make, have
made, use and sell Compounds and BI Products.  If Sequana commercializes
products under such a license, Sequana shall pay to BI royalties in an amount
which reflects BI's contribution to the development of such BI Product, if such
contribution was significant and other than through the performance of the
Research, and in any event in an amount no greater than that set forth in
Article 4.2 for comparable products.


	Following the third anniversary of the Effective Date, if
Sequana has identified at least one Asthma Gene through the Research, BI may
elect to terminate the Research with six (6) months notice to Sequana.  In the
event of any such termination prior to the fifth anniversary of the Effective
Date, BI shall pay to Sequana a "wind-down" payment equal to fifty
percent (50%) of the funding budgeted for the Research in the preceding twelve
(12) month period.  In addition, the licenses in effect on the effective date of
such termination shall remain in effect with respect to any Asthma Genes,
Compounds or BI Products with respect to which BI is then diligently pursuing
development and/or commercialization, subject to the terms and conditions of
this Agreement.


	Change of Control.  In the event that a
pharmaceutical company succeeds to all or substantially all of the business or
assets of Sequana to which this Agreement relates, whether by sale, merger,
operation of law or otherwise, prior to the end of the Research Term, BI may
terminate the Research with thirty (30) days notice to Sequana.  Notwithstanding
such termination, BI's other obligations will continue in effect, subject to the
terms and conditions of this Agreement.  As used in this Article 12.6,
"pharmaceutical company" shall mean a company whose primary business
is the marketing and sale of human therapeutic products.  In addition, the
licenses in effect on the effective date of termination shall remain in effect
with respect to any Asthma Genes, Compounds or BI Products with respect to which
BI is then diligently pursuing development and/or commercialization, subject to
the terms and conditions of this Agreement.


	Survival.  Articles 3.5, 4.1, 4.2, 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 7.4, 8, 9, 10, 11 and 16 shall survive any termination
or expiration of this Agreement (excluding expiration according to
Article 12.8).


	End of Agreement.  This Agreement and all
obligations of both Parties hereunder, unless earlier terminated according to
this Article 12, shall expire concurrently with the expiration of the last-
to-expire royalty obligation hereunder.  Following such an expiration, BI shall
have a non-exclusive, royalty-free, fully-paid license under the Sequana
Technology to make, have made, and use Compounds and to make, have made, use and
sell BI Products, and Sequana shall have a non-exclusive, royalty-free, fully-
paid licensed under the BI Technology to make, have made, use sell Sequana
Products.
	ASSIGNMENT



	Assignment.  Neither Party may assign, delegate or
otherwise transfer any of its rights or obligations under this Agreement to a
third party without the prior written consent of the other Party, which consent
will not be unreasonably withheld; provided, however, that each Party may assign
this Agreement without such consent to an entity that succeeds to all or
substantially all of its business or assets to which this Agreement relates,
whether by sale, merger, operation of law or otherwise.  Subject to the
foregoing, this Agreement shall be binding upon the Parties and their respective
successors and assigns.


	Assignment to Affiliates.  Notwithstanding the
foregoing, BI will be entitled to exercise any or all of its rights and to
perform any or all of its duties under this Agreement through one or more
Affiliates on the condition that BI will guarantee due and satisfactory
performance by any such Affiliate of any duty delegated to it.
	REPRESENTATIONS AND WARRANTIES



	Mutual Representations and Warranties.  Each Party
hereby represents and warrants:



	Corporate Power.  Such Party is duly organized and
validly existing under the laws of the state of its incorporation and has full
corporate power and authority to enter into this Agreement and to carry out the
provisions hereof.


	Due Authorization.  Such Party is duly authorized
to execute and deliver this Agreement and to perform its obligations
hereunder.


	Binding Agreement.  This Agreement is a legal and
valid obligation binding upon it and is 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 authority over it.


	Sequana Representations and Warranties.  Sequana
hereby represents and warrants that to the best of its knowledge as of the
Effective Date that there are no issued third party patents or pending patent
applications which would be infringed by BI's practice of the Sequana Technology
existing as of the Effective Date, pursuant to the licenses granted
herein.


	Disclaimer.  BI and Sequana specifically disclaim
any guarantee that the Research will be successful, in whole or in part.  The
failure of the Parties to successfully clone Asthma Genes will not constitute a
breach of any representation or warranty or other obligation under this
Agreement.  Neither BI nor Sequana makes any representation or warranty or
guaranty that the Research will be successful.  EXCEPT AS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, SEQUANA AND BI AND THEIR RESPECTIVE AFFILIATES MAKE
NO REPRESENTATIONS AND EXTEND NO WARRANTIES OR CONDITIONS OF ANY KIND, EITHER
EXPRESS OR IMPLIED, WITH RESPECT TO THE SEQUANA TECHNOLOGY OR BI TECHNOLOGY,
INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, OR NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
THIRD PARTIES.
	NOTICES



	Notices.  Any notice or other communication required
or permitted under this Agreement will be in writing and will be deemed given as
of the date it is: (i) delivered by hand; or (ii) mailed, postage prepaid, first
class, certified mail, return-receipt requested, to the Party at the address
listed below; or at an updated address; or (iii) sent, shipping prepaid, return-
receipt requested, by overnight delivery service (e.g., DHL, FedEx), to the
Party at the address listed below; or at such other address as the applicable
Party may indicate by notice hereunder.


	
To Sequana:
	
Sequana Therapeutics, Inc.

	 	
11099 North Torrey Pines Road, Suite 160

	 	
La Jolla, California 92037

	 	
Attn: Chief Executive Officer

	
To BI:
	
Boehringer Ingelheim International GmbH

	 	
D-55216 Ingelheim am Rhein

	 	
Attn: Corporate Licensing

	 	
cc: Legal Department





	MISCELLANEOUS



	Governing Law; Venue.  The construction and
performance of this Agreement will be governed by the laws of the State of New
York, without reference to conflicts of laws principles.  The exclusive venue of
any disputes arising under this Agreement which are not settled by binding
arbitration pursuant to Article 3.5.2 shall be in the U.S. District Court
for the Southern District of New York, and the Parties hereby consent to the
personal jurisdiction of such court.


	Non-Use of Name.  Neither Party will, without the
prior written consent of the other Party use in advertising, publicity or
otherwise, the name of any employee or agent, any tradename, trademark or
simulation thereof owned by the other Party, or represent, either directly or
indirectly, that any product or service of the other Party is a product or
service of the representing Party or that it is made in accordance with or
utilized the information or documents of the other Party, except as may be
required by law.  Notwithstanding the above, Sequana may disclose the basic
provisions of this Agreement for the purpose of obtaining additional funding or
engaging in merger discussions.  Any such disclosure shall be subject to the
confidentiality provisions as set forth in Article 8.


	Waiver.  The failure of a Party in any instance to
insist upon the strict performance of certain terms of this Agreement will not
be construed to be a waiver or relinquishment of any of the remaining terms of
this Agreement, either at the time of the Party's failure to insist upon strict
performance or at any time in the future, and such remaining terms will continue
in full force and effect.


	Severance.  Each clause of the Agreement is a
distinct and severable clause and if any clause is deemed illegal, void or
unenforceable, the validity, legality or enforceability of any other clause or
portion of this Agreement will not be affected thereby.


	Titles.  All titles and Article headings
contained in this Agreement are inserted only as a matter of convenience and
reference.  They do not define, limit, extend or describe the scope of this
Agreement or the intent of any of its provisions.


	Compliance with Agreement and Laws.  Each Party
shall comply in all material respects with the terms of this Agreement and with
all laws, rules and regulations applicable to the discovery, development,
manufacture, distribution, import and export and sale of pharmaceutical products
pursuant to this Agreement.


	No Other Products.  Except as otherwise agreed or
specifically provided in the terms of this Agreement, neither BI not its
Affiliates nor sublicensees shall commercialize any Compound other than as a BI
Product, except in accordance with this Agreement.


	Limitation of Liability.  In no event shall either
Party be liable to the other Party for any lost profits, cost of procurement of
substitute goods or services, or other indirect, special, incidental or
consequential damages, however caused and on any theory of liability, arising
out of or related to this Agreement.  The foregoing will not affect either
Party's liability, if any, with respect to contribution or indemnity for third
party claims for personal injury, death, or physical damage to
property.

[THIS SPACE INTENTIONALLY LEFT BLANK]


	Entire Agreement.  This Agreement together with its
Exhibits contain the entire agreement and understanding between the Parties as
to its subject matter.  It merges all prior discussions between the Parties and
neither Party will be bound by conditions, definitions, warranties,
understandings, or representations concerning such subject matter except as
provided in this Agreement.  This Agreement can only be modified by written
agreement duly signed by persons authorized to sign agreements on behalf of both
BI and Sequana.

In Witness Thereof; the Parties
hereto set their hands to this Agreement.
Sequana Therapeutics,
Inc.


By: /s/ Kevin J.  Kinsella


Name: Kevin J.  Kinsella


Title: Chief Executive Officer


Date:_____________________________ 


 

Boehringer Ingelheim
International GmbH


By: /s/ Muller /s/ D.  G.  Mitchard


Name: Muller Mitchard


Title: Authorized figuratives


Date:_____________________________ 


 

 

By:________________________________


Name:______________________________


Title:_____________________________


Date:______________________________

























Exhibit A

Sequana

Therapeutics

Boehringer

Ingelheim

Isolation of Asthma & Atopy

Susceptibility Genes

Research Plan

1995-1996

Outline Research Proposal

1995-1996

Strategic Overview

Bronchial hyperresponsiveness and atopic asthma are
polygenic conditions resulting from complex interactions of genes and
environmental agents.  Sequana Therapeutics has undertaken to isolate and
characterize genes involved in asthma etiology.  The current asthma program is
focused on identifying genes contributing to bronchial hyperresponsiveness (BHR)
and frank asthma in humans.  Several large unique asthmatic patient populations
have been ascertained in this effort, and a complete genome scan has lead to
identification of at least two novel genetic loci influencing BHR/frank asthma.
In late 1995 we will augment this ongoing program using several complementary
patient populations selected for allergic asthma, or atopy.

The research plan for 1995 and 1996 has three primary
foci:

1.Fine genetic mapping and mutation detection in the two
BHR loci that have been identified and validated;

2.Additional genome-wide screening for BHR and frank
asthma susceptibility loci, followed by verification of linkage and linkage
disequilibrium in independent patient samples;

3.Genome-scan and candidate gene evaluation of atopy
genes in genetically informative samples of phenotypically and ethnically
matched atopic families.

Current Progress

Patient Collection: Airway Hyperreactivity

Tristan da Cunha.  To date, Sequana has collected
BHR, frank asthma, and atopy-related phenotypes from four independent samples.
The cornerstone of these samples is entire population of the island of Tristan
da Cunha.  Tristan da Cunha, a small South Atlantic island situated between Rio
de Janeiro, Brazil and Capetown, South Africa, is inhabited by 282 living
descendants of seven British, American, Italian, and Dutch founders.  Current
inhabitants reflect ten generations of intense inbreeding, which has resulted in
kinship resemblances of at least first cousin levels for all individuals.  This
degree of inbreeding, coupled with at least one recorded case of asthma in the
island founders, has led to a population prevalence of 20% -50% for frank
asthma, BHR, and allergic response.  The founder effect in this population
renders it the most unique and powerful asthma patient resource in the
world.

DNA and asthma and atopy phenotypes have been obtained from
nearly all (269/282) living inhabitants of Tristan da Cunha.  The primary
phenotypes for analysis include lifetime history of asthma, age of asthma onset,
methacholine challenge response, smoking history, and skin prick tests for
twelve common allergens.

Replication Samples: Toronto.  A major emphasis of our
research strategy for identifying novel genetic loci is to validate suggestive
linkages by replication with independent patient samples.  Accordingly, Sequana
has established two cohorts of sib-pair samples for replication with Tristan da
Cunha.  The first comprises 110 Caucasian sib pairs drawn from Toronto, Ontario,
Canada.  Toronto sib-pairs were ascertained based on the following criteria: (i)
proband having methacholine PC20 < 4 mg/ml; (ii) availability of
at least one sibling of the proband, either affected or unaffected; (iii) at
least one living parent from whom DNA could be obtained.  Phenotypes obtained
from this cohort include: Asthma history questionnaire, methacholine challenge
test, total IgE level, skin prick responses to 10 common allergens, and smoking
history.

QIMR.  The second replication sample consists of 221
dizygotic twin pairs, obtained via a collaboration with the Queensland Institute
of Medical Research (QIMR) in Brisbane, Australia.  This sample was drawn from a
registry of over 4000 twin pairs, with ascertainment based on positive history
of wheezing followed by physician diagnosis of asthma or atopy.  Available
phenotypes include histamine challenge responses, physician diagnosis of asthma
and atopy, skin prick responses to twelve common allergens, total IgE, smoking
history and other respiratory-related environmental exposures, and over 200
additional anthropometric, demographic, and medical variables obtained by
questionnaire and physician interview.

Chinese Family.  BHR, asthma, and atopy phenotypes
also have been obtained from a large family of 174 Chinese individuals living in
Toronto, Ontario.  This family was identified based on a high proportion of
asthmatics (> 25%).  DNA has been extracted from all individuals.  This
family is not used as a replication of Tristan da Cunha due to ethnic
differences; rather, it is employed to evaluate mutation ages and variability
among ethnicities.

Linkage Analysts

Genome Scan.  A 20 cM genome scan of more than 240
microsatellite markers has been completed on the Tristan da Cunha population.
Linkage analyses of these data have yielded 11 possible linkages for airway
hyperreactivity at a probability level of 51% or less.  Many of these are likely
to be false positives due to random statistical fluctuation; however, two
linkages exceed the 0.5% level, and two others occur with probability less than
0.01%.  These latter findings correspond to LOD scores greater than 4.0.  These
loci are henceforth denoted WHZ1 and WHZ2.

WHZ1 Saturation.  The chromosomal regions surrounding
the initial WHZ1 and WHZ2 markers have been saturated with additional
polymorphic genetic markers.  Most of the work in this saturation has focused on
WHZ1, owing to stronger initial evidence for linkage (probability = .00004) and
an attractive candidate gene very near the linked marker.  Saturation marker
mapping of WHZ2 is ongoing.  The resulting genetic map of WHZ1 includes markers
spaced in intervals no greater than 5 cM across a possible linked region of
approximately 30 cM.  Sib-pair and affected pedigree member linkage analyses of
the saturation markers yielded confirmatory evidence for linkage and refined the
genetic interval to 12 cM.  Eight additional markers spanning the 12 cM region
have been identified and developed.  These are shown below, with genetic
distances by the Tristan da Cunha population.



 

 

 

 

 

 

 

Replication.  The saturation markers have been
genotyped in the Toronto and QIMR sib-pair samples.  Sib-pair analyses of both
samples yielded significant evidence for linkage to multiple markers in this
region (p <.05).  Control markers located in unlinked regions of the genome
provided appropriate negative evidence for linkage.  In all samples, WHZ1
linkage was obtained with frank asthma and positive airway hyperreactivity, but
not for available measures of atopy (skin prick tests in all samples; IgE in
Toronto and QIMR).  This replication in three independent samples represents the
strongest evidence ever compiled for an asthma susceptibility gene.

WHZ1a candidate gene.  It is noteworthy that the
strongest evidence for linkage in the Toronto sib-pair and QIMR samples is not
obtained at the initial marker identified in Tristan da Cunha (marker
"D" shown above).  Rather, the most significant marker is situated
approximately 1.3 cM proximal, shown as marker "C" above.
Furthermore, the QIMR sample, which is our largest outbred sib-pair sample,
yields a further refined interval for linkage, spanning approximately 3.6 cM on
the map above (markers "B" to "E").  This interval contains
an attractive candidate gene for airway hyperreactivity, which we denote WHZ1a.
This candidate gene is less than 0.5 cM from marker "C".

Physical Mapping and Sequencing

Cloning of Genomic Regions.  In the physical
mapping core group at Sequana, yeast artificial chromosomes (YACS) containing
genetic markers linked to each asthma locus are identified by routine PCR
methods.  A contig of overlapping clones is then assembled using sequence tagged
sites (STSs) to establish overlaps between the clones, fluorescence in situ
hybridization (FISH) to assay for chimerism, and pulse field gel electrophoresis
(PFGE) to size the clones.  A YAC contig for the WHZ1 asthma locus (shown below)
has been completed.  Seven known genes are in this contig.  In specific regions
of interest within each YAC contig, for example near a candidate gene, cosmid
contigs are also being assembled.  A cosmid contig across the WHZ1a candidate
gene within the WHZ1 region is 80% complete.

Identification of New Genetic Markers.  Polymorphic
microsatellites (CA)n repeats have been identified from both YACS and cosmids in
the WHZ1 region.  These markers have contributed to the genetic refinement of
the WHZ1 interval.  A novel (CA)n repeat polymorphism has been identified in a
WHZ1a intron.

Mutation Detection.  Initial screening of mutations in
WHZ1a is presently underway.  Mutation screening of patient DNAs is conducted by
several complementary methods:

1.Single stranded conformational polymorphism (SSCP)
evaluation is used to detect polymorphism in the coding regions of WHZ1a.  This
method lends itself to large scale, fast analysts of several candidate genes
concurrently.

2.PCR and sequencing of exons of patient DNAs and
controls.  This provides a very detailed analysis of a particular segment of
sequence and can be used to reveal the exact nature of a polymorphism.  or
mutation identified by methods like SSCP.

3.RT-PCR and Northern blotting are underway to verify the
size of candidate gene transcripts and level of expression in available tissues.
Analysis of splice variants will also be undertaken.



 

 

 

 

 

 

 

 

Future Activities

Overview.  Four major areas of emphasis are targeted for
the asthma program in 1995-1996.  These include:

(i)Gene verification and mutation detection of WHZ1.
Although WHZ1a is an attractive candidate gene, there are at least 6 other genes
in the region.  Primary effort will be devoted to establishing the asthma
susceptibility gene(s) in the WHZ1 region and identifying mutations in this
gene.  This involves both continued physical mapping of WHZ1a and physically
locating and screening other genes in cloned regions.  WHZ1a
polymorphisms/mutations will be characterized by the end of September 1995.

(ii)Marker development, linkage replication, and gene
localization of WHZ2.  The same approach taken in WHZ1 will be applied to the
second strong linkage arising in Tristan da Cunha, WHZ2.  This includes
construction of a fine genetic map of less than 5 cM, developing 

additional markers if necessary, replicating linkage and
linkage disequilibrium across the markers, determining all known genes and ESTs,
and physically mapping the hyperreactivity gene in the region.  Marker
development and linkage replication will be completed in 1995.  Gene
localization will begin in 1995 and continue into 1996.

(iii)Identification of other airway hyperreactivity loci.
As described above, there are a number of additional asthma loci showing
suggestive evidence for linkage.  These chromosome regions will be evaluated
genetically by replication and by marker development for saturation.
Furthermore, a genome scan is planned for the QIMR sample in order to complement
the inbred Tristan da Cunha population.  The follow-up analyses of suggestive
linkages and the 20 cM scan of QIMR will continue through 1996.  The QIMR sample
numbers can easily be expanded.

(iv)Development of an atopy program.  Characterizing
genes predisposing to atopy versus asthma is crucial to the research program and
to subsequent development of diagnostic and therapeutic agents.  Access to
additional patient populations for genome scanning and linkage replication is be
established at present.  The cornerstone of this effort will be a collaboration
with Dr.  David Marsh of Johns Hopkins University.  Dr.  Marsh is a world leader
in allergic asthma and has collected a very large number of families for
identification of atopy genes.  The samples of Dr.  Marsh, in combination with
our QIMR twin sample, provide a complete atopy program, allowing sufficient
resources for linkage replication, fine mapping, and mutation characterization.
The programme would follow the route of a genome scan with special emphasis on
candidate gene regions.

Specific Activities.  The Sequana research program is
split into five "core" areas, consisting of (1) DNA Collection; (2)
Genetic Mapping; (3) Physical Mapping; (4) DNA Sequencing and Mutation Analysis;
(5) Gene Characterization and Assay Development.  Specific activities in each of
these core areas are described below.

DNA Collection




	Acquire additional patient samples for fine mapping
BHR genes, including a large (> 2000 individuals) case-control sample for
allelic association and epidemiological studies.  The Sharp clinic in San Diego
is the most likely resource for this sample.


	Acquire atopy samples from Dr.  David Marsh, including
400 Amish sib pairs and 500 patients in inbred families from
Barbados.



Genetic Mapping




	Conduct linkage disequilibrium analyses of WHZ1
region in all patient populations.


	Develop markers for saturating WHZ2 region and all
suggestive linkages arising from Tristan da Cunha.


	Genotype Tristan da Cunha, Toronto sibling pairs, and
QIMR twin samples for all saturation markers.  Follow-up validated findings with
case-control association analyses.


	Conduct 20 cM genome scan of QIMR sample for additional
loci.


	Replicate these findings in Tristan da Cunha and Toronto
sib pairs.



Physical Mapping and Sequencing




	Complete cosmid contig of WHZ1 region (80% complete
at present).






	Identify additional markers in WHZ1 from YACs.  Genotype
if polymorphic.


	Identify novel genes in the WHZ1 region by exon trapping
and cDNA selection as necessary.  Perform large scale sequencing (of very
limited regions) and identify genes by sequence features.


	Sample-wide variant assessment and correlation with
genetic and phenotype data.  When the exact sequence of polymorphisms or
potential mutations of key patients have been determined, we will assay a much
wider selection of patient groups by methods such as allele specific
oligonucleotide (ASO) hybridization.  This allows assessment of every variant as
a genetic trait within the group, and will clarify which variants in which
candidate genes are associated with disease.



Gene Characterization




	BI will be largely responsible for gene
characterisation and functional assay development.


	Sequana may use the two hybrid system and other yeast
genetic techniques to probe the function of any unknown gene, with mutations
linked to asthma or associated phenotypes, uncovered by the study.


	Sequana will use its Bioinformatics capability to
annotate and integrate all the information obtained about the genes found.  This
will include the construction of an asthma candidate gene data base and, as
appropriate, access to the public databases including three dimensional protein
structure prediction programmes.














Exhibit B

Asthma Patient Recruitment

Sequana has entered into agreements with the following
groups prior to the Effective Date to acquire patient samples for the study of
asthma.

	
Signed Agreements
	
Families
	
Fixed Cost
	
Variable Cost
	
Total Cost

	
Fudan University, PRC
	
100
	
$  15,000
	
$  40,000
	
$  55,000

	
RenJi Hospital, PRC
	
125
	
0
	
25,000
	
25,000

	
Shanghai 1st Hospital, PRC
	
125
	
0
	
25,000
	
25,000

	
Queensland Inst. Med. Res.
	
220
	
121,000
	
121,000
	
  242,000

	 	 	 	 	
$347,000




Amount to be Negotiated and Approved by the JRC

	
SLRI (China, Toronto)
	
100
	
100,000
	
0
	
$100,000




COLLABORATIVE RESEARCH AGREEMENT

between

SEQUANA THERAPEUTICS

and

BOEHRINGER INGELHEIM

INTERNATIONAL GmbH

Table of Contents

Page

ARTICLE 1.DEFINITIONS*
ARTICLE 2.RESEARCH*

ARTICLE 3.JOINT RESEARCH COMMITTEE*

ARTICLE 4.DEVELOPMENT MILESTONES AND ROYALTIES*

ARTICLE 5.GRANT OF LICENSES*

ARTICLE 6.EXCLUSIVITY*

ARTICLE 7.DEVELOPMENT*

ARTICLE 8.CONFIDENTIALITY*

ARTICLE 9.PUBLICATION*

ARTICLE 10.PROPERTY RIGHTS AND PATENTS*

ARTICLE 11.INDEMNITY AND INSURANCE*

ARTICLE 12.TERMINATION*

ARTICLE 13.ASSIGNMENT*

ARTICLE 14.REPRESENTATIONS AND WARRANTIES*

ARTICLE 15.NOTICES*

ARTICLE 16.MISCELLANEOUS*